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All Governments Influence Spending
It is elementary economics that all governments influence spending. Sin taxes such as high excise taxes on cigarettes and liquor discourage excessive consumption in those less desirable areas. Tax credits encourage business formation. We are not talking about issuing scripts for everything. That has proven not to work. It is merely using modern technology to make the system of influencing spending more efficient. |
Issuing credit cards need not be costly or time consuming. It is already done. Each and every smart card ID already is a credit card., a debit card, an access control and tracking device, etc. All that's needed is to put in the back end, and voila, a part of the system becomes cashless and eminently trackable. Just the additional fiscal income from making it harder to cheat on taxes would pay for the system 100 times over. If it is cashless, all funds are always subject to the purview and taxation powers of the state. Anyone who "cons" the government would leave a trail a mile wide, and the beauty is that they cannot hide - their loot would largely still be in the system.
But back to the topic at hand. The focus here is WHAT could serve as an alternative to American T Bills. The argument is that China should boost domestic consumption. The question is how. If you don't like outright consumption, how about using the same 5,000 RMB per person to build a medical care delivery system? Print the same amount of money (which should show up as national debt). Instead of just using it pay insurance, add an entreprenurial element, and give each person a spending account instead, and also allow them to form coops for making profits. It all takes tweaking and there are risks involved of course, but the possibilities are very encouraging. Since most of that money would be spent domestically (except perhaps the small percentage, say 3-5% that would be spent on imported drugs), the recycled effects in the economy would be huge. It would also develop further medical expertise that can either b e exported, or new domestic industries (e.g. elective surgeries, convalescent and long term care, etc.) that can serve imported patients with good profits.
The cost? The nation would have a bigger national debt. But compared to Japan or America, the numbers are still glowing. Also, the higher debt ratio would likely lower the RMB and take off the pressure to revaluate. Several birds with one stone.