E2 Tradability profile

Topic

The tradability profile of Property + Investment is high by default: financial markets operate globally and in an interconnected manner, with capital moving between jurisdictions with relatively low friction—subject, of course, to capital controls whenever the State decides to impose them.

This profile resembles that of Information/Knowledge—in that both are high by default and allow the respective "lane" to operate on a global scale with relative ease—yet it does not reach the extreme near-zero friction found in the Information/Knowledge lane. While the Information/Knowledge sector involves no physical good or jurisdictional barrier capable of halting the reproduction of a copy, Property + Investment involves capital crossing actual jurisdictional borders; it is precisely here that the State—acting as a cross-cutting modifier that sets the rules for all six lanes—can intervene with capital controls to increase friction whenever it deems necessary. This profile stands in contrast to the low tradability of Services and differs from the Resources/Extraction profile, where the commodity travels but the resulting income and employment remain tied to the extraction site; in the Property + Investment lane, what moves is neither a physical good nor local income, but capital itself, unconstrained by any default tie to a specific jurisdiction.

This high level of tradability explains why systemic illiquidity and contagion do not stop at the borders of a single economy. If the agents in this lane are modeled as nodes in a network—and capital moves between jurisdictions with relatively low friction—then contagion spreading through that network (once aggregate leverage crosses the fragility threshold) can reach nodes in any jurisdiction, unless State-imposed capital controls increase friction and sever some of those connections.

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