Late Yuan Dynasty: I am the true emperor

Chapter 395 Public Transport Economics (IV)
Hearing Tao An's question, Lu Jin wrote another line on the blackboard.

"So-called energy is the source of energy. This is a special term in physics. If you don't understand it, you can also think of it as the same thing as 'power' or 'heat', but energy is purer and has a richer source.

"Let's take a simple example. What can provide heat to people? Firewood and coal, right?"

Everyone nodded. If they had just mentioned coal, they would have understood. But according to Lu Jin, the sources of energy were more abundant, which meant that it was not as simple as coal.

"I heard that in the former Song Dynasty, the people of Bianjing burned coal instead of firewood, so the industry that provides coal to such a big city belongs to the energy supply industry. I also heard that the people of Bianjing in the former Song Dynasty also need to buy water for daily use, so the industry that provides drinking water to the city is called the water supply industry.

"The above are examples of energy and supply. As for why we have to classify the coal sellers and water sellers into two major categories, it is because we will need to supply far more than just these two items in the future. You will understand later.

"Also, I've heard that the people working in the city would buy charcoal and water after they got their wages, so wages and monthly wages are often called salary. This term has already appeared in the pre-Song Dynasty, so there will be more and more new words like salary, energy, and supply in the future, especially in the various subjects in the Gongshu Secret Code, which contain a lot of new words. You have to learn to adapt."

"Yes!" everyone responded in unison.

Lu Jin then knocked on the blackboard and said.

"Why do we divide various production activities in this way? It is to better govern the country. Now that the industries have been divided, how should we manage them? This is what Guanzi's 'art of lightness and heaviness' means."

Lu Jin wrote a few words on the blackboard again.

"What is the art of lightness and heaviness? It is to make the light heavy and the heavy light. It can be summed up in two words: balance and moderation. Guan Zhong proposed the Changping Warehouse System, which collects grain in good years and releases it in bad years. And what we just talked about, raising interest rates to absorb reserves during inflation and quantitative easing during deflation, are all applications of the art of lightness and heaviness."

Everyone suddenly understood what was going on when they heard this. If that was the case, then raising interest rates to absorb deposits and quantitative easing were indeed Guan Zhong's theories. No wonder Lu Jin had said before that this book on economics was a complement and extension of Guan Zi.

However, Lu Jin then said, "But I think Guanzi's method of light and heavy is still too narrow, or in other words, it is no longer enough in today's era. For the management of various industries in the country, we must not only balance and moderate, but also guide and support them appropriately, so that they can become a help and tool for the court to govern the country and quell rebellions.

"If you can manage the country's industries well, and even accomplish things that hundreds of thousands of troops can hardly do, this is what Sun Tzu's Art of War says: 'To conquer the enemy without fighting is the best of all'. So you must pay attention to this. In the future, if the prime ministers of the court say that they don't understand economics, it's simply laughable. Such people are not worthy of being in the temple!"

Everyone sat up straight upon hearing this, but Liu Zhang also asked curiously, "My lord, I still don't quite understand. This country issues paper money and even trades with foreign countries. It does need to use the art of lightness and heaviness to manage the industry. But how can we manage the industry with this art of lightness and heaviness to rival hundreds of thousands of troops?"

Seeing that he asked the question, Lu Jin was not angry, but encouraged him, "You asked a good question. For war and governance, the art of lightness and heaviness is indeed not enough. That's why I said that Guanzi's theory needs to be extended and supplemented. Therefore, I extended this art of lightness and heaviness to 'macroeconomic regulation' and 'microeconomic regulation'."

As he spoke, he wrote two new words on the blackboard again before turning around and speaking to everyone.

"These two words should be easy to understand. Macro refers to a broad perspective, representing the whole world, while micro refers to a specific industry or a geographical area, such as a province, a prefecture, or a county. You already understand the economy. Regulation is adjustment and control, which is a more complex and more effective management method than the art of lightness and heaviness.

“As for how to use it, I will give you two examples. First, the application of economic regulation in military strategy, how to achieve things that hundreds of thousands of troops cannot do through industrial regulation.

"It is said that reading history makes people wise. Looking at history, we can find that during the peak period of the Han and Tang dynasties, they were able to suppress the Rongdi in the north. Huo Qubing conquered the Wolf's Lair, drank water from the vast sea, took over the Hexi Corridor, and destroyed 36 countries in the Western Regions. The Tang Dynasty was also able to destroy the Turks in one battle, and even fought further west than the Han Dynasty.

"But have you noticed that in both the Han and Tang dynasties, the Western Regions were ruled longer than the Southern and Northern Regions? Moreover, the distance from the Western Regions to Chang'an is much farther than the distance from the Southern Regions to Youyan in Shanxi. Why was the Western Regions, which was farther away, ruled longer, while the Southern Region, which was so close, lost its rule? Who can tell me why?"

Everyone frowned and thought about it. This time, Chen Yu raised his hand first and said, "I would like to say something."

"Mr. Zhonghang, please speak."

Chen Yu then said, "I think it is a matter of military farming. Although both the Han and Tang dynasties won victories over the Rongdi in the north, they did not establish military farms in the south and north of the desert. Instead, they established military farms in the Western Regions. During the Han Dynasty, there were 20,000 military farm soldiers stationed in the Western Regions at most. During the Tang Dynasty, there were even more. At its peak, there were 50,000 military farm soldiers stationed in the Western Regions. It is precisely because of this that the Tang Dynasty ruled the Western Regions longer than the Han Dynasty. Only by maintaining garrisons in the local area could they achieve long-term rule.

"Due to climate issues, it is impossible to cultivate land in the south and north of the desert, so it is impossible to station troops there. This is why we have lost control over the Rongdi in the north."

The others present nodded when they heard this, and Lu Jin also commented, "That's a good point, but it's not comprehensive enough. Today we are discussing the relationship between economy and governance. To put it bluntly, farming is still a matter of management. According to the classification we just made, it belongs to the primary industry.

"This brings up a new concept, the issue of ruling costs. If you want to rule a place and maintain it for a long time, you need to send officials and garrisons, maintain post roads, and keep up transportation and communications. Official salaries, garrison food, repair post roads, and horse breeding all cost money. If ruling a piece of land is compared to doing business, then what I just said is the cost of ruling, which is the capital of your business.

"The next thing is to look at the output this piece of land brings. If the taxes you collect from this land just offset the three costs I just mentioned, then it can only be said that you are barely maintaining it. If the taxes you collect can exceed the cost of your rule, then this land will naturally be able to maintain long-term stability.

"Now tell me, what else is the reason why the Han and Tang dynasties ruled the Western Regions longer, besides farming?"

Everyone suddenly realized what Lu Jin had said. If they didn't react, they would be fools. Wang Guangyang said, "Because the Western Regions were open to foreign merchants, the Han and Tang dynasties could collect taxes in the Western Regions. However, not only is it difficult to cultivate land and station troops in the Mobei, but there are no taxes to collect. Even if they could conquer the southern and northern parts of the Mobei and bring them under their rule, it would be a money-losing business. Naturally, the court would not do it."

“Great answer!”

Pa pa pa pa - Lu Jin immediately applauded and praised, finally these Confucian scholars were enlightened.

Then he continued, "If I can solve the problem of farming in the grasslands, and the local food is enough to feed the garrison troops, and our tax revenue on the grasslands is even higher than the annual tax revenue of the entire Jiangsu and Zhejiang provinces, will the court still abandon the grasslands?"

Everyone shook their heads, and Tao An said, "Of course not, but how can the prosperity of Jiangsu and Zhejiang be compared with the grassland?" Lu Jin reminded, "That's why I said that we need to regulate the economy and guide the industry. Whether we can collect taxes in the south and north of the desert and make money for the court, it all depends on how you manage it.

"In business, the smartest way to make a profit is to reduce costs and increase efficiency. The same is true for governing a country. First, we need to increase the output of the primary industry. Although we cannot fish or plant trees on the grassland, we can still do farming and animal husbandry. If the local agricultural and animal husbandry output is greatly improved and can meet the salaries of the garrison and officials, then are there other profit points that can be explored to make more money for the court?"

Everyone frowned and thought deeply. They really couldn't think of what else this deserted grassland could produce except cattle and sheep.

Seeing their confused look, Lu Jin had to remind them again, "So you are still not good at business, don't just focus on agriculture and animal husbandry, can't we develop some secondary industries on the grassland besides the primary industry?

"China is in great need of copper mines, but herders on the grasslands are not good at metallurgy. What if the imperial court could find copper mines in the south and north of the desert, and they could pay millions of copper coins to the imperial court every year? Would you still think this land has no value?"

"Of course not." Everyone shook their heads.

Lu Jin then said, "That's why I said that if the imperial court could find profitable industries in the grasslands and guide them, it would bring a large amount of income to the imperial court every year. It would not only be able to maintain the garrison and official salaries, but also bring a lot of surplus. Wouldn't the grasslands be able to maintain long-term peace? Isn't this better than mobilizing hundreds of thousands of troops to march north year after year? This is the way to defeat the enemy without fighting."

Everyone pondered after hearing this. What is economic regulation? In layman's terms, it is actually management. How to manage it so that the court can earn taxes, of course, it can ensure long-term stability. To put it bluntly, if the grassland can earn millions of taels of silver for the court every year, even if a rebellion occurs, the officials in the court will definitely persuade the emperor to send troops to suppress it as soon as possible. After all, that is all money.
During the Xuande period of the Ming Dynasty, Zhu Zhanji first gave up Jiaozhi, which Zhu Di had conquered with great difficulty, as well as the Three Xuans and Six Guards that had been incorporated into the tributary rule, and gave up the legal system that stretched from the Indochina Peninsula to the Indian Ocean. After Zhu Zhanji's death, the so-called "Three Yangs" even gave up all the land north of the Great Wall.

Their reason is the same as what the Confucian scholars often say, "If you have money but cannot use it, and people but cannot employ them, it will only waste food and money. What's the point of keeping them? It's better to abandon them."

To put it bluntly, the government is spending more than it earns. The cost of ruling is too high, and the court can't find a profit point. If Jiaozhi gives the court several million taels of silver every year, and Monan and Mobei give several million taels of silver, do you think those Confucian scholars will abandon their land and shrink their borders? I'm afraid they will be more active than anyone else in using foreign troops! In a word, it's still a question of interests.

What Lu Jin is guiding them to do now is to attach importance to economic policies and find ways to tap into profit points. Otherwise, even if he conquers a larger territory while he is alive, his descendants will sooner or later abandon the land and shrink their borders if they cannot make a profit.

Qin Conglong was a provincial-level official in the Yuan Dynasty and had served in the Lingbei Province. He really couldn't imagine what kind of profitable business there could be on the grassland, but Lu Jin said there was a copper mine, which was indeed possible. After all, the productivity of herders was backward, and for thousands of years, apart from grazing sheep and eating grass on that land, they could almost regard the Mongolian land as an undeveloped virgin land, so it was not surprising what they could dig out from it.

After changing the topic, Qin Conglong asked again.

"The cost of ruling that you mentioned is indeed very concise. It is true that the imperial court treats the ruling of the local areas as a business. If we can include the grassland in our territory in the future, we may be able to find some profitable industries to ensure long-term peace and stability in the grassland. However, what role does the other example you mentioned just now, this economic regulation, play in governing the country?"

Lu Jin then said, "Finding profitable industries on the grasslands and ensuring long-term peace and stability in the northern border is a national event, right? Then, on the other hand, is harnessing the Yellow River also a national event?"

Everyone nodded, and Tao An said, "Of course it counts. The Yellow River flows through Shaanxi, Gansu, the Central Plains, Qi, Shandong, Huai and Yang, accounting for half of China. The Yellow River often floods. If we don't pay attention to flood control, then the incident caused by the violent Yuan Dynasty is a good example. But what is the connection between economic regulation and Yellow River control?"

"Of course there is a connection." Lu Jin explained immediately.

"What are the words that Confucian scholars usually use to describe a prosperous era? "When the Yellow River is clear, a sage will emerge." "Those who understand water management know that the most difficult thing to control in the Yellow River is actually the silt.

"During the Qin and Han dynasties, the Yellow River was still called the River. I have no way of verifying when it became the Yellow River, but from the saying "When the Yellow River becomes clear, a sage will appear", we can see that the greatest expectation of the people of the world for taming the Yellow River is to make it clear. Does that mean that only when a sage appears can the Yellow River become clear?
"I tell you, this is all nonsense. Human efforts to manage the Yellow River can also make it clean."

Everyone pricked up their ears when they heard this. Could it be that their commander also knew how to control floods?
Then I heard Lu Jin say again, "Today is not an astronomy and geography class, so I won't go into detail. I will only talk about the connection between the Yellow River management and economic policies.

"The Yellow River can be divided into three sections, upper, middle and lower, with Lanzhou and Kaifeng as nodes. The upper reaches west of Lanzhou can be called the water source section. The management method should focus on water conservation. The main means is to control the scale of agriculture and animal husbandry, avoid over-cultivation, over-grazing, and environmental damage, save water, and conserve water so that more water can flow down from the water source.

"So where does the Yellow River's silt come from? In fact, it's mainly in the middle reaches, that is, the section from Lanzhou to Kaifeng. The two banks of this section, Shanxi, Shaanxi, Gansu, Henan and other places, have a lot of loess.

"From the Qin and Han Dynasties to the early Song Dynasty, the capital was either in Guanzhong, Luoyang or Kaifeng. Over the past thousands of years, large-scale felling of trees and reclamation of land have led to a large amount of soil and water loss.

"The roots of the grass and trees are intertwined, just like a fishing net that can hold the soil tightly. But when the grass and trees are burned or cut down, the rain will wash them away and turn them into mud and sand that will flow into the Yellow River. The Yellow River will then turn yellow, and then silt will accumulate along the way. When it reaches the lower reaches, it will start to change its course randomly and flood everywhere.

"Yang Xian, you are from Shanxi. Tell us whether there is a lot of loess in Shanxi and Shaanxi."

Yang Xian nodded immediately and said, "Indeed, I didn't expect that the Lord is so proficient in the geography of Shanxi and Shaanxi!"

The others also suddenly realized that this was the first time they had heard of the three-section theory of the Yellow River and the idea that the silt came from the middle section.

Lu Jin continued, "So, when managing the Yellow River, the main focus should be on conserving soil and fixing sand from Lanzhou to Kaifeng, and the main focus should be on blocking and dredging from Kaifeng to the sea. High dams should be built to lock the Yellow River and prevent it from changing its course. The main focus should be on flood control, and clear water should be stored to flush the silt downstream into the sea.

"Among these three sections, the most important are soil conservation and sand fixation in the middle section and clear water storage and yellow water flushing in the downstream section.

"How to protect soil and fix sand? The most important thing is not to cut down trees. The court should issue a decree to ban logging in Shanxi, Shaanxi and Henan. Not only should logging be banned, but more trees and grass should be planted to let the grass take root and lock the soil so that it does not flow into the Yellow River. The northern part of Shanxi and Shaanxi should also prevent wind and fix sand, plant grass grids to fix sand, and plant trees to prevent wind.

"Then the question arises. Firewood is the most important of all necessities. If you don't allow people to cut down trees, they will need a lot of wood to cook, build houses, and make utensils. If you don't allow people to cut down trees, how can they live?

“This requires macroeconomic regulation at the national level!”

(End of this chapter)