"Finance and Economics" Wang Yong: To promote common prosperity, industrial upgrading is an important starting point, and deepening reform is also very important.

Wang Yong: To promote common prosperity, industrial upgrading is an important starting point, and deepening reform is also very important.

Finance

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(This article is 2021)

At the Sixth Plenary Session of the Nineteenth Central Committee, "common prosperity" was mentioned again. The 19th Plenary Session of the Sixth Central Committee pointed out that based on the new development stage, implementing new development concepts, building a new development pattern, promoting high -quality development, comprehensively deepening reform and opening up, promoting common prosperity, adhering to the development of development and improving people's livelihood, cooperating to promote the people Wealthy, strong in the country, and beauty in China. At the press conference held on November 12, Deputy Director Han Wenxiu of the Central Finance and Economic Committee Office explained the "three needs" that promoted common prosperity, namely to achieve high -quality development, build a system of income distribution system that reflects efficiency and promote fairness. And the enterprise "do your own affairs".

How do young scholars in the New Development Economic School look at the issues of common prosperity and governments? In this economist circle interviewed Vice President Wang Yong, the following is the full text of the interview:

01. What is the premise of common prosperity?

Talking about common prosperity, we need to understand the prerequisite for common prosperity. It should be "common" as possible on the basis of wealth, rather than losing wealth together. Common prosperity is not common poverty. We must not want to return to the common poverty in the original "big pot rice" model, so I must emphasize: First, on the basis of ensuring wealth, the distribution is more fair and more human care.

Although we have achieved good economic achievements since the reform and opening up. In the past 40 years, our GDP has reached 9.2%of the annual average rate of annual speed, but now our per capita income is still less than 1/5 of the United States, so our main task is now, so our main tasks, we are now the main task, our main task, we are now the main task, we are now the main task, we are now the main task, so we are the main tasks, so our main tasks, we are now the main task. Still making big cakes, and then better allocate cakes. It only emphasizes that the distribution does not emphasize growth and does not meet our current stage of development. If the cake is not big, the contradiction between the cake will become more prominent. If the distribution of zero -sum game becomes the main contradiction, it will be more difficult to solve the problem of distribution, and it will easily lead to the tear and instability of society (Wang Yong, 2004). Conversely, after making cakes, there will be greater space to compensate for related interests or compensation for some groups with relatively small benefits. It is easier to achieve common prosperity. Therefore, deputy director Han Wenxiu summarized the eight important experiences of my country's economic development achievements, listed "development is the last word" to the first one, first of all.

Second, to achieve common prosperity, I think the key is to have a healthy and sustainable industrial upgrade. I think this is the most fundamental motivation to achieve common prosperity. Why do you say that?

First of all, we must make the cake bigger. The increase in total national income in macro corresponds to the upgrade of the middle view level industry. If a country has stagnated macroeconomic growth, it must be due to problems in the upgrading of the middle viewing industry, the leading industry upgrade is weak, and even many industries have declined at the same time (JU, Lin and Wang, 2015). The entire cake cannot be bigger, and of course there is no way to achieve common prosperity. Secondly, if there is no healthy industrial upgrade, there are not enough employment opportunities, and the income of ordinary people is less, which is not easy to achieve common prosperity. In particular, we are still developing countries, and there are many poverty -stricken areas. In these areas, we have relatively advantageous industries and are some labor -intensive industries. If these industries develop well, we can increase a lot of employment opportunities; but if those industries are in accordance with comparative advantages, they are due to some reasons. For example, the government has not played a promising role in potential, such as not providing corresponding hardware infrastructure in time, or some government's "chaotic" behavior, etc., so that the potential comparative advantage has not been exerted, enterprises in the industry in this industry are not exerted. It still cannot form the competitive advantage, and the industry cannot develop (Wang Yong, Lin Yifu, Ju Jiandong, 2019). In this way, the employment opportunities of ordinary people will become less, especially the employment opportunities of relatively low -skill labor force, which means that the poor people have no income, which will amplify the inequality of income.

Therefore, the steady industrial upgrade is the fundamental guarantee for improving employment. The development of many industries also requires high -skills and low -skills labor. The healthy industrial upgrade can drive the needs of relatively lower skill workers and reduce the unemployment rate. Especially in areas with relatively poor economy, this effect is more obvious.

Again, with the improvement of my country's per capita income, in more regions, industrial upgrading is gradually transforming from the original labor -intensive type to capital -intensive and to skill -intensive types. Therefore, if you want to achieve upgrading, the human capital you need is getting higher and higher. More skilled labor is needed. He must invest in human capital. This is the prerequisite for industrial upgrading.

Many empirical studies have shown that in order to increase the salary income of ordinary people, it is important to invest in human capital, including education, such as education, on -the -job education, skills training, and the health of employees. These human capital investment can help the population in the poorest areas to get rid of poverty, allowing them to have more employment opportunities, including more opportunities to enter large cities, entering industries with higher returns, so that they can enter the middle class faster.

At the same time, we can't just talk about education and not industrial upgrading. According to the theory of new structural economics, at different stages of development, the most suitable level of human capital investment is also different. To meet the structure of our industrial development at this stage, only the supply structure and industrial upgrade of human capital will be upgraded. The demand structure of human capital is well matched enough to truly promote the upgrading of the industry and make the return on human capital investment the highest. If the investment in human capital is excessive, it will not only occupy the resources of other social production activities, but also those labor forces that have obtained high human capital can not find enough job opportunities in their own country, which will easily cause social contradictions; Insufficient investment will curb the industry upgrade (Wang and Tang, 2020).

Finally, in order to allow certain industries to achieve a healthy and sustainable upgrade, there are also corresponding requirements for the revenue distribution structure, and the gap between the rich and the poor cannot be too large.

The income demand of different industries is different. Some industrial production necessities, and some of which are producing luxury goods. The consumption structure of the rich and the poor is also different. For those products and services with high added value and high income demand elasticity, and relatively high -quality services, how large the total demand in society is, not only affected by the total income level, but also depends on our income distribution Essence If only a small amount of products and services can afford to buy, the total demand for these products and services in society is relatively low, so companies may not be willing The technology, because such technology usually requires a large fixed cost investment. Only when the total demand of society is high enough, companies that pursue maximum profits are willing to make such a fixed cost investment. When the total social needs of society are insufficient, enterprises cannot produce large -scale production, so they will choose to be more suitable for small -scale production technology. Usually, marginal production costs will be relatively high. To.

It should be noted that the problem of insufficient total demand is not only the constraints that the non -trade service industry often faces when upgrading, but even for those trade -available products and services, due to the existence of international trade costs, and during product development, the period of product development and development Usually it is only sold in the domestic market, so domestic demand is still the most critical. Domestic income distribution directly determines the total consumer demand for these products and services. Now that "dual cycles" have been said, the proportion of net exports in my country ’s frequent projects is close to 0. It can be said that it is very low. Therefore, the total demand mainly depends on domestic demand, including internal consumption needs and investment needs.

For these relatively high -end industries, in order to achieve industrial upgrading, they need to intervene in the distribution of income of the whole society, such as the progressive tax of income income, and transfer to the middle class and low -income groups after taxation from groups with particularly high income. For the total needs of these relatively high -end products to achieve the technical upgrade of the industry. The larger market demand can make the scale of production larger, and it is easier to stimulate technological innovation. It can improve production efficiency from "dry middle school", which can further reduce production costs and improve product quality (Matsuyama, 2002). In this way, it is easier to enter the international market and form a virtuous circle. Conversely, if there is no good revenue distribution structure, the corresponding upgrades of these industries will be terminated and stagnated. Therefore, using industrial upgrading as the starting point, it can also be used to guide how to make the revenue re -distribution policy more efficient. 02. The relationship between the industry upgrade and common prosperity of the way to change the road

New structural economics divide industries into five major types: leading, catch -up, transition, transforming models and strategic types (Lin Yifu, 2017; Lin Yifu, etc., 2018). The fourth category of these five types of industries is the transformation of the road -to -road industry. It is a relatively new industrial format. For example, it is like a unicorn enterprise and grows very fast. (The so -called unicorn enterprise is that it has been founded for less than 10 years, but its market valuation has exceeded $ 1 billion in non -listed companies. If it exceeds $ 10 billion, it is called a super unicorn.)

At present, there are more and more unicorn companies in China. Many of them have the characteristics of platform economy and digital economy. They are data -intensive production technology. The characteristics of scale remuneration are very strong. We are now experiencing the fourth industrial revolution. Therefore, when industrial upgrading, we very much hope to work hard to apply data technology and artificial intelligence technology to the industry well, but at the same time, it is easy to make these industries monopolize. The principle of economics tells us that monopoly usually causes efficiency losses, is not conducive to market competition, and is not conducive to the long -term development of the industry. Therefore, in order to upgrade the industrial health, antitrust needs to be carried out in a reasonable interval, which will objectively have a positive effect on income distribution.

In addition, for these data -intensive industries, our people are data providers of the platform economy. When we buy services provided by companies such as Didi, Meituan, we actively provide a lot of data, but these contain customer privacy information The ownership of the data and the right to use are actually taken away by the enterprise, and the enterprise is repeatedly used these data. To make data as a production factor that can really effectively participate in income distribution, we first need to regulate the ownership and distribution of data, and confirm the right. Now there are international literature studies that the effective balance between economic efficiency and customer privacy protection must be returned to customers, and the ownership should not be given to the enterprise, because the latter does not protect the customer's privacy active incentives ( Jones and Tonetti, 2020). The ownership and distribution of data to consumers will enable more vast people to get more income from this data -intensive industry, and will further promote the optimization of income distribution.

The above discussion of the relationship between industrial upgrading and common prosperity shows that healthy and sustainable industrial upgrading is an important starting point for achieving common prosperity.

03. Tax structure issues in common prosperity

Regarding common prosperity, the third point I want to say is the tax structure. my country's taxation structure is different from the United States. Many taxes in China are mainly targeted at enterprises. However, many of the United States are tax on the income or behavior of residents, such as consumption taxes.

This difference in tax system can lead to many endogenous policies. If it is mainly taxed for enterprises, from the perspective of the government, its tax source is mainly from the enterprise. These governments will try to attract investment, better for enterprises, and hope that more enterprises will come in; For those, local governments want more people to come in, not more companies in. These two different tax systems will affect many local governments' decisions and incentives. It will affect our household registration system, population policy, industrial policy, etc., which will have a great impact on income distribution.

With the continuous adjustment of my country's economic structure and population structure, my country's tax system also needs to make corresponding reforms and adjustments in a timely manner (Wang Yong, 2019). This is a difficult task that needs to minimize policy loopholes and reduce arbitrage "tax avoidance".长期以来，主流经济学中有个比较盛行的重要观点认为，对于企业或资本征税，对于富人征税，其实就是对投资征税，会降低投资回报率，从会降低经济增长的速度( Lucas, 1990), from the perspective of efficiency, it should be levied on consumer taxes, especially for consumer goods with low price demand.

In addition, economists generally believe that in the market economy, income and capabilities and efforts are positively related. If the progressive tax of income is levied, it is to levy more taxes on people who work harder and work harder. As a result, their work enthusiasm is not conducive to making big cakes.

Therefore, economists have been studying the balance between efficiency and distribution under the condition of information asymmetry, and formulate the optimal tax rate (Mirrlees, 1971; Kochelakota, 2010). In our country, although I believe most rich people have become rich because of their ability and efforts, and the grasp of opportunities, it is undeniable that a considerable number of people are not mainly because of their ability or hard work. Corruption or skirting relationships, seeking policy arbitrage opportunities. This part of the wealthy group has led to the easy psychology of the society. If it can be used to anti -corruption for a long time, and a part of the stolen money repaid for anti -corruption is used for poverty alleviation, then it will also play a positive role in improving income distribution and alleviating social contradictions, and it will help improve the social image of the rich. Establish the correct view of wealth. When we discuss income distribution, we need to consider how the tax system itself is reforming. We need to realize that the tax system itself will not only affect the first distribution of the cake bigger, but also affect the secondary allocation of direct legal adjustment of the income distribution. All three times. There are so many rich people who are willing to do charity and donation. At least some of them can be exempted from donation. Instead of being forced by the government by taxes, it is better to take the initiative to give back to the society by their preferences.

04. Promoting common prosperity needs to continue to deepen market reform

To promote common prosperity, a very important aspect is to continue to deepen market -oriented reform. In particular, the integrated reform of the element market.

Only when labor, capital, land and other production factors can fully participate in market allocation can we improve the efficiency of factors and make better cakes. At the same time, the owner of the element increases income due to the improvement of the element return. A worker with the same skill, if you can work in a new city, may get a lot of income higher than before, the worker also wants to go to this new city to work and live, but because of the restrictions of various administrative barriers This good thing has not happened. It is also a dollar. If the financial structure is efficient, it can be configured to the production activities with higher returns, and if there is no efficiency, it may be configured to activities with low returns. It is also a piece of land. It is idle in some places, but in other places, but the supply is in short supply. Why can't we avoid this waste and resource mismatch through market -oriented reform?

In addition, if there is no good market environment, no more people will engage in innovation and entrepreneurship. Those who have entrepreneurs who can only be talented can not become entrepreneurs. "Wealth" is not conducive to "common prosperity".

05. Combining the effective market and the government should be combined with the government

In the end, I want to emphasize that on the road of pursuing common prosperity, it is necessary to combine the "valid market" with "the government". One of the sakes of the government is because of the situation and promoting industrial upgrading. For the five categories of different industries, the most suitable policy that the government should adopt is different (Lin Yifu, 2017; Wang Yong, 2021). New structural economics advocates the industrial policy of "market -led and government guidance". When helping to develop the economy in Tibet, the main time was that our central government directly supported Tibet's financial and property through transfer payment. Later, he changed his mind and gradually formed cadres to support Tibet. In developed provinces or one -to -one cities and counties in central enterprises and cities and counties in Tibet. Give play to an important role, from the previous property support to the support of knowledge and the support of government management capabilities. After the aid cadres in Tibet are in place, according to the actual situation and needs, the government that provides support to the counterparts to provide more targeted specific help. Later, it was found that the effect of this assistance was very good, from the original "granting fish" to "granting to fish". This model of helping developed regions is more in line with my country's political system and specific national conditions (Wang and Ren, 2021).

Of course, the government in new structural economics is different from the government of "chaos", and also different from the government (Wang Yong, Huaxiu Ping, 2017). The government is based on "valid markets". If the government does too much, it will become chaotic. If you should do it without doing it, it is "inaction". Regarding the effective market, the most important thing is that the national market integration reform of production factors needs to be further improved. Otherwise, income distribution will neither efficiency nor fair.

references:

[1] Jones, Charles I., and Christopher TONETTI (2020).

[2] Ju, Jiandong, Justin Yifu Lin, and Yong Wang (2015), “Endowment Structure, Industrial Dynamics and Economic Growth”, Journal of Monetary Economics 76, 244-263[3] Kocherlakota, Narayana. R. (2010) . The new dynamic public finance. Princeton University Press.

[4] LUCAS, Robert. E. (1990), "SUPPLY-SIDE Economics: An Analytical Review". Oxford economic payers, new server, 42, 293-316.

[5] Matsuyama, Kiminori. (2002). The rise of masumption societies. Journal of Polictical Economy, 110 (5), 1035-1070.

[6] Mirrlees, James A. (1971) "An Exploration in the Theory of Optimum Income Taxation." The Review of Economic Studies 38, No. 2 (1971): 175-208.

[7] Wang, yong and xuemin tang (2019), "Human Capital, Industrial Dynamics and Skill Premium", Working Paper

[8] Wang, yong and lixia ren, (2021) "Idea Flows: Theory and Evidence from the Aid Program of China’ s Central Government to Tibet ", working in progress

[9] Lin Yifu (2017), "Industrial Policy and the Development of my country's Economic: Perspective of New Structural Economics", [Shanghai] "Fudan Journal (Social Science Edition)"

[10] Lin Yifu, Zhang Jun, Wang Yong, Kou Zonglai (2018), "Industrial Policy: Summary, Reflection and Outlook", Peking University Press,

[11] Wang Yong (2004), "Endogenous Alliance, Economic Growth and Revenue Distribution", "World Economy Wenhui"

[12] Wang Yong (2019), "From the perspective of new structural economics, see the current fiscal policy adjustment of our country", "Learning and Exploration"

[13] Wang Yong (2021), "New Opportunities and New Challenges of China's Industry Upgrade during the" Fourteenth Five -Year Plan "period: perspective of new structural economics", "International Economic Review"

[14] Wang Yong and Huaxiu Ping (2017), "The Connotation of" Affairs Government "in the new structural economics: a reply to Professor Tian Guoqiang", "Economic Review"

[15] Wang Yong, Shen Zhongkai (2018), "endowment structure, income inequality and industrial upgrade", "Economics Season"

[16] Wang Yong, Lin Yifu, Ju Jiandong (2019) "The Government and Industrial Policy of the Government and Industry: a New Structural Economy Model", the paper of new structural economics

Wang Yong: Member of Chang'an Street Reading Club and Deputy Dean of the New Structure Economics Research Institute of Peking University

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