Wednesday, September 29, 2010

A Discovery of a Serious Mistake Made in the Real Market Process and a Suggested Solution for the Current Economic Crisis

 
Many experts and government officials are trying to solve the current economic crisis and revitalize the economy, but to no avail. I believe that our economic crisis is getting worse day by day, moving inexorably toward a depression.

I have discovered that a serious mistake has been made in the development of real transaction systems and applications through the use of IT and networking technology over the last twenty to thirty years of the Modern Information Age. Real transactions are directly restricted by time and space. There have also been many different and complex rules and standards in the real transactions across the world. So, in developing those systems and applications, we should have simplified them and constructed a fair rule and standard by directly overcoming the restriction of time and space with IT and networking technology, instead of just simplifying them by manipulating the constituent factors of transactions, such as products, services, providers, and customers, which instantly increases the efficiency and productivity of real transactions only to a limited degree. Unfortunately, there is no such case in the world as of yet. I believe that this is one of the most serious mistakes we have made in the Modern Information Age.

Since e-procurement became available, we have developed numerous transaction systems and applications, including various collaborative function systems, such as eBay, Amazon.com, and numerous logistics and supply chain solutions in the real market process. Let us look at some examples. E-Bay’s auction system is an effort to simplify the rules and standards by a product or a service, and Amazon.com’s e-seller system is an effort to simplify them by a company (i.e., a seller). However, they made the mistake of giving up the opportunity of facilitating competition among providers. The developers of eBay’s or Amazon.com’s e-marketplace system or home shopping system have tried to simplify them by the character of products or services. In this case, only products or services that are not sensitive to the rules and standards can be efficiently traded through these systems. Some big companies have tried to simplify them by their buying powers to manage their purchasing alone (e-buyer model). Most of collaborative function systems and applications have been developed through simplifying them by services of individual functions. There are many other cases, but almost all of them have this characteristic that might be attributed to the desire to immediately increase productivity and efficiency. However, strangely and ridiculously, nobody has recognized yet what mistake we have made in developing those systems and applications.

Because IT and networking technology have been mostly used for manipulating the constituent factors of the transactions, the employment situation has continuously worsened in the market; through efforts to reduce the number of transactions and functions in a chain of linearly constructed transactions and to increase the efficiency of a function through collaboration with all sectors of the market and also through a mutually complementary relationship between the supply side and the existing market process. The more the Information Age has developed, the more the employment situation has worsened, and policies aimed at the improvement of the employment situation have been unsuccessful. That is, no matter how powerful the adopted expansionary economic policies and stimulus plans were, they have been ineffective and useless. If we do not fix that mistake, I strongly believe that this economic and social tailspin cannot be stopped. It could even develop into a worse crisis. I believe that mistake must be the real cause of the current economic crisis.

If the restriction of time and space is effectively overcome by appropriately using IT and networking technology, I believe that a system like the Internet could be developed in the real market process. Then, numerous applications could also be easily developed in the real market—similar to what happened to information transactions during the Internet Revolution—and numerous new businesses and jobs would be created in all sectors of the market. I believe that constructing a system like the Internet in the real market process is the most effective and viable solution for ameliorating the current economic crisis and for revitalizing the economy.

I believe that our economy is now in imminent danger. We do not have time to delay any longer. To stave off this impending crisis and to revitalize the economy, we should develop a system like the Internet for the real market process and realize it in the market as soon as possible, before it is too late. 


l        Ho-Hyung (“Luke”) Lee (luke.h.lee@gmail.com) is by training a lawyer, an international businessman and entrepreneur – and an inventor.  He is currently the president of Ubiquitous Market System, Inc. (UbiMS).

Friday, September 24, 2010

An Economic Tsunami is Coming

By Luke Hohyung Lee in August, 2009

In October 1962, we came close to nuclear Armageddon.  When the threat subsided we enjoyed a momentary euphoria.  Then, within a year it dawned on everyone that we still had to face the realities of the nuclear threat that has never entirely gone away.  In October 2008 we faced down another near catastrophe – the financial meltdown and accompanying severe recession.  Yes, we’re glad the worst is over – but is it?  Just as we felt a momentary elation after walking back from the brink of nuclear catastrophe in 1962, we are seeing the summer market rally and deluding ourselves into thinking the recovery is at hand.  Recovery is not at hand.  We now face a more severe danger unless we act now.

Most people look at the improved leading market indices and fail to look at the whole economic environment.  When they are shown some improved economic reports, they have too easily concluded that the whole economic outlook has also improved, and ignored the fact that behind the improved economic reports hide some serious problems.      

Over the last several years we have thought that it was only a weak economy without considering the changed economic environment. But, our diagnoses and prescriptions for improving the economy have ended each time in failure; rather, they have created numerous abnormalities in the market. 

We are missing the overall picture if we think that we are going to get back to the halcyon days of the past.  I believe the real problem is the market paradigm. That is, I believe that only if we fix the problems in the market paradigm, the problems in the whole economy would be more manageable and solvable.  If we focus on stimulus packages and monetary policy alone, we will be even worse off than those terrible days of last October.   


Recognizing the changed economic environment and where the problems come from

The development of the modern information age over the last 30 years has brought big changes to the market and society through the digital revolution and the internet revolution. But, strangely enough, the market paradigm has changed little.  The existing market paradigm which was developed in the industrial age has remained and operated without much effect in the current market.

While the existing market paradigm has remained, other major changes have been made in the whole market and society, and our economic environment is now in a much different position from the past one.  

In the supply side, the following have occurred:

l       Sharp productivity increases from IT progress;

l       Increased off-shoring and outsourcing toward lower-labor cost countries;

l       Broad adoption of automation processes, equipped with information devices.

But these changes have also resulted in increased difficulties of job creation for middle- and lower-income workers and the intensification of the polarized gap between poor and rich.

Moreover, efforts to reduce the number of transactions and functions in linearly constructed transactions and due to the increasing of the efficiency of a function itself by collaboration, the existing functional market paradigm itself has actually resulted in the worsening of employment conditions in the market as a whole.   

Because of the established mutually complimentary relationship between the supply side and the existing functional market paradigm, job creation for middle- and lower-income people has been more difficult. 

These mutually complimentary phenomena that led to the worsening of employment conditions have operated as a force to lower the level of consumer spending over time.  (Let’s call this Force [1])  This has been a major factor for the recession.   

While the old market paradigm has remained in place, to promote the level of consumer spending, there seemed to be no other choice but to adopt expansionary economic policies (i.e.: expansionary fiscal policies and expansionary monetary policies) and stimulus economic plans to keep it going. That is, they have tended to act as a force to increase the level of consumer spending (Force [2]), to promote growth and prosperity.

When Force [2] is more powerful than Force [1], growth could appear in many parts of the market. But, the problem is that Force [1] is a continuous force, and Force [2] is only a temporary one. That is, when Force [2] disappears, and due to the continuation of Force [1], the economy pulls back to recession. Thus, we have continuously adopted excessive expansionary economic policies and enacted stimulus economic plans to stave off the recession over the last 8-9 years.  But this has only postponed the inevitable deep economic malaise we have now descended into.

Because we have adopted these excessive expansionary economic policies and stimulus economic plans as a stopgap too often, we have experienced some additional serious side effects in the market:  (1) a federal budget deficit that has increased significantly, (2) Due to monetary liquidity increase, various economic bubbles increased all over the market, and inflation increased, and (3) Other various abnormal phenomena were accumulated in the market.   These contained a huge risk to lower the level of consumer spending suddenly to force the economy into recession.

More serious was that we didn’t effectively regulate the creation of numerous sub-prime monetary products.  In other words, despite the potential risks of these products, we went ahead anyway as it was felt they contributed to increase the level of consumer spending.  So, to our peril, we didn’t put a stop to what we now recognize as a very dubious policy.

Finally, beginning with the housing market bubble burst to the current financial market meltdown, the economy has now plummeted to the level we find ourselves in now.  

What, then, could be the real cause of the current economic and social crisis? The conventional answer is that it’s the housing market bubble burst or the sub-prime mortgage system failures. But what underlies those?  It’s the existing functional market paradigm itself. The existing functional market paradigm is no longer suitable for the modern information market.  A new market paradigm is needed. 


An analysis for the current economic phenomena as of August, 2009 -- and an outlook

In the past few months, improved economic reports, including increased corporate earnings, and better than expected employment reports have propelled the Dow Jones upward, and many experts are predicting that the recession is over. 

Even though some experts such as Prof. Nouriel Roubini are still warning of the possibility of a double-dip recession, because the hope for the economic recovery is too high, most of their warnings are being reported but ignored. Moreover, even a dispute over when the exit strategy for economic stimulus has started.   

I see those improved economic reports as stemming from the temporary effects made by the recent powerful expansionary economic policies and stimulus economic plans, and the cost reductions through restructuring.  If these temporary effects disappear, the economy will be aggravated again to further recession by the continuous Force [1] (cited above). Therefore, to maintain the improved economic trends like the ones mentioned, the second and third adoptions of powerful stimulus economic plans will be necessary.  Also, no matter how high the possibility of increased inflation, the exit strategy which lowers the level of consumer spending cannot be executed without adverse effect.     

The unavoidably worrying fact is that even if we can delay the continued recession through a second and third adoption of powerful stimulus economic plans and maintaining of the existing expansionary economic policies, we cannot prevent the increase of the potential risks such as the serious increase of inflation, the creation of new economic bubbles, and the accumulation of new abnormal phenomena in the market, -- all of which can lower the level of consumer spending even more.  Moreover, due to the recent powerful stimulus economic plans and expansionary economic policies, future economic bubbles and potential risks such as a commercial real estate bubble have not been removed and still remain in the market.  In other words, these have been significantly aggravated; and we cannot imagine when they will burst again.  In other words, the possibility for these to be an economic tsunami is very high.  

If we do not change the existing functional market paradigm to a new market paradigm, I strongly believe that this economic and social crisis cannot be stopped. It could even develop into a bigger crisis.  As long as the current conditions remain, we cannot achieve sustainable economic growth.

The possibility for an economic tsunami within a short period of time is very high. We will not simply experience another recession (double-dip) but will have an economic catastrophe (“depression”) on our hands.


A New Synergy Market Paradigm as a Suggested Solution – and a Recommendation

Geometrically progressive market changes have already been made by the rapid growth of synergy software applications (i.e., three-dimensionally integrated information systems) over the last 20 years. Yet, the market results made through the market paradigm (or process) that comprised existing functional market systems could only have produced arithmetical changes.                             

As market changes could only be satisfied through the existing functional market paradigm, “a structural gap” has existed in the market. As I show in detail elsewhere, this is the real cause of the economic and social malaise which currently afflicts us.        

I believe the only viable remedy for this structural gap will be by intentionally inducing synergistic (or geometrically progressive) market results in the market paradigm (or process).

I would like to suggest a new synergy market paradigm for the current economic and social crisis and to prevent an imminent “depression”. (Details for a new synergy market paradigm or system are shown elsewhere.)

If a new synergy market paradigm is introduced and fully implemented in the market, the existing comparative competition paradigm would be changed to a new absolute competition paradigm, and the centralized communication, volume and distributed expense would induce the voluntary participation of all members of the market. This would significantly contribute to the improvement of employment conditions in the market as a whole.

With the influence of the new synergy market paradigm, also in the supply side, the existing competition by size would be changed to a competition by quality and service, and the existing efficiency-oriented mass production and mass consumption would also be changed to a more effectiveness-oriented, diversified or individualized production and consumption system. Due to these changes, local employment conditions would be improved considerably, and the business environment for middle- and small-companies in the domestic market would also be improved significantly.

As a mutually complimentary relationship between the supply side and the new synergy market paradigm is established, job creation for middle- and lower-income people could be more activated, and the polarized gap between poor and rich could also be more moderated.

These mutually complimentary phenomena for the improvement of employment conditions made from the changed supply side and the new synergy market paradigm could be finally transferred to a structural force to increase the level of consumer spending, and will also be an initiative force for economic recovery and revitalization.

Under this situation, a policy for a working economic environment would be established, and no more excessive expansionary economic policies would be needed. Thereafter, the federal budget deficit could be reduced, and many economic abnormalities could also be resolved naturally.

I strongly believe that this is the most effective path to get out of the current economic and social crisis and revitalize the economy.

People might think that it will be impossible to change the market paradigm, or it will take too much time, even that it is desirable.  But, I believe the conditions and circumstances for the development of a new synergy market paradigm are already in place. That is, information technologies, facilities, devices and people are already in place to develop this new synergy market paradigm.  The only issue remains how to develop it.  I believe that solution is also already available.  It only needs to be implemented. Therefore, if decision makers are willing to make the hard choices, it will be relatively easy to implement, and it also won’t take long to see positive effects.

Moreover, this new synergy market paradigm will powerfully induce the voluntary participation of all members of the market by providing various economic benefits to them – and, especially by creating many jobs in the market. I’m not just talking about thousands of jobs, but millions of jobs.

The current economic crisis is now getting worse day by day moving inexorably toward a depression. We don’t have time to delay action any longer. To stave off this impending crisis and to revitalize the economy, I strongly recommend the government initiate and support the development of this new synergy market paradigm and realize it effectively in the market as soon as possible – before it is too late.                                                           

<Suggest also to see: Overcoming an Economic Sisyphean Task – Or, the Tr... http://t.co/u6VxPA4>

Author: Ho-Hyung Lee (luke.h.lee@gmail.com) - Ho-Hyung (Luke) Lee is by training a lawyer, an international businessman and entrepreneur and an inventor.  He is currently the president of Ubiquitous Market System, Inc. (UbiMS). Ubiquitous Market System is nothing less than a new synergy market system that will put us on the real path to prosperity. (8/18/09)

Thursday, September 23, 2010

The Current Economic Recession, Analogous to a Serious Diabetic Disease

By Ho-Hyung (Luke) Lee (luke.h.lee@gmail.com)

Many experts are trying to solve the current economic crisis, but to no avail. It seems that our economy is inextricably tied to a wider series of economic problems, such as the housing market collapse, the sub-prime mortgage system failure, and the financial market meltdown. These problems have catapulted us into what may be a deep recession—a high rate of unemployment and a virtual retrenchment in new business development. We are faced with a situation that makes the Gordian knot seem like child’s play. Our “knot” can be untied only by employing an Alexandrian solution, not any of the conventional solutions we have turned to in the past to jumpstart a flagging economy mired in recession. 

The current economic situation is analogous to a serious diabetic disease. Generally, it is difficult to detect diabetes from a single, simple symptom before it develops into a serious complication. This is because this one symptom, apart from any other, does not look to be seriously harmful to the body and because it is not easy to detect the relationship between the symptom and the disease. Likewise, it will not be easy to determine the real causes of the current economic conditions which afflict us. If each complication is treated separately, the proper treatment will escape us. Moreover, this may also cause other potential, perhaps fatal, complications.

As many experts may recognize, the market as a whole could not have itself generated enough businesses and jobs to keep consumer spending at the desired level. There seemed little other choice but to adopt excessive economic policies to immediately increase the level of consumer spending. Accordingly, every Western nation, including the U.S. and Japan, has aggressively adopted expansionary policies for economic revitalization, but most of them have been ineffective and have created numerous abnormal phenomena in the market; the federal budget deficit and monetary liquidity have increased significantly, and numerous other economic abnormalities have accumulated in the market.

An objective review of current market conditions leads one to conclude that there must have been a serious change in the market process, for if there is a serious and negative change regarding business and job creation in the market process, the market will be unable to self-generate enough businesses and jobs to keep consumer spending at the desired level. As a result, no matter how powerful and aggressive the adopted economic policies are, they will not be effective. Rather, they will likely cause greater ill effects.

The question now arises as to what kind of correlation exists between the changes in the market process and the self-generation capability of the market. The development of the modern information age by way of the digital revolution and the Internet revolution has brought major changes to the market and to society as a whole. Most people would agree with this. What is less widely acknowledged is that changes in the market process that were intended to increase its efficiency actually adversely influenced employment conditions. A significant improvement in employment conditions was temporarily achieved in the IT and Internet sectors of the market during the dot-com boom; however, through efforts to reduce the number of transactions and functions in a chain of linearly constructed transactions and to increase the efficiency of a function through collaboration with all sectors of the market, the existing market process has actually worsened employment conditions. Moreover, it has also contributed to the shift to a more efficiency-oriented supply side environment—that is, a mutually complementary relationship between the supply side and the existing market process has been more firmly established.

To increase efficiency, the following actions have occurred on the supply side:
l       Sharp productivity increases from IT progress;
l       Increased off-shoring and outsourcing to lower-labor cost countries;
l       Broad adoption of automation processes equipped with information devices.

These changes have also resulted in increased difficulties in job creation for middle- and lower-income workers and an intensified polarity between the poor and the rich. It could be said that the existing market process has been too efficiency-oriented to create businesses and jobs in the market, and that this is deeply correlated with the self-generation capability of the market. That is, the real cause of the current economic and social crisis is that the existing market process is no longer suitable for the modern information market.

If we do not change the existing efficiency-oriented market process to a more effectiveness-oriented one, this economic and social tailspin will not stop; it could even develop into a worse crisis. At the very least, as long as the current conditions remain, we cannot achieve sustainable economic growth.

The conditions necessary for the development of this effectiveness-oriented market process are in fact already in place—that is, the information technologies, facilities, devices, and people already exist. The only issue that remains is the will to develop it. I believe that the solution is also already available; it need only be implemented. If the decision-makers are willing to make the necessary choices, it will also be relatively easy to implement, and it won’t take long to see positive results.

According to my simulation, if we shift the existing outdated market process to a new updated market process, more than 5 million new jobs could be created in the U.S. market alone within 5-7 years. This is the Alexandrian solution to help us emerge from the current economic and social crisis and revitalize the economy.

Our economic crisis is getting worse day by day, moving inexorably toward a depression. We don’t have time to delay action any longer. To stave off this impending crisis and revitalize the economy, the government must initiate and support the development of this new market process and actualize it in the market as soon as possible—before it is too late.

<Suggest also to see: Overcoming an Economic Sisyphean Task – Or, the Tr... http://t.co/u6VxPA4>

Tuesday, September 7, 2010

Overcoming an Economic Sisyphean Task – Or, the True Path Back to Economic Prosperity

by Ho-Hyung (“Luke”) Lee


Every high government official and many top economic experts have tried to solve our continuing economic crisis and revitalize the economy over the last several years, but to no avail. Resembling the myth of Sisyphus, every attempt to restore the economic status quo has resulted in that huge boulder tumbling back to the bottom of the hill. If we do not break down the logic of the economic rules of the game – the real source of our problems -- I believe that every new effort will be just as ineffective and useless as everything else we have tried.

The Existing Maddening Economic Condition

We need an economic paradigm shift. Nothing else will do. The impasse we are now in I refer to throughout this article as the “existing maddening economic condition.” And it is maddening. But first, let me give a little history, before I give you my solution for this impasse. The development of the Modern Information Age made possible by the Digital Revolution and the Internet has unquestionably brought major changes to the market and to society as a whole. What is less widely acknowledged is that changes in the market process that were intended to increase its efficiency actually worsened employment conditions. And, as most everyone knows, stagnating employment means a stagnant economy.

A significant improvement in employment conditions was temporarily achieved in the IT and Internet sectors during the dot-com boom. However, efforts to reduce the number of transactions and functions in a chain of linearly constructed transactions—such as Wal-Mart, e-buyer, e-seller and e-auctioneer systems, and existing e-marketplace systems in the real market process—and to increase the efficiency of functions through numerous collaboration activities with all sectors of the market have actually worsened employment conditions. At the same time, these events contributed to the shift to a more efficiency-oriented supply side environment. That is, a mutually complementary relationship between the supply side and the existing market process has been more firmly established. To increase efficiency, the following major steps have occurred on the supply side:

• Sharp productivity increases from IT progress.

• Increased off-shoring and outsourcing to lower-labor cost countries.

• Broad adoption of automation processes equipped with information devices.

Yet, these changes also resulted in increased difficulties in job creation for middle- and lower-income workers and an intensified polarity between the poor and the rich. Moreover, they have also contributed to the weakness or near collapse of the general service industry and actually aggravated the employment situation. In my view, the existing market process has been too efficiency-oriented to the point where it has not created enough businesses and jobs to keep consumer spending at the desired level. This is strongly correlated with the worsening of the self-generation capability of the market.



This worsening of the self-generation capability of the market has lowered the level of consumer spending over time (Force [1]). It has been a major factor in the deepening of the recession.

To raise the level of consumer spending, there seemed to be little choice other than expansionary fiscal and monetary policies, along with stimulus plans, to keep the economy going. These measures have tended to act as a force to increase the level of consumer spending (Force [2]) to promote growth and prosperity.

When Force [2] is more powerful than Force [1], growth can appear in many parts of the market. However, the problem is that Force [1] is a continuous force, and Force [2] is only a temporary one. That is, when Force [2] disappears and Force [1] continues, the economy pulls back to recession. Thus, we have continually adopted excessive expansionary economic policies and enacted stimulus plans to stave off recession over the last eight to nine years. This has only postponed the inevitable deep economic decline into which we have now descended. This is what I mean by the existing maddening economic condition we are experiencing now. Is there a way out of this maddening spiral?

Because we have adopted these excessive expansionary economic policies and stimuli too often as a stopgap, we have experienced serious side effects in the market: (1) budget deficits at both the local and federal levels have ballooned significantly; (2) because of the monetary liquidity increase, various economic bubbles grew in size and number; thus, (3) the potential for inflation increased; and (4) other abnormal phenomena accumulated in the market. Each of these contributed to a sudden drop in the level of consumer spending, which propelled the economy into deeper recession.

What of course precipitated this crisis – i.e., the immediate cause -- was that we did not effectively regulate the creation of sub-prime financial products. Despite the potential risks of those products, financial institutions went ahead, as it was felt they contributed to increasing the level of consumer spending. We now know we were wrong. So, to our peril, we did not put a stop to what we now recognize as a dubious policy that exacerbated the situation. Finally, from the housing market bubble burst to the current financial meltdown, the economy has now plummeted to a level from which catastrophe looks probable.

What, then, is the real cause of the current economic and social crisis? The conventional answer is that it is the housing market bubble burst and the sub-prime mortgage system failures. That’s the simple answer. But what underlies those? Is it perhaps the existing market process itself? I can see free market ideologues cringe now. But with the market process as it exists now, the market as a whole cannot self-generate enough businesses and jobs to keep the level of consumer spending at the desired level. That is, the existing market process for the real market is too heavily efficiency-oriented and no longer suitable for the modern information market.

If we do not change this existing efficiency-oriented market process soon to a more effectiveness-oriented market process, that is, if we do not break down the logic of the existing maddening economic condition, I strongly believe that this economic tailspin cannot be stopped. At the very least, as long as the current conditions remain, we cannot achieve sustainable economic growth.

Changed Communication Capability and Development of a New Three-Dimensionally Integrated System through IT and Networking Technology

The increases in efficiency and application capabilities resulting from the digital revolution have made possible the development and spread of a multitude of digital devices. It has created many new businesses and jobs in the manufacturing and technology sectors of the market. It has also made possible the development and expansion of IT and computer networking technology.

Fast forward to today’s Modern Information Age. Through the use of IT and networking technology, communication has been rapidly transferred from existing linearly constructed communication—that is, one-to-one based communication such as telephone and telegraph—to two-dimensionally constructed communication, or one-to-multiple or multiple-to-one based communication such as radio and television. Moreover, with the further development of IT and networking technology, these two-dimensionally constructed communications advanced into three-dimensionally integrated communication such as the Internet. With the development of three-dimensionally integrated communication systems such as the Internet as a link between information sources and recipients, we could have made huge increases in effectiveness in information and created numerous new businesses and jobs in the IT and Internet sectors of the market.

A communication capability resulting from the development of IT and networking technology has already been established to develop these three-dimensionally integrated systems, not only in information but also in the real process of the market and society. Further, they can be produced intentionally, not just inadvertently as in the past. The full development of three-dimensionally integrated systems is now possible. Moreover, the global information exchange enabled by the World Wide Web has made them more broadly realistic.

Some efficient three-dimensionally integrated systems have already been realized. However, disappointingly, all of them are systems only for information transactions, not for real transactions. For example, the Internet is a link between information sources and recipients, an e-marketplace between information providers and customers, and e-platforms between software developers and users.

Because these three-dimensionally integrated information systems were developed with only the base of information (digital code), they have not only been freed from the restrictions of time and space but have done so in accordance with a fair rule and standard. That is, the efforts and investment for their development were not only economical, but the intended results could be more accurately predicted with a fair rule and standard in place. Accordingly, there are no limits to maximizing the effects. It has depended principally on their participants’ imagination. However, oddly, the conditions of real-world processes have not been considered at all. As a result of this oversight, we could not develop any efficient three-dimensionally integrated systems in real processes through the use of IT and networking technology.

This development of modern information accessibility has led to immense economic growth in the IT and Internet sectors around the world, beginning with the popularization of the Internet in 1996. However, the so-called dot-com economy between 1997 and 2001 failed to make profits or enlarge economic gains and, thereafter, engendered a bubble economy. Moreover, an improved communication capability has not been utilized to its fullest potential to develop three-dimensionally integrated systems in the real market process.

A Serious Mistake Made in the Real Market Process

Since e-procurement appeared, the e-market as a three-dimensionally integrated transaction model has been recognized for its efficiency. It is likely to yield greater efficiencies, up to maximum efficiency, by eliminating intermediaries from transactions between providers and customers and by facilitating competition among providers.

Nevertheless, it is difficult to construct an efficient e-marketplace in the real market process. Because the distribution and delivery of real (physical) products and services and the activities of providers and customers are directly restricted by time and space, there have been different rules and standards for transactions in the real market process. As a matter of course, we have developed numerous transaction systems and applications, including various collaborative function systems and applications such as eBay, Amazon.com, and numerous logistics and supply chain solutions, by simplifying the rules and standards through IT and networking technology. Here, a serious mistake was made, but nobody has recognized what that is, until now.

The mistake is that in developing those systems and applications, we have tried to simplify the rules and standards by manipulating—that is, classifying or limiting—the constituent factors of the transactions such as products, services, providers, and customers. Let us consider some examples. E-Bay’s auction system is an effort to simplify the rules and standards by a product or a service, and Amazon.com’s e-seller system is an effort to simplify them by a company (i.e., a seller). However, they both made the mistake of giving up the opportunity of facilitating competition among providers. The developers of eBay’s or Amazon.com’s e-marketplace system, or other home shopping systems have tried to simplify the system by the character of products or services. In this case, only products or services that are not sensitive to the rules and standards can be efficiently traded through these systems. Some big companies have tried to simplify by their buying power to manage purchasing alone (e-buyer model). Most collaborative function systems and applications have been developed through simplifying by services of individual functions. There are many other cases, but almost all of them have this characteristic of immediately increasing productivity and efficiency.

Because IT and networking technology have been used mostly for this purpose, the employment situation has continually worsened in the market. Things have gone wrong from the beginning. In a more bizarre twist, the more the Information Age has progressed, the more the employment situation has worsened, and policies aimed at improving the employment situation have been unsuccessful.

We need to consider a basic question once more. Why have there been so many different rules and standards? Have they been made due to the constituent factors of the transactions such as products, services, providers, and customers, or due to the restriction of time and space itself? I believe the latter is correct. However, to develop an efficient transaction system, not only must they be simplified but also a fair rule and standard must be put in place. Yet, without directly overcoming the restriction of time and space, it will be almost impossible to construct a fair rule and standard in the real market process. To simplify and also construct a fair rule and standard, IT and networking technology should have been used in such a way that directly overcomes the restriction of time and space. Unfortunately, no instance of that has yet occurred.

Breaking Down the Logic of the Existing Maddening Economic Condition

Real transactions are directly restricted by time and space. Without directly overcoming the restrictions of time and space, it is almost impossible to construct an efficient three-dimensionally integrated system such as the Internet and an efficient e-marketplace in the real market process.

By directly limiting the restrictions of time and space, such as directly limiting the market ranges, the same services (i.e., delivery times) of offerings from providers and the same price of like offerings from a provider at the final delivery point as a fair rule and standard would be established to regulate an efficient e-marketplace. By operating the supply chain infrastructure in a limited market range, the integration of a supply chain would construct a system like the Internet in the supply chain (real market) process.

I believe that such a three-dimensionally integrated market system with the Internet and the efficient e-marketplace combined can be easily developed that will effectively overcome the restriction of time and space by using IT and networking technology. It will neither participate in the production activities of the supply side nor influence the consumption activities of the demand side directly. Instead, it will provide direct, fast, and efficient links and marketplaces to both sides. Because each participating member can easily develop other applications on its own by using this supply chain infrastructure with other outsourcing service providers, it will be capable of increasing its own competitiveness by expanding its effectiveness in this open system. Numerous applications could also be developed in the real market, based on unlimited imagination. If it is developed and implemented in the real market, the existing efficiency-oriented market process would be changed to a more effectiveness-oriented market process, which is far more suitable to the modern information market. The self-generation capability of local markets would be improved, already an emerging trend in numerous micro-markets. This is how to break down the logic of the existing maddening economic condition.



If this new three-dimensionally integrated market system is fully implemented, the existing comparative competition paradigm for more market share would be changed to a new absolute competition paradigm for securing all customers. The centralized communication, volume, and distributed expense would induce the voluntary participation of all members of the market. This would significantly contribute to the improvement of employment conditions as a whole.

With the influence of this new, more effectiveness-oriented market process, the existing competition by size would be changed to a competition by quality and service. The existing efficiency-oriented mass production process and mass consumption would also be changed to a more effectiveness-oriented, diversified, or individualized production and consumption system. These changes
would enhance local employment conditions considerably, and the business environment for middle- and small-sized companies and for the general service industry would also improve significantly. Moreover, companies that off-shored and outsourced to lower labor cost countries would come back into the domestic arena.

As a mutually complementary relationship is established between the supply side and this new more effectiveness-oriented market process, job creation for middle- and lower-income people could be enhanced, and the polarized gap between poor and rich moderated.

These mutually complementary phenomena for the improvement of employment conditions would be a positive force for economic recovery and revitalization. The improvement of the self-generation capability of the market could finally be transformed into a structural force to increase the level of consumer spending without sizeable lapses resulting in recessions.

In this scenario, a policy for a smoothly functioning economic environment would be established, and no more excessive expansionary economic policies would be needed. Thereafter, the budget deficit at both the local and federal levels would fall, and many economic abnormalities could be resolved naturally.

I strongly believe that this is the most effective path to get out of the current economic and social crisis and revitalize the economy. Some might think that it will be impossible to change the market process or that it will take too long, even though conceding that it would be desirable. But I believe the conditions and circumstances for the development of this new effectiveness-oriented market process are already in place. That is, information technologies, facilities, devices, and people are already in place to develop a new three-dimensionally integrated market system. The only issue that remains is the will to develop it. I believe that the solution is in sight. It only needs to be implemented. Once decision-makers are willing to make the necessary choices, it will be relatively easy to implement, and it will not take long to see positive results.

This new three-dimensionally integrated market system will powerfully induce the voluntary participation of all members of the market by providing various economic benefits to them—especially by creating many jobs, not just thousands of jobs, but millions of jobs.

The current economic crisis is worsening day by day, moving inexorably toward a depression. We do not have time to delay any longer. To stave off this worsening crisis and to revitalize the economy, I strongly recommend the national economies of the world and their government leaders initiate and support the development of this new three-dimensionally integrated market system as soon as possible—before it is too late.



Ho-Hyung (“Luke”) Lee (luke.h.lee@gmail.com) is by training a lawyer, an international businessman and entrepreneur – and an inventor. He is currently the CEO of UBIMS, Inc. ("Ubiquitous Market System").