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Chapter 21 Can the visible hand control the invisible hand (3)
The main meaning of the Laffer curve is: when the tax rate is zero, the tax will naturally be zero; and when the tax rate rises, the tax will also rise; tax rate.When the tax rate exceeds this optimal tax rate point, tax revenue not only does not increase, but begins to decline.Because when the tax rate increases beyond a certain limit, the operating costs of enterprises will increase, investment will decrease, income will decrease, and the tax base will decrease, which will lead to a decrease in government tax revenue.In response to this situation, Laffer used a curve on the number axis to describe the relationship between taxes and tax rates.This curve is called the "Laffer curve".The purpose of this curve is to remind the government that lowering the tax rate at an appropriate time can stimulate production, and the total tax revenue will actually increase due to the reduction of the tax rate.

Regarding the Laffer curve, let's first look at people's usual understanding.Generally, people think that the higher the tax rate, the more tax can be collected for the same amount of tax base.For example, if a tax is levied on a person with an income of 100 yuan, 100 yuan is the tax base. If the tax rate is 5%, the country can collect 5 yuan in tax; if the tax rate is 10%, the country can get 10 yuan in tax. Compared with the original, there are 5 yuan more in the treasury.

There is no doubt that within a certain range, if the tax rate is increased, the country can indeed collect more taxes.However, once the increase in the tax rate breaks through a certain limit, people's enthusiasm for work will decline. In addition, people's enthusiasm for paying taxes will not be high, so the motivation for tax evasion will increase, which will further lead to a decline in the tax base. decreased.

Laffer became President Reagan's economic advisor because he invented the "Laffer Curve" theory, and was responsible for planning the tax cut policy implemented by the government.But in practical applications, the "Laffer Curve" is also controversial. The reason why it is questioned is that it can only have the expected effect on high-income taxpayers. For low-income people, they do not afford high tax rates. , so it will not be hurt by high tax rates.In view of this analysis, the "Laffer Curve" can be successfully applied in practice only by using the stratum analysis method.

The supply-side school of thought is a school of economics that emerged in the United States in the 20s.This school emphasizes the supply side of the economy and believes that demand will automatically adapt to changes in supply, hence the name.

Laffer, one of the main representatives of the supply-side school, explained supply-side economics as "providing a set of analysis structures based on individual and corporate stimuli. People change their actions according to stimuli, are attracted by positive stimuli, and avoid negative stimuli. The role of government in this structure is to use its function to change incentives to influence social behavior."

6. Why is Greenspan so powerful -- Monetary Policy
"Stupid! It doesn't matter who is president, as long as Allen is the chairman of the Federal Reserve."

This is a slogan put on the cover of Fortune magazine in 1996, on the eve of the US election.In the U.S. financial circles, comments like this abound: "As soon as Greenspan speaks, investors all over the world will prick up their ears." "When Greenspan sneezes, investors all over the world will have a cold."

Who is Greenspan?Why is he so powerful?
Greenspan is no stranger to anyone who cares about the economy.He is the former "head" of the Federal Reserve. In 1987, former US President Reagan appointed him to be in charge of the Federal Reserve. Until 2005, Greenspan worked for the White House for 18 years. The longest-serving Fed chairman in U.S. history.

"Fed" is the abbreviation for the Federal Reserve Board, the central bank of the United States.From 1913 to the present, the Federal Reserve has been controlling the currency and credit of the United States, playing the role of "the borrower of last resort".In order to "provide a safer, more stable, and more adaptable monetary and financial system" for the United States, the Federal Reserve uses three levers: open market operations, bank loan discount rates, and financial institutions' statutory reserve ratios to regulate the economy.As the head of the U.S. central bank, the reason why Greenspan "sneezes, global investors will have a cold", the most important thing is that he holds an important magic weapon - monetary policy.

The central bank is the highest monetary and financial management institution in a country and occupies a dominant position in the financial systems of various countries.Its functions are macro-control, ensuring financial security and stability, and financial services.As a "national bank", it is the maker and executor of the national monetary policy and a tool for the government to intervene in the economy. At the same time, it provides financial services for the country, acts as an agent for the treasury, issues government bonds, and raises funds for the government.

Monetary policy refers to the central bank's use of various tools to adjust the money supply and interest rates in order to achieve the established economic goals, and then the sum of policies and measures that affect the macroeconomy. It can be said to be the magic weapon of the central bank.Monetary policy adjusts the money supply through the central bank, affects the interest rate and the degree of credit supply in the economy to indirectly affect the aggregate demand, so as to achieve a series of measures to achieve an ideal balance between aggregate demand and aggregate supply.Usually, there are two types of monetary policy atmosphere, expansionary policy and contractionary policy.

Expansionary monetary policy stimulates aggregate demand by increasing the growth rate of the money supply.This policy makes credit easier to obtain and lowers interest rates.Therefore, an expansionary monetary policy is most appropriate when aggregate demand is low relative to the economy's productive capacity.When the financial crisis that broke out in the United States in 2008 affected my country's economic development, my country adopted an appropriate and loose monetary policy with low interest rates, and the total amount of loans in the whole society continued to rise.

Contractionary monetary policy reduces the level of aggregate demand by reducing the growth rate of the money supply.This kind of monetary policy increases interest rates because it is more difficult to obtain credit.Therefore, when there is serious inflation, it is more appropriate to adopt a contractionary monetary policy.

Monetary policy has four functions: stabilizing prices, increasing employment, promoting national economic growth and balancing the international balance of payments.The object of its adjustment is the money supply, that is, the total purchasing power of the whole society, which is manifested in the cash in circulation and the deposits of individuals, enterprises and institutions in banks.Cash in circulation is closely related to changes in consumer price levels and is the most active currency. It has always been an important target of the central bank's attention and adjustment.

Fiscal policy refers to the guiding principles of financial work stipulated by the state based on political, economic, and social development figures in a certain period of time, and adjusts aggregate demand through fiscal expenditure and taxation policies.Increasing government spending can stimulate aggregate demand, thereby increasing national income; otherwise, it can depress aggregate demand and reduce national income.Taxation is a contractionary force on national income. Therefore, increasing government taxation can suppress aggregate demand and reduce national income, and vice versa, stimulate aggregate demand and increase national income.

7. The "lazy" Swiss - social security
If you travel to Switzerland often, you'll quickly become envious of the way the country's people live.Here, from the government officials down to the Li people, with a relatively complete social system, their lives are very comfortable, and it is rare for someone to "bow their waists for five buckets of rice".

Due to the concerted efforts of the government and businesses, the underdeveloped tourism industry is quite developed, which attracts many tourists who come for sightseeing and vacation.But in Switzerland, shops, restaurants and entertainment venues in most cities are closed on Sundays and holidays.In many Swiss restaurants, chefs turn off their fire after 10 pm and no longer serve customers, and they will close soon.The reason is simple, every employee must rush home to enjoy life.

The right to rest is placed at the forefront of all rights in Switzerland. "He who rests works" is the motto of almost all Swiss.If you look at the daily work of a government worker in Switzerland, you will find that their working hours are very loose. In their words, it is almost time to leave work after drinking two cups of coffee.Good welfare conditions, satisfactory wages and benefits, all of which are full of envy.

With enough rest time, how to arrange annual vacation has become a top priority for the Swiss.Often, many people start planning their vacation schedule the year before.No matter how busy the work at hand is, take a break when it’s time to rest, even if you pay more overtime pay, you don’t do it, and you have to wait until you go back to do the big things.During vacations, they never wear suits and don't carry cell phones.They are in a completely new living environment and just want pure rest.

Perhaps, living in modern Chinese society, with the increasing work pressure, it is inevitable that we have a feeling of "Arabian Nights" about the life of the Swiss.In fact, if we understand the social security system, we will understand that the life of the Swiss is not a myth, but evidence-based.

Social security refers to the social security system that the state and society distribute and redistribute national income through legislation, and guarantee the basic living rights of social members, especially those who have special difficulties in life.The essence of social security is to maintain social fairness and promote social stability and development.

Social Security has a long history.As early as 560 BC in Greece, the government had issued pensions to disabled veterans and their relatives; provided certain clothing, food and allowances to the unemployed and the disabled; allowed poor patients to enjoy medical assistance, etc. Welfare.

After the British Enclosure Movement, in view of the fact that a large number of farmers lost their livelihoods and flowed into the city, threatening the normal life and social stability of the city, in 1601, the British government issued a decree to alleviate the survival crisis of the poor.

In the period of monopoly capitalism, legislation such as the "Sickness Insurance Law" enacted by Prussian Prime Minister Bismarck marked the birth of the modern social security system.

In 1935, the Roosevelt administration promulgated the "Social Security Act" in the United States to implement old-age insurance and career insurance.After the Second World War, the British Labor Party fully implemented the idea of ​​building a welfare state put forward in the "Beveridge Report" and fully implemented social security.

In 1948, Britain announced the establishment of a "welfare state", and many developed countries in Europe and America followed suit.Over time, the level of welfare of a country has become one of the criteria for measuring the level of economic development of the country.

From the development process of social security, we can easily see that social security is the inevitable product of the development of market economy.As long as human beings and human society exist, the problem of social security for laborers will always exist. Therefore, social security for laborers is a problem that all societies face.Especially under the high efficiency and high risk of today's market economy, the social security system is particularly important, and only under the conditions of the market economy, social security can play its complete and huge role in maintaining economic development.

Generally speaking, among the social insurance, social relief, social welfare, preferential treatment and resettlement that make up social security, social insurance is at the core.

Social welfare in a broad sense refers to the welfare subsidies, welfare facilities and social services provided by the state to improve and enhance the material and spiritual life of all members of society.

Preferential care and placement refers to the state's preferential treatment, pension, and placement for special workers and their relatives, such as soldiers and their relatives.In my country, the objects of special care and placement mainly include military martyrs, restored veterans, disabled soldiers and their families; the contents of preferential care and placement mainly include providing pensions, preferential treatment, subsidies, setting up military sanatoriums, honor homes, and resettling and rehabilitating veterans, etc. .

With the rapid development of economy, my country has invested more and more in social security.However, compared with other countries in the world, there are still many problems in social security in my country, but everything has a process of development. We believe that in the near future, we will also be able to live a better life with a higher social security system. Like the Swiss, they live a free and comfortable life like a "fairy".

The welfare state is a capitalist country that implements and improves a set of social welfare policies and systems by establishing and funding social public undertakings.The welfare state is not social insurance, public health care, family welfare or social relief programs, nor is it equivalent to social security or social policy, but the sum of them.

(End of this chapter)