Consumption and demand can be divided into four grades. The first grade is necessary consumption of clothing, food, housing and transportation. The second grade is ordinary consumption, which means buying some more clothes and purchasing TV sets and washers, etc. The third grade is extravagant consumption, which means going to hotel and restaurants, taking cars and going to dancing-halls, etc. The fourth grade is over-extravagant consumption.
Today, there is still a numerous unemployed army in the world, who is living a miserable life. And there are still quite a lot of people whose living standards are very low. They even fail to reach the necessary consuming level of the first grade and are also leading a very hard life, just like the unemployed people. Therefore, I think any country should set up a project of relief fund. According to the scientific and technical production levels of the present world, it is completely feasible for a country to grant relief fund, and this should be done.
What should we do to raise the living standards of poor people? I think the following steps should be taken: 1. The government should carry out market regulation, urging the market to produce sufficient necessary consumer goods of the first grade to meet poor people's needs for necessary consumes goods of the first grade. My article "ON WHATS MARKET REGULATION AND ON RELATIONSHIP BETWEEN MARKET AND GOVERNMENT" website:<http://www.geocities.com/WallStreet/Exchange/3058/marketaa.html> has had a detailed exposition on how to carry out market regulation. 2. The government should increase the taxes of the consumer goods of the third and the fourth grades and make use of this money to grant relief fund. 3. If this money is not sufficient for the needs of relief fund, the government should carry out the policy of financing deficits, instructing the central bank to issue more paper money to solve the difficulty of relief fund. The number of the issued more paper money may be enormous. For instance, at the beginning of 1980s, the yearly financing deficits of the USA is over 100000 million dollars, the increase of paper money will undoubtedly give rise to inflation, but inflation is no excuse for government's refusing to grant relief fund. Is there any country that has got no inflation? 4. The government should make laws to fix a minimum wage level in accordance with the economic situation of the country and make it clear that the wages of all the workers oughtn't to be lower than this level. 5. When poor people can't afford to buy their houses, the government should offer money from taxes or increased paper money to build a large number of houses every year and rents them to poor people charge-free or at a low price, thus making every family possess a house of 25-35 square metres so as to meet poor people's lowest housing needs. 6. When poor people have relief fund in hand, their consuming capacity will be improved, leading to an increase in the social needs for necessary consumer goods of the first grade and, as a result, the profits of enterprises producing consumer goods of the first grade will increase, too. In this way, more and more people will invest in the production of necessary consumer goods of the first grade. With more investment, there will be less unemployment, which is the truth. 7. With relief fund in hand, poor people won't stay home with nothing to do, for it is really unbearable for one to have no thing to do all day long. They are sure to work with jobs offered and reasonable wages. 8. If the government of a country fails to take measures to raise the living standards of poor people and compel them to improve their living standards all by themselves, they will unavoidably commit crimes, resulting in a rise in the criminal rate. I think any government and its people won't expect a rise in the criminal rate of their own country.
Nowadays, most countries all over the world use Harrod-Domar Growth Model to judge the economic growth of a certain country and, according to this model, calculate this country's economic growth rate. This method of calculation is really unfair for poor people, for it fails to judge whether the poor people's living standards have been raised. For example, the yearly economic growth rate of China has reached 9-10 percent, but the poor people's living standards of China haven't been raised. There are still a lot of people suffering from cold and hunger. They can't afford to send their children to school, and, as a result, too many children are deprived of education. Therefore, a new economic theory is badly needed to judge a country's economic growth. My article "ON THE DEVELOPMENT OF SOCIAL ECONOMY" website:<http://www.geocities.com/WallStreet/Exchange/3058/development.htm> has established a set of complete economic theories and also a new model of economic growth, by means of which we will be able to judge a country's economic growth accurately and fairly.
-- Ju-chang He SHENZHEN, P.R. CHINA E-mail address: <chang at public.shenzhen.cngb.com> Welcome to visit My Home Page at <http://www.geocities.com/WallStreet/Exchange/3058/>