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    Zhu Xiaohuang: Why can bad money drive out good money?

    2018-07-23 09:12:30

    Mongers Report Financial Law Behavior Research Association

    preface

    In the current multiple social fields, there are regular phenomena in which bad money drives out good money. What are the root causes of these poor differences in expelling good phenomena? In fact, bad money drives out good money. This is the expression of humanity's profit and greed. The key point is to pay attention to the current situation, give up the long-term, and only have a small environment, giving up the big pattern. Specifically, there are three direct reasons:First, the imbalance between rich and poor;Second, power loses its constraints;The third is to supervise bankruptcy and the rules are invalid.

    There is no perfect institutional arrangement in the world to make fair and equitable, current long-term, risk-reward, and poor-quality excellent absolute choices, but the direction of civilization should be excellent and growing, and the inferiority is shrinking. convergence. This is the ultimate destination of human nature.

    First, bad money drives out good money

    In financial and monetary studies, bad money drives out good money with two basic meanings.One is that in the process of using modern banknotes, people often choose to use the complete and clean new coins to collect and tend to use old and broken banknotes, so that the new currency will be withdrawn from circulation. In addition, the more initial meaning is that when a country simultaneously flows two currencies with different actual values ​​and the same legal price, such as gold and silver, the currency with high actual value or gold and silver (good money) must be melted and collected. Or export and exit the circulation field, while the currency with low actual value, such as the lack of fine gold and silver (bad money), is flooding the market.In the 16th century, the British "Grechen phenomenon" means that consumers retain the currency with high storage and use the low-quality currency for market trading and circulation.

    Regardless of gold and silver coins or banknotes, there are regular phenomena in which bad money drives out good money.When the dollar rises, people will throw out the yuan, hold the dollar, and throw out the depreciating currency, that is, the bad money, more into circulation. When inflation occurs, people will collect gold and silver that are relatively stable in storage value, and use inflation paper money for payment.

    A similar phenomenon can be found by extending this eviction to other areas of society. For example, the cost of living in the city is too high, especially when housing prices are high, the social elites whose income is not enough to resist housing prices will gradually find it, but those who have money but are of low quality can stay. In the long run, the structure of the urban population will The emergence of the expulsion elite effect has led to a decline in the management level of the city. In the enterprise, if the evaluation incentive mechanism is not perfect, the low-energy people may be better at catering to the assessment indicators and the will of the leadership, thus gaining institutional recognition and rewards, such as the prevalence of formalism and even the imaginary number of false numbers, thus having a pragmatic and innovative ability. People who are unfair, long-term, will inevitably expel high-capacity people, and fundamentally damage the interests of enterprises.

    However, all the unreasonable expulsions in the big pattern are gradually realized in the optimal choice in the specific small environment, silent and irresistible. Unreasonable expulsion is formed under the institutional framework, and its evil consequences will only appear in a long period of time. and soPreventing and cautiously dealing with various systems and rules. The strategic misconduct of leaving bad money to drive out good money is a very important and far-reaching concept of corporate management and even risk prevention.

    Second, poor exile is excellent

    Bad money is a very complicated concept. In addition to the value difference in the monetary sense, the valuable currency, that is, the good money, does not play a circulation function, and some anti-value phenomena can also produce the effect of expelling good money:

    Counterfeit money drives out real money.For a specific person, the money income he should hold is always limited. In a limited amount, the more counterfeit money, the less real money. If it is a poor person with a limited amount, the counterfeit currency is fatal.

    The bad guys expel good people.Competition is the norm regardless of the workplace in the workplace. If the rules cannot protect good people, that is, those who have rules and morals, then the good people in the competition must lose to the bad guys. Because competition under certain rules often becomes the competition for the bottom line of the character. The bottom line has a low flow rate, the bottom line has a high quality, and the quality is often washed away by the flow.

    Inferior products expel excellent products.The low cost of low-quality products, if there is no effective constraint of social supervision mechanism, it will easily expel the same kind of excellent products. If counterfeit products do not respect intellectual property protection, there is no research and development cost or technology payment, and of course, it is easy to expel technical innovation enterprises. . This expulsion will make the foundation of social and economic development desertification and become an unsustainable and inexhaustible, passive water.

    Yongcai expels talent.Starting from the instinct of human nature, the low academic qualification emphasizes the ability. In fact, academic qualification is one of the most powerful standards. The mediocrity and the avoidance of short-term tend to deal with interpersonal relationships, good at leaning and internal friction, strong dependence on enterprises, and relatively low cost. If the enterprise evaluation system is biased, it will expel a strong talent within a certain degree and scope.

    False numbers expel real numbers.Typical frauds such as local government economic data have caused the central government to distort the assessment of local performance, so that the counterfeiters win and the honests are eliminated. In the commercial field, Taobao's product evaluation system is designed to create full competition, break the information asymmetry, and help buyers make decisions. However, due to the prevalence of “single bills”, some sellers have created high-selling and high-scoring “explosions”. According to Taobao's search ranking rules, high-selling and high-scoring products are ranked in the forefront of search items, and businesses that rely on quality and service without participating in the single-sheet business are overwhelmed. There are similar phenomena on other Internet platforms, such as food and beverage reviews, movie box office and so on.

    Imitation eviction research and development.Due to the lack of a perfect intellectual property protection environment, counterfeit goods plagiarize original designs, occupying the market with price advantage, and investing heavily in research and development to gain first-mover advantage instead of becoming a straw that is competitive. The Indian generic drug in the recently broadcasted movie "I am not a drug god", because it does not need to do research and development to bear billions of dollars in research and development costs, so you can sell 20,000 yuan a month of medicine to 200 yuan a month, squeezed out The market capacity of genuine drugs, because the pricing of drugs involves patients' rights to life and fairness, will always involve a lot of social sentiment, so the counterfeit drugs in the film instead gain moral sympathy in China. In fact, the audience mixed the cost of product pricing and the two different issues of government welfare assistance and differential tariffs. The same eviction phenomenon exists in other patent fields. What is even more frightening is the phenomenon of fake drugs expelling genuine drugs. The recent long-term production of fake vaccines by Jilin Changsheng Company has been exposed. It is reported that the company has almost half of the vaccine supply market, which is of course the result of expelling genuine vaccine drugs. Although we can condemn the various regulatory agencies that have gone bankrupt, the power of counterfeiting and counterfeiting to drive out genuine and genuine goods is still derived from huge profits.

    There are still many evictions that are reversed and difficult to describe.

    Third, bankruptcy supervision

    The bad money to expel good money is just an economic and monetary phenomenon caused by the difference in value, and it will not produce negative and negative results.However, this phenomenon extends to other social fields, causing the poor side to expel the common phenomenon of the fine side. If it accumulates for a long time, it will cover the society in optimizing the structure, value creation, talent decline, cultural inheritance, technological innovation, long-term interests, The social operation infrastructure such as strategic conception and risk cost will eventually distort the “three outlooks” of society and individuals, causing a vicious circle of social development and failing to extricate themselves.

    The pervasiveness of the above-mentioned adverse effects and the widespread existence of good phenomena reflects the huge loopholes in social governance. Industrial production is inferior, food safety and even baby milk powder are disturbing. Production accidents emerged, traffic accidents were alarming, P2P scams plagued the public, counterfeit drugs caused panic, and so on, indicating that various regulations have gone bankrupt.Behind the failure of the regulatory function is the institutional structure in which governments at all levels are involved in economic and civilian competition. When all levels of government are involved in sharing huge profits, any regulatory function will be ineffective.

    Fourth, binding humanity

    What are the root causes of these poor differences in expelling good phenomena?

    In fact, bad money drives out good money. This is the expression of humanity's profit and greed.The key point is to pay attention to the current situation, give up the long-term, and only have a small environment, giving up the big pattern. The drive of interest is soaking all things like water. To guide the flow of these waters requires the ability of the society as a whole. Human nature is not a good or a bad, but a God's arrangement, but humanity also needs to follow the direction of the big pattern in the personal environment.

    What is the big picture? It is the rule of market competition and the legal system restricting public rights and the value orientation of social governance on this basis.

    Specifically, there are three direct reasons:

    First, the imbalance between rich and poor.Poverty makes people's desire for profitability easily exceed the expectations of normal capital interests, impetuous and unruly rules. The greater the gap between the rich and the poor, the more unbalanced people's psychology, the more likely it is to generate the impulse to use the rules to extract additional benefits, and even undermine the rules to obtain income. In this process, it is difficult to take into account long-term interests and overall interests.

    Second, power loses its constraints.If the administrative power that loses its restraint is involved in the actual economic transaction process, it will abandon justice under the drive of interests and become an excellent hotbed of bad luck.

    The third is to supervise bankruptcy and the rules are invalid.The failure of the rules and the lack of legal remedies have resulted in low cost of violations and high returns. This is not caused by simple moral misconduct, but by deeper imbalances in equity. Fairness imbalances make people doubt the fairness of the rules. Although such suspicions do not necessarily have a legitimate basis, when most people feel unfair, the expectations of the rules gradually become invalid. So the failure stems from the uncertainty of the expectations of the rules. This uncertainty stems from the willfulness of administrative power. The arbitrariness of any executive power is because power is too big to be bound. The administrative power to lose restraint is often a good running bridge for inferiority.

    There is no perfect institutional arrangement in the world to make fair and equitable, current long-term, risk-reward, and poor-quality excellent absolute choices, but the direction of civilization should be excellent and growing, and the inferiority is shrinking. convergence. This is the ultimate destination of human nature.

     Zhu Xiaohuang: Why can bad money drive out good money?

     Zhu Xiaohuang: Why can bad money drive out good money?

     Zhu Xiaohuang: Why can bad money drive out good money?

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