Patterns in Foreign Direct Investment – One of the greatest phenomena that the era of globalization has witnessed is that of rising Foreign Direct Investment. With technological advancements, end of the cold war and the boom witnessed in the financial services sector, we see firms increasingly looking towards foreign shores to establish their interests and thus boost profitability. Simply put, Foreign Direct Investment is the act of making an investment on part of a company in a business in another country. This paper will discuss the merits and faults of FDI and the role that it plays in the calculus of global business.
There are three forms of foreign direct investment. Firstly, the firm may acquire stocks in a host country’s company or may form an affiliate of sorts. This is a rather complex form of FDI. A simpler form is where the company simply reinvests the profits of the affiliate in the host country. Finally, the third method is where the companies raise capital through stock market in the host country.
In today’s world, a company can transform through an evolutionary process. Ohmae (1990) described the stages of evolution as early internationalization, exporting, production, complete and true globalization. Basically, the firm goes from using agents for export to setting up shop in the host country until the point where the company becomes truly global. In many cases, this process is sped up by the use of FDI, which is a wonderful miracle for the businesses of today.
Why a company may turn to FDI can be explained by a number of motives. Dunning (1993) identifies 4 primary reasons. Firstly, it could be to attain access to resources that may not be available in the home country. Secondly, FDI could be a tool to gain access to untapped markets with massive potential. Usually, alternatives to FDI such as exporting and licensing may face trade barriers or challenges such as monopoly laws, customs restriction and high tariffs. By using FDI, companies can avoid all such issues. A third reason for opting for FDI could be that it allows greater efficiency. The country being invested in may have low-cost labor or raw material or may provide low-cost manufacturing. Finally, FDI may be a tool for acquiring strategic assets. Often, in markets where there is rising monopolistic or oligopolistic behavior, firms can turn towards FDI to protect themselves in such harsh business environments. They may acquire certain assets, build specific capabilities or establish themselves in certain markets by using FDI, all for the simple reason of protecting the business against oligopolies.
It is important to first understand the nature of MNCs and how they integrate. When a company acquires or combines with another company that is producing a similar product which happens to be at the same stage of production as that of the company itself, we call such a company as horizontally integrated MNC. The motivation behind such an integration may be to diversify risk or lower costs. On the other hand, vertically integrated MNCs are such that acquire or merge with a company that is involved in a different stage of production for the same product as that of the company. An example could be that of an oil marketing company acquiring an oil drilling company. An entirely different type of MNC is that called Conglomerate MNC. It occurs when a company acquires or merges with another company that is producing a different product.
Another important distinction to understand is in that of the multiple kinds of investments and the purposes that they serve. Firstly, Brownfield Venture means an investment that is intended to improve the existing capacity or efficiency. In contrast, a Greenfield Venture means an investment that results in the construction of a new establishment or plant in the country where the investment is being made.
Foreign Direct Investment trends are often hard to identify and it is even more difficult to pin down the underlying factors that cause such trends. A recurring theme, however, has been that of the effect that global recessions and financial market meltdowns have on the FDI trends. As is evident from figure 1, FDI understandably fell after the 2008 recession. Slowly, global economies have been getting back on their feet but it is curious to note that FDI inflows to developed economies has generally followed a downward trend.
Developing Countries and Patterns in Foreign Direct Investment
In contrast, the developing economies have seen a rise in FDI, albeit at a slow rate and with many fluctuations. To further argue this point, author argues that “Notably, the high-wage differential between West Europe and Asia has been the most significant factor contributing to the restructuring of US FDI during 1981–2000” and that “Populous countries such as China and India have been further liberalizing their economies and improving infrastructure” (Sethi et al 2003, p.325).
Figure 2 shows data for year 2015 identifying the countries that attracted the greatest FDI inflow. The United States leads it all the way followed by China and Netherlands. While this data confirms the understanding that the US and Western Europe continue to be the recipients of most of the FDI, it must be noted that China, India and Brazil also receive a considerable amount of the FDI which shows the rise of what is called the ‘BRICS’ bloc.
Foreign Direct Investment Inflow
Table 1 identifies huge growth in the FDI inflows for developed countries and developing Asia. Quite curiously, it may be noted that the inflows to Africa and Latina America actually fell.
Patterns in Foreign Direct Investment
Following the same trend, Cross-border mergers also grew enormously for developed countries. While on the subject of developing Asia, it will be pertinent to consider the trends in FDI specific to this region, given the fact that it is rising to play an increasingly important role in global economy. The ASEAN Investment Report 2016 notes a number of interesting observations.
It identifies the close relationship between USA and this region in the following words: “South-East Asia is host to the largest number of United States companies in Asia, with over 1,500 companies operating in ASEAN. Some 70 per cent of the 130 United States MNEs listed in the Global Fortune 500 in 2015 are present in the region. United States FDI stock in ASEAN has risen sharply in recent years, from $50 billion in 2000 to $226 billion in 2014”.
Sources of Foreign Direct Investment Finance
The report also indicated that while FDI flows declined in 2015 as compared to 2014, “FDI in manufacturing rose, equity capital financing of FDI activities was at an all-time high, and regional investment expansion by MNEs remained strong” (The ASEAN Secretariat xiv, 2016). Finally, the form of FDI that was most popular continued to be equity investment as is evident from figure 1.4.
Developing Asia has enormous influence with regards to the inflow of FDI in these economies. A UNCTAD identifies that “developing economies saw their FDI reaching a new high of US$741 billion, 5% higher than in 2014. Developing Asia, with its FDI flows surpassing half a trillion US dollars, remained the largest FDI recipient region in the world, accounting for one third of global FDI flows” (Global Investment Trends Monitor). Having said that, the same report concludes that while FDIs have indeed increased, there is little constructive impact on the global economy because there is little Greenfield investment. Overall, a slowing global economy and fragile geopolitical scenarios are making analysts all over the world issue grim outlook regarding the FDI flows globally.
It is appropriate to discuss the structural variations that have been noted in FDI. Primary and manufacturing sectors have been involved in increasingly lesser FDI flow while the service sector has been on the rise. This has multiple implications because services, unlike manufactured goods, cannot be stored and sold later. This is why we see that service industry firms are increasingly establishing outfits/branches in other countries, often at heavy costs.
The reason why such firms are willing to bear these costs is because globalization offers greater payoff in the long term as getting established in multiple markets allows these firms to attract a greater number of customers. Furthermore, many economies in the world have been moving towards deregulation which has also boosted service trade. A point to be noted here is that the rise of nationalism can certainly hurt FDI as politicians with ‘protectionist’ agenda are voted to power.
To understand FDI patterns, it is also important to consider the several theories regarding this topic. One theory presented by Raymond Vernon suggests that FDI really depends upon the product lifecycle. What this basically means is that there is a period of growth which stimulates production both at home and abroad. Soon, the foreign production becomes competitive which marks the beginning of the maturity stage in the cycle. This competition then seeps into the domestic market thus leading to a decline in sales. This is the product lifecycle theory.
The International Production theory which basically states that a firm considering foreign investment is likely to be swayed by the attractions presented by the home country relative to those provided in the country which is under consideration for investment. A number of economists have presented arguments against this theory citing the relatively recent patterns noted globally. A key argument is that while the theory would suggest that businesses should move to developing countries since they provide a cost advantage, the actual pattern is quite opposite because businesses are moving to developed countries to take benefit from the greater market opportunities in those economies.
Another curious business behavior is explained by the oligopolistic theory. This theory says that when one major firm of an industry moves abroad, its competitors feel obliged to copy the behavior. This may be done with a motivation to prevent the competitor from tapping into an unexplored market. While this doesn’t necessarily explain why a business might move to a developed country, some economists suggest that in a lot of cases, firms are simply copying each other in moving to developed countries.
Internalization theory talks about controlling activities in the intermediate market and bridging the gaps in the various stages of production by moving into new markets. What this means that a company may use its subsidiaries to attain raw materials for its primary concern. It is curious to note that while this theory may hint towards a Greenfield pattern with regards to manufacturing companies, the reality is quite different as such firms have stayed away from investing in developing countries.
Patterns in Foreign Direct Investment Theory
Another interesting theory is the market imperfection theory. What this basically means is that a company’s decision to invest in foreign economies may be motivated by a variety of factors. This includes its competencies and capabilities that are unique to the company and not shared by any of its competitors. There exists great information asymmetry especially with regards to the relationship between exchange rates and its impact on FDI. This can cause variations in the cost of external financing as compared to internal financing.
A very important theory to consider is the OLI eclectic paradigm which was developed by John Dunning. He argued for the benefits of FDI as compared to exporting or licensing. His argument was that if a firm is to involve itself in profitable FDI, it must have 3 advantages: ownership-specific, location-specific and internalization. The first one is self-explanatory; FDI cannot be successful until the firm undertaking it has a competitive advantage in form of a tangible asset e.g., manpower, capital.
It may also have an advantage in intangible assets such as knowledge, access to markets. The second advantage is location-specific which means that the country being invested into must have an advantage as a location such as infrastructure, natural resources, government incentives etc. Finally, internalization is necessary otherwise the firm may as well simply hire a firm in the other country to do the task. Internalization is basically a tool to exploit the market imperfections in price.
While these theories are important to understand, what is even more crucial is the effect FDI can have on the country receiving all the investment. Some of the more obvious benefits include greater employment, tax revenue generation, transfer of technology and other spillover effects. A more subtle effect can be increase of competition which makes markets more efficient thus ultimately helping the consumers.
Disadvantages include the fact that the firms investing in a country are usually large MNCs which have greater market power than local firms engaged in the same industry. Thus, greater FDI could really hurt local business. In some cases, FDI can also adversely affect the balance of payments. This happens when the investing firm imports its capital from abroad. Finally, there is the feeling of the economy being high jacked by powerful MNCs. Many consumer protection groups thus argue that FDI can hurt the local consumer and national interest in the long run.
In conclusion, it may be argued that while FDI has its merit, the current global outlook does not seem too hospitable for such form of investment. While unemployment and terrorism have allowed the rise of nationalist governments in most of the western civilization, it can lead to decreased FDI in the less developed countries. Governments may pressurize companies to invest within the country rather than taking the business to a low-cost country.
This will not only reduce FDI, it will also reduce efficiency and may contribute towards abject poverty and a whole host of other problems for the developing nations. Increasing concerns over China and its overheating economy will also have implications for investors’ investment behavior and it will be curious to watch whether the concerns over China’s alleged credit bubble have any effect on FDI patterns globally.
Works Cited
Sethi, D et al. “Trends and Patterns in Foreign Direct Investment Flows: A Theoretical And Empirical Analysis”. Journal of International Business Studies 34.4 (2003): 315-326. Web. 12 Jan. 2017.
Ohmae, Kenichi, The Borderless World; Power and Strategy in the Global Marketplace, London: Harper Collins, 1990
The ASEAN Secretariat, ASEAN Investment Report 2016 – Foreign Direct Investment and MSME Linkages. ASEAN Secretariat and United Nations Conference on Trade and Development, 2016. Print.
United Nations Conference on Trade and Development, Global Investment Trends Monitor. United Nations Conference on Trade and Development, 2016. Print. No.22.
Relevant Patterns in Foreign Direct Investment Research
Question: What other patterns in foreign direct investment have you encountered that have not been covered in this post? Feel free to leave a comment below
Law Enforcement Philosophies, Psychological Theories, Models of Police Behavior, Policing Styles Concerning the Individual Officer, And Stress Associated with The Life of a Police Officer
Law enforcement is an essential activity in the society that is used as a means to supervise human behavior and to ascertain that the laws and the regulations that have been set by the society are not only adhered to but are also followed. The enforcement of this law assumes many forms, which include statutes, ordinances, regulations, zoning laws and codes of administration among others.
Policing is a subset of the enforcement of law that deals with the process of regulation of the law enforcement function. Law enforcement and policing borrow from the philosophies of legal, public policy, systems, and global perspectives. These perspectives are all interrelated and tend to occur in association. Enforcing the law is not an easy task. It requires the exhibition of certain behaviors that are based on the personality of the officer. Additionally, it exposes them to numerous stresses, both physical and psychological.
Background Information
Law enforcement is a fundamental process and means through which human behavior is supervised in a formal way to ascertain that the laws and the regulations that have been set by the society are not only adhered to but are also followed. It is also a formal way of ensuring that the society has a given level of stability and security to enable its members to carry on with their daily livelihoods.
The enforcement of this law assumes many forms, which include statutes, ordinances, regulations, zoning laws and codes of administration among others. This form of enforcements of the law are authorized in a legal manner through the philosophy of police powers. These powers refer to the lawful authority that is accorded to the government through voting by the citizens to enact the laws and regulations with respect to the health, morals, welfare, and the safety of the people in the society (Alpert, 2015).
These powers are performed by different levels of the government within the United States of America, and entails the formulation and the regulation of the water and sewer systems, systems for transportation and highways, systems for monetary regulation, fire protection, medical and healthcare systems, parks and recreational areas, an assistance that is general to the individuals who are deprived economically, among others. The implication of these is that the police powers accord authority to the agencies in charge of law enforcement to act on behalf of the citizens.
The law enforcement process, as mentioned earlier is a formal process whose sanctioning comes through voting by the citizens, in representative democracies such as the one in the United States of America. In such democracies, there exists three arms of the government and the law enforcement role is given to the executive arm of this government.
The executive arm comprise of the President whom is the head of the federal government, the governor, who is the executive head of the state level of government, and the mayor who is the executive head of the local government. Through voting, citizens give these heads and their representatives the authority and power to appoint officials of law enforcement, and to establish philosophies and policies that are general with respect to the manner in which law enforcement operates in the nation (Alpert, 2015).
The other arms of the government are not left out either. They have the ability to influence either directly or indirectly the law enforcement function of this executive arm. The legislative arm of government accords the necessary authority that is statutory upon which the activities of the law enforcement officials are dependent.
This authority entails their right to lawfully use varying degrees of force to attain the goals and the objectives of law enforcement. It also defines the behaviors that when demonstrated in a particular setting are deemed to be criminal in nature. The judiciary on the other hand performs the role of reviewing the actions executed by the officials of law enforcement based on the rules that have been established through the constitution, civil law, evidence, and criminal procedures (Alpert, 2015).
Such reviews are carried out during the proceedings of the judiciary, which may entail evidence hearings, criminal and civil trials. Through these reviews, the judiciary provides the general idea of how law enforcement should be carried out in a specific context (Alpert, 2015).
Law enforcement and policing are concepts that are interrelated. It is therefore important to understand their relationship. While law enforcement, as a function, is carried out by all levels of government and enforced through regulations, codes of administration, and laws in relation to the welfare, safety, and health of the society, policing is a subset of the enforcement of law that deals with the process of regulation of this law enforcement function (Alpert, 2015).
Policing is observed by the activities of the criminal justice system that deals with the criminal detection, followed by investigation, and the prosecution. It also deals with prevention of criminal activities (Alpert, 2015). The activity of policing in the United States is carried out by policing agencies at all the three levels of government. At the federal level, the Federal Bureau of Investigations (FBI) is in charge. At the state level, the state police, highway patrols, and the criminal investigations units carry out policing. At the local level, the local police departments, offices of the sheriffs, campus police among others do the policing (Alpert, 2015).
Philosophies of Law Enforcement
There are four concepts that have been used as founding philosophies for law enforcement. These are the legal approach, the public policy approach, the systems theory approach, and the global approach (Conser, Paynich, & Gingerich, 2013).
The Legal Approach
This philosophy operates on the overall idea of “the law is the law”. It is a philosophy in which human behavior is viewed from a perspective that is rule-based, in which obedience and respect to the law is a mandatory requirement and obligation of every person within the society, and that the law is the common guide to behavior. This approach is often used by those who strongly advocate for the control of crime through severe punishment for those who commit infractions (Conser, Paynich, & Gingerich, 2013).
In this particular approach to law enforcement, the law enforcement officials are put in a position that is awkward based on their swearing to protect the laws of both the nation and their state. These officials recognize that a strict enforcement of the law would see so many people getting arrested or even be summoned for breaking any of the laws.
Thus, they are made to assess carefully every human behavior based on the “letter” and the “spirit” of the law (Conser, Paynich, & Gingerich, 2013). If every aspect of the letter of the law is adhered to by these officials, it implies that anyone who violates any of the laws will call the police intervention. If they adhere to the spirit of the law on the other hand, it implies that the officers will consider certain contextual factors that influence human behavior, and which may lead one to breaking the law.
In this case, certain laws may go without being enforced in their entirety and certain violations may call for informal handling such as verbal reprimands or even warnings. Others may go without any police intervention (Conser, Paynich, & Gingerich, 2013).
The process of evaluation, as outlined above, forces the enforcers of the law to utilize both selective enforcement and their discretion. Discretion refers to the process in which the officer makes a decision to use one alternative from among numerous other viable alternatives. This form of decision making is not provided for by the law but is acknowledged by both the judiciary and the profession.
The understanding that supports this acknowledgement, and that has revolutionized the current legal approach to law enforcement is that the police cannot enforce all the laws and regulations that have been enacted. Thus, selective enforcement, which is a product of discretion, allows the law enforcing officials to enforce specific laws in different contexts based on their assessment of situation, or the priorities that the agency in which they belong have (Conser, Paynich, & Gingerich, 2013).
The above is contrary to the concept of full enforcement, which is part of this approach. Full enforcement entails the enforcement of all the laws regardless of the situation or context. In an ideal situation, this is neither practical nor possible. This kind of enforcement is often given as a justification by the officials when they intervene in situations like those dealing with gang offenses, drugs, gun violence or offenses of the traffic (Conser, Paynich, & Gingerich, 2013).
The above said, existing empirical evidence has failed to support this philosophy of law enforcement because they have not demonstrated that through the passing and the enforcement of all criminal laws, all social problems in the society can be solved as this approach suggests (Conser, Paynich, & Gingerich, 2013).
Public Policy Approach
This philosophy comprises of the rules and regulations established by various legislative bodies and the law enforcement agencies. In this philosophy, the social ills of the society are identified and a solution is formulated in the form of either a law or a regulation.
For instance, if they it is proven that domestic violence is the cause of separations in families and violent behavior in children, a bill can be passed into law that places a severe punishment to all facilitators of domestic violence in order to safeguard the family unit and protect children from such scenes. Additionally, policies can also be formulated to address issues of public concerns with respect to their welfare, safety, and health (Conser, Paynich, & Gingerich, 2013).
As such, this philosophy has been fundamental in contemporary teaching of law enforcement due to its dynamic approach. This is because it has allowed law enforcement to not only be concerned but also to be proactive in handling of community challenge. It has allowed the enforcers of the law to carry out interventions that are suitable for a particular problem at a particular time.
Additionally, it has allowed the collaboration between the community, legislative bodies, and the officials of law enforcement, and in the process increased accountability and transparency (Conser, Paynich, & Gingerich, 2013).
The formal role of making these public policies has been the function of the executive arm of the government, with the help of the legislative arm that enacts them. The police chief, sheriff, or the head of the police department on the other hand have been the final authority when it comes to enforcing the policies.
However, according to this philosophy, public policies have to follow the set protocols and involve the necessary internal procedures and issues of management, legal influences, and the political requirements (Conser, Paynich, & Gingerich, 2013).
Law Enforcement and Policing Essay
Systems Approach
In the systems philosophy, the whole environment in which a social issue lies is viewed with the aim of analyzing how the forces and influences in this context contribute to the social concern. In this case, law enforcement is viewed in terms of the impact the environment it operates in has over its effectiveness (Adderley, 2013).
By considering law enforcement through this philosophy, law enforcers are able to consider the impact and the influence other factors of the environment have in the society. They are also able to understand impact their decisions have, and the probable implications of the resulting actions on other functions within the community. It therefore considers the formal and informal social controls, economic factors, social influences, and politics, and the role they play in commission of crime and enforcement of the law (Adderley, 2013).
Global Approach
This is an extension of the systems perspective discussed above. However, it differs from the systems approach in that in this philosophy, law enforcement is administered with the consideration of not only the local environmental factor within the society but also world events and the influences that international relations have on the nation’s health, welfare and safety.
In this case, law enforcement is dependent on the security and stability of other countries that any nation has direct or indirect ties with (Conser, Paynich, & Gingerich, 2013).
Psychological theory of Law Enforcement
Social psychologists from the early years of 1950s believed that alternatives for utilizing instrumental approach in enforcing the law existed. They demonstrated this through studies like “Why people Obey the Law” that such alternatives were not effective in the enforcing of authority that was legal but also in attaining compliance with the requirements of the law when compared with instrumental mechanisms in numerous settings within the society (Tyler, Goff, & MacCoun, 2015). This gave birth to the psychological theory in law enforcement (Tyler, Goff, & MacCoun, 2015).
According to proponents of this theory, the behavior of an individual is determined by the level of their belief or disbelief in the appropriateness of deferring to the authorities that enforce the law (Tyler, Goff, & MacCoun, 2015).
This belief is etched on legitimacy, in which individuals in a society believe that the people who are in power are worthy of ruling over them and making decisions that can directly or indirectly influence the manner in which they live and co-exist in a society. Thus, this belief accords the people the ability to decide whether to obey the law and the enforcers of the law (Tyler, Goff, & MacCoun, 2015).
The aim of legal authorities, including the police and the courts, and the law itself is legitimate in the face of the members of the society to be able to enforce the law. They should be in a position to make the citizens believe in the power and the rule of the law, and in the individual upon which the responsibility of ensuring that the law is respected, obeyed, and enforced is bestowed.
Models of Police Behavior
The Authoritarian Model
Theorists, between the years of 1960s and 1970s, believed that the use or misuse of power by a police officer was based on their personalities that took after authoritarianism that predisposed them to the use of force. They defined authoritarianism as a group of beliefs that encompassed a strong devotion to values that were both conventional and associated with the middle class.
The police officers with this personality tend to think in a rigid manner, are less flexible; tend to identify themselves with powerful people in the society, and value public exhibition of toughness and strength (Sarver & Miller, 2014).
The Police Culture Model
The proponents of this model believe that the behavior exhibited by any police officer is related to their culture that pressures them to have views regarding policing that are similar. For instance, this culture requires them to be suspicious, isolated from those that they consider outsiders, and portray loyalty that is considered extreme towards their colleagues.
While evidence does not exist to support the claim that these aspects comprise police culture, they have significantly influenced the behavior of police officers (Chan, 1996).
Policing Style and Law Enforcement
Research studies and most of the literature published on the styles of policing have described three main styles in law enforcement. These include the watchman style, the legalistic style, and the service style (Zhao & Hassell, 2005). The watchman style of policing is founded on maintaining order within the society.
In this style, the police officer assesses the violations made through the examination of consequences that are both personal and immediate for the offense one has committed rather than considering the legal aspect of that offense. They utilize maximum possible discretion through this style and the aim is to maintain peace within the community (Zhao & Hassell, 2005).
The legalistic style on the other hand focuses on a stringent enforcement of the rule of law. Police officers using this style have been shown to make the highest number of traffic citations and arrests. Most of the calls they receive are handled formally through the making of an arrest or the making of a formal complaint (Zhao & Hassell, 2005).
The final style of policing is that of service. In this style, priority is given to all forms of assistance that the public needs with regards to maintaining law, order, and safety without giving preference to strict adherence to law enforcement as per the legalistic style or maintenance of order as per the watchman style.
This implies that service style is the bridge where the two extremes of policing meet. It however, just like in watchman style, allows the police officer to exercise a certain level of discretion (Zhao & Hassell, 2005).
Stress Associated with The Life of a Police Officer
Stress often forms part of everyone’s life. However, police stress is special as it describes the pressures that are negative, which are associated with the work of enforcing the law (Garbarino, Cuomo, Chiorri, & Magnavita, 2013). Police officers get exposed on a daily basis to the negative sides of human being. Pain, indecency, dealing with suspicion, and at times handling hostile situations such as public unrest and riots often takes a toll of these officers, subjecting them to an immense level of stress (Garbarino, Cuomo, Chiorri, & Magnavita, 2013).
The stresses that police officers are subjected to can be categorised into four groups. These include those that are inherent in their work, those that arise internally due to the policies and practices of their department, those that are external due to the society and criminal justice system, and the internal stresses that the individual officer confronts (Garbarino, Cuomo, Chiorri, & Magnavita, 2013).
The police officer also gets stressed from the threats they encounter to their safety, the safety of their family, and their health. They are also subjected to boredom and an alternation of alertness and the need for mobilized energy that comes suddenly with the continual arrival of new cases that require their attention. Such anxiety coupled with the responsibility the public has given them of ensuring lives are protected confer a significant amount of stress on them (Garbarino, Cuomo, Chiorri, & Magnavita, 2013).
Conclusion
Law enforcement provides means that are formal for the supervision of human behavior. This supervision ascertains that the laws and the regulations that guide the society are adhered to and are followed. It is fundamental in ensuring that the society has a given level of stability and security to enable its members to carry on with their daily livelihoods.
It is done at all levels of government and ensures that the health, security, and safety of people is maintained. Policing is a subset of the enforcement of laws that deals with the manner in which law enforcement is done. These two concepts are based on numerous philosophies and the style of policing, which can be watchman, service, or legalistic in nature. Also, policing and police work is not an easy task as it subjects those involved to numerous stresses that are either physical or psychological.
References
Adderley, P. S. (2013). Criminal Network Analysis inside Law Enforcement Agencies: A Data-Mining System Approach under the National Intelligence Model. International Journal of Police Science & Management, 15(4), 323 – 337.
Alpert, R. G. (2015). Critical Issues in policing: Contemporary Readings (7th ed.). Long Grove, Illinois: Waveland Press Inc.
Chan, J. (1996). Changing Police Culture. The British Journal of Criminology, 36(1), 109–134.
Conser, J. A., Paynich, R., & Gingerich, a. T. (2013). Law Enforcement in the United States. Jones & Bartlett.
Garbarino, S., Cuomo, G., Chiorri, C., & Magnavita, N. (2013). Association of work-related stress with mental health problems in a special police force unit. BMJ Open, 3, e002791.
Sarver, M. B., & Miller, a. H. (2014). Police chief leadership: styles and effectiveness. Policing: An International Journal of Police Strategies and Management, 37(1).
Tyler, T. R., Goff, P. A., & MacCoun, a. R. (2015). The Impact of Psychological Science on Policing in the United States: Procedural Justice, Legitimacy, and Effective Law Enforcement. Psychological Science in the Public Interest, 16(3), 75-109.
Zhao, J. “., & Hassell, a. K. (2005). Policing Styles and Organizational Priorities: Retesting Wilson’s Theory of Local Political Culture. Police Quarterly, 8(4), 411-430.
Did you find any useful knowledge relating to law enforcement and policing in this post? What are the key facts that grabbed your attention? Let us know in the comments. Thank you.
Checks and balances are a principle of government where different branches are empowered to operate independently with the aim of controlling each other’s possible excesses. This means that the branches are induced to share the power to monitor each other. Checks and balances are mainly applicable in constitutional governments, with the fundamental relationships mostly constituting tripartite governments working to not only check on each other but also complement each other (Owens, 2005). The United States is one example of a government with checks and balances involving legislative, executive and judicial branches.
There are other checks and balances in the American Constitution. One is the presidential veto of the legislation, which can be overridden by the congress’ two-thirds majority vote. The other is the executive and judicial impeachment by Congress. In this arrangement, Congress is the only arm of government with the powers to appropriate funds.
Additionally, the houses check each other on the possible abuse of power or any disproportionate action. In practice, Congress also has the powers to reverse the Supreme Court decisions that they deem inappropriate through the initiation of a constitutional amendment. The Supreme Court members and other executive members, who are presidential appointees, must be approved by the senate. It is also the role of the senate to approve treaties (Owens, 2005).
The legislative veto was prominently exercised in 1983 by the Congress. During this time, particular clauses in the laws gave the executive powers the authority to act in specific subjects where the majority of votes from both houses registered their disapproval of such actions.
The case involved the deportation of an alien, where the Supreme Court ruled against that legislative vetoes as being unconstitutional. This was after the House of Representatives voted to overturn the Justice Department’s decision to suspend the deportation of the alien. The Justice Department’s decision had adversely affected over 200 laws, which covered varied subjects, including the presidential executive orders on declaring war, deciding foreign aid, sanctioning sales of arms, and environmental protection among others (Manuel & Cammisa, 2019).
Despite the decision by the Supreme Court, Congress continued to exercise their powers, which include legislative veto powers. Today, checks and balances have gone through evolution from custom and constitutional convention to congressional committee system and investigative powers, including roles played by political parties and the influence of the president when initiating legislations.
The Origin of Checks and Balances
The framers of the United States constitution had a strong influence from the Montesquieu and William Blackstone, who had the original idea of checks and balances. The Constitution framers saw checks and balances, as the only way of securing individual liberty in the constitution. When the people had elected representatives to the assembly, John Adams, the American statesman and the second president of the United States started the debate by asking whether the powers of government, legislature, executive and judiciary should be under one body (Adams, 2009).
Adams argued that this approach would deny the people freedom and that the people would certainly be unhappy if the government was under one assembly. This would be articulately captured in his letter to Richard Henry Lee, where he stated:
“A legislative, an executive, and a judicial power comprehend the whole of what is meant and understood by government. It is by balancing each of these powers against the other two that the efforts in human nature towards tyranny can alone be checked and restrained and any degree of freedom preserved in the constitution” (Burleigh, 2011, p. 161).
Based on this view, the judicial review would be established and given the role of examining the actions of the legislative, executive, and administrative arms of government to ensure that every action is constitutional. Although this role was not expressly highlighted in the text of the Constitution, it became one of the most important aspects of the United States Constitution.
This separation of powers in the form of checks and balances originated from the Roman Empire. In the Roman Empire, the monarchy was represented by the consul, aristocracy by the senate and democracy by the people. This type of arrangement greatly influenced America’s system of separation of powers in the checks and balances system.
In the British system, the checks and balances operate in a modified separation of powers under parliamentary systems. In this form of checks and balances, parliament has the prerogative powers to adopt a no-confidence vote against a sitting government, or cabinet, which in turn leads to the dissolution of the parliament. The British Parliament has supreme powers with the ability to pass laws. These laws are not subject to any review by the courts for constitutionality, hence remain the ultimate legal ceiling for deciding cases. In France, the government operates under the Fifth Republic (1958).
They have a form of government where a Constitutional Council of nine members, who are appointees of the president, Senate, and National Assembly, reviews the constitutionality of legislation. The nine-member team has a term limit of nine years. In the Federal Republic of Germany, the formation is similar to that of the United States, where the parliamentary and federal systems checks on each other. They have the power to declare a law unconstitutional.
The Americans’ adoption of the “trias politica” is seen as one that was inspired by the social and political philosopher Montesquieu through his published “Spirit of the Laws.” This was considered one of the greatest historical works in the field of political theory and jurisprudence.
Montesquieu’s work is seen as one that would later inspire both the Declaration of the Rights and the Constitution in the young United States under James Madison. This is because it was Montesquieu’s idea of the government as constituting executive, legislative, and judicial powers that would be adopted by the drafters of checks and balances. The system was based on the principle that the three powers should operate separately and independently to guarantee the liberty of the American people.
The genesis of checks and balances
As earlier stated, the concept of separation of powers was installed through the implementation of a series of checks and balances, which was incorporated into the United States Constitution. The goal was to ensure no single branch of government or person was too powerful to subvert the constitution.
This meant the constitution was put under the custody of three branches of government, namely legislative, executive and judicial systems. The drafters envisaged a scenario where without checks and balances it would be easy for an individual or a branch of government to exceed its bounds, perpetrate fraud, and engage in commissions and omissions errors.
In essence, the system of checks and balances was meant to act as some sort of control mechanism separating powers of the three branches of government. Practically, however, the power to take specific action was vested on one branch while the others were meant to verify the appropriateness and legality of the action.
As the founding father of the principles of checks and balances, James Madison had experienced it from personal level the dangers of one person or government having too many powers. This is what informed Madison’s remarks, “The truth is that all men having power ought to be mistrusted” (Sidlow & Henschen, 2016, p. 42). The framers of the checks and balances believed that because it was the creation of government under the administration of humans over humans, there was the need to “first enable the government to control the governed; and in the next place, oblige it to control itself” (Welch, Gruhl, Rigdon, & Thomas, 2012, p. 31).
The founders believed that humans are naturally selfish, and always coveted to possess more property. They also believed that leaders would yearn for more powers to acquire material wealth at the expense of the people and that this aspect of humans could not be changed. As such, Madison would comment, “if men were angels, no government would be necessary” (Welch, Gruhl, Rigdon, & Thomas, 2012, p. 31). The framers decided that the only way to ensure the government-controlled itself was to develop a structure that would prevent anyone leader group of leaders, or factions of people from exercising power over more than a small part of it (Manuel & Cammisa, 2019). This is the reason why they fragmented the government into small units with different powers over each other, as reflected in the structures of federalism, separation of powers, and checks and balances.
Federalism was the first step towards the division of power between the national government and the state governments. The United States government under the Articles of Confederation has been set in a manner that the state government wielded more powers. In this arrangement, the national government exercised only the powers granted by the state governments.
The founders of the constitution became unhappy with this arrangement, neither were they happy by the unitary system that the British government practiced during the colonial times. Thus, they arranged to have a unique system, with a strong national government and reasonably strong state governments to run concurrently.
This was the birth of the federal system of government, which was a compromise between the previous confederal and unitary systems. They had seen federalism as the best way to provide adequate power for the government function even as they check excessive power that could lead to tyranny.
The constitutional provisions delegated some powers to the national government even as others were reserved for the state governments. For example, foreign affairs roles, including those making treaties, declaration of war, and repelling of external attacks among others were bestowed on the national governments. Others were the authority to print currency and regulate interstate trades.
Taxation was tasked both on national and state governments. These provisions ensured the national government remained with more powers to deal with both domestic and foreign matters. However, authority over other matters such as those of the welfare of the people was handed over to the state governments. According to the Tenth Amendment, the powers not delegated to the national government were reserved for the state governments. This arrangement also guaranteed some reasonably strong state governments as well.
However, the generality and succinct nature of the Constitution’s language made it quite ambiguous. Although this made the document acceptable both to the proponents of the strong national government and supporters of strong state governments, it made it a bit vulnerable that it could be interpreted in favor of any side.
The next step was the Separation of powers, which was directed to the national government. This was the power to make, administer, and judge the laws would be split into three branches of legislative, executive, and judicial (Hamilton & Slutsky, 2017). To reinforce the principle of separation of powers, members of the three branches were selected through different means.
Representatives were elected by the people, senators were selected by the state legislatures, and the president selected by the Electoral College, whose members were selected by the states. In this arrangement, only federal judges were chosen by officials in the other branches. The President nominated the federal judges and the Senate vetted them for final confirmation. However, after their appointment, they were allowed to serve for their “good behavior”, hence served for life with full independence (Hamilton & Slutsky, 2017).
The design of the Senate was meant to act as a conservative brake on the House, largely because the selection of senators by the state legislatures and their longer-term was viewed as more trustworthy. However, Thomas Jefferson protested the establishment of a legislature with two houses, arguing that it would lead to a divided government (Welch, Gruhl, Rigdon, & Thomas, 2012).
In this aspect, there was the possibility of one political party controlling both elected branches, as another party winning the presidency. This division has been common throughout the United States’ history, especially since the emergence of Democratic and Republican parties in 1856. This prompted the addition of another element of Madison’s concept of separation of powers: The checks and balances.
Checks and balances were established to prevent the concentration of power. Madison argued that “ambitions must be made to counteract ambition”, hence the decision to give each branch some authority over the others (Bailey, 2015, p. 21). This arrangement ensured that if one branch abused its powers, the others could use the checks to put the offender into the task of taking responsibility. In this model, the American government would be comprised of the legislative branch whose role was to enact the laws, the executive tasked with implementation and enforcement of the laws, and the judiciary to interpret the laws in reference to the Constitution in case there is a legal controversy between the other branches or the people.
How checks and balances worked in the past
As earlier explained, checks and balances were established to prevent the concentration of powers in one hand or on a group of people. In Madison’s view, “the greater security against a gradual concentration of the several powers in the same department consists in giving those who administer each department the necessary constitutional means and personal motives to resist encroachments by others…” (Welch et al., 2012, p. 32). Based on this assertion, each branch was given some authority over the others such that if one branch abused power, others would use their constitutional power to prevent it.
Checks and balances complicated the government’s functional abilities, because rather than having a simple separation of powers, the American system became a complex, and to some extent, a contradictory constitutional arrangement. While the system of separation of powers gave each branch its own sphere of authority, the checks and balance system gives each branch to watch over other branches, and question their actions if they deem it unconstitutional or illegal.
For instance, separation of powers gave the congress powers to make the laws, but checks and balances the president has the authority to veto them and courts can rule such actions unconstitutional. In this arrangement, all three branches, directly and indirectly, play a role in the process of legislation calls it “a government of separated institutions competing for shared powers” (Mettenheim, 1997, p. 23).
However, a number of scholars have argued that the practice of separation of powers, and that of checks and balances was never practiced as such (Owens, 2005; Jones, 2000). Instead, it was a government of separated institutions sharing powers. This was well captured in the often-repeated statement by Dwight D. Eisenhower, “I am part of the legislative process” to remind other branches of his veto powers as the 34th President of the United States (Mettenheim, 1997, p. 23).
With this form of arrangement comprised of federalism, separation of powers, and checks and balances, conflicts abounded. This arrangement invited several parts of government that would struggle against each other, hence limit any one branch’s ability to dominate the rest. They envisaged a balanced government, where the national and state governments would represent different interests. The House would represent the common people while the senate would represent both the wealthy people and the small states.
The president would represent all the people, as the Supreme Court represented the Constitution. In their own wisdom, they anticipated that although the branches would struggle for more power, none could accumulate enough powers to dominate other branches. That is, each branch would have to compromise or cede some powers and accept policies in favor of the interests of all parties or the majority’s interests.
Nevertheless, it was noted that there were numerous elements of undemocratic clauses in the early Constitution with its checks and balances components. Some of the undemocratic features included those that denied some Americans the right to participate in the government, and some Americans could not receive equal treatment from the government.
First, even though there were checks and balances, the constitution did not have clauses that forbid slavery. The Congress was not allowed to bring to an end slave trade for over two decades. In fact, the Three-Fifths Compromise institutionalized slavery even further by increasing the political powers of slaveholders (Henricks, 2017).
Moreover, the Constitution did not guarantee a section of society the right to vote. This gave states the freehold authority to exclude African Americans, Native Americans, women and other minorities from voting. In fact, some years would see certain states excluding white men who did not own property and those who never belonged to any established church from voting (Henricks, 2017). The founders created the Electoral College to prevent the people from choosing the president.
The changes and transformation of checks and balances
Checks and balances have faced a lot of tests since its enactment into the Constitution centuries ago. It started with President Franklin Roosevelt when checks and balances faced one of its greatest challenges in 1937. During this time, Roosevelt audaciously attempted to pack the Supreme Court with libel justices.
After reelection win for the second term in 1936 by a big margin, Roosevelt faced one big challenge against the judicial review. The latter threatened to undo some of Roosevelt’s major policy achievements through the judicial powers in checks and balances. Between 1935 and 1936, a conservative majority in the Court did away with many significant acts of Congress, including those that dealt with the National Recovery Administration, the centerpiece of Roosevelt’s New Deal (Rofe, 2007).
Roosevelt would later in 1937 ask Congress to bestow in him the powers to appoint an additional justice for any member of the Court who had reached the age of 70 but did not retire. The request could expand the Court to have up to 15 justices. The proposal was the beginning of the never-ending battle of the three branches of government that is seen to date.
Many Supreme Court justices even considered resigning to protest the proposal just in case the plan had gone through. At the end of it all, Chief Justice Charles Hughes opposed the proposal by writing an open letter to the Senate against granting the president such a request (Abbott, 2011). Additionally, one of the older justices resigned, which allowed Roosevelt to replace him. This replacement shifted the balance on the Court, which narrowly averted a constitutional crisis because the checks and balances system remained intact despite the threats to its survival.
The enactment of the War Powers Act vs. Presidential Veto.
In November 1973, Congress passed the War Powers, which technically overrode the presidential veto to declare war unchecked. President Richard Nixon opposed the move by Congress, terming it an “unconstitutional and dangerous” check on his duties as commander-in-chief (Nuechterlein, 2019, p.49). Created in the wake of the Korean War and the much-contested Vietnam War, mandated the president to first consult with Congress when deciding to deploy American troops to any war.
The legislatures had the 60 days grace period to declare war or authorize the deployment of the U.S. soldiers. If they failed to act during this period then the American troops would be sent back home. The main purpose of the War Powers Act was to give legislatures powers to check on the increasing powers that the White House had on war declarations. The latter was seen as making some war declarations that were deemed unnecessary and costly to Americans. This was after President Harry Truman, JF. Kennedy, Lyndon Johnson, and Richard Nixon had each mounted the undeclared conflict during the Vietnam War (Nuechterlein, 2019).
After the passing of the War Powers Act, controversies about the act would continue when in 1981, President Ronald Reagan decided to deploy American troops to El Salvador. His actions raised concerns because he neither consulted nor submitted a report to Congress.
Years later, President Bill Clinton would go against the act by his continued bombing of Kosovo even after the 60-day grace period had elapsed. President Barack Obama would also extend the controversy when in 2011 he initiated military action in Libya without seeking authorization from Congress. During Bill Clinton’s reign, the House of Representatives’ attempts to repeal the Act through amendment of many of its components was narrowly defeated, living the Act intact.
State of Emergency Declaration
The challenge with checks and balances was also experienced with the presidential powers to declare a state of emergency. The first test happened when President Harry Truman declared a state of emergency in December 1950. As the first state of emergency, Truman never sought approval from Congress. In 1976, Congress would pass the National Emergencies Act, which would formally grant them the powers to check the President’s powers to declare national emergencies. The Act was enacted in wake of the Watergate Scandal, and it included the requirement to have the states of emergency expire after a year unless renewed.
Since 1976 after the passing of the National Emergencies Act, there have been nearly 60 states of emergencies declared by different presidents. In these moments, presidents had the powers over many components of the nation including land use, military, public health and immigration among others.
The state of emergencies can only be stopped if both the Senate and the House of Representatives vote to veto it or if the matter is declared unconstitutional by the courts. The most recent one was when President Donald Trump declared the State of Emergency on February 15, 2019, with the aim of obtaining funds to implement his border wall with Mexico
President Trump declared, “The current situation at the southern border presents border security and humanitarian crisis that threatens core national security interests and constitutes a national emergency” (Dycus, Banks, Hansen, & Vladeck, 2019).
How checks and balances work today
In the arrangements with three branches of government- legislative, executive, and judicial, the framers of the constitution had visualized a stable federal government with separation of powers with checks and balances (Manuel & Cammisa, 2019). In the Federalist Paper No. 51 published in 1788, Madison described the principle, “The accumulation of all powers, legislative, executive and judicial in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny” (Hudson, 2012, p. 13).
In both theories and practice, each branch of the United States government is under checks by others, hence creating a “watch-over-each-other” kind of relationship. For example, the President heads the executive branch and has the veto powers to decline or reject laws passed by Congress.
On another dimension, Congress has the powers to override the Presidential vetoes with a two-thirds vote from both the Senate and the House of Representatives. On a similar breadth, the Supreme Court, which is the judicial branch, has powers to nullify any Congress-passed laws if they deem it unconstitutional. But the powers of the Supreme Court are also curtailed because he or she must be an appointee of the President with approval from the Senate.
In the a nutshell, the executive branch checks and balances on the legislative branch include powers to veto laws passed by Congress, propose new laws to Congress, Submits the Federal Budget to the House of Representatives, and appoint federal officials, whose duties are to execute and enforce laws (Manuel & Cammisa, 2019).
The executive branch checks and balances on the judicial branch include roles such as the nomination of judges to the Supreme Court, the nomination of judges to the federal court system, and the presidential powers to pardon or grant amnesty to persons convicted of crimes. However, presidential vetoes can be overridden by Congress with a two-thirds vote from both the Senate and the House of Representatives. Senate can also use the two-thirds rule to reject proposed treaties, and nomination of federal officials and judges.
Congress can also impeach and remove the President or any other executive member. In this format, House serves as the prosecution, while the senate becomes the jury. On its role to check on the Judicial branch, the legislative branch has the powers to create lower courts, reject presidential nominees to the federal courts and Supreme Court, amend the Constitution to reverse decisions of the Supreme Court, and ability to impeach the judges of the lower federal courts.
The Judicial branch checks on the executive branch through judicial review to rule laws they deem unconstitutional. The judicial branch also checks on the legislative branch through the powers to rule presidential actions unconstitutional, and use the judicial review powers to rule treaties unconstitutional.
In short, there is a general agreement that the executive branch has had some expanded powers since the 19th century, consequently disrupting the original intentions of the framers of checks and balances. Some of the concerns are the presidential vetoes, which can be overridden by Congress.
Similarly, the ability of Congress to thwart presidential appointments and judicial determinations has also created a lot of controversies. On the expanded powers of the executive, some have questioned the president’s powers to issue executive orders to federal agencies without seeking approval from Congress. This is because executive orders are not expressly stated in the United States Constitution, but instead implied by Article II. In Article II, it is stated that the president “shall take care that the Laws be faithfully executed.”
The president’s executive orders can only direct the government to make some policy changes, but they neither have the mandate to create new laws nor powers to appropriate funds from the treasury.
Nevertheless, checks and balances system has served the original purpose as intended by the framers by ensuring that the three branches of the United States government balance their roles and powers.
The Current Events in Washington
Over the years the Executive has been accused of attempting to expand its powers over legislative and judicial branches beyond the limits provided to them by the constitution. After the end of the Civil War, the executive branch has always sought to expand its constitutional scope in many ways. This is specifically on the role of the president as the Commander-in-Chief, and other powers such as his roles in issuing executive orders, declaration of local and national emergencies, granting and revocation of security classifications, presidential pardons, presidential bill signing statements and executive privileges (Manuel & Cammisa, 2019).
Some have also argued that there are more checks on the powers legislative branch enjoys than over the other branches of executive and judicial branches. For instance, both the executive and judicial branches have the powers to override or nullify the laws passed by the legislative branch.
President Donald Trump has relentlessly taken actions that are deemed to diminish the checks and balances system. For the last three years since he came to power, a number of actions have been taken from the White House that many critics believe are a direct assault on the checks and balances principle.
There are those who believe that President Trump has been consistently installing Imperial Presidency. This is because of the series of decisions and actions that seem to infringe on the roles of the legislative branch of the government under Article I of the Constitution. For example, issues that have been raised are related to taxing, borrowing and spending money, sanctioning acts of war and regulating commerce among others.
According to Manuel & Cammisa (2019), President Trump is just advancing what has been going on covertly for the last half-century, which is the erosion of checks and balances principles in favor of the executive at the expense of judicial and legislative branches.
In particular, President Trump has disregarded the powers granted to the legislative branch by the checks and balances provisions in the Constitution on many occasions. For instance, it is the prerogative role of the legislative branch to determine what funds should be drawn from the treasury and for what purpose (Manuel & Cammisa, 2019).
This violation of the funding provided is part of the articles of impeachment that included the allegations of bribery attempts, which involved the withholding of funds that Congress had already appropriated to be given to Ukraine to help them defend themselves against the Russian incursion. This is similar to President Trump’s decision to divert funds meant for the United States military base in the U.S. and Europe to instead accomplish his campaign promise of building the Mexican border. This was one of the most egregious actions based on the fact that Congress had explicitly refused to approve the wall construction on many occasions.
The highlights of the dilution of the checks and balances component of the constitution were even worse when President Trump instructed government officials to ignore subpoenas from the committee of the House of Representatives. The committee required the government officials to testify and volunteer data for the purpose of accomplishing its legislative role. The president claimed, “Absolute immunity” for himself and those of his former and present staff in government agencies both insider and outside White House. This action led to the other article of impeachment advanced in the House, which was based on the obstruction of Congress by the executive.
While President Trump has not explicitly resorted to preventing his close associates to testify, every action shows a person who is determined to strip Congress of his legislative roles as stipulated in the Constitution. These actions could only mean one thing: preventing Congress from exposing him, which may lead to unfavorable publicity.
Ironically, Congress has really struggled to retain its power to declare war and other core mandates that the executive seems to overstep its mandate. In practice, the last two decades have seen matters to do with foreign policy and war solely being dealt with by the executive branch of government. For example, recently, President Trump ordered the assassination of Iranian General Qassem Soleimani only after notifying Russia, Israel, and Republican leaders in the two houses. This means that the president chose to bypass the role of the legislative branch.
The current state of the checks and balances provided in the constitution and action by the executive suggests that the legislative authority has been seized by the executive branch of government. This systematic move has continuously undermined the watchdog role of each of the three branches as envisaged by the framers of the constitution, thus exposing American citizens to the accumulated tyrannical authority of the executive wing of the government.
Checks and Balances in the American Constitution
As some have argued, President Trump is simply the crest of a long-term trend that has been with Americans for decades. These have been evident in the past few years by the differences in ideologies between the three branches of government (Samuilov, 2019). When President Obama was faced with the gridlock that barred his legislative proposals from passing the two houses in the first two years into the presidency, he resorted to executive orders to allow him to accomplish his objectives.
Republicans protested President Obama’s moves, arguing that he was going beyond his mandate as a president. Interestingly, courts successfully nullified some of his decisions. However, some of President Obama’s appointees to major regulatory agencies continued to follow up and implement some of the policies that he supported, despite being rejected by the legislative branch.
The dramatic nature with which President Trump has taken into reversing many of Obama’s executive orders has exposed partisan differences between Republicans and Democrats. As has been the trend, Obama’s success with executive orders and regulatory initiatives are being reversed faster than they came. Despite having enjoyed majority support in both houses in his first two years, Trump has systematically and speedily issued executive orders to reverse almost every progress Obama made with his executive orders.
Trump has made numerous appointments in the regulatory bodies and given them tasks to modify and abolish rules their predecessors installed. The other alarming trend of Trump’s regime is the frequent appointment of heads of departments and agencies under the “acting” capacity. This strategy has helped him prevent the senate from subjecting the chosen appointees into explaining their actions or seeking the Senate’s authority in certain actions. Ironically, Republicans who protested Obama’s executive orders are currently silent on President Trump’s executive orders.
To make matters worse for the legislative branch, the Senate has been under the GOP control. As such, they have been reluctant to reassert its authority by setting a firm limit on the period one should serve on an interim basis after appointment to the action capacity. The consequence is that political appointees who are responsible for many functions of the government are not answerable to anyone except the White House, diminishing the role of checks and balances clauses in the Constitution (Samuilov, 2019). The outcome is the imbalance in checks and balances, which has massively tilted in favor of the executive, hence losing its original meaning as envisioned by the framers of the constitution.
Conclusion
The framers of the American Constitution envisaged a situation where power concentrated in one person or a group of people would lead to possible excesses with the leadership of the United States. They saw checks and balances, as the only way the constitution would secure individual liberty. This prompted them to create checks and balances clauses that would ensure the three branches of government- the executive, legislative and judicial, checked on each other to bring balance while executing their duties.
Giving each branch some authority over the other worked well to control the excesses of the government. Although checks and balances complicated the government’s functional abilities, it protected the American people’s liberty. One of the most prominent impacts of checks and balances would come during the Franklin Roosevelt presidency. When Roosevelt audaciously attempted to pack the Supreme Court with libel justice after his reelection in 1936 by a big margin, it was the Supreme Court’s checks and balances powers that saved the situation.
However, over the last few decades checks and balances principles have faced massive challenges of defacing by successive regimes from the 1970s. In specific is the use of executive orders by president that has peaked in President Donald Trump’s government. Before Trump, there was President Bill Clinton, George W. Bush and Barrack Obama whose use of executive powers to make declarations was massively criticized (Samuilov, 2019). In other words, Checks and Balances have tilted to favor the executive branch of the government than legislative and judicial branches.
References
Abbott, P. (2011). The Challenge of the American Presidency: Washington to Obama. Lanham, MD: Lexington Books.
Adams, J. (2009). The Works of John Adams, Second President of the United States.
Bailey, J. (2015). James Madison and Constitutional Imperfection. Cambridge, England: Cambridge University Press.
Burleigh, A. H. (2011). John Adams. Piscataway: Transaction Publishers.
Dycus, S., Banks, W. C., Hansen, P. R., & Vladeck, S. I. (2019). National Security Law, Sixth Edition and Counterterrorism Law, Third Edition: 2019-2020 Supplement. MD: Aspen Publishers.
Hamilton, J., & Slutsky, S. (2017). Judicial review and the power of the executive and legislative branches. Research in Economics, 71(1), 67-85.
Henricks, K. (2017). “I’m Principled Against Slavery, but …”: Colorblindness and the Three-Fifths Debate. Social Problems, 65(3), 285-304.
Hudson, D. L. (2012). The Handy History Answer Book. MD: Visible Ink Press.
Jones, C. O. (2000). The Presidency in a Separated System. Washington, DC: Brookings Institution Press.
Manuel, P. C., & Cammisa, A. M. (2019). Why American Government Operates Under Checks and Balances, and British Government Does Not. Checks and Balances? 41-75.
Manuel, P. C., & Cammisa, A. M. (2019). What If American Democracy Functioned Without Checks and Balances? Checks and Balances? 115-142.
Mettenheim, K. V. (1997). Presidential Institutions and Democratic Politics: Comparing Regional and National Contexts. Baltimore, MD: JHU Press.
Nuechterlein, D. E. (2019). The National Security Council and the War Powers Act. National Interests and Presidential Leadership, 121-140.
Owens, J. E. (2005). Institutional Competition and Conflict in a Separated System: the Congress, the Presidency and the Courts at the Turn of the Century. Revue Française d Etudes Américaines, 106(4), 99.
Rofe, J. S. (2007). Franklin Roosevelt’s Foreign Policy and the Welles Mission.
Samuilov, S. (2019). Donald Trump’s Presidency: Domestic Conflicts and Russian-American Relations. Russia and America in the 21st Century, (Спецвыпуск).
Sidlow, E. I., & Henschen, B. (2016). GOVT 9. Boston, MA: Cengage Learning.
Welch, S., Gruhl, J., Rigdon, S. M., & Thomas, S. (2012). Understanding American Government – No Separate Policy Chapter. Boston, MA: Cengage Learning.
Did you find any useful knowledge relating to checks and balances in the American constitution in this post? What are the key facts that grabbed your attention? Let us know in the comments. Thank you.
According to UNPF, a Hedge fund was first created by Alfred Winslow Jones in 1949, where he combined several characteristics that define hedge funds even in today’s business environment. In this view, Alfred Winslow Jones sold short-term stocks as he projected a decline in price while acquiring more long-term stock that expected price increase by using leverage to purchase these additional funds.
Alfred Winslow Jones avoided the Investment Company Act 1940 requirements by creating a limited partnership with 99 investors (Lieberman, 2018). As a result, Jones took 20% of the profits generated from the ‘hedge fund’ and charged management fees of the fund that saw several imitators use the model, especially the limited partnership structure and management fee as proposed by Jones.
Thus, Hedge funds seek to address the inefficiencies in the market. UNPF has four types of hedge funds: long-short equity, macro, fixed-income arbitrage, and event-driven hedge fund (Hartley, 2019).
Status of the Hedge Funds Industry
In today’s business environment, the hedge fund industry has not performed well for the last decade, with more positive projections expected in 2021 (Ellen & Li, 2022). In the current state, the hedge funds continue to grow, but they continue to adapt to greater use of technology in their operations, lower management fees, and enhanced access to retail investors.
For instance, 50 hedge funds produced over 24% gains in 2020 while the S&P 500 generated about 18.40% gain with collectively 5-year net returns of 14.81%, while the S&P 500 had an annual return of 15.22%. In this view, the hedge fund industry’s return over 2020 was 6.41% which shows that the industry is doing well based on the prevailing economic conditions resulting from the Covid-19 pandemic (Ellen & Li, 2022).
The hedge fund performance in the last decade has not been rewarding, but it has managed to record impressive performance, and its growth and performance are expected to continue ballooning in 2022, which will fuel significant change in the next decade.
Pros and Cons of Hedge Funds
Flexibility
Compared to Mutual funds, hedge funds are articulated as more flexible as the Securities and Exchange Commission (SEC) does not focus or concern itself on hedge funds (Ellen & Li, 2022). In this view, hedge funds are not traded publicly, making them flexible as there are no regulations that regulate the performance of hedge funds. Additionally, hedge funding may adopt strategies such as short-term selling, leverage investment, and derivatives across several investments without limitations or regulations (Hartley, 2019).
Hence, through shorting or short selling, hedge funding can gain profits from the declining price of a security, a stock, or a bond in the market. Thus, hedge funds are flexible as investors could take advantage of the declining price and adopt shorting to make profits as the gain in the rise of price in their investment option.
Good Performance
Based on the current status of hedge funds and the S&P 500, hedge funds have a promising trend in 2022 compared to other investment options (Ellen & Li, 2022). With the hedge fund’s aggressive investment strategy, investors can gain higher returns based on the fund’s investment strategies, including short selling, leverage buying, and use of derivatives in its operations.
Hedge funding often perform better in the market as it does not have market uncertainty as other investments. It allows fund managers to short sell for declining prices, borrow to invest, or leverage busying and derivative use (Jorion, 2021). Therefore, hedge funds have a sustainable competitive advantage compared to other investments that are not flexible and high regulated with SEC compared to hedge funding activity.
Diversification
With the highly volatile investment markets, hedge funding offer investors an opportunity to add diversification and significantly reduce risk in the investment options. As diversification investment, hedge funding articulated long/short strategy, tactical trading, and event-driven that offer investors a positive investment portfolio (Hartley, 2019).
As a result, hedge fund managers can reduce risks, allowing investors to obtain instant diversification in the market’s investment portfolio. Thus, hedge funds offer their investors’ instance diversification, reducing risks associated with the bond market and conventional equity.
Hedge Fund Fees
For managers to operate a hedge fund for the investor, there is a fee structure referred to as ‘2 and 20’, which can be expensive in the long run. In the structure, investors have to pay a 2% management fee for a 20% fund manager hedge fund; usually, a performance fee of profits gained in a year (Jorion, 2021). Therefore, hedge fund fees are costly in the investment strategies as with or without profits; one has to pay 2% as a management fee and give up 20% of the total profits made from an investment.
Hedge Funds are Less Liquid
The concentration investment strategy of hedge funds exposes the funds to huge losses compared to mutual funds. In this context, investors often lock up money for a year, which leads to significant losses if they happen. The use of leverage strategy further increases the risk involved with hedge funds as an investment strategy as the borrowed money if a failure occurs in hedge fund transaction, it could be a double loss (Hartley, 2019).
Therefore, hedge funds are considered long-term investment options that require investors to lock up vast sums of money for a year or more in anticipation of good returns, which is not always the case.
Based on the current state of the hedge fund industry, especially in the economic recovery from the Covid-19 pandemic, risk reduction benefits in stocks or bonds allow a significant reduction of overall portfolio risk in the market. The concept of surplus optimization in the hedge funds minimizes the expected shortfall (SF) with a ten-year asset portfolio (Ellen & Li, 2022).
As a result, 7% of the pension percentage of the pension fund should be allocated to hedge funds as a strategic investment option in minimizing risk investment portfolios in the market. With a hedge allocation of 2%, the improved SF is about 1% while the extreme loss is at 5%; in the same context, a hedge fund allocation of 7% improved SF expected is close to 5%, while its extreme loss probability is at 12% (Jorion, 2021). Therefore, allocating a 7% pension fund to hedge is effective as it minimizes risks with an investment option of stock and bond hedge fund strategies.
Successful managers such as Chris Hohn’s TCI or Ray Dalio’s Bridgewater associates provide better opportunities for the pension allocation to the hedge fund to be a success and enhance profit marking. To effectively understand hedge fund in this context, the basic structure of the hedge fund doctrine should be adhered to for better hedge fund returns. One of the critical operational issues that hedge fund allocation face is the flexibility of unregulated that makes its investment portfolio in the pension fund (Ellen & Li, 2022). For UNPF to build a hedge fund allocation, it should consider the pension’s users in its operations.
Hedge Fund Pitch Finance Assignment
Second And Separate from The Above
To effectively invest the $50,000,000 on two hedge funds for the period of five-year lockup, first, it’s essential to establish the two hedge funds as limited partners to enhance the flexibility of the funds from the regulations of SEC in their operations. It is essential to understand the 2 and 20 rule in managing these hedge funds as the returns will be viewed on an annual basis, which means that 2% management fee of these two hedge funds and 20% for profits gained in the investment portfolio.
I propose a short/long hedge fund strategy in the investment portfolio to allow flexibility to withdraw the money if something truly catastrophic happens. Second, we need to consider the hedge fund structure or model that will entail; the fund, which is the entity holding the securities where an investor participated. The fund allocation needs to consider the general partner for the hedge, the fund responsible for day-to-day operation, and the fund’s investment manager (Student).
The available investment capital of $50,000,000 will be invested in two hedge funds, including credit-focused hedge funds with convertible bonds with two choices:
Issue 25MM shares at $10; however, it is essential to note that share price could decline, let’s say $47; as a result, the return of the investment could be: $25MM*$47=1.175B
Issue the 5-year lockup debt as 5%, resulting in an interest cost =$50MM*5=$250MM annually that will translate to 1B or refinancing over the first 5years.
To maximize the returns on the hedge funds, the fund should adopt the ‘Multi-Strategy Hedge Funds.’ The Multi-strategy hedge funds offer the hedge fund a number of benefits including; multiple strategies within one fund, developing over time (5-year lockup), having attractive returns with low volatility, and enhancing capital allocation its returns can be muted. However, the Multi-strategy funds have one limitation: they require chasing hot trends/ideas that may not yield many returns for the investment portfolio.
With the multi-strategy hedge funding, the management fee will be 1.4% and 16% for the profits gained annually based on the current state of the hedge fund industry, which is promising compared to the last decade and is performing better than the S&P 500. Additionally, the five-year lockup offers the easy management of the hedge fund as I can use multiple strategies within one fund, enhancing the working conditions.
While hedge fund management is not a new phenomenon in the investment market, to effectively acquire ten employees with consultancy services sort from the best hedge fund managers, including but not limited to: Chris Hohn’s TCI or Ray Dalio’s Bridgewater Associates. As this is a short/long hedge fund, there will be no modeling after the existing one as the 50MM hedge funds are aimed at the 5-year lockup. The multi-strategy hedge funds are longer-term investments caused by attractive returns with low volatility.
I am uniquely qualified for this opportunity as I am hungry for knowledge with exceptional knowledge on hedge funding and hedge fund strategies. I will effectively execute the task while learning from the best hedge fund managers in the industry, such as Chris Hohn’s TCI or Ray Dalio’s Bridgewater Associates.
References
Ellen He, Y. and Li, T., 2022. Social Networks and Hedge Fund Activism. Review of Finance.
Hartley, J.S., 2019. Liquid Alternative Mutual Funds versus Hedge Funds: Returns, Risk Factors, and Diversification. The Journal of Alternative Investments, 22(1), pp.37-56.
Jorion, P., 2021. Hedge Funds and Financial Misreporting. The Oxford Handbook of Hedge Funds, p.393.
Lieberman, D.L., 2018. Hedge Funding and Impact Investing: Considerations for Institutional Investors. The Journal of Investing, 27(2), pp.47-55.
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Sociology and Modern Capitalism – Marxists hypothesize that inequity and poverty are practical components of capitalism’s productive system: capitalism must produce in an equal social construction. Inequality is passed from solitary generation to other over a situation of services and prospects that backgrounds every distinct.
The conurbation’s social topography is prepared up of a classification of the social situation that reproduces the class construction. The alteration in the scheme results from a modification in the request for labor (Coleman).
As a result of perpetual poverty in American capitals, a permanent system requires the creation and re-deployment of industrial reserve forces. Inequality and deficiency cannot be exterminated without essential variations in the style of production.
Covid-19 and Modern Capitalism
Several aspects of the Covid-19 epidemic cannot be separated from capitalism: state policies aimed at preventing activity, regional health inequality, action, and skill through the absence of Global depression (Van Bavel et al. 4). Entirely of this can be the topic of study to display the connection with capitalism.
However, it is interesting that the interest in the above references is to present a relevant or structural understanding of the current crisis, deeper causes, or realities. Despite several random factors, it has nothing to do with the accident that has played a vital role in mobilizing and exacerbating it.
To be sure, Jade Lindgard and Amy Poinsuit’s excellent article is entitled “Coronavirus, a Boomerang That Comes Back to Our Face.” Numerous systemic processes have been termed in association with the results that have made possible the current epidemic.
Schools are predictable to be sealed for weeks or months, and parentage are precipitously enforced to go to home-based school, frequently when they are enquired to remain their steady jobs. As well as most of the labor of this home education will be on working mothers.
The virus cannot discriminate against itself because it is infected; however, its effects will not reach everybody correspondingly in a society that suffers from gender inequality. Parentages who are not parents face a burden, and of these parents, mothers are the ones most affected (Peet 568).
The pay inequality frolicked a dominant part in this inequity: for various, the father had a well-paying job, so he considered living in the mother’s home economically. On uppermost of that, several mothers felt they were better qualified for daily work in home-based schooling.
Certain believed it was a congenital disability, though others lured their infantile girls into the social world – girls babysitting for a fellow citizen or serving to take attention of fresher siblings and companions because he has the skills made him a better candidate.
Home Schooling Job Sociology
The study shows that mothers will do the utmost of the work of caring aimed at and instructing their country’s offspring throughout our large-scale coronavirus related school closings (Van Bavel et al. 6). Besides, not all mothers will be capable of ensuring the same.
A working mother may be forced to select amongst being punished for not prioritizing work, or her children may be tested for not giving priority. Specific those restricted with savings, relaxed from working at home-based, or partners allied to job safety may have to decrease working hours or leave absentee addresses.
Solitary mothers, who previously face extra inquiry for their parents, determination be even more precious (Coleman). People who can’t afford to proceeds time off, deprived of endangering their works, will facade more severe pressure and scrutiny, and as a result, their children will grieve unnecessarily. Americans are slowly coming to terms with the fact that institute closings are essential to deal with the epidemic.
Sociology and Modern Capitalism
Though this is trendy, we as a state can take paces to reduce the load on mothers. At the very least, we prerequisite and disaster, nationwide, timely payment strategy for parentages of offspring under 12. Followers of Congress are declamation of numerous reasons to give specific or entirely Americans cash to equalize the economic effects of epidemics (Peet 569). These suggestions are a decent jolt. However, they do not gross into excuse the additional hardships of institute closings.
Learning is the municipal worthy that we sustenance through taxpayer-funded municipal education. Our institutes are not solitary places of knowledge; however, we also the protection and care of new offspring (Van Bavel et al. 8).
hen schools are closed, we provide education, protection, and supervision for our children – especially by paying their mothers to help their children’s education. Paying for this wage is one way to continue investing in our children while confirming that families can be financially stable if working hours are condensed.
Conclusion
My greatest expectation is that when it’s all above and back in school sessions across the country, we recall a lot of social inequity training that this epidemic suffix will instill us. Solitary of these teachings will be almost the load on mothers when they move away from community facilities such as schooling.
I hope we will use this knowledge to sponsor our institutes’ betterment as a portion of a more excellent drive to progress the social organization that can help us better through such national disasters in the upcoming. American geographer and historian Mike Davis have shown the general link amongst global capitalism and pigs flu.
Nowadays, it is perfect that the epidemic of Covid-19 shows that the creative services that have accrued globally have developed services of devastation that drop us into modern-day barbarism. To acquire this, we need to reconnect the various social engagements, with the scrap for radicalism further than the state-run and the principal, to discover illegal inventions outside catastrophic capitalism.
Work Cited
Peet, Richard. “Inequality and poverty: a Marxist-geographic theory.” Annals of the Association of American geographers 65.4 (1975): 564-571.
Coleman, James S. Foundations of social theory. Harvard university press, 1994.
Van Bavel, Jay J., et al. “Using social and behavioral science to support COVID-19 pandemic response.” Nature Human Behaviour, (2020): 1-12.
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