Can tourism consumption really boost the economy?

The boom in tourism consumption does not boost the economy

Original Snow 798 Thunderbolt Plus 2024-01-26

Recently, Heilongjiang's tourism is very hot, and the Heilongjiang Bureau of Culture and Tourism has sent a letter of thanks to the whole country, and the directors of culture and tourism from all over the country have also come to the front desk, attracting tourists with stiff words and awkward dances, trying to use tourism to drive local economic development.

All the projects planned by local governments are mostly chicken feathers. As early as when Zibo barbecue was popular, I wrote an article "Seeing him rise a tall building, seeing that his building is about to collapse". Such programs can often be popular for a while, but they are not sustainable and result in a lot of bad investment, not to mention wasted taxes.

It's a given. Because the economy is not planned, if you do not act according to the laws of the market, you will inevitably pay a price. If it succeeds by chance, it is not because it is well planned, but because it happens to conform to the laws of the market and meet the needs of consumers. Even if you don't go to a clock, you can get it right twice a day.

The economic foundation of the Northeast is actually quite good, and the revitalization of the Northeast is not for the director of culture and tourism to come out to dance, not to attract tourism consumption, but to create a good business environment to attract investment. This is the magic weapon for the success of China's reform and opening up. The simplest and most straightforward way is to directly exempt tax for 30 years and create a special economic zone with open market access and free trade. In short, it is difficult to cut regulations, intervene less, and reduce tax burdens, and it is difficult not to prosper.

But I saw a Weibo today, and he said this:

In this short sentence, there are many mistakes exposed, and many people think like this, so it is necessary to take it out and talk about it.

"As long as China's money does not flow out, I am happy that any province makes money." This is typical Keynesian, mercantilist nonsense.

According to this logic, the Chinese should only buy what the Chinese produce, which is to be self-sufficient and close off the country;

According to this logic, Americans should be angry when they use dollars to buy things all over the world every day, and all the money will flow out;

"Heilongjiang" does not make money, and it is always specific individuals who make money. There is really no difference between you buying rice from a Northeast person and you buying rice from a Thai person. Trade is a matter between people and has nothing to do with countries and provinces; trade crosses borders and has nothing to do with countries and provinces.

It's as simple as that, but once wrapped in the big word collectivism, many people get dizzy. All the nonsense of supporting domestic products and restricting trade has come out, and it seems that he will not stop until he is crippled.

Thinking that exports (money flowing in) is good, and imports (money flowing out) is bad, which is a typical mercantilist perspective (looking at the economy from the perspective of a businessman), and the result is the introduction of various policies to encourage exports and restrict imports, such as export subsidies, industrial policies, exchange rate manipulation, tariffs and trade protection, etc., which will push countries into confrontation and war.

This is all because of the poison of Keynesianism.

Keynesianism's view of exports as one of the "troikas" driving economic growth is a classic reversal of cause and effect.

Think about it, the reason why you can spend money (imports) must be because you make money elsewhere (exports), otherwise what do you spend? So exports are just a means of payment for imports.

Suppose that in an extreme case, if a country does not export (make money) but only imports (spends money), does it harm the citizens of that country? No, it will improve the well-being of its own people. After the discovery of gold in the Americas, gold has been flowing out, and conversely, it is importing goods, and does it have any effect on people? No, no. Gold, as currency, is a medium of exchange, used to exchange for living materials, people need more bread and eggs, rather than holding gold to live. Not to mention the colorful banknotes that are of no use other than exchange.

Therefore, imports can improve the well-being of the people.

Then, a place with less imports must be because there are fewer exports. Because only when our own production capacity is strong and we produce what others need, can we import it. A place where birds that don't produce anything don't poop, do you expect him to be able to import them? What does he get in exchange?

Unless the Fed is a hooligan. Because it specializes in exporting dollars, it imports goods back. Therefore, Trump said all day long that the manufacturing industry is returning to China, and this TM is playing hooliganism, and he is cheap and obedient. You don't produce at all, or every day the trade union makes trouble, all kinds of controls make the enterprise unable to produce, and then rely on others to produce and then take a piece of paper to exchange, how can the manufacturing industry return to China?

But this situation is not sustainable, a country that only prints money and does not produce will inevitably have a recession, and the recession economy will not be able to support a strong currency, and those rotten pieces of paper will eventually be discarded like pieces.

In the final analysis, the core problem of economics is the problem of production, not the problem of consumption. Because there is production first and then consumption, supply creates demand.

And the premise of production is that you have capital. Therefore, there is no Keynesian "troika" of investment, consumption, and exports to promote economic growth. There is only one drive, and that is capital investment.

This brings us to another so-called "carriage": consumption.

Consumption does not boost the economy.

Robinson caught 10 fish today, and this production activity is driving the economy. Because it is clear that now there are 10 more fish, and the material wealth to meet the needs of the person has increased. He ate the ten fish, and it didn't pull the economy. Only by saving consumption, eating a few fewer fish, saving enough fish to eat for 10 days, forming savings, and then investing in making fishing nets, improving labor productivity, and being able to catch 100 fish a day, can we boost the economy.

If a society's output is only enough to consume, eat and drink, then there is no possibility of economic progress. Only when output is greater than consumption and savings are formed, can we continue to invest in the process of roundabout production, use more advanced production technology, and bring greater output in the future, so that the economy can progress.

A progressive economy is one in which investment is increasing faster than the rate of population growth. It requires people to reduce their time preferences, temper their desire to consume, and invest more capital in the future.

Therefore, capital investment is the only source of economic progress. Capital investment also initiates the process of human civilization, and any action that consumes capital is the initiation of the process of impoverishment and barbarism.

As long as investment goes up, jobs are easy to find, and real income increases, where can we worry about not having consumption? Seeing that consumption increases, the market will prosper, which is a typical example of only looking at the surface and not looking at the fundamentals, and reversing the relationship between cause and effect. It's as stupid as thinking that the rooster crows and the sky dawns.

The amount of capital investment depends on whether people have stable expectations for the future and whether property rights are stably protected. If people have poor expectations for the future, property rights are always violated, and there is no tomorrow today, then there will be a proportional decrease in investment and an increase in consumption, and in absolute terms, investment and consumption will decline at the same time. Production can't be carried out, people are unemployed, what else is there to consume?

For example, Meng Xiaosu said that he would take out one-third of his savings to buy a house, and Lin Caiyi said that he would "spend all his money to win glory for the country."

The main culprit is Keynes's theory of the "consumption function".

Keynes believed that there is a stable linear relationship between consumption and income, and that when income increases, people will increase consumption, but consumption does not increase as fast as income.

And one person's expenses are another person's income. When you spend, the other person's income increases, and in this way, his consumption also increases, and the spiral increases, and the perfect closed loop.

Keynesianism even proposes an "acceleration principle": any increase in consumption leads to a proportionate increase in investment, because there is a fixed relationship between the output of consumer goods and the number of machines needed to produce them.

So, be sure to stimulate consumption.

This is a hodgepodge of fallacies of complete nonsense.

First, there is no fixed linear relationship between income and consumption, or between consumption and investment. My income has increased recently, but I plan to invest in a project, but I will reduce consumption; some people's income is growing very fast, but the proportion of consumption does not increase, because they have a low time preference, so they like to live a simple life; while Sanhe Dashen has no money at all, and then eats and drinks.

As for the theory of acceleration, it completely ignores the role of entrepreneurs and treats them like machines, and if consumption increases by 100, he invests 200 in equal proportions.

Secondly, as mentioned earlier, the premise of consumption is production. One person spends on the premise of previous production, while the other gets income because he has produced what others need. In short, the root cause is production, not consumption. And the premise of production is to have savings, if you eat and drink clean, there is a lot of consumption, and the savings are exhausted, will you drink the northwest wind in the future?

Third, consumption does not need to be stimulated. If it is an individual, he will consume, and who doesn't like to buy, buy, buy, buy, and buy? If it is an individual, he must also consume, because if he does not consume, he will not be able to live.

Fourth, there are many factors that affect consumption, which are closely related to each person's time preference, sociocultural and psychological factors, and the level of savings. But the decisive factor is not his current income level, but his expected future income. When a person expects his income to be unstable or declining in the future, he will cut back on spending.

Why do civil servants and pensioners love to travel?

The expected decline in future incomes is due to too much regulation, unstable property rights, and economic recession, which makes people afraid to invest or consume. If you always issue money indiscriminately, and watch your savings become worthless, then you will be drunk today and drunk tomorrow. Therefore, the indiscriminate issuance of money will lead to an increase in the time preference of a society, and people will become short-sighted, inclined to consume more and save less, and consume capital, so inflation is the meat grinder of capital, starting the process of social impoverishment.

We will find that Keynesian macroeconomics, which quantifies the relationship between consumption, income, investment, etc., into a fixed and unchanged ratio according to the method of aggregate calculation, is very absurd, and this macro calculation method has nothing to do with everyone in the real world.

In the eyes of macroeconomics, there are no living people at all.

But why is this kind of macroeconomics so popular?

Because it can provide a basis for interventionism. Isn't it true that one person's expenditure is another person's income, and when consumption increases, income will increase, and investment will also increase exponentially? That is good, then we should stimulate consumption, constantly lower interest rates, engage in subsidies for old and new ones, issue consumption vouchers, engage in holiday economy, tourism economy, and even deceive and empty your six wallets.

At this time, the macroeconomic data is very good, but it is like a person who has been hollowed out and stuffed with straw, and it looks fat, but it is empty. A person who has 1 million savings and spends 10,000 yuan is of course different from only spending 10,000 yuan. However, when calculating GDP, it only calculates the consumption of 10,000 yuan, and does not calculate savings and capital accumulation, so it will be underestimated when the economy is progressing, and it does not know the extent of capital consumption when it is regressing the economy.

If you are poor and still do not consume, then the state will spend money for you, borrow money, spend money on inflation, and engage in big projects. But deficits and inflation hurt private investment, because they concentrate private resources in the hands of the government, less capital is used to meet people's needs, less production, and the result is more poverty and discourage consumption. Debt and inflation to a certain point is an economic crisis, and at that point, wealth is cleared, businesses go bankrupt, unemployment everywhere, even having enough to eat becomes a problem, and consumption is still wool.

Therefore, if we want people to increase consumption, we need to make investment increase, labor productivity increase, real income rise, and have good expectations for the future. Only then can people afford to spend money and dare to spend it. The solution to investment growth and expected stability is three-pronged:

Cut control, less intervention, and lower tax burden.

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