In most cases, overcoming the sense of division could be one of the factors for success. At the same time, both division and unification can turn rancid. In the worst-case scenario, the unification of the divided groups could lead to a revolution.
Back in the 6th century AD, the groups of “Greens” and “Blues” ferociously supported their teams at chariot racers. At one point in 532 AD, these groups united to overthrow the Byzantine Emperor. Eventually, the Byzantine Empire overcame the crisis by quelling the so-called Nika riot and pouring gold to rebuild it.
Similarly, in 2020, governments are rebuilding the economy by bailing out companies. However, in the post-crisis of our time, it is happening more than ever before. Moreover, due to modern times — transparency, trust, and a sense of unity become crucial factors.
Unlike the devastating unity of the Nika riot, the foundation for uniting should be in the trust between players in the economy. One example is Magic Johnson’s life insurance company providing $100 million to help SMEs owned by women and minorities.
In modern post-crisis, who could impose unity and trust to rebuild the economy? Could that be an act of the new role of the government? Or could financial institutions lead the change by some new approach? Or are we about to witness the innovative types of old models of invoice financing, such as invoice factoring?
The Role of Governments in Supporting the Economy
When mentioning the government role in the economy, we usually think of fiscal policy and public spending. Of course, throughout history, governments were protectors like in the abovementioned Nica rebellion.
15 centuries ago, rebels were using the arena as a base to plunder the city, burn religious buildings, and besiege the Byzantine Palace. After bribing some leaders, Emperor Justinian “the Great” closed the arena and killed 30.000 people who participated in the coup. In contrast to modern times, ancient times’ “lockdown” had an opposite intention then to save lives.
But what followed was the same — the recovery and reuniting the nation. In both cases, it is the extensive use of money and power to rebuild the economy. Regardless of methods, the time of Justinian was the most prosperous for the Byzantine Empire.
Apart from stopping the crisis, governments are supporting the economy in a myriad of ways. For example, the US government fueled Tesla and SpaceX with $5 billion. The same applies to most research and innovation initiatives in Europe and the rest of the world.
Seemingly, these R&D efforts helped to propel new products on the market. For example, pharma companies make profits from fundamental research done by state-backed universities.
At the same time, the pressure that voters put on governments is immense. Since there is a limit, supporters of the “universal income” even predict the neoliberal economy’s demise. The question is, would the governments venture into the last mile, or should the entrepreneurial ventures lead the way?
Major Players in Rebuilding the Economy
For keeping the herd’s unity, sometimes hindering businesses, our species tend to divide “them and us.” However, a symbiosis between the financial and private sectors is trampling these differences.
Because of this, financial institutions were approving billions of loans to those stockpiling cash in March 2020. Logically, the metrics for these loans were past collaboration and performance.
But what would future hold? When the financial crisis is lurking, how could financial institutions address this uncertainty? Finally, what factors would determine an approval of credit lines?
Because these predictions are hard, we contacted some of the experts working for financial institutions. In some of their opinions, this crisis would last for many years, at least two. The common conclusion is that the government has experienced similar due to the previous crisis.
However, similar to raging masses, the current crisis comes from the unpredictable future. What is worse, people are changing their consumption habits. For this reason, and to survive in these times, we will witness more competitiveness in price and models of deliveries.
To become more competitive, producers should follow the massive production that cut costs, too. Since producers are the drivers of “The Economic Machine” recovery, they should produce double. It is because this move lowers the prices and nurture more spending. This way, we can stop deleveraging. Or make it beautiful as Ray Dalio suggests in “How the Economic Machine Works” video.
For this reason, stockpiling is a viable way to lower the cost of future production. Moreover, according to Ray Dalio, the recovery rate improves as we all increase our productivity. Thus, investing in productivity tools is the most feasible strategy.
However, all of this requires structured measures and collaboration of all players on the market.
Infidia: Both Productivity and Finance to Boost Productivity
Invoice financing based on blockchain is an excellent solution for SMEs’ liquidity. However, it features many problems. Besides credit checks, there is a common issue of the invoice factoring model — the customer needs to verify the invoice.
For some customers, this could mean suggesting the insolvency of the company. For others, such as retailers, this could signal the ability to change trading terms and add one or more percentage to their rebates.
Because of this, the model of Invoice financing by Infidia is perfect for taking chances on the market, while non-disclosing the financial data. With our innovative model, Infidia is a helper and one of factors for overcoming the crisis and rebuilding the economy.
Originally published at https://www.infid.app on June 15, 2020.
