Chapter 2 Chapter 01 Why our income is so low

In 2010, the aftermath of the financial crisis still lingered, and the issue of the "pockets" of Chinese residents still attracted attention. On January 12, 2010, the international investment bank Credit Suisse released the "Chinese Consumer Survey Report", stating that the household income of Chinese residents has increased by at least 50% since 2004.As soon as this report came out, it immediately aroused strong doubts from some citizens, who shouted that the family income had been "increased".A report from the Chinese Academy of Social Sciences disclosed that during the 15 years from 1992 to 2007, the proportion of employee wages in GDR dropped by 12%.Judging from the actual feelings of most citizens and the surveys of relevant organizations, in recent years, the growth rate of real income of Chinese residents has been relatively slow, and the proportion of GDP has been declining, which has become a major worry for China's economic development.

Now there are two interesting phenomena, one is that China has become the second largest country in luxury consumption, and the other is that during the financial crisis, the "shortage of migrant workers" reappeared.Can you figure it out?A big consumer of luxury goods, its consumption accounted for only 29% of GDP in 2009. According to this data, China is actually a country with a serious shortage of consumption power. Why is there a serious shortage of consumption power?Because the Chinese are too poor.Let me give you an example, add up the salary income of each country, divide it by the GDP of this country, and then make a comparison (see Figure 1-1).This ratio is the highest in Europe and the United States, with an average of 55%, Japan is 53%, Australia is 47%, South Korea is 44%, South America’s Argentina, Mexico, and Venezuela are 33% on average, Southeast Asia including the Philippines and Thailand is 28% on average, and the Middle East includes Iran. And Turkey is about 25% on average. Unfortunately, we do not have detailed African data. It should be below 20%, but I am not sure.So who do you think China will be closer to?Europe and America?South America?Southeast Asia?middle East?Or Africa?According to the questionnaire survey I conducted during the lecture, most of the audience believed that our ratio should be similar to that of Africa.

Killing me!If readers also think that our ratio is the same as that of Africa, then you can only say that you are a little optimistic.Readers guess what our ratio is?Let me tell you, only 8% is the lowest in the whole world!But we were not like this before. The proportion was even as high as 18% in the past, but in 2008 it dropped to 12%, and in 2009 it was only 8%. What about per capita wages (see Figure 1-2)?The per capita wage per hour is Germany, which is about 30 US dollars, and the second is the United States, which is about 22 US dollars.We are worse than Thailand, Thailand is still close to 2 US dollars, and we are only 0.8 US dollars an hour, ranking last in the world.

Although our salary level is not good and we are at the bottom of the world, but we have the number one, that is our working hours (see Figure 1-3). Our annual working hours are as high as 2,200 hours, and the United States is behind us. They are far worse, they only have 1610 hours, the lowest in the Netherlands is only 1389 hours, Japan is slightly higher at 1758 hours, Brazil and Argentina are second only to us, with 1941 hours and 1903 hours respectively.Look at our workers, they are paid the lowest wages in the world, but their working hours are the longest in the world.What a hard-working nation, what a poor nation!

I don't know if you have noticed that our GDP is rising sharply, but the rise of residents' savings is very slow.If saving is a measure of wealth, then although our GDP has grown at an annual rate of 10% over the past few years, it has little to do with our common people, because the wealth of the common people has not increased much, that is to say , the gap between the growth rate of our common people's wealth and the growth rate of our GDP is getting wider and wider.Readers can ask themselves, am I happy with my income?Can my income cover my living expenses?Everyone basically says that our income never keeps up with our expenses, because we always feel that we are living beyond our means and stretched beyond our means.Our income can neither outperform GDP (see Figure 1-4), and what's more serious is that our income can't even outperform CPI.After the same starting line, the slowest running is our income.

Mao Yushi once asked such a sentence: "Why are Chinese people said to be the most industrious, but we are not rich?" What is the reason?Including the leaders and heads of our government and enterprises who went to Africa to investigate and work, and wrote inscriptions to several African countries. According to our practice, the inscriptions of the leaders will say: "The friendship between the hardworking and brave Chinese and African people will last forever, and the friendship will last forever!" Seeing this, African leaders stopped working. They said, you Chinese are hardworking, and we Africans are not hardworking. We are only brave.Do you see it?African people don't think you are praising them for their hard work.

Think about it, after the financial crisis, there was a "shortage of migrant workers" in the Pearl River Delta, and 99% of the enterprises were short of workers.Later, many people analyzed the reason and found that it was not simply because of the increase in orders, but because the workers were not satisfied with their wages, which were too low.In the past 10 years, the wages in Dongguan have basically been 770-900 yuan a month, including food and housing. There has been no change in the past 10 years, but inflation has increased significantly in the past 10 years, so our migrant workers are getting poorer and poorer. , we have become the nation with the lowest income and the longest working hours in the world.

Our "farmer generation" are very hardworking. For a salary of 770-900 yuan, they are willing to work part-time. Because they have wives and children in their hometowns, they can endure low wages and harsh working conditions.But our "second generation of farmers" is not like this, they don't want to work for such a small amount of money.Moreover, the "agricultural generation" is still reluctant to let their children go out to work. It is too hard and tiring, and they can't earn much money.This has formed a malignant tumor. Think about it, if the salary in our country cannot increase, the savings will not increase, so how can we increase consumption?The reason why any consumption-encouraging policies promoted by our country are unsuccessful is because the common people are too poor.For the government, it is necessary to make the common people rich before they can drive consumption.

Many ordinary people now have this sense of crisis in their wallets, and they always feel that their expenditures will always be more than their incomes.Under the sense of wallet crisis, China's "post-80s" are now facing the status quo of low wages and high prices, so they joked about themselves: "Thirty is hard to stand, forty is confused, and fifty is resigned to fate."I found that the Chinese nation is actually a very humorous nation, and it really hurts people to be able to laugh at themselves like this under such a difficult environment. Credit Suisse, an investment bank, made a report saying that after 2004, Chinese household income increased by 50%.These foreign investment banks like to talk nonsense.You need to know that foreign investment banks write research reports for a purpose, for example, if they want to boost the stock price, or what they want to do in China, they will write whatever is beneficial to them, without telling the facts at all.This phenomenon is especially evident in Hong Kong, China. If these investment banks want to boost the stock price, they will say which company is so good, and then everyone will buy the stock of this company, and the stock price will naturally go up, and then the investment bank will suppress the stock price. If they go on, they can make a lot of money.That's what they do, so we don't believe what they write.

The lives of our ordinary people are indeed very hard, but what about our entrepreneurs?Our entrepreneurs are actually working very hard. Many entrepreneurs say that they are working for the laborers, and they can't go to bed until 12 o'clock every night.Don't our workers work hard?The workers are also working very hard, working in such a poor environment and receiving such low wages.Therefore, whether it is an entrepreneur or a worker, everyone is working very hard.But what is the result of this hard work?The result is the lowest wages in the world.According to my analysis, there are two reasons for this.

The first major reason is the exploitation of us by Europe and the United States.What you heard from me seems to be very similar to what Lenin said, and that is because what Lenin said was correct.I have recently spent a lot of time studying Lenin's theory, and I have put some of my research experience into my new book and book.Readers, please think about it, why do we workers get so little money?I would like to ask our entrepreneurs again, who do you think you are working for?You think you're making a lot of money now, don't you?You are wrong, in fact, you should earn 10 times more money, instead of just earning such a small amount of money.Why? Our scholars often say that our traditional labor-intensive industries in China have low gross profit margins due to the lack of core technologies, and the solution to the current situation of low gross profit margins is to transform into high-tech enterprises, such as chips, whose gross profit margin is as high as 40%. .We scholars are always talking nonsense.Personally, I have never opposed high technology, but please think about it, why is the gross profit rate of China's traditional labor-intensive industries so low?Is it really because it is a traditional labor-intensive industry that lacks core technology?I can only tell you four words - nonsense.Take toys in Dongguan as an example. The gross profit margin of our Chinese toy industry is close to zero, but let’s look at American toy companies such as Mattel. What is their gross profit margin?In 2007 their gross profit margin exceeded 40%, the same as that of chips.Mattel does not do manufacturing. It controls all other links in the industrial chain except for manufacturing, including product design, raw material procurement, warehousing and transportation, order processing, wholesale, and retail. Therefore, Mattel controls the pricing power of sales. Toys How much to sell, it has the final say.It gives us a profit of 10 cents per toy.If your factory can only earn 10 cents, how much can you pay our workers?Definitely low.To be more specific, we can only make a profit of 10 cents for every toy we manufacture, while Mattel can make a profit of 3.6 dollars.That's why its workers can earn $40,000 a year, while our workers only make $2,000 a year. That's the difference. Let me ask readers to think about the production cost of our factory, or take the toy factory as an example, do you want to buy plastic pellets?of course yes.What are plastic pellets?Chemical Products.And who controls the prices of chemical products in the world?wall street.Therefore, when you buy raw materials, you will find that you have no pricing power, and the price is controlled by others.So for our manufacturing industry in China, we are just stuck in the middle-the price of purchasing raw materials is controlled by Wall Street, and the price of the products produced is controlled by companies like Mattel.I named Mattel "Industrial Capital", and I named Wall Street "Financial Capital".Our manufacturing industry can really be said to be: there were wolves in the front and tigers in the back. Financial capital is like a wolf, and industrial capital is like a tiger. Specifically, when buying raw materials, it is financial capital that controls our prices; we sell At that time, it was industrial capital that controlled our prices, so we were caught in the middle, and together they exploited us completely. In fact, then again, why do they put manufacturing in China?Because manufacturing has a characteristic - "destroying the environment, wasting resources, and exploiting labor", they are not willing to want such rotten things.Therefore, they control all links in the industrial chain except manufacturing.So I doubt very much that 30 years ago, when China started to reform and open up, European and American countries had already set a strategy, which was to use financial capital and industrial capital to control the pricing power of raw materials and sales, and then put manufacturing in China, destroying the Our environment, wasting our resources, exploiting our labor.In the end, through these two ends, it sucks us clean.Therefore, the more China reforms, the more China opens up, and the more China manufactures, the richer Europe and the United States will become. There is another point worth thinking about. Compared with other countries, such as India, we are also exploited people, but how can we be worse than them?Because we have a second reason, the reason is that our industrial policy has gone wrong in recent years.We spend a lot of social resources on building bridges and paving roads, so our GDP grows at a rate of 10% per year. This kind of growth does not mean that our economy has any great growth. What really drives GDP is reinforced concrete.For example, in 2008, consumption accounted for only 35%, and in 2009 it became 29%; in 2008, it was 57% for reinforced concrete, but in 2009, it became 67%.What does this mean?This means that the resources that can create wealth and be used for consumption in our entire society are used by us to make steel and concrete.Let me take a province in East China as an example. The government stipulates that farmers should demolish their homesteads and build houses on the land planned by the government. A house costs about 100,000 yuan, and the farmers take the only 100,000 yuan in their savings. Build a house.This seems to be no problem, you consume the steel and cement with serious excess capacity, you increase the GDP, then I ask you, what will our farmers do in the next few years?You know, the farmers’ savings of 100,000 yuan could have been used to do business to earn some money, to be consumed, and to stimulate other production. There is a lot of wealth, but unfortunately, these precious production resources are used by us to make reinforced concrete. The more reinforced concrete, the poorer the people will be. What we have talked about in the previous topics is already the life experience of the middle class. If you look at the life of those low-income earners, you will feel even more pitiful.Let’s take a look at the living bills of a peasant family in Guizhou that have been circulated on the Internet. There is a sentence on the bill: “Since there is salt, why do we need soy sauce?” Isn’t this enough to explain how hard life is for us ordinary people? ?In addition, the conclusions drawn by the Academy of Social Sciences and many other research institutions at home and abroad also make us very worried.They said that on the one hand, the income of more than 80% of our families has not increased significantly, and on the other hand, the gap between the rich and the poor is getting worse.For any country, when wealth is concentrated in the hands of a very small number of people, social conflicts will become more and more serious. Our current problem is that income is low and the gap between the rich and the poor is serious. I am very worried that these poor people will lose hope of making progress, or they will start to despair.Plato once discussed the social classification of the Utopia. Plato had a theory of gold, silver and copper, saying that the managers, defenders, and craftsmen of the city-state are like gold, silver, and copper, and these three are immobile.Although the sage Confucius, the sage of traditional Chinese culture, also proposed the social classes of monarch, minister, father, and son, he also talked about a concept of respecting the virtuous, which means that those who are virtuous and talented Through their own efforts, they can jump to the upper class of society.But this concept seems to be difficult to promote now, because we have artificially set up many bottlenecks and obstacles.For example, although China's urbanization process is slowly accelerating, it will continue for many years. The reason is that if most people flow into the cities, how will they survive?To give a realistic example, the monthly income of a migrant worker is generally 1,000 yuan, renting a house costs more than 200 yuan, some property management fees include cable TV fees, water and electricity bills, etc., probably more than 300 yuan, and meals may cost more than 200 yuan a month. So what's left?The income of ordinary people is so low, let me ask you, what is the basis of the urbanization process?That is, you must work for these people, and then stimulate consumption by providing job opportunities.But the problem is, our wages are so low, how can they live? Let's start with a common misconception: rent control prevents inflation.This view can be interpreted as follows: Because rents enter into and deeply affect the cost of living, an increase in rents will quickly lead to higher wages demanded by unions, thus increasing current production costs and increasing prevailing prices of goods. In general, a shortage of any commodity in the economic sense will cause its price to rise.This forces the public to economize on the use of the good, while making it profitable for private enterprise to increase its supply.If one consequence of sharp price increases is hardship for the poor, a simpler and more equitable way of alleviating that hardship is to rely on direct cash transfers from general revenue.The alternative policy of rent control will lead to adverse social impacts. Landlords, as a class, rather than society as a whole, have to subsidize a large proportion of tenants in society.In addition, rent control reduces labor turnover for a period when rents are widely expected to rise sharply, which discourages private sector investment in working-class housing and sharply sharpens the existing stock of regulated housing. decline. We did not discuss the policy feasibility of direct subsidies to the poor.My view is that this direct subsidy approach would be far less costly than the rent control system we know, and more certainly would be subject to less social disapproval and no need to establish A rigid legal machine under the law of restraint. As a political issue, people are likely to think that rent limit laws are relatively easier to enact and more attractive, and can be generally accepted by most voters as a way of "robbing the rich and giving to the poor" to help the poor.But when economists or any scientists push forward or justify this policy based on "policy feasibility", the result will be depressing.It is the scholar's job to point out to the public and foresee as clearly as possible the main effects of alternative policies that could be chosen.If this is done fairly, it will effectively inform the concerned public about more favorable economic outcomes, and if more modest measures are proposed to address some of the current social problems, then the Use will increase the likelihood that more sensible alternative economic policies will eventually prevail. This article is excerpted from "The Truth About Economics: 13 Serious Economic Fallacies" by EJ Mishan