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The current economic landscape is characterized by three intertwined pressures - short-term, medium-term, and long-term challenges that complicate the situation beyond mere inflation or deflationAt present, one of the most pressing issues is a notable decline in consumer spending often referred to as "consumption degradation." This phenomenon has emerged after a variety of incentive policies have been exhausted, leading to a lack of improvement in the economyStruggling households are not the only ones feeling the financial strain; local governments are also buried in debt, grappling with obligations including citizen mortgages and a variety of governmental bonds such as municipal and urban investment bondsAs a result, both residents and governments find themselves entangled in a web of debt, leading to a reluctance to spend among consumers and hesitancy from businesses to invest.

In the medium-term scenario, the primary concern revolves around the search for new growth drivers in a diminishing economy

For decades, the interplay of three primary engines—investment, exports, and consumption—has propelled economic growth, with real estate contributing nearly 75% of investment activityHowever, as the real estate market falters, it leaves behind a considerable chasm that is challenging to fillThe need for upgrades in industry and investments in emerging technologies like renewable energy and semiconductors has emerged as a potential solution, but filling the void left by the real estate sector is no simple featThe urgency for renewal will only intensify if the real estate burden remains unaddressed, further preventing a robust economic recovery.

In the long run, the effects of an aging population and declining birth rates pose additional hardshipsIf current demographic trends persist, there will be a continuing depletion of young labor, exacerbating existing economic difficulties and indicating a challenging future ahead

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This multi-faceted pressure—short, medium, and long-term—is emblematic of the current economic climate.

A greater examination of these challenges reveals a foundational issue: the focus on a production-centric development model that has characterized our nation’s economic strategy for yearsThis approach, while successful in driving rapid economic growth, has led to systemic issuesTo maximize production and sales, costs, particularly labor costs, have been consistently minimizedThis has created a cycle where wages are suppressed, which, while beneficial in the short term, ultimately results in greater hardship for the average workerAs living costs have risen, wages have not kept pace, leading to a situation where productivity is prioritized at the expense of fair compensationThe 996 working culture—referring to a schedule where employees work from 9 am to 9 pm, six days a week—has emerged from this paradigm, generating immense pressure on workers to maintain their productivity.

Despite this, it is important to acknowledge the role of ordinary citizens in fostering the tremendous economic development we've witnessed over the years

However, the resulting system favors production capabilities that significantly exceed consumption capacity, which is now exacerbated by obstacles in exports and sluggish internal consumptionThis creates an ominous disconnect that must be addressed for future economic stability.

To create a pathway for change, an orderly three-phase approach focused on short, medium, and long-term strategies is essentialIn the short-term, addressing the current debt-driven deflation must take precedence—an effort that requires alleviating consumer debt, which has stifled spendingProposals include a sweeping reduction in existing home loan burdens and introducing a large-scale issuance of consumption vouchers to stimulate economic activityWhile these initiatives are being vigorously pursued, they bring their own economic repercussionsThe distribution of consumer vouchers, for example, could lead to inflation, and once the immediate crisis of debt-related deflation subsides, large interest rate hikes would likely follow, becoming a necessary measure to keep inflation in check.

As for medium-term strategies, increasing the income for the average citizen is crucial

Elevating the minimum wage significantly and increasing its proportion of GDP from the current 40% to the OECD average of 55% would bolster consumer spending powerFurthermore, providing enhanced social welfare systems and ensuring job security by reducing layoffs would instill confidence in consumers, encouraging them to engage more in the economy with a sense of security.

In the long run, implementing progressive taxation policies, such as imposing high taxes on wealth and estates, will be necessaryIt’s critical to improve educational equity while controlling rising housing costs, especially in high-priced urban areas as a means to encourage population growth in less populated citiesThe stark contrast in the cost of raising children between first-tier and lower-tier cities illustrates a significant challenge: a high-cost city may not entice families to have children even with substantial financial subsidies, while a smaller city could reap benefits from relatively modest incentives