Chapter 1363 Shock Therapy!
Yang Ming knew that Yang Shuhai had feelings for Yang Jirong and his wife and him.
This feeling was not because of his money and status.
It was related to blood relationship.
However, Yang Ming himself could not go back often, but Yang Jirong and his wife could still visit their hometown occasionally.
The day after tomorrow is New Year's Eve.
At this time, the Yang family not only sent out invitations.
Lin Dezhong has already started preparing for this year's New Year's Eve feast.
Here in the Repulse Bay Hillside Villa, Yang Ming has begun to feel the atmosphere of the Spring Festival.
. . .
February 2, 1992.
The 29th day of the twelfth lunar month.
Li Jun, who was far away in Moscow, Goose Country, came back.
Arrived in Hong Kong at around 10 o'clock in the morning that day, and it was Lin Dezhong and the bodyguard who went to pick up Li Jun in person.
Repulse Bay Hillside Villa.
Li Jun had already taken off his thick coat, and he found that he was much more comfortable in Hong Kong. The main reason was that the weather in Hong Kong was much warmer.
It is still snowy in Moscow, but here in Hong Kong, the temperature has risen to more than 20 degrees Celsius. How can it be uncomfortable?
"What is Moscow like now?"
At the end of December, the Soviet Union had officially disintegrated and disappeared, replaced by the new Goose Country.
Of course, Yeltsin is now in power.
However, it is only more than a month apart from December, or even less than two months, but the impact on the world is indeed very large.
Even now, many Goose people, and some people in other countries, can't figure out why the good Red Empire is gone?
Of course, the current Commonwealth of Independent States is completely different from the former Goose Country.
"It is still very chaotic, with a shortage of food, milk, bread and other foods. At the beginning, Europe and the United States said they would provide Goose Country with them, but after the disintegration of the Soviet Union, Europe and the United States gave up their previous promises."
In fact, this is inevitable.
For Europe and the United States, they just let Goose Country take the bait first. Since Goose Country has taken the bait, it is naturally impossible to feed the bait again.
In addition, the promises that were made in the past are no longer recognized.
Although the current Goose country has inherited most of the Soviet Union's legacy, it is in a time of internal and external difficulties. In addition, the Chechen forces in the Goose country have also begun to change.
The most important thing is that the Goose country's economy is in big trouble now.
In fact, this is after Gore came to power, the planned economy of the Soviet Union has been messed up, and now private enterprises have not yet developed.
However, Yang Ming thought that the shock therapy that the Goose country soon implemented was the most terrifying.
At the end of 1991, the Soviet Union disintegrated, and the Goose country became independent, inheriting most of the former Soviet Union's assets. The rich legacy made Yeltsin very happy, but it was difficult to be poor. A lot of half-dead enterprises, plus 1 trillion rubles of domestic debt and 120 billion US dollars of foreign debt also made the new ruler sleepless and restless.
As an opposition to the former Soviet Union, Yeltsin believed that the reforms since the 1950s, which were piecemeal and patched up, had ruined the future of the Soviet Union in vain.
He decided to learn from his mistakes. Goose should avoid repeating the same mistakes and revive its great power. It should not be an old lady with bound feet anymore. It should make drastic changes and carry out profound reforms.
At this time, Gaidar, who was only 35 years old, catered to his needs and, under the guidance of Sachs, concocted a radical economic reform plan. Yeltsin "saw the pearl" and promoted him to the second person. In early 1992, a reform based on shock therapy was fully launched in Goose.
The highlight of shock therapy and the first step was to liberalize prices.
The Goose government stipulated that from January 2, 1992, 90% of consumer goods prices and 80% of production materials prices would be liberalized.
At the same time, restrictions on income growth were lifted, civil servants' salaries increased by 90%, retirees' subsidies increased to 900 rubles per month, and family subsidies and unemployment benefits also rose accordingly.
The first three months of price liberalization seemed to have immediate effects and obvious results.
The long shopping queues disappeared, and the shelves were filled with a wide variety of goods. The Chinese people, who were used to waiting in long queues for supplies with tickets, seemed to see the benefits brought by the reform.
But not long after, prices soared like a kite with a broken string. By April, the price of consumer goods had risen 65 times compared with December 1991.
Russia originally wanted to stabilize prices through state-owned stores, but unexpectedly, black market vendors and state-owned store employees colluded to resell the goods and make huge profits. The government's wishful thinking fell through, and the market order became a mess.
Due to the premature liberalization of fuel and raw material prices, the production costs of enterprises increased sharply. By June, the wholesale price of industrial products rose 14 times. Such high prices made buyers daunting. The consumer market continued to be sluggish, and the weak demand in turn suppressed supply. Enterprises cut production one after another, and the market supply and demand entered a vicious circle.
The second step of shock therapy, the "double tightening" policy of fiscal and monetary policies and price reform were almost simultaneously introduced. Fiscal tightening is mainly about increasing revenue and reducing expenditure, increasing revenue and reducing expenditure.
All tax incentives were cancelled, and all goods were subject to a 28% value-added tax. At the same time, a consumption tax on imported goods was imposed.
In conjunction with the revenue-raising measures, the government cut public investment, military spending, and office expenses, incorporated off-budget funds into the federal budget, and restricted local governments from using bank loans to make up for deficits.
The tight monetary policy, including raising the central bank's loan interest rate, establishing a deposit reserve system, and implementing loan limit management, was used to control the flow of money and curb inflation at the source. However, this time the government miscalculated again.
Due to excessive tax burdens, corporate production has further shrunk, and the number of unemployed people has surged. The government has had to increase relief subsidies and direct investment, and the fiscal deficit has risen instead of falling.
The tightening of credit has caused serious shortages of working capital for enterprises, and enterprises have defaulted on each other, causing triangular debt to become increasingly serious.
The government was forced to loosen monetary policy and issue an additional 18 trillion rubles of currency in 1992, which was 20 times the amount issued in 1991.
Amidst the roar of the money printing press, fiscal and monetary tightening policies failed.
The third step in shock therapy is large-scale privatization.
Gaidar believes that the reason why reform is full of dangers and crises is that state-owned enterprises are not market players and the competition mechanism does not work. Price reform is like building a tower in the sand. It will collapse when it encounters any disturbance. In order to speed up the privatization process, Zhengfu initially adopted the method of giving away free of charge.
According to the evaluation of relevant experts, 1/3 of the total state-owned property value of Goose Country is about 1.5 trillion rubles, and the population is exactly 150 million. In the past, property belonged to everyone, but now it is distributed to individuals, and everyone must be honest and independent. share.
So every Goose countryman received a 10,000-ruble privatized security, and could freely purchase shares based on the certificate.
However, by the time privatization was officially launched, it was already October 1992. Times had changed and 10,000 rubles at this time was only enough to buy a pair of high-end leather shoes.
Therefore, this measure has caused a large number of state-owned enterprises to fall into the hands of the privileged class and the nouveau riche. What they care most about is not the long-term development of the enterprise, but to resell it for profit as soon as possible. The employees neither receive dividends nor have the right to participate in decision-making. At this time, no one was paying attention to production and operation, and corporate efficiency was deteriorating. In December 1992, Gaidar was disbanded.
The failure of shock therapy almost reduced the GDP of Goose Country by half, and its total GDP was only 1/10 of that of Country M.
The economic structure has also undergone significant changes. The fuel, electric power and metallurgical industries have become key sectors of the national economy, accounting for approximately 15% of GDP, 50% of the total industrial product structure, and more than 70% of exports.
The labor productivity of the actual economic sector is extremely low. If the labor productivity of the raw materials and energy sectors is close to the world average, other sectors are far lower than the similar indicators of country M by 20% to 24%.
More than 70% of production equipment has a service life of more than ten years, which is twice as high as that in economically developed countries. This situation is a direct result of the significant reduction in domestic investment, especially in real economic sectors.
Foreign investment is unwilling to enter Goose Country, and the total amount of foreign investment absorbed is only US$11.5 billion. An overall reduction in science and technology development expenditures, insufficient investment, and insufficient emphasis on innovation have resulted in fewer and fewer products with competitive prices and quality in the international market. Especially in the civilian technology product market, they have been squeezed out by foreign competitors. , domestic goose products still account for less than 1%.
Residents' living standards have plummeted.
By the end of 2000, the total monetary income of people in Go was less than 10% of that of people in M, and their health conditions and average life expectancy were also deteriorating. Some experts estimate that it will take 15 years for the country's per capita GDP production to reach the level of Portugal or Spain, and to maintain an annual GDP growth rate of 8%.
"If the skin is gone, the hair will not be attached."
"Shock therapy" copies other people's practices, completely deviating from the national conditions of Goose Country, and failure is inevitable.
This is the most essential mistake made by the country's democratic reformers during the country's economic transition.
Giulietto Chiesa, an Italian who spent nearly 20 years as a journalist in Moscow, commented: “It’s because the country’s democratic reformers ignored the country’s own traditions and characteristics and lost the spirit of the country. , copying and copying neoliberalism and modern monetarism that are also controversial in the West, and the result is that Goose Country has fallen into the disastrous situation it is today."
Historically, due to the failure of reforms, Gaidar of Goose Country had to resign on January 16, 1994.
Ye Liqing was also forced to announce the abandonment of "shock therapy" reforms in the State of the Nation Address in February 1994, and admitted during the 1996 election that "it was a mistake to try to copy the Western economy in the past reforms."
In fact, the medical term "shock therapy" was introduced into the economic field by US economist Sachs in the mid-1980s.
Shock therapy was first proposed when Sachs was hired as an economic adviser to Bolivia.
Bolivia is a small, economically backward country in South America. Due to the long-term turbulent political situation and the government's continuous mistakes in economic policies, the resulting economic problems have accumulated in large quantities but have not been resolved, eventually leading to a serious economic crisis.
In 1985, Bolivia's budget deficit reached 485.9 trillion pesos, accounting for about 1/3 of its GDP, and the inflation rate was as high as 24,000%.
Foreign debt in 1984 was US$5 billion, with interest payable of nearly US$1 billion, exceeding export revenue. From 1980 to 1985, residents' living standards dropped by 30%, and the national economy was almost on the verge of collapse.
It was precisely in the face of such a dangerous economic situation that Sachs, who was employed at the time of crisis, boldly proposed a set of economic programs and economic policies. The main contents were: implementing tight financial and fiscal policies, reducing government spending, canceling Subsidies, liberalizing prices, implementing trade liberalization, achieving exchange rate stability through currency devaluation, further reforming the administrative and tax systems, privatizing parts of the public sector and enterprises, rescheduling debt and accepting foreign aid, etc.
Since the implementation of this set of economic programs and policies has a strong impact, it may cause great shocks to the economic life of the society in the short term, and even lead to a "shock" state. Therefore, people borrow the medical term and call the economic program and policy proposed by Sachs to stabilize the economy and control inflation "shock therapy".
In general, shock therapy is aimed at the seriously unbalanced social total supply and demand situation. Starting from controlling the total social demand, it adopts severe administrative and economic means to compulsorily and significantly compress consumer demand and investment demand in a short period of time, so that the total social supply and demand can reach an artificial balance, thereby curbing hyperinflation and restoring economic order.
This policy regulation has a clear emergency nature.
Because the balance of total social supply and demand requires not only controlling the excessive total social demand, but more importantly, stimulating the effective growth of the sluggish total social supply.
The practice of macroeconomic operation has proved that the former is easy to achieve in a short period of time, but the latter requires a long time and great efforts to be effective.
Since the focus of shock therapy is on total social demand, and the implementation measures are relatively strong, it is very easy to get immediate results.
This is the secret of the miraculous effect of shock therapy in Bolivia, and it is also the essence of the original meaning of shock therapy. The difference between "shock therapy" and gradual approach lies not in the content and goal of transition, but in the order and intensity of reform.
Specifically, in terms of macroeconomic policy, "shock therapy" is more severe in fiscal tightening; in economic liberalization, "shock therapy" advocates a one-step approach to achieve the liberalization of prices, foreign trade and free convertibility of currency; in privatization, it emphasizes rapid realization, and even adopts the method of free distribution for this purpose.
With the joy of the first victory, Sachs came to the United States and Eastern European countries, which had just undergone drastic changes, and continued to sell his shock therapy.
However, compared with the original, the shock therapy he sold this time has added a new meaning, that is, in addition to completing the conventional mission of stabilizing the economy, curbing inflation, and eliminating the foreign debt crisis, it also has to shoulder the heavy responsibility of completing the economic transition.
Sachs summarized the shock therapy he sold this time into three changes, namely stabilization, liberalization and privatization.
The so-called stabilization is to quickly curb hyperinflation, restore economic order, and stabilize the macroeconomy through severe contractionary fiscal and financial policies and a series of compulsory measures to suppress total social demand.
The so-called liberalization is to achieve price liberalization through "one-step price reform", to achieve foreign trade liberalization through the abolition of state monopoly on foreign trade, and to achieve foreign exchange liberalization through the abandonment of foreign exchange control and monopoly.
The ultimate goal of implementing price, foreign trade and foreign exchange liberalization is to maximize the activation of the market mechanism so that it can play its due regulatory role in social and economic life.
The so-called privatization is to privatize the state-owned economy through property rights system reforms such as return, sale, lease, and shareholding reform, and finally shape and establish the main body of the market economy.
Sachs believes that only by adopting this shock therapy including the three changes can the United States and Eastern European countries successfully complete the transition from planned economy to market economy in the shortest time.
Russia and Eastern European countries have shown an extremely strong interest in this extremely tempting shock therapy sold by Sachs, and have invited Sachs to serve as a government economic adviser in these countries to participate in the formulation and implementation of shock therapy. Since the 1990s, China and most of the Eastern European countries have been eager to implement shock therapy.
In fact, Yang Ming already knew that Russia and even post-Soviet countries such as Ukraine had already started implementing shock therapy.
Among them, China and Ukraine were the worst hit.