The hottest economic downturn is the result of eco

Economic downturn is the result of economic development

at present, people mostly attribute the economic downturn to the rise of institutional costs, so the solution lies in tax cuts to reduce institutional costs. However, in fact, the economic downturn is the natural result of economic development, and the rise of institutional costs is not only the result of economic development, but also the purpose of economic development. Isn't economic development for a better life? So why does economic development lead to economic downturn

the reason for this is very simple. We know that scarce things are more expensive. With development, more things will naturally be cheaper, and enterprise profits will decline. The purpose of production is to meet demand. The process of economic development is a process of constantly meeting demand. When demand is met, natural demand is saturated and demand is insufficient. According to Goshen's law, people's need for certain property decreases gradually as they are satisfied, until they reach the saturation of need, and then the desire for such property disappears, or even turns into disgust. The reason why economic development leads to economic downturn is actually rooted in the value paradox, that is, if the demand remains unchanged, the greater the supply, the smaller the marginal utility and value, and vice versa. If the supply is constant, the greater the demand, the greater the marginal utility and value. Otherwise, the smaller. Therefore, economic development is inversely proportional to value or profit. In a sense, entrepreneurs are committing suicide and leaving themselves with no way to go. The only way out is transformation and upgrading. Are there other options

will China's economy be L-shaped next? Yes, because economic growth originates from demand, and the process and result of economic growth are naturally the process of continuous demand satisfaction and the saturation of final demand. The so-called insufficient effective demand is actually the saturation of demand, and beyond this point, it is overcapacity. The more production, the greater the excess. The greater the surplus, the more the loss. This is the paradox of value and the law of marginal utility. At present, after 30 years of rapid growth and development, China's economy has obviously turned into a declining stage. For example, China's economy continued to decelerate after 2010. The economic growth rate fell from more than 10% in 2010 to 7.3% in 2014, and further fell to the list in 2015. The exposure draft includes two parts: 1. The national catalogue of industries that encourage foreign investment is 6.9%, the lowest record in 25 years. This is the first time that China has experienced such a long-term economic slowdown since its transition to a market economy in 1979. At present, the downward pressure on the economy is still huge. This slowdown is usually attributed to China's internal structural problems, such as inefficient state-owned enterprises, high debt leverage, aging and unsustainable investment led growth model. Such a problem is not easy to solve. As a result, the collapse of China's economy is considered inevitable. Will China be the next Japan? This is a commonly used comparison method at present. Indeed, there are many similarities between the two. Many scholars believe that China's economic miracle is nothing more than a replication of Japan's economic miracle on a larger scale. Both are based on outward processing exports. With the aging population, rising costs, and the containment from the United States to help them better solve market demand, the glory of Japan's economy has long gone. Similarly, China is facing the same dilemma at present. Before the economic slowdown, Japan and South Korea also achieved impressive growth with rapid industrialization and export-oriented policies driven by huge investment. These three countries have similar experiences, but their periods are different. In terms of per capita GDP, China lags behind Japan for more than 40 years and South Korea for about 20 years. Specifically, the annual growth rate of Japan's per capita GDP averaged 8.6% in the 1960s, but fell rapidly to 3% to 4% in the 1970s and 1980s; However, South Korea found many problems, and its GDP growth rate fell from 7% to 8% in the 1970s and 1980s to 4% in the 2000s. China's 30-year double-digit growth came to an end in 2010, with an annual growth rate of less than 7%. The annual growth rate of the three countries began to decline when the per capita income reached about $8000. Like Japan and South Korea before, China is implementing this adjustment. But it faces serious obstacles: first, the limited institutional and human resource capacity, which may hinder domestic innovation and effective resource allocation. Due to the low fertility rate and the rapid aging of the population, China is also facing the problem of reduced labor force growth. According to the data released by the United Nations, the average growth rate of China's working age population will be negative 0.1% from 2010 to 2020, far lower than the 1.5% from 2000 to 2010. In addition, as employment shifts to services, overall productivity growth is likely to decline, as is the case in Japan and South Korea. In China, the per capita GDP growth of service workers was only 1.3% from 1981 to 2010, while that of manufacturing was as high as 15.1%. As former US Treasury Secretary Lawrence Summers and Harvard University Professor Robert Barro pointed out, like Japan and South Korea, economic slowdown is inevitable for China. Many scholars pessimistically believe that China's GDP growth rate will decline to 5% to 6% in the next 10 years, and in the long run will be 3% to 4%, or even negative growth

will China's economy be V-shaped next? Yes, because the old demand is met, the new demand will be generated, and the new demand will promote the economic growth from L-shaped to V-shaped. So, have China's investment opportunities dried up? Obviously not. China is still a developing country. First, as a middle-income country, China has ample opportunities to upgrade its industrial capacity. Although there is serious overcapacity in steel, cement, glass, aluminum, shipbuilding and other industrial fields - although the traditional labor-intensive processing industry has lost its comparative advantage due to rising wages - they all belong to low and medium-sized industries. China has many investment opportunities in the process of transforming to medium and high-tech industries, such as special steel, precision machine tools, advanced equipment and other fields. Such investment will bring high economic returns. Secondly, China's past infrastructure investment was mainly to connect one city with another through highways, high-speed railways, airports and ports. However, infrastructure in cities such as subways and sewage treatment systems is seriously inadequate. Investing in these areas can reduce transaction costs, increase economic efficiency and generate higher social and economic returns. Third, China urgently needs to invest in the field of environmental protection. In the process of rapid economic growth, China has encountered serious environmental pollution problems. Investing in this field will bring high social returns. Finally, urbanization. At present, about 55% of China's population lives in urban areas. The level of urbanization in high-income countries usually exceeds 80%. In the future, with the development of economy and the improvement of urbanization, it is necessary to invest in housing, urban infrastructure and other public services

therefore, from the perspective of economic volume and China's own continental economic structure, China and the United States are more similar and comparable. Compared with the United States, China is now similar to the United States before and after World War I. after World War I, the United States changed from a debtor country to a young creditor country, and from a capital importer to an exporter. Then President Wilson proposed a 14 point plan to lead the United States to the center of the international political arena, but it was resisted by European powers. Then the United States chose to return to the isolationist policy, devote its energy to domestic development, and put forward that American politics is doing business. Therefore, there was a period of great transformation, great change and great prosperity in American history, which was called "Coolidge prosperity" in history. It made the American economy fully developed, and the American people reached "a happy realm rarely seen in human history", which created a solid foundation for the United States to move to the international stage later. First, after World War I, the United States became a young creditor country and an undisputed leader in the world economy. Similarly, China is now the largest foreign exchange reserve country in the world, from a capital importing country to an exporting country, and its fiscal revenue has become the second largest country in the world. Secondly, it was from external demand to domestic demand. At that time, the United States realized that their country not only had rich material and human resources, but also had a broad domestic market. Similarly, at present, due to the collapse of global demand and the intensification of trade frictions, it is impossible for China to continue the development model of export driven by external demand, so it must rely on the steam power generated by itself to move forward and gradually obtain new development power from its internal vitality. Third, the economic transformation of the United States at that time mainly depended on the adoption of mass production in industrial production, especially the rapid growth of the automobile manufacturing industry, which injected great vitality into the economic development of the United States. Similarly, at present, in the global industrial chain, China is accelerating the development from low-end to medium and high-end, and striving to seize the opportunity of the next round of scientific and technological revolution and industrial revolution

will China's economy be W-shaped next? Naturally, once new demands are met, new demands will be generated. Therefore, in the long run, the process of economic development is a W-shaped natural evolution process. For example, the economic development process of the United States in history is a typical W-shaped process. The United States was originally a British colony, but by undertaking the transfer of industry, capital and human resources in Europe, especially Britain, it became an industrial country overnight from an agricultural country. William stilder, the author of the best-selling book "Americanization of the world" at the beginning of the last century, believes that although the United States was under British rule in the 18th century, with the rise of the United States, the future economy of Britain will be closely related to the United States. At that time, Europeans exclaimed "American invasion", complaining that every ordinary citizen wakes up every morning in the sound of an alarm clock made in the United States; Get up from the sheets made in New England, USA, and shave with New York soap and Yankee safety razor. Then put on socks made in West Carolina, and then put on a pair of Boston boots outside; Fasten the suspenders made in Connecticut, and so on. Europeans find that life is inseparable from being made in the United States. British Prime Minister William granston predicted in 1878 that it is inevitable for the United States to surpass Britain in business status. "When we are still proud of our rapid development, Americans have been trotting ahead of us." So why did the United States surpass Britain? One reason is that British people and British companies invest more than half of their savings in the United States every year, which is even more than their investment in their own country. Although the income brought by these investments has increased Britain's annual national income, these investments themselves have modernized American enterprises. Overnight, the United States has changed from a society dominated by agriculture to an urbanized society dominated by industry, and has become a symbol of economic success that has attracted worldwide attention. Then came the transformation of the United States after the first World War, which led to another 20-year great development of the American economy, but it did not last long. The great depression in the 1930s almost killed the United States. The next step is Roosevelt's new deal and the re prosperity of the American economy after World War II, which is based on the transformation of the wartime economy to the civilian economy, the establishment of the welfare system expanded the domestic consumer market, and the Marshall plan created a huge