Chapter 1347 Crisis Awareness

This transformation attempt of the Bohemian Province was actually promoted by the central government of East Africa. After all, the East African economy is still relatively hot, and the hot economy can cover up many urban development problems.

The reason why Ernst chose the province of Bohemia was not only due to the unbalanced industrial structure of the province, but also because Bohemia itself is located in the inland area of ​​East Africa, and development in the inland is not as easy as on the coast.

Ernst had a premonition that the world's economic forces would face a serious crisis after the European war ended, especially after European countries restored economic production order.

When the war broke out in Europe and the Middle East, the rest of the world was not idle. Except for countries like East Africa and the United States that had accumulated terrifying industrial production capacity, the industries of Japan, the Far Eastern Empire, British colonies, and even South America had to a certain extent. has been greatly developed.

Among them, the development of British colonies is relatively prominent. Regions such as Canada, Australia, India, and New Zealand have received a large number of industrial orders from the British mainland and have established many enterprises.

Take Canada for example. During the war, Canada's industrial investment increased nearly twenty times compared with normal times. The United Kingdom and the United States invested in many factories in Canada to produce warships, weapons and other important materials. They also exported large amounts of agricultural products, becoming an important factor for the Allied Powers. Logistics base.

During World War I, the entire world's industrial production capacity increased rapidly. This was a very dangerous signal, which meant that the postwar world economy was bound to face a major crisis.

And Ernst had a premonition that this economic crisis might still surpass the previous world economic crisis of 1929. After all, under Ernst's influence, the behemoth East Africa emerged, which further contributed to the blind expansion of world production capacity.

The time when the world economic crisis broke out this time was probably after Europe completed the war and reconstruction, which took about five to ten years.

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Rhine city.

Ernst discussed his predictions with East African government officials.

"Currently, the empire's industrial overcapacity is serious. This round of rapid industrial growth is mainly driven by the stimulation of the European war. Once the war in Europe ends, European orders will decrease, which will inevitably have an impact on the empire's economy."

"This impact may have a lag, because under the market economy, investment is blind. Today's good business environment has given investors and entrepreneurs confidence."

"But our government should not have this idea. We should know that the rapid economic development in the previous years was caused by the war in Europe."

"Therefore, the government must be aware of dangers, correct the 'advantage' and 'blindness' in the economic field, guide private investment back to rationality, and at the same time guide high-quality economic development, from blindly pursuing quantity to focusing on quality and innovation."

A simple thinker knows that a massive industrial oversupply crisis will definitely break out in the future. After all, the market is so big, but all countries are expanding their own industrial investment, which will inevitably cause indigestion in the world economy.

Although industrial development represents the progress of productivity to a certain extent, if distribution is not done well, blind development of industry will inevitably lead to the collapse of the world's original market order.

Hans Layton, Minister of Commerce of East Africa, said in cooperation: "Not only that, but now our trade with Europe has actually revealed certain risks. The five-year war can be said to have left European countries heavily in debt."

"So, we should worry about whether European countries are at risk of defaulting after the war. Of course, Americans are definitely more worried about this issue than we are. The United States is now Europe's largest creditor, but the scale of our debt and that of European countries is not small. ”

To a certain extent, this is also the reason why East Africa jumped out to promote peace in Europe at this time. Europe can hardly suck out much blood, and the orders from European countries are just a bunch of white slips.

Debt can certainly affect European politics, but only if it is backed by military strength and countries dare not default on their debts. However, Europe happens to be the most militarily powerful sector in the world.

When the debtor holds the "truth" in his hands, this is not a good thing for the creditor. What's more, the financial industry in East Africa is not as developed as that of the United States. Even if the politics of Europe can be manipulated through debt, the beneficiary will obviously not be in the end. East Africa, not to mention European countries themselves are not good men and women.

So Ernst said: "Europe's debt problem must always be maintained within a reasonable range. We cannot count on the conscience of European countries, so we must further strengthen the debt review of Europe. In trade with Europe, we must make real money Silver, or hard currencies such as equipment and technology that can arm the country’s economy and industry.”

"The general direction of the imperial economy is to digest the fruits harvested during the war, stabilize the steady and healthy development of the national economy, promote the adjustment of industrial structure, and rebuild the moat of the domestic economy."

The economy of East Africa can be described by the word "freedom", which makes East Africa's economy, industry and urban development expand and expand rapidly like taking a tonic.

However, the hidden dangers behind this radical liberal economic development model are huge. After all, East Africa has not established a supporting and stable economic system to accommodate and digest this kind of economic results obtained by encouraging the growth of young people.

If this contradiction is not properly handled before the arrival of the next economic cycle, economic indigestion will have a huge impact on East African society and greatly weaken the vitality and potential of economic development.

With Ernst's words, this also means that at the current stage, East Africa's economic development will shift from liberalism to conservatism again.

Why is it a new one? Because in the past, East Africa's own economy has been in a "conservative" state for a long time. However, this conservative state has also been gradually relaxed as time goes by.

For example, in the last century, the East African economy can be described as closed. It not only refused investment from other countries, but also, like North Korea in its previous life, rarely communicated with other countries, especially developed countries such as Europe and the United States, in other fields.

Later, as East Africa gained a certain ability to protect itself, East Africa began to liberalize its coastal areas. After the South African War, it began to absorb a large amount of foreign investment. Finally, it was not until World War I that it completely lifted the economic ban and encouraged the development of private economy and the world. trade exchanges.

However, the wind direction has changed again. Of course, this does not mean that the East African economy will return to the era of planned economy, but that it will return to conservatism to a certain extent.

This is what Ernst meant by establishing an economic moat in East Africa. To put it simply and straightforwardly, it means re-establishing tariff barriers to cope with the impact of the possible world economic crisis on domestic enterprises and industries in East Africa.

And this process, according to Ernst's idea, definitely cannot be done in one step, but must be done step by step. Many of them may even be plans that can be laid out immediately after the economic crisis arrives.

So Ernst said: "Now the East African economy is deeply bound to the world market, and the global economy is closely related. If an economic crisis breaks out in Europe and the United States, it will inevitably be transmitted to East Africa. Even if we do not adjust our economic policies, there may be an economic crisis. It broke out first in East Africa.”

"Therefore, we must try our best to adjust our country's economic development situation, especially to reshape our country's industrial structure after the war, so as to adapt to new international market changes."

"To ensure that the crisis does not break out in East Africa first, and if a world economic crisis occurs, the government must have reliable plans to minimize losses. It is best to achieve a positive cycle of the domestic economy and ensure the stability of foreign trade through technological innovation. "

"Of course, the economic crisis will definitely not happen immediately. According to my expectations, it is more likely to happen after 1925."

"So our country's economic development should be relatively stable and may even continue to prosper."

"The government's job is to take advantage of this prosperous period to provide supporting facilities and policies, accelerate industrial upgrading and transformation, eliminate backward enterprises, support high-quality innovation and technology-based enterprises, eliminate backward industries, and develop emerging industries."

According to Ernst, the economic crisis is like a flu, and only those with strong immune systems are spared and recover first.

The so-called immunity for East Africa means a high-quality industrial structure, a fair market environment, enterprises with vitality and core technologies, etc.

"Take the steel industry, for example," Ernst said. "During the world wars, our steel production climbed to nearly 40 million tons."

"However, a large part of this is stimulated by external markets, orders from Europe, or demand from lagging regions such as the Far East."

“Rather than being produced due to domestic economic development needs, if the external market collapses and we fail to make corresponding adjustments, then there may be nearly millions of tons of excess production capacity in the domestic market for nothing, and there will also be It may face dumping competition from international steel and further expand the losses caused by excess production capacity.”

East Africa's annual steel production once reached 40 million tons, which is six to seven million tons more than the United States, the world's second largest steel producer.

A large part of it is mainly supplied to Europe or other markets. At its peak, this market absorbed nearly 10 million tons of production capacity. That is to say, at the peak of East African steel exports, the export of steel and related products was almost equal to that of the United Kingdom. Steel production for the entire year.

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However, after 1917, East Africa's exports of steel and related products fell back to the level of millions of tons.

Compared to East Africa's nearly 40 million tons of steel production capacity, the proportion of millions of tons is actually not very high, but this is mainly because East Africa itself is a large steel consumer.

East Africa has a population of 160 million, a huge industrial scale, rapid economic development, and rapid urban and infrastructure construction, so its own steel demand is definitely indispensable.

But millions of tons is already a very astonishing figure. You must know that the annual steel production of most countries in the world does not reach one million tons, and those countries that can exceed one million tons can fully be called Industrial powerhouses, such as Belgium before the war.

Therefore, Ernst said: "The problem of overcapacity must be gradually resolved and returned to a reasonable range."

"Take steel production companies as an example. Some steel plants with low technical content or serious waste must be closed down for rectification or even eliminated. Some companies with technological innovation must be encouraged."

"In this way, eliminating backward enterprises will free up the market and use it to cultivate enterprises with strong competitiveness and technology. Only such enterprises with core competitiveness will have more strength to compete with foreign enterprises. "

"Especially in the tax policy, certain adjustments should be made to encourage the development of technologically innovative and high-quality enterprises. For example, encourage the development of emerging industries such as electronic technology, electric power industry, alloy research and development, chemical industry, and new materials research and development."

"In the financial sector, rectification and correction are also needed. my country's financial sector has achieved initial development, but the problems exposed are also very serious. The experience of previous economic crises in Europe and the United States tells us that inadequate supervision and excessive relaxation in the financial sector are also important causes of economic crises."

After all, the first investment of many entrepreneurs comes from banks and other financial institutions, and the inadequate use of these funds can easily lead to bad debts and thus thunder. The last economic crisis started from the financial sector in Vienna.

"Finally, it is the private sector. East Africa has now entered the era of market economy, and the proportion of private investment and private enterprises has exceeded that of state-owned capital, but the government cannot really let it go just because of the identity of private enterprises."

"It is also necessary to severely crack down on disruptors of market rules, rectify the market atmosphere, and at the same time support high-quality enterprises to improve the market's ability to resist risks."

Enterprises are related to employment issues. If too many enterprises go bankrupt during an economic crisis, it is easy to cause serious social problems, but the East African government certainly does not have the ability to be the head of all enterprises.

And private enterprises are more pure than East African state-owned enterprises, and do not have corresponding social responsibilities and political tasks.

However, even in this case, many companies are still blinded by profit, and do not produce actual social value, but instead destroy the market environment and atmosphere.

To give a typical example, during the frenzy of railway construction in the United States in the last century, there were many shell railway companies that made money out of nothing. Such companies may not have built an inch of railway, but they made a lot of money by hyping up stock prices through public opinion.

Their existence not only made the last shareholder lose everything, but also brought bad social atmosphere. After all, many railway companies sincerely built railways, but not only did they not make money, but they also suffered losses, while shell companies that used railways as a cover to speculate in stocks made a lot of money. Who can accept this psychological gap?

The final result is that more and more railway companies choose to take "shortcuts", which triggered the economic crisis in the United States in the 1970s.

In order to stimulate the development of the private economy, the East African government has been relatively lax in management, so this situation is inevitable. Now the East African government has to do nothing more than "set things right" and let the market order return to normal.

Only after the market order returns to normal can we rebuild the confidence of enterprises and consumers and allow truly responsible and hard-working enterprises to develop.

Of course, East Africa has been developing rapidly in recent years, so although there are many economic problems, it has not caused much impact. After all, when the economy is good, there are many opportunities and the tolerance rate of ordinary people is high, so they will not be desperate.

However, if we pretend not to see it because it has not caused any impact for the time being, it will only bring bigger problems when it breaks out in the future. If the East African government wants to rectify the market environment, it will definitely experience a period of pain, but compared with waiting until the economic crisis to lose everything, the so-called period of pain is insignificant.

This also means that the East African economy will definitely not be as bright as before, and may even enter a state of relatively slow economic growth. This is the first time in East African history. Before the 19th century, due to territorial expansion and other reasons, the East African economy has been in a period of rapid growth, and in the first two decades of the 20th century, the East African economy has been developing at a high speed, so it may be the first time that the East African government has played against the economic wind.