Smart Buddha Daddy

  I have a friend who works as a journalist in a “strong second-tier” city and has worked in financial journalism for more than 10 years. He has insights on the economic trend. In early 2019, he said he bought another house, in his early 100sqm, in the city center.
  Why buy this house? He said for two reasons.
  The first is that cash is kept and will be “confiscated” by more than 10% by the currency of the financial system every year. When buying stocks, I feel a little bit bloody, and most people cannot afford the stock market toss.
  Secondly, her baby’s only daughter was mindful of the third day of school, and her grades were good, but she was not sure if she could go to a famous school after 4 years. Therefore, it is better to prepare a “dow dowry” as early as possible, and the girls will not be bullied after getting married with a weighty dowry. “In the TV series, 90% of the daughter-in-law who was bullied by her mother-in-law and forced her to have a second child and a third child were due to poor family?”
  After listening to my friends, I immediately felt the father’s wisdom. Especially the second point-friends made very rational investment trade-offs for their children’s future life, instead of rampaging like ants on a hot pot, as many parents do. To my surprise, the daughter of my friend for so many years did not take piano or dance classes, only a calligraphy class. Friends say that he is the father of the Buddhist department, while others are “tiger”.
  Why not take those extracurricular classes? Quite simply, the return on human capital investment is very uncertain, but the return on capital investment is definite. Moreover, excessive investment in human capital can damage children’s minds and destroy their childhood. Furthermore, future economic returns may also be low. Of course, this child may also become a successful entrepreneur and capitalist, but this probability is extremely low.
  I have seen a number of statistics. In 2010, officials of the National Federation of Trade Unions revealed that the proportion of China ’s residents ’labor compensation to GDP reached a peak of 56.5% in 1983 and continued to decline. It has fallen by almost 20 percentage points in 22 years.
  From 1978 to 2005, in sharp contrast to the continued decline in the proportion of labor compensation, the proportion of capital compensation in GDP increased by 20 percentage points. In response, officials of the National Federation of Trade Unions expressed hope that relevant departments could introduce policies and measures to increase the proportion of labor remuneration in the initial distribution.
  Obviously, when most people become professionals, they will be wage earners rather than entrepreneurs who depend on capital gains. After all, the probability of a successful business is too low. Therefore, the proportion of labor income in the primary distribution is indeed related to the vital interests of most people. So what are the future megatrends? Will the distribution balance be skewed towards labor income or capital income?
  Must look at the big picture. My judgment is that from a global perspective, the situation is very optimistic. First, we must judge who made the initial allocation. It is determined by power, and power can formulate tax policies to regulate the initial distribution. For ordinary people, personal tax and real estate tax are two typical, one is the tax on labor remuneration, and the other is the tax on capital income. But you will find that the growth of individual taxes is rigid. Real estate taxes have been called for many years, but never really levied.
  Secondly, we must understand a global issue. The bargaining power of capital over state power will become higher and higher. Because capital flows across borders are much easier than labor flows across borders. A simple example is that the wealth of the rich is easily transferred out of the country through various means and converted into US dollar assets, while ordinary people are much more troubled to immigrate.
  Therefore, for the purpose of retaining capital, in many countries around the world, power will increasingly please capital rather than workers. In other words, the financial policies of various countries will become more and more friendly to capital, giving them low taxes and exemptions, plus interest rate subsidies and franchising treatment. Laborers will become the most stable “tax base” in the economy, maintaining the stability of the fiscal and financial system through deposit and loan interest rate differentials, taxes (direct and indirect taxes), and payment on asset prices.
  A friend said a few days ago that her daughter intends to go to Beijing, Guangzhou and Shenzhen after graduating from college. He also has to find ways to make more investments, because two sets of houses in second-tier cities can replace one set of houses in first-tier cities.