Chapter 11 Hold the gate of a powerful and powerful country

The world economic depression triggered by the subprime mortgage crisis in the United States, of course, has also affected China, because China's exports have been affected.However, the situation in China is quite different from that of the United States and other Western countries. Many boundary conditions are opposite, and these boundary conditions put China in a relatively favorable position.If we do not have a clear understanding of such a favorable position, we may make ourselves give up the once-in-a-lifetime historical opportunity.I am fully aware that telling such a fact will attract some ignorant people's scolding, but if I dare not say it because of this, it would be a pity that the people of the country are ignorant of such an opportunity.I know that given China's current situation of adoring foreigners from top to bottom, and being frightened by Westerners from top to bottom, it is impossible for China to seize this opportunity well, but give them a little wind, maybe Still helpful.

Why don't you Americans lower your standard of living In this economic depression, western countries have introduced rescue measures one after another.Looking at all these bailout measures, none of them exceeded the ideas of Roosevelt's New Deal, but their boundary conditions were completely opposite to those of Roosevelt's time, so they could not be effective.Why do we say that their boundary conditions are opposite to those in Roosevelt's time?First of all, the United States during Roosevelt’s period had extremely strong production capacity. At that time, the United States was really rich and would not spend it; second, the United States at that time was the creditor of the whole world, and the whole world owed it money.Well, from these border conditions of the United States in the Roosevelt era, we can see how different the United States and other Western countries are today.When analyzing this economic depression, we should never forget that its trigger point is the subprime mortgage crisis in the United States, and the subprime mortgage crisis is definitely not that Americans have money and will not spend it, but that they spend their money riskily. The United States owes huge debts to foreigners.Therefore, the situation in the United States today is not at all the so-called "insufficient effective demand", but that the effective demand exceeds its own production capacity and its own supply capacity.

Originally, assuming that there is no structural rigidity problem, the financial crisis in the United States and the reluctance of financial institutions to lend, etc., are the market leverage to adjust the excessively high effective demand, reduce its effective demand, and bring it closer to the actual production capacity of the United States.The problem is that both effective demand and production capacity are structurally rigid, and the reduced effective demand cannot be concentrated on imported products and services. It will definitely hurt the demand for US products and services, making the US originally Insufficient production was further reduced, leading to serious unemployment problems.Therefore, the government has to introduce a rescue plan to try to restore the demand for American products and services.However, structural rigidity still has to play a role here. Huang Jisu’s ridicule of the famous international financial and investment expert Marc Faber quoted in the article "Fire Building Collapses, It’s Time to Imagine the Future" very vividly illustrates This structural rigidity problem: American consumption, the ultimate profit is not the United States, because the production in the United States is indeed going downhill.

In short, if the U.S. government wants to restore the effective demand for U.S. products and services, it must also expand its demand for imports, which will further expand the U.S. external debt and make the money that caused the economic depression be spent riskily. problem worsens.Of course, some people think it doesn't matter. Among them, there are many Chinese who believe that the United States is omnipotent, and some Americans.Krugman, an American economist and Nobel laureate in economics, said: The U.S. government does not have to be afraid of deficits, because the deficits are money owed by the U.S. itself.I don't know if he is implying such a meaning here: the foreign debts owed by the United States are all in US dollars, which can be settled by printing notes, so don't worry;I have seen that most American netizens do not agree with this opinion. They think that if you owe money to others, you owe money to others, and you cannot say that you owe money to yourself.Let's not make moral judgments here, but only proceed from interests. How can the United States expect foreign countries, such as China, to be so stupid that they will always pay for their money?If one day China refuses to pay the bill, even if it can repay all the original debts, as long as the structure that requires permanent blood transfusions from foreigners remains unchanged, what will the United States do after it reneges on its debts?It seems that in the United States and China, simple people are always more honest and correct than sophisticated economists.

Then, Roosevelt's New Deal-style rescue measures do not conform to the actual situation of the United States and other Western countries, such as the United Kingdom, so what measures should be taken?I think this problem is almost unsolvable, because as we have learned in the management of the family, the problem of not spending money is always easy to solve, and the problem of spending money risking it is very difficult to solve.Of course, we can also say that there is a solution to this problem, that is, Americans lower their living standards, lower their consumption and wages, so that they can lower the prices of their own products, adjust the industrial structure, and make the products of China and other countries lose competitiveness, so that the reduced effective demand is concentrated on imported products and services.In fact, this is also what the U.S. government officials are clamoring for China to raise the exchange rate of the renminbi against the U.S. dollar.However, the problem isn't all about the Chinese government's reluctance to raise the yuan's exchange rate.First, can Americans afford a drastic reduction in living standards?You know, part of their high standard of living today comes from the cheap goods China sells to them, and from the money China lends them—yet they are still cursing at China.If you can't bear it, the problems in the United States will still not be solved. Until one day, whether you can bear it or not, things will be like this.If such a solution is not a solution, the problem is unsolvable.

In short, the economic depression in the West today is less urgent than it was in the 1930s.However, the reason why the economic crisis was so fierce at that time was that people at that time knew too little about economic laws. In fact, the situation at that time was much better than it is now, and it is difficult to find effective solutions to today's predicament.Therefore, although its condition is slow, it will last for a longer period of time. During this process, the relative economic status and relative living standards of the United States and other Western countries will continue to decline slowly, unless there is a catastrophe, such as war, etc. .

Not an absolute win-win: overestimating your opponent is the way to lose As long as we say that there are problems in the West, no matter how realistic and conservative we are, there will always be a group of "slave youth" or people who don't know clearly who will jump up and think that you are a "Boxer" and you are "ignorant". The biggest misunderstanding in judging the situation by all kinds of people from top to bottom. My analysis of the current economic situation will definitely attract abuse from many Chinese rightists and even leftists who believe that the West, especially the United States, is omnipotent.For example, I once posted on my blog a chart of the shrinking market capitalization of the world's major banks produced by JPMorgan Chase Bank.My original intention is to provide a little information to bloggers, because this picture is very vivid.I didn't add any comments either.But there are those who I call "nuqing" who have jumped up, trying to find out China's shortcomings, sing praises for the Western masters, and whitewash the peace.I will not quote the specific statement here.And there are some elites who have stepped into the room, and they even agree with the "nuqing" on the Internet.It seems that the rhetoric they used is very consistent with traditional Chinese values ​​such as "fullness suffers losses, modesty benefits" and "modestness makes people progress, and pride makes people lag behind". It seems that there should be nothing wrong with it.In fact, the problem is serious and obvious: underestimating your competitors and overestimating yourself is certainly the way to defeat; but overestimating your competitors and underestimating yourself will also make you lose your most valuable chances of winning and ultimately failed.Only by knowing ourselves and the enemy truly and seeking truth from facts can we be victorious in all battles.

On the other hand, China is just the opposite of the situation in the West: China is truly overcapacity, and at the same time, China is now a creditor to the world.Simply put, China's current border conditions are exactly similar to those of the United States 80 years ago.Therefore, for China's economic depression caused by the sluggish export market, it is entirely possible to use Roosevelt's New Deal-style measures.The problem China is facing now is the same as that of the United States at that time. It is a problem that money will not be spent. As mentioned above, this is actually a relatively easy problem to solve.

At present, the export-oriented manufacturing industry in China's coastal areas has been greatly affected. It is said that after the Spring Festival in 2009, there were as many as 20 million migrant workers who did not find work, twice the original estimate.This situation may be used by some people to explain that the situation in China is actually not as good as that of Western countries, how terrible the situation in China is, and so on.In fact, this situation is definitely not unsolvable.China can solve this problem by launching more infrastructure projects and improving social welfare to stimulate domestic demand, etc., which are commonly used in Roosevelt's New Deal.Many of the remaining migrant workers in the coastal export industry were not skilled workers, so it is not unsuitable for them to switch careers and engage in infrastructure construction.In fact, we just took advantage of this opportunity to fill the gap between China's infrastructure and Western developed countries.When we invest heavily in infrastructure construction, we will even find that the current conditions are better than before the world economic depression.For example, we found that raw materials, which had been rising for a long time, suddenly became cheaper.

The only difference between China's current economic situation and the United States 80 years ago is that the United States at that time did not encounter technical barriers from countries with a higher technological level than it, and even the Germans were confused and drove first-class scientific and technological talents to the country America to go.The blockade that China has suffered in this regard is very painful: on the one hand, Western countries demand that China provide money to save them, but on the other hand, they firmly refuse to transfer core technologies to China, which reflects their deep-rooted hostility towards China.But now that China has so much foreign exchange reserves, and Western countries are in such a deep economic depression, I am afraid they cannot help them not to transfer them at all.

Another myth about the current economic situation that needs to be dispelled is that today’s China and the West are inextricably linked economically. To help Westerners maintain their extravagant lives.Ferguson, the Harvard professor who invented the term "Central America" ​​understood this point.On his recent trip to Chongqing, he thought that "Central America" ​​was over.Why did he understand it once he went to Chongqing?Because he saw Chongqing's super-large-scale infrastructure construction, he understood that China can provide a very strong impetus for its own economy as long as it relies on its own domestic demand instead of relying on the US market.It is a pity that due to years of advocating foreign countries, the thinking of relying on foreign countries has become a fixed trend from the top to the bottom in China. The Chinese themselves cannot see this, and cannot turn it into a conscious policy measure. It can only be a crooked attack like Chongqing. Calculated on a per capita basis, China is currently much poorer than Western countries, and China’s science and technology are also far behind Western countries. I understand this very well, and those "slave youths" should stop telling me such useless information .Even so, as long as there is no war, all the fundamentals of the Chinese economy are much better than Western countries.China does not have to be afraid of shrinking overseas markets at all—the reduction in effective demand in overseas markets has nothing to do with it. We can use national fiscal policies to create effective demand.The only thing China needs to fear is the supply of overseas raw materials, but under today's situation, western developed countries cannot afford these raw materials, so we can use them at a lower price.This also means that we don't need to export so many things to exchange for these raw materials, so it doesn't matter if we earn less money from overseas markets.Isn't this situation a good one for China?I think that as long as our own macro-control measures are appropriate and strong enough, the economic depression in Western countries will last longer, which is really not a bad thing for us. Why should we save Western countries that hold such deep-seated hostility towards us? ?Judging from the current international trade order, the interest relationship between China and Western countries is like this: there must be elements of cooperation and a community of interests, but there are also elements of conflicting interests. We must analyze specific things in detail. They think that China and Western countries are a community of interests, which is absolutely not in line with the actual situation, and this is only the Chinese people see it this way, and most Westerners do not think that they are a community of interests with us, including the professor who invented "China America". I changed my mind. The above-mentioned economic interest relationship and relative power relationship between China and the West will be a normal state, unless it is interrupted by international trade, military or political factors, for example, our overseas raw material supply is cut off by war, At this time, the balance of power depends on the military, not the economy. The most unfavorable condition for industrial upgrading is our own psychological barrier The biggest problem facing China's economy, and even China's national security, is backwardness in industrial technology.In the 1950s and 1960s, in order to ensure survival in the dangerous international environment at that time, China implemented an industrial modernization catch-up strategy.This strategy was interrupted due to the "Cultural Revolution", and the real implementation time was very short.Except for a few fields related to military industry, China's industrial technology base is still very backward on the whole. After the "Cultural Revolution", the first problem the Chinese government faced was to improve people's living standards in order to gain the legitimacy of the regime.Therefore, the catch-up strategy was abandoned and replaced by the comparative advantage strategy.Abandoning the catch-up strategy was necessary at the time and had its rationality, but on the other hand, the situation that China is now facing with backward industrial technology is slow to change.Many mainstream economists believe that backwardness in industrial technology is not a problem, as long as we give full play to our comparative advantages and earn money from the market.However, whether it is from the purely economic point of view of economic development stamina, or from the political and military point of view of national security, if a big country like China cannot fully master the most advanced industrial technology, its living environment will never be regarded as stable.Therefore, in China's development, we must always keep in mind the vital gate of industrial technology, seize opportunities and realize its major upgrades. So, what advantages and disadvantages do we have for upgrading industrial technology now?After 30 years of rapid economic growth through reform and opening up, China's overall industrial technology base is still slowly improving. Compared with the situation in the 1950s and 1960s when only a few departments emerged suddenly, this has actually put us in a more favorable position. The position to realize the take-off of industrial technology (so, I don't fully agree with the point of view that completely negates China's industrial technological progress in recent years).With such a technology base, we already have better conditions to undertake higher-end technologies, which is a favorable condition.What are the disadvantages?First of all, the western developed countries have blocked our technology. This kind of blockade has been relaxed at the relatively low end (they need our labor force to work, so they have to transfer some technology), but it remains the same at the high end.However, I think the economic depression that the western countries are experiencing this time will put China in a stronger bargaining position to force them to transfer technology.We need to recognize their weak position today and our strong position, otherwise we will miss the opportunity.For example, the British, today they hope that China will help them get out of trouble, and they all speak very humbly.But humility is not enough, we should ask them to take practical actions to show goodwill, which should be mainly reflected in the transfer of technology: we have cash in our hands, a lot of cash, we can help by buying your things You guys, but we don’t want to buy your luxuries that are useless except to satisfy the vanity of a small group of nouveau riche, we just want to buy your technology, if you don’t sell it, it means that you are very hostile to us, what can we do? What about working with you?On the other hand, even if the governments of Western countries do not sell, under the current economic situation, their companies and even individuals will have stronger incentives to transfer technology to China.I really don't understand why those local governments in China go to Wall Street to "hunt talent"?Those liars who only know a few tricks in the casino!After the financial crisis, will their casinos still be open?How?Are those crafts still useful?I don't know these things, what's the use of hiring these crooks with high salaries?The bottom-hunters should go to Detroit and Seattle!Go hire an engineer there.No matter how bad it is, even if you recruit an experienced old worker to come back and tell us how his factory is done, it will be ten thousand times better than recruiting those scammers from Wall Street.What's more, in addition to Western countries, there is also Russia, which is not so hostile to us and is now in trouble. It has at least some military technology that we need. I heard that it has lowered the threshold and is willing to transfer it to us. many things. In fact, the biggest obstacle and the biggest disadvantage for us to realize the upgrading of industrial technology today are precisely our own psychological barriers, and our elites are frightened out of their wits by the Westerners.I once met an engineer engaged in aerospace technology at a friend's house, and he had this opinion.He said: The biggest obstacle to our development of science and technology now is that our upper-level elites think that science and technology is a very mysterious thing, and we Chinese can't do it at all, just give up.In fact, technology is not so mysterious, as long as you work hard, it will not fail.As a graduate of a university with a background in science and engineering, and as someone who understands the thinking of Chinese elites, I very much agree with this aerospace engineer.There are too many people in China who always say how mysterious Western technology is and how bad we are.I admit that this mentality of being intimidated by foreigners has its historical basis, that is, we once had a history of disrespect for science and blind exaggeration.But today I said that technology is not mysterious, we Chinese can do it, it is not the same thing as that kind of blind exaggeration, but there are such a group of useless "elites", once you say that Chinese people can do it, they will If you get angry, you will definitely be included in the "Boxer Regiment". In fact, even if the West does not transfer technology to us, with the largest number of science and engineering graduates in the world every year, we can form a very strong army of science and technology to achieve a major upgrade of industrial technology.We are now tracking the advanced technologies of developed countries, and what we are tracking has a great latecomer advantage: at least you already know which direction can be successful and which direction cannot be successful.Of course, tracking also has the disadvantage of being a latecomer, and that is the market problem.However, now that China has a lot of cash in its hands and a lot of idle production capacity, China can definitely subsidize more technological research and development as a part of its fiscal policy to stimulate domestic demand, without having to consider short-term market returns. There is really nothing mysterious about science and technology, as long as you put your strength and resources into it, and over time, you can make it happen.Some people say that China's science and technology corruption is serious, and investing resources in it will only encourage corruption.In my opinion, this statement seems reasonable, but it is actually problematic.First of all, those who say this do not understand that the scientific and technological corruption in Western developed countries is also quite serious.The tech field is prone to corruption, rooted in the fact that it is a field of severe information asymmetry.Of course we want to stop corruption in the field of scientific research as much as possible, but this must not be a reason for us not to invest heavily in the field of science and technology.What's more, we have a way to deal with corruption in the field of scientific research, and this way is to impose severe punishments after discovery.For areas with serious information asymmetry, severe punishment after the event is more effective than preventive measures in advance. With the Chinese people's ingenuity and abundant human resources, as long as we break down the psychological barrier that thinks that we can't do technology, we should not only be able to follow the most advanced technology development in the West, but also to do things that require a lot of human resources. Things that can't be done.Today, the Western economy is depressed, and their bargaining power is reduced, while China just needs to start domestic demand and needs to accommodate college graduates. There is no better time to upgrade industrial technology.I know that due to the psychological barriers we have from top to bottom, it is impossible for us to fully grasp this opportunity, but it is better than nothing to say here, maybe someone will listen to me, believe it, and grab as much as possible Live a little chance yet.