Comparing Disclosure Based Regulation And Merit Based Regulation Finance Essay

Comparing Disclosure Based Regulation And Merit Based Regulation Finance Essay There are tw0 basic models of regulatory system which is the supervision framework for securities market which is a merit based regulation and disclosure based regulation. These regulation systems are important to provide adequate investor protection and regulate business practices or codes of conduct that reduces systemic risks. There are several countries which have adopted the disclosure based regulation which are Malaysia, Hong Kong and Singapore. The countries which are still following the merit based systems are China and Philippines but to certain extend.  [1]   MBR The recognition of the need for a securities regulator to ensure investor protection and market integrity is located in the Securities Commission Act 1993 (SCA), under which the Securities Commission (SC) is established. Section 15(1) of the SCA requires the SC to, which control all matters relating to securities and to take all reasonable measures to preserve the confidence of investors in the securities market by ensuring sufficient security for such investors. The principal thrust of the regulatory framework currently applied by the SC is merit-based. Section 32(4) of the Securities Commission Act 1993 (SCA), give power that all proposals that involve issues or offers of securities to the public be subjected to the SCs prior approval. The SC has the discretion to approve the proposals with such revisions and subject to such terms and conditions as it deems fit. The SC also has the power to reject corporate proposals if it is reasonably satisfied that these proposals are not in the best interest of the public company and/or the investing public  [2]  . Authorities regulate securities offering Under the MBR, The authorities regulate the securities offering by protecting and shielding the investor by ensuring that the offering of the securities of the companys is judged by the authorities to be fair, just and equitable. Under this approach, the regulators or the authorities would make an assessment regarding the companys viability, quality and capabilities of the companys management, its suitability for listing and taking regard of the public interest before approving any issuance proposal regarding the companys securities.  [3]  For example, section 34(4) of the SCA, issues or offers of securities is subjected to the approval from the SC. Issuers and advisers disclose to authorities Under the MBR model, the issuers and advisers disclosed all information regarding the companys business to the authorities or the market regulators. These are because under this type of model, the market regulator needs to approve first the securities before the investor can be allowed to invest in the companys. This is for the purpose to protect the investor. Authorities reviews investment merits of offering Regulators review each transaction according to its perceived merits. The evaluation is completed in two stages which is firstly, adequacy of disclosure is assessed then, and the merits of the transaction are subjected to value judgment. Merit-based regulation assumes that the market regulators are better informed than investors and can better decide the merits of transactions on their behalf.  [4]  These merit judgment is the indication whether the companys can provide safe securities in making business in order to protect the investment made by the investor. Advantages of MBR Model In merit based regulation, it is a paternalistic attempt to improve or to develop the fairness between the relationship between the sellers and buyers of the securities in the capital market. These models also act as a shield to protect the public investors from the risks involved in acting on impulse. This is because the authorities had made deep valuation and merits regarding the companys business in order to approve the securities issued by the companys. This model or regulatory system is particularly suitable to be adopted for Malaysias emerging capital market which has a large proportion of financially unsophisticated retail investors. This is also reduce or minimizing the possibility of promoters of public companies exploiting these less sophicated investors to use as to their own advantages. In the securities market, the Securities Commission is also able to ensure that mechanism in place is working well in order to prevent unscrupulous and unethical practices in the issue or offer of the securities by the companies. By ensuing that the mechanism place is working, the investor would have minimized the risk of losing their investment by the unscrupulous and unethical practices of some companys who would provide false or inadequate information regarding their business. But, the ultimate decision still lies within the investor. This is because the decision and the evaluation of the security offered lies with the investing public. The securities commission will not give a guarantee that the investment made by the investor would get a return or profit.  [5]   The SC has the power to check and ensure that the securities that are offered by the issuers are fairly and reasonably priced. Disadvantages of MBR Model This is regards to the public interest where the public investor would make their decision in investing their money in the companys based on the SC. The approach of MBR posed a problem of moral hazard. This is because when the market regulators or the SC gives their approval of the merits of a particular company, it exist danger that investors will perceive that the corporation will be a good investment as the SC had given their approval after making some merits regarding the business of the companys. This would lead to an impression whereby the investor did not need to individually evaluate the merits or risk of investing in that company. The investor would totally leave it to the market regulator to make the research. By using these models, the regulatory approach of MBR restricts entrepreneurs and investors choice in making decision in choosing the right company to invest by limiting the scope of investment that is offered to them. This is because only SC will give and provide the necessary approval in order to make the issued security to be approved. If the companys does not comply the guideline given and the SC does not approve the issue offered, thus limiting the option available to the investor in investing their money. This approach also denies certain ventures of access to public funds unless the issuer of securities agrees to modify their offering according to the pre-requisite set by the SC. The issue that always arises is that the SC and the issuers of securities tend to have conflicting views as to how and the extent to which a proposed venture or transaction will be beneficial to investor in general. The SC is also known to be more conservative in its judgment and normally will not approve highly risky securities to be offered to the public. The merit based regulation also provided that by giving much protection to the investor, this will take the bargaining power from the securities offeror or issuers and the power will be switch to the investor instead. The protection is significant because the issuers of the securities need to raise funds at a substantial discount from the actual price of their securities. From this Market philosophy, this over-protection of the investing public had compelled issuers to raise funds at a substantial discount from the actual value of their securities or add to the perception of initial investors that they would be guaranteed a premium when the corporate body is launched onto the marketplace. Basic principle of DBR The basic principle of DBR is the need for the issuers and intermediaries offering securities to provide investors with sufficient, accurate and timely disclosure of all relevant information regarding the companys business, prospects, finances and the terms of the securities in order to allow investors to better evaluate the risks and merits of their investment.  [6]  This is to allow the investor to make they own informed investment decisions. Usually is done through the use of prospectus which focuses whether the companies comply with the standard of disclosure required. For example, in Malaysia, the companies that is listed in Bursa Malaysia, one of the listing requirements of the standard disclosure is to have at least two annual reports that can be inspect by the investors in order to make their decision to invest. The investor are expected to carry out their own due diligence or with the assistance of expert or professional such as lawyers and accountant because the investo r hold a higher level of responsibilities in evaluating the risk or particular offering based on the disclosed information before investing.  [7]   Authorities regulate disclosure of information in securities offering Under DBR, the regulation of the disclosure or the standard of the disclosure in securities offering is on the authorities where the authorities will provide the guidelines for the company in disclosing the relevant information pertaining the companys business, finances, prospects and terms of securities. The burden is put on the issuers of the securities and advisers and not on the authorities. Issuers and adviser disclosed to investor Under the model Of DBR, the issuers of the securities will provide sufficient information according to the Securities Commission Guidelines regarding the disclosure of information regarding their business. The advisers which are normally experts or professionals such as accountants, lawyers and other technical experts need to have play their role in the preparation of prospectus for the investing public. These are because each of these adviser or experts can be held liable for a defective prospectus under the DBR. The due diligence process is for the purposes of preparing good and complete prospectus and involves performing reasonable investigate work in order to determine that the prospectus does not contain any material omission or false information. Financial advisers and experts in particular are expected to have a very high standard of reasonable care. An adviser has an obligation to make a reasonable investigation not just for the purpose of its own due diligence defence but al so as a duty to the investing public who will be relying on the opinion and recommendations of the advisers. In order to minimize their potential risk, the expert of professionals must make due diligence enquiries.  [8]   Investors determine investment merits of offering In the DBR System, the investor cannot expect that the securities regulator to protect them forever. In order to invest, the investor cannot invest blindly. The investor must make their own research and collect data and information regarding the companys business. Investors have to evaluate and assess the merits of any security being issued or offered before making any investment decision It would become more apparent that investors would have to change their laid-back attitude. They can no longer take for granted that securities being issued or offered have already passed the regulators investment merit review. Instead, the information necessary for the investors themselves to evaluate the investment merit of a security will be available. Investors must also take a more active interest in the companies they invest in emphasis should always be placed on fundamentals and long-term performance rather than short-term profit. Investors should be concerned about ensuring that their rights and interests as shareholders are protected, and that greater transparency and accountability are shown by the directors or principal officers of the companies concerned. Ultimately the effectiveness of the disclosure regime to be adopted in Malaysia will depend on investors themselves. They must also rise to the occasion by paying closer attention to the affairs of the corporations in wh ich they invest. Under a disclosure-based regulation, investment analysts and financial journalists would have access to more relevant information to enable them to make more detailed analysis, research and assessment of each security issue or offering and can conclude at a better finding and recommendation. This is of particular importance in Malaysia in view of the large proportion of retail investors, some of whom lack the technical expertise and or the time needed to evaluate the web of information disclosed by issuers of securities. These investors may need to rely on the analysis disseminated by the investment analysts and financial journalists to make better informed investment decisions.  [9]   Advantages of DBR There are several advantages of the DBR regulatory model system. Basically, this would result in a more transparent and informed market whereby companies have to improve their quality of disclosure to facilitate potential decision making by potential investors. By upgrading the quality, the investors have more choice and more information pertaining the business and the finances of the companies before making any investment in the companies. Investor must know and get the information given by the issuer of securities to because the investor will hold the burden of all the responsibility towards their investment decision. One of the major advantages of DBR, the companies can raise more funds at a lower or cheaper cost. This is because it is based on the assumption that the higher level of transparency will lead to a greater evaluation risk by underwriters which would then contribute to a lesser cost in raising the fund which give the issuers companies the power to price it assets at a higher premium rates.  [10]   Another advantage under the DBR is where the role of the regulator is to ensure that the structure of the market is consistent and efficient for the market In order for the investor to make a decision. The regulators will ensure that the information given by the companies are disclosed so that the investor will become the judge in making judgment of the merits of alternative investment, so that the regulator would only emphasis on disclosure and eradication of fraud.  [11]   According to analysis, by shifting towards the disclosure based regulation, the benefit that the securities market will enjoy is that the increased of efficiency of the Malaysian capital market by removing the barriers to competitiveness which is present in the old merit regulatory system.  [12]   A higher standard of disclosure by the companies is ensuring by the regulatory bodies. This is because the companies are expected to follow the guidelines of disclosure of the information according to the SC. This would give more chance to the investor in making their own research of the accountability of the companies before making any investment. The Ground for the shift of regulatory model from MBR to DBR The Securities Commission continues to play an important role in providing direction on broad policy matters and in enforcing the securities laws and regulations. Its role is to ensure that the incentives and structure of the market are consistent with efficiency, fairness and stability. The table below shows the ground for the shift to DBR regulatory system. Three Tenets of DBR Disclosure The responsibility of directors of public companies is to ensure that all material information required by the public to make investment decisions is provided accurately, in full and on a timely basis. In disclosing such information, the question that is need to be asked is whether Has any important piece of information been omitted? Is any part of the information misleading? Is the information complete and accurate? Investors rely on available information when deciding where and when they should invest their money. There is a need for information when new securities are offered in the primary market. There is also a need for information when dealing in securities already traded in the secondary market. Disclosure of information therefore benefits investors by facilitating them to make investment decisions. Companies intending to offer securities to the public are required to fully disclose information about the affairs of the companies and the securities which are being offered, in the offering documents or prospectuses. For a public listed company, disclosure obligations are stipulated in the Listing Rules of the stock exchanges. Due Diligence In preparing the information to be disclosed to the public, directors of public companies must undertake a due diligence exercise to verify and ensure that the information to be released is accurate and timely. Due diligence is a process by which inquiries are conducted to ensure that information to be disclosed is true, sufficient and timely. Due care must also be given to ensure that there is no omission of material information. Material information is information which would reasonably be expected by rational investors to facilitate their investment decisions. Information that can affect the trading activities and prices of the companys securities must be released immediately. The onus then lies with the investor to consider and weigh the information provided before making decisions. Following amendments to the Securities Commission Act 1993 (SCA) in 1995, which placed a higher standard of responsibility on promoters, directors, and advisers in respect of disclosures, the Securities Commission released a publication on Due Diligence Practices in August 1996. The publication is intended to explain the importance of due diligence, especially given the criminal liabilities imposed on persons responsible for submission of proposals to the Securities Commission under section 32 of the SCA. In March 1999, another publication on Due Diligence Guidelines on Submission of Proposals to the Securities Commission was published. It was jointly issued by the Association of Merchant Banks in Malaysia, Federation of Public Listed Companies, MIA, MACPA and MAICSA. The publication, in detailing the due diligence process, the question whether 1) Who will be held responsible for conducting the due diligence? 2) Who should be included in a Due Diligence Working Group(DDWG)? 3) What should the terms of reference and role of the DDWG be? 4) What is the methodology used in conducting the due diligence exercise? The publication also includes a due diligence checklist for an initial public offering and sets out clearly the roles and responsibilities of the various parties involved in the exercise. Corporate Governance The timely, accurate and transparent disclosure of material information is an integral component of ensuring good corporate governance. Boards of directors of companies need to be open about the businesses they direct and this includes transparency in corporate activities and transactions. This is essential so that shareholders can exercise their rights constructively. However, they can only do so if they are provided the relevant information. Apart from compliance with laws and regulations that constitutes one aspect of ensuring that directors perform their fiduciary duties properly, there are also codes of best practices which the directors are expected to observe. Among the codes to be observed are The Malaysian Code on Corporate Governance, issued by the Finance Committee on Corporate Governance and The Company Directors Code of Ethics issued by the Registry of Companies.  [13]   Time Frame for Shift to DBR The shift to DBR takes effect over a period of five years under three phases, beginning in 1996, with full DBR expected to be achieved by the year 2001. An outline of the time frame and focus of the shift is set out below: Table 2: Time Frame for Shift from MBR to DBR

A Call from the Lower Middle Class

Most people belonging to the lower middle class are usually those who have a little degree of education and acquire basic office and clerical jobs. A rising issue on the division of classes is the abolishment of the lower middle class and the threat of more lower classes to evolve. Thus, in order to save the lower middle class, their needs as well as priorities must be considered and given enough attention. One of the basic needs of people belonging to the said class is health care. Due to the high cost of obtaining a health insurance, only limited people are able to access to an assured quality health care. Another need that should be considered is the opportunities for high wage jobs. The salary that the lower middle class gain from their works is not sufficient especially for those who already have a family. Such salary will be allocated to the everyday budget of his family. With the continuously increasing prices of the necessary commodities, the allocation of a low wage salary would be difficult. Some of the supposedly basic necessities for the family might be disregarded and sending their children to college might also arise as a problem. With regards to education on the tertiary level, an affordable college education must be provided. Reduced cost of education for those belonging to the lower middle class families would mean great importance and assistance. Â  Provision of scholarship programs is also a solution for the problem in education. The issue on education must be given priority since this process prepares the next generation for a better job. In the long run, if the education would be adequate, then the threat for the demolition of the lower middle class will no longer exist. Other needs of the lower middle class that must be considered concerns provision of low housing programs, reduced tax payment and an improve retirement security. The said social class must not be taken in for granted because they take part in the development of the economic growth of the country. The progress of the lower middle class is a means to reflect the condition of the state’s economy. Reference Strengthening the Middle Class. Retrieved April 17, 2008, from http://www.hillaryclinton.com/issues/middleclass/

Viewing Mrs. Dalloway Through the Lens of “Modern Fiction”

In â€Å"Modern Fiction,† Virginia Woolf comments on the flaws of modernist writers such as Wells, Bennett, and Galsworthy.   Their narrow focus on the material and lack of affinity for the spiritual or realistic, is evidence enough that they have fallen short in the literary sense.   In Mrs. Dalloway, Woolf explores connections with truth, reality, and that which is above the material through her narrative techniques, complex imagery, and provoking themes, thus emphasizing through Mrs. Dalloway what she has so adamantly called for in â€Å"Modern Fiction.†Woolf possesses the ability to create a work of fiction that evokes a pleasant reading experience for the reader without utilizing a central plot.   In Mrs. Dalloway, Woolf chooses to explore the narrative possibilities of bringing several characters through one single day in time.   This narrative technique works well in a text that mainly focuses on Mrs. Dalloway’s world view, her inner workings, and her exploration and sensory experience of the world surrounding her.The organizational structure of the novel challenges Woolf to create characters that are deep enough to be realistic while dealing with only one day of their lives.   Woolf creates within the character of Clarissa the inherent sense of the magnanimity of living one day in time.   Clarissa â€Å"had a perpetual sense, as she watched the taxi cabs, of being out, out, far out to sea and alone; she always had the feeling that it was very, very dangerous to live even one day† (16).Through Clarissa, Woolf creates a sense of the complexity each day is capable of bringing to individual characters, thus calling her readers to â€Å"look within life†¦examine for a moment an ordinary mind on an ordinary day.   The mind receives a myriad impressions—trivial, fanstastic, evanescent, or engraved with the sharpness of steel† (3).   Clarissa, through her sensory perception of the world around her, feels the danger of living even one day.Woolf’s embrace of the realistic and spiritual aspects of the world, asserted in â€Å"Modern Fiction,† are set up within this novel so that those views will be challenged.   Through the character of Clarissa, struggling through one day in time, Woolf compels the reader to consider the possibilities beyond the material world.   This narrative technique moves the action forward, and simultaneously delves into the life and inner workings of Clarissa, baring her soul to the reader and opening up the possibilities and realities of the spiritual world.Woolf also employs imagery that similarly challenges the reader to explore the possibilities of what lies beyond the material.   The imagery of death is quite prevalent in the text, and these images are mainly viewed through Clarissa, as she makes sense of her life.   Critic Jacob Littleton, in his article, â€Å"Portrait of the Artist as Middle-Aged Woman,† asserts that b ecause Clarissa possesses a â€Å"heightened view of existence,† she always possesses a â€Å"preternaturally vivid awareness and fear of the termination of the existence she loves so much† (38).Clarissa’s â€Å"fear of termination† resonates most clearly in her isolated attic bedroom.   The image of her bedroom symbolizes loneliness and death, and serves as a place where Clarissa frequently contemplates these subjects.   Her bed, â€Å"no longer the marriage bed symbolizing fertility, is symbolized by her fertile mind as shrinking into her world in a way that other outlooks available to her do not† (40).   She has no one but herself in which to rely, and this is evidenced through her continual fascination with the concept of death and the end of existence.Clarissa’s transcendental theory, which she uses as a reference to inform herself of the realities of the spiritual realm, causes her to surmise that â€Å"since our apparitions, th e part of us which appears, are so momentarily compared with the other, the unseen part of us, which spreads wide, the unseen might survive, be recovered somehow attached to this person or that, or even haunting certain places after death†¦perhaps—perhaps† (79). The image of the spiritual transcending death through means of apparitions is another powerful image within the text, and interlocks with the image of death and presents itself simultaneously.In the case of Septimus, Clarissa is able to feel a connection with him after he has died that seems to transcend death.   She assimilates herself with him after he took his life.   She knows that â€Å"she felt glad that he had done it; thrown it away†¦He made her feel beauty; made her feel the fun.   But she must go back.   She must assemble† (185).   Mrs. Dalloway sees herself in Septimus, even though she has never encountered him face-to-face; she sees something in Septimus that she desires fo r herself.Woolf, through Clarissa’s transcendental theory and interactions with the image of Septimus, uses Clarissa’s experience to assert her own views on the spiritual aspect of reality.   There is something far above the material that causes Clarissa to feel this affinity with Septimus.   There is something beyond herself that calls her to him, thus causing her to desire his fate for her own.   The power of the imagery of death and the ability to transcend it is fully realized in the doubling of Clarissa and Septimus.Lastly, Woolf uses themes that connect reality with the spiritual realm in an attempt to further her thesis in â€Å"Modern Fiction,† for fiction to be modern and worth reading, it must explore that which is above the material world.   Woolf’s main concern in the novel seems to be the inner workings of Mrs. Dalloway, her thought processes, and how she engages with the world surrounding her.   Woolf juxtaposes Clarissa’s i nternal self with her external world, thus setting up one of the most prevalent, resonant themes within the text, and it is â€Å"against this system that Woolf places a world of private significance whose meaning is wholly irreducible to facts of the external world† (37).This struggle between the internal and external surrounds not only Clarissa, but her double, Septimus, and thus permeates the novel.   Personality, according to Ellen Bayuk Rosenmann, in her article, â€Å"The Invisible Presence,† seems to be a â€Å"private fact,† which is far â€Å"alienated from public and political culture† (77).   Society at large is able to neither appreciate nor understand the inner workings of the soul, and thus stands at a distance.Woolf asserts in â€Å"Modern Fiction,† that â€Å"Whether we call it life or spirit, truth or reality, this, the essential thing, has moved off, or on, and refuses to be contained any longer is such ill-fitting vestments as we provide† (3).   In essence, the separation between the internal (soul) and the external (material world) is not navigable.   Mrs. Dalloway is forced to break down the material barriers that bar her from knowing herself, and delve into the depths of her soul to find the spiritual, the truth.Another fascinating theme within the text is the intriguing concept of human interaction.   Characters within the novel are being continually merged together through their experiences and through their own imaginations and memories as well (Littleton 39).   One of the most interesting examples of this is the relationship between Mrs. Dalloway and Septimus.   Clarissa never visually sees Septimus, yet he is the most significant part of her day.   Clearly, Woolf is merging the two characters together, yet she blurs the lines a bit, thus furthering her assertions in â€Å"Modern Fiction,† that â€Å"life is not a series of gig lamps symmetrically arranged; life is a lu minous halo, a semi-transparent envelope surrounding us from the beginning of consciousness to the end† (4).Septimus is a part of Clarissa’s consciousness, even though she does not realize it.   His life has a large impact of Clarissa, and he is the sole character that compels her to remain true to her soul. Critic J. Hillis Miller, in his article, â€Å"Repetition as Raising the Dead,† explains that â€Å"no man or woman is limited to him or herself, but each is joined to the others†¦diffused like a mist among all the people and places he or she has encountered† (173).   The characters are connected on various levels, and Woolf shows this connection quite acutely through the lens of Lady Bruton as she muses about the way in which Hugh and Richard remain with her after they leave, â€Å"as if one’s friends were attached to one’s body, after lunching with them, by a thin thread, which†¦became hazy with the sound of bells, striki ng the hour† (112).This statement furthers Woolf’s ideal that there is an inherent spiritual connection within human beings, a â€Å"thin thread† which connects humanity.   The interaction between the characters is remarkable, as Woolf continues to assert that there is a spiritual connection between human beings that surpasses any material, physical connection (8).Through means of narrative technique, fascinating imagery, and compelling themes, Woolf continues to assert her thesis in â€Å"Modern Fiction,† that fiction must be concerned with the reality of life, its inherent truth and spirituality.   If fiction is only willing to explore the material, it will do a disservice to humanity, for there is a world beyond the material that begs to be explored.   In Mrs. Dalloway, Woolf explore this other world, and brings to light fascinating possibilities that lie far beyond that realms of the material.Works CitedLittleton, Jacob. â€Å"Mrs. Dalloway: Por trait of the Artist as a Middle-Aged Woman.† Twentieth Century Literature. Hempstead: Spring 1995. 41:1, 36-48.Miller, J. Hillis. â€Å"Repetition as Raising the Dead.† Virginia Woolf. Ed. Harold Bloom. New York: Chelsea, 1986.Rosenmann, Ellen Bayuk. â€Å"The Invisible Presence: Virginia Woolf and the Mother Daughter Relationship.† Baton Rouge: Louisiana State UP, 1986.Woolf, Virginia. Mrs. Dalloway. New York: Harcourt, 1925.Woolf, Virginia. The Common Reader. 1st edition. 1925.

About The Prince by Machiavelli - Free Essay Example

Sample details Pages: 5 Words: 1544 Downloads: 10 Date added: 2019/10/30 Category People Essay Level High school Tags: Niccolo Machiavelli Essay Did you like this example? Niccolo Machiavelli was born in the country now known as Italy, by the time it was Florence as its own independent nation. On May 3, 1469 and had an amazing childhood that any children could ever ask for. He was educated at a very nice school and grow up in the middle-class family. Don’t waste time! Our writers will create an original "About The Prince by Machiavelli" essay for you Create order While growing up, he spent two years studying business mathematics; he was fortunate enough to work approximately eight years in Rome for a Florentine banker. After returning to Florence in 1494. When he came back to Florence, there was a massive conflict that overthrown the ruling family who has been ruling Florence for decades. The current ruler was religious based ruler. During the 1500s Machiavelli got married to Marietta di Lodovico Corsini, after getting married and lived together, they built a family and were fortunate to have six children. Machiavelli wrote The Prince as a book that the people in power will have to follow if they want to maintain their power. By the time when he wrote the prince it was not published and never got to be ready by many people because it did get a lot of criticism by some scholars and people actively involved with politics by the time; they argued against it saying that his intention for writing this book was not to help guide how to rule but instead how to not rule. In chapter one he talked about the types of government and how they are established. He specifically mentioned republics and monarchies as the types of government that were alive this time. While he was specifically writing this volume to the new prince, I still dont know why he included the part of chapter one, because based on my interpretation, If I was the new prince or the ruler I would feel like, the whole chapter one was written to tell me that I am newly monarchy that I got my authority through power and that would make me feel threatened by the Machiavelli and I would not even try to bring him through my government, because soon or later he could be the one betraying the ruler. In the second chapter, since he had lived in mostly monarchy society and he was dealing with the monarchy and not republic he did not talk about it because he had no reason to mention republic since the ruler was not under republic, but monarchy and his intention really was to maintain the monarchy. Machiavelli believed that hereditary monarchy was way easier to maintain because who gets to rule in the hereditary monarchy are those who are in the nuclear family and sometimes to extended families but extended families only for reasonable circumstances. The newly established monarchy was not as easy to maintain. Its very reasonable to say that Machiavelli was right because the newly established monarchy always has the opponents, who are trying to get the monarchy out of power. And the opponents might be several people who are on different groups or those who have a different political party. This type of monarchy is similar to the U.S. political party system, where the Democratic party and the republican party do switch the presidency back and forth and the party that doesnt win the presidency is the party that is always criticizing the other party deeply. Hereditary monarchy is like the ruler who is ruling under the divine right, because when is the hereditary monarchy not a lot of people question the legitimacy of the ruling family and so is the divine right, the ruler always claim that his/her ruling power came from God. That response minimizes the number of people who question and to try to go against them ruler because he/she (the ruler) uses God to maintain the power. And even if he be thus deprived, on the slightest mischance happening to the new occupier, he will be able to regain it (Machia, 05). Machiavelli strongly believed that those monarchies that are heredity when they lose their ruling power are more likely to regain back again. This is how Machiavelli differentiate the newly established monarchy and the ones that are heredity. The following chapter Machiavelli describes how maintaining a new monarchy is more exhausting than maintaining a hereditary monarchy. When there are a monarchy people are willing to change than monarchy to a recent one or the opponent, hoping that a new ruler will be better than the present one. This mentality of hoping a better state will always make people act against the prince or any monarchy that is not providing what people are asking at that time. For instance, France before the revolution and after the revolution, most of the conflicts and even revolution the people reacted against the government in place, but they never get what they wanted but they always go with the next alternative, that they think might lead them to prosperity. When the revolution took place, Napoleon was highly preferred by the French people because, he represented the French working class, but the soon he assumed power he was seemed worse than the monarchy that was previously there. Machiavelli in this chapter was trying to explain that no matter how much people might know that their decision is wrong they will always disorder the ruler. In this case, the prince might find himself in a position of fearing the people that have put him in power that they might acts against him again. This fear appears when the prince reaches to the point of seeing that he cannot maintain the support of these people because not being able to meet their expectations that their situation will better than the how the previous prince kept them. In this case, Machiavelli is telling the new prince that, people will take revenge if he is not strong enough to make them fear of him. Machiavelli demonstrates two ways to keep the state without conflict. The first which he mentioned, was through the appointment of the ministers, where those ministers will be governing but all the loyalty still remains to the prince, who appoint those ministers. And the second one that Machiavelli mentioned was the nobles. These nobles are not appointed by the prince, but they all still obey the rules of the prince and they take him as the ruler of the entire country. Although that this might sounds off track, but I found these ideas are similar to the American system of a three branch of government. It made me wonder while drafting the constitution of the United States if the founding fathers of the United States followed Machiavellis way of setting up a lasting government. The reason why I said that is very similar is because, the idea of the president nominating the supreme court justices, and the people who serve in Congress to be elected by the people and the President to be el ected by the electoral college, this is very similar to what Machiavelli is using an example of why the Kingdom of Darius, occupied by Alexander did not act against the successors after his death. Machiavelli explains some of the ways to hold to rule in the state that has been used to live in freedom using their own set of laws. The first thing he mentioned is to destroy those people. The second thing is to make sure that prince who takes full control and then after that the prince should make sure that the state keeps its own laws but to charge taxes and establish an oligarchy to keep the state in a friendly way. Machiavelli strongly believed that destruction is the only way to secure a state that has previously enjoyed the lifestyle of freedom and liberty. And he argued that the prince or the ruler who doesnt admit this has a reality puts himself in the danger of being destroyed by the people he rules. Personally, I strongly disagree with Machiavelli, because I believe by nature people are generally nice and when people are treated with fairness and respect are more likely to respond with kindness and to respect the ruler. But if the ruler uses the destruction as a way to ru le and to make people fear him, soon or later people seek acts of revenge and might not only be people who have been destroyed even those who are working by the side of that ruler or prince might seek revenge in the behalf of those people whom they helped to destroy. In the Prince volume, Machiavelli provides actual advice on the different ways that someone can get to power. More specific, chapter IV through XIV is the heart of the content in which Machiavelli wrote this volume for. He mentioned how to gain and to rule the newly established states, how the prince should do to maintain his power and control over the people, and how to maintain a strong army. Overall, Machiavelli wrote the prince as the symbol of guidance to the prince and he wanted to work for the Florentine government, unfortunately, it did not work. His volume was received as a ridiculous idea by people who first read it. But most people have actually used his argument to create a political argument and government regime.