Understand economics from scratch

Chapter 25 How Much Do You Know about the Economic Situation and Government Behavior——Macroeconomics You Must Know (5)
Internationally, there are two warning lines for measuring the fiscal deficit: the first warning line is that the fiscal deficit should not exceed 3% of GDP, and if it exceeds, fiscal risks will arise.For example, the total GDP of my country was 2008 trillion yuan in 30, how much is 30% of 3 trillion yuan?That is 9000 billion yuan.If my country's deficit is greater than 9000 billion yuan, it has exceeded the warning line.The second warning line is that the government's fiscal deficit cannot exceed 15% of the total fiscal expenditure.If the government's money is not enough to spend, it can borrow; if it is not enough to spend, it can still borrow.But you can't borrow too much. The fiscal deficit of a country's government cannot exceed this percentage. If the deficit exceeds 15% of the total fiscal expenditure, it means that the deficit is too large.

Most countries in the world use the issuance of national debt to solve the fiscal deficit problem.Keynes once said that if a country’s government runs into a deficit, it can stimulate the economy by issuing national debt, and the issuance of bonds can stimulate economic growth.

The premise that the government can do this is that the money earned back from the projects invested by the government with national bonds can repay these debts in the future.If the government wants to repay these debts, in the final analysis, it will still be borne by the taxpayers. If the taxes of this generation are not enough to repay, the next generation will have to continue to pay.Therefore, the national debt issued by the government is actually to spend the money in the future today.

Property Protection: William I and the Mill
On October 1866, 10, William I, who had just won the "Seven Weeks War" against Austria and included 13 million people and 500 square kilometers of land into the territory of Prussia, was surrounded by a large number of subjects Fortunately, he was in a palace in Potsdam.However, an old mill in front of the palace disappointed him a lot. He wanted to dismantle it, but the mill did not belong to the royal family; he wanted to buy it back, but the miller refused to sell it.The furious king forcibly demolished it, but was sued by the miller to court.It was the first time for a commoner to sue the king, but the three judges who heard the case resolutely and unanimously ruled that the defendant violated Article 64, Article 79 of the Imperial Constitution by arbitrarily using the royal power and infringing the plaintiff’s property rights stipulated in the Constitution. and ordered the defendant William I to immediately rebuild a mill of the same size on the original site, and compensate the plaintiff 6 marks.

At that time, Europe already had fully independent courts.The law stated that anyone, including the emperor, could be a defendant.What is even more jaw-dropping is that this time William I not only really sat in the dock, but also lost the lawsuit.In the end, the court ruled that the emperor lost the case, and the mill had to be rebuilt on the original site and the owner of the mill had to be compensated for economic losses.For the court's judgment, William I had to obey and implement it, and rebuilt the mill.

Decades passed in a flash, and William I and the owner of the mill passed away one after another.Due to illegal management, the descendants of the small mill owner faced bankruptcy.In desperation, he wrote a letter to William II, expressing his willingness to sell the mill to the emperor.

After reading this letter, William II was deeply moved.He felt that this mill was different and a witness of history.It represents an image of judicial independence and impartiality and must be preserved forever as a monument for future generations.William II personally wrote a letter to persuade the little miller, hoping that he could love his mill like his father cared for his life back then, and pass it on from generation to generation.In order to help the small miller pay off his debts, several thousand marks were given away.

After the little miller received the letter and the money, he was very moved.He expressed that he would remember the past and never sell the mill again.

Since the European Enlightenment, economists have argued that a beneficial property rights system must protect property rights, ensure that people are rewarded, facilitate contracts and resolve disputes.Only when people can feel this sense of security will they be encouraged to invest and expand reproduction, thereby promoting economic development, the accumulation of social wealth, and social progress.If a society or country cannot provide a relatively safe living environment, poor people can plunder the assets of rich people at will, and stealing and robbing houses become commonplace, then such a society and such a country will inevitably lead to sluggish economic development, and even Backsliding because people lose the incentive to accumulate wealth.

The property rights system in our country has not been perfect all the time. The imperfect property rights system has led to a series of disputes about property rights, which has caused people to have an unbalanced psychology in a subtle way, and made people have an unhealthy mentality of hatred for the rich. social atmosphere.People encourage labor and creation of wealth, but wealth and the human rights and property rights of wealth owners are not properly protected.In this way, the development of society will inevitably be affected.Therefore, in order to ensure the development of society, we must encourage people to work hard to get rich, and we must establish perfection... These are the contents included in property rights.

What the property rights system protects is the interrelationship between people corresponding to things.However, we must clearly see that the protection of property rights includes two aspects: one is that investment and property are protected from infringement by others; the other is that we must admit that a strong government that can protect private property rights may itself become a destroyer of property rights .

For example, the Spanish royal family confiscated a large amount of private capital in order to maintain huge military expenditures, and at the same time borrowed from the private sector and issued a large amount of bonds.The interest burden on the government is getting heavier and heavier.Later, it even unilaterally announced the extension of the debt repayment period and the reduction of interest rates.Later, he still couldn't pay back, so he simply declared bankruptcy in plain language, and finally reneged on his debts.So the best way out for people at that time was to be a student, a monk, a beggar or an official: under such a property rights system, who else would invest in productive activities?
Let's look at America again.During the War of Independence, the country borrowed a large amount of national debt from individuals. After the War of Independence, the country was unable to repay the huge national debt, so many people advocated that the debt be forgiven.However, at that time, because many high-level people in power were themselves creditors of national debts, these creditors united with many congressmen who had national debts, and finally held a meeting in Philadelphia and passed a bill that established the legal basis for the inviolability of private property in the United States.It is this system of encouragement and demonstration of property rights protection that gives the United States, an emerging capitalist country, the impetus for its rapid development.

Western countries regard the invention of the iron thorn as the seventh greatest invention in the world. Why does such a simple thing get such high praise from people?Because it is the invention of this very simple iron thorn, which greatly increases the cost of theft for thieves, effectively protects the safety of social wealth, and promotes the progress and development of society.Now, in residential areas in many cities, buildings are equipped with anti-theft nets, anti-theft doors, and even anti-theft camera probes to prevent theft.However, we must clearly know that the higher the cost of protecting property, the lower the value of wealth will be.When we have to spend 10,000+ yuan of wealth to protect a diamond necklace worth tens of thousands of yuan, the diamond necklace is actually worthless.

In the face of the current lack of property rights system, we should pay more attention to protecting our property rights in real economic life, and protect the legal evidence of property acquisition in economic activities.For example, the invoice for purchasing a house is the only evidence for you to legally obtain the house. Only based on this can you apply for a house property registration certificate at the real estate management department. With this certificate, your real estate can be legally used, mortgaged, insured, rented out, Gifting, selling... Another example is that in daily trading activities, people have not yet developed the habit of asking for invoices when buying goods. Without an invoice, you have no legal evidence of obtaining the goods, so you want to return, exchange, repair, maintain, etc. , there is no legal proof, and it is easy to produce problems of unclear production rights.

It can be seen that establishing a complete, effective and operable property rights protection system to reduce social transaction costs is already an urgent task for our current market economy and society.The market economy society is a realistic society. Although everyone is a rational economic person, human rationality is also limited, and everyone has a certain tendency to opportunism. Therefore, in some occasions, when power, law, emotion When none of them can effectively solve some special, chaotic, and ambiguous property rights problems, human opportunism will play a role, and the evil consequences of "black eating black" are inevitable.When the cost of property rights transactions using normal means is too high, people may turn to abnormal means to reduce transaction costs.In the current period of economic transition, among ordinary people, cases of property rights disputes are actually happening every day. A large part of these cases are caused by economic disputes, and the so-called disputes are actually unclear property rights.A series of vicious cases of property rights disputes have attracted the attention of the country's top leaders. Under such circumstances, the country has imposed strict restrictions on forced relocation in the "Regulations on Urban Housing Relocation", which effectively protects the rights and interests of individuals. property rights. The "Constitution" also pioneered the addition of clauses to protect private property.Don't underestimate such a sentence, its practical effect and historical significance will be very huge and far-reaching, perhaps it will cause a profound revolution in the property rights system.

(End of this chapter)