Constructing water channels for the Wealth River to further improve income distribution and boost consumer demand with monetary purchasing power.

According to data from the National Bureau of Statistics, the total amount of social retail sales from January to August increased by 4.6% year-on-year, maintaining an overall stable and progressive trend. But in August, the year-on-year growth rate of social zero was 3.4%, a decrease of 0.3 percentage points from the previous month; The month on month growth rate is 0.17%, although it has turned from negative to positive compared to last month, it is still at a relatively low level, and the recovery of consumption momentum is still weak.

Some opinions suggest that the low consumption momentum is due to the rapid decline in consumption rate, and there is an urgent need to effectively boost consumption. So, when discussing boosting consumption, does it mainly refer to promoting long-term economic growth or achieving short-term GDP growth targets?

In 1936, economist Keynes proposed a fable about bees in his famous "General Theory" - a group of bees that eat and drink all day long and are very prosperous, but quickly decline and collapse after listening to a philosopher's teachings on frugality. This implies that the national economy is the same, the more frugal it is, the poorer it becomes, and the more it consumes, the richer it becomes. This is the counterintuitive "paradox of thrift".

But is it really the case? In the short term, especially for the GDP growth target during a certain period under conditions of oversupply, the situation is indeed like this. Imagine France during the era of Balzac, if a candle manufacturer had an excess production capacity of 10000 candles per month (priced at 1 yuan per candle) and as a result, some machines and workers were idle, then the frugal Grandet would consume 10000 candles per month; But the next year, Grandet suddenly became more generous, consuming 20000 candles per month. The production capacity of candle manufacturers will be immediately released, idle machines and workers will also be put into operation, and the total social output will increase by 10000 yuan per month without significant cost changes. After deducting savings, candle manufacturers will also use the remaining portion of the additional 10000 yuan income for consumption, thereby increasing the income of other economic entities. This process is constantly repeated, and each round of consumption brings new income, leading to a doubling of total demand, which is the well-known multiplier effect.

However, in the long run, especially under non surplus economic conditions, the "paradox of thrift" does not hold. Imagine again, if Grandet did not increase his monthly consumption by 10000 candles, but instead deposited the money in the bank, this 10000 yuan would also be transferred by the bank to other enterprises or individuals in the form of loans to increase investment or consumption. This would not only generate GDP, but also enhance the productivity of the economy and society in the next period, or be more conducive to long-term economic growth. In addition, if the economy is already at the boundary of production possibilities and the optimal allocation of production factors, producing an additional 10000 candles will result in a cost increase of over 10000 yuan, and Grandet's new demand will inevitably not be met. At this time, there is no need to boost consumption.

Therefore, in the long run, investment is a means of obtaining more consumption in the future, and the distribution between investment and consumption reflects consumers' rational choice between "consume now or consume less now but consume more in the future". We should avoid the practice of 'making tomorrow worse for the sake of having a good day today'.

Against the backdrop of overcapacity challenges faced by some industries in China, combined with the current macro policies of strategic decision-making, we can answer the question mentioned earlier, that is, boosting consumption currently refers to encouraging consumption in order to achieve the target GDP growth rate in a relatively short period of time.

Research has shown that factors affecting residents' consumption rate include not only wealth quantity, income distribution, and growth expectations, but also the supply capacity of goods and services, social security level, and even cultural factors. Among them, income distribution is not only a medium - to long-term issue, but also has short-term marginal improvement space. If the income gap widens too much, it will reduce the consumption rate, which is caused by the decreasing marginal propensity to consume. When it comes to the issue of income distribution in recent years, we immediately think of the stories of sudden wealth in the digital age, such as a digital technology company that, once listed, will produce dozens of billionaires.

So, is the current insufficient consumption in our country caused by the widening income gap due to the digitalization process? Does digitalization reduce or widen the income distribution gap? Scholar analysis seems to be inconclusive. Most studies suggest that digital technology has widened income inequality and may lead to a concentration of wealth towards the top, due to factors such as greater rewards for high skilled workers, job displacement caused by artificial intelligence, and the "winner takes all" effect of online platforms. For example, the analysis conducted by Hong Junjie and others from Shandong University of Finance and Economics from 2011 to 2020 shows that during this period, the digital economy significantly widened the income gap between regions and between urban and rural areas. But there are also studies suggesting that digital technology can alleviate income inequality through various means such as lowering job barriers for certain positions, improving rural residents' entrepreneurial behavior, and promoting inclusive finance.

Returning to classical economic theory, national income mainly comes from wages, land rent, and capital profits. So, what impact has the digital economy brought to these fields?

From the perspective of labor force, the unmanned economy in the production process is advancing rapidly, with the rise of industrial robots (18.270%, 0.04%, 0.22%), unmanned driving, intelligent customer service, unmanned convenience stores, etc., indicating that the combination relationship between capital and labor in the digital age is weakening, leading to a decrease in employment and a decrease in labor income share.

From the perspective of real estate, the rise of online sales platforms that go to physical stores and intermediate links has had a widespread and profound impact on the offline wholesale and retail industry. The previously evenly distributed housing rent based on geographical space has been transformed into a concentrated digital rent based on a few top platforms.

From a capital perspective, the distribution of new digital capital represented by data and traffic shows significant inequality across the entire society and various social classes. A few digital giants have acquired a large amount of data capital and achieved higher capital appreciation rates through data-driven network effects; At the same time, top live streaming stars such as Li Jiaqi are also able to earn huge profits by controlling platform traffic more than ordinary users.

Of course, these issues are only some stage problems under the wave of digital economy, and denying the digital economy based on them would be absurd. As mentioned earlier, consumption needs to be boosted, not stimulated. Therefore, this year's government work report proposed the implementation of a special action to boost consumption, and the Political Bureau meeting of the Communist Party of China Central Committee held in April also clearly stated the need to increase the income of low - and middle-income groups and enhance the role of consumption in driving economic growth. Therefore, what really needs attention is to build water channels for the Wealth River, further improving income distribution to boost consumer demand with monetary purchasing power. According to the traditional Chinese medicine approach of treating the symptoms, there are three suggestions as follows.

Firstly, the current unmanned economy may have shown higher economic efficiency, but it should be cautiously promoted in industries and sectors that have a wide impact on employment. For example, according to data from the Ministry of Transport, there were 7.483 million registered ride hailing drivers nationwide at the end of October last year. They conveniently converted idle labor into effective employment by purchasing a passenger car at increasingly low prices. Based on this, autonomous taxis can be piloted, but they should not be widely deployed in the short term. Similar industries such as food delivery, banking, and labor-intensive manufacturing should also have a reasonable control over the pace of "unmanned" development.

Secondly, timely guidance and promotion of the rebalancing of online and offline economy, achieving a moderate reconstruction of income distribution in geographical space. For example, accelerating the construction of a fair and consistent tax and regulatory framework both online and offline; In the current vigorously promoting urban renewal action, more resources will be given to create a 15 minute convenient living circle, enhancing consumers' consumption stickiness to the real experience and high-quality service of physical stores; Support and encourage the development of successful offline retail models such as Fat Donglai and Joy City (3.370, -0.05, -1.46%). Some scholars have suggested that reshaping the horizontal distribution mechanism of taxation between regions is also worth exploring. For example, value-added tax comes from the creation of new value in society, and both production and consumption governments have contributed to value creation and realization, and should be shared together.

Thirdly, promote the redistribution of wealth created by digital capital, allowing workers to reasonably share the economic returns it brings. For example, in accordance with the law and regulations, accelerate the determination of ownership of some data assets with public attributes held by enterprises, and scientifically distribute the profits generated by them by the public sector for social secondary distribution; Actively guide mainstream platforms to allocate traffic reasonably to social welfare and the general public, and moderately reduce the gap in traffic distribution.

In summary, one of the prominent points to boost consumption in the digital economy era is to improve income distribution. As Su Shi pointed out in his book "Yu's Method of Connecting Waters", "The key to river management is to understand the principles and consider the human feelings. We should not only actively embrace the digital economy to promote the operation of this huge social wealth creation machine, but also timely build reasonable water channels to "streamline" and make income more evenly distributed, thereby effectively improving the overall consumption rate.