Budgeting by mortgaging our children's future
Monday, 14 June 2010
Maswood Alam Khan
WHENEVER I hear about deficit budgeting -- call it household or national -- I remember a joke that tells about a borrower's trick to dodge a moneylender. In response to a lender's insistence on adjusting an overdue loan a borrower, according to the joke, said: "Don't worry. I will pay back your money in a month's time because my father will be dying within a week or at best two, the doctor has assured me. Mind you, I am the only successor of all my father's cash and property".
I wish while framing our national budget of Taka 1, 34, 170 crore with a deficit of Taka 39, 323 crore the budget policy framers made sure that all of us living in Bangladesh who are above 50 years of age had enough personal bank balances to cover the deficit and immediately after our deaths all our money in the forms of bank balances and the savings bonds etc. would go to the government's exchequer to adjust the deficit of our national budget the way the naughty borrower in the joke was planning to pay off his debts.
But the scenario in our deficit national budgeting is just the reverse. Here, the old, the dying and the dead will remain unscathed. We are rather forcing our future generations to pay for our debts that we are now using to spend for satisfying our greed for a plethora of creature comforts with little or no benefit at all trickling down our economic system to reach the babies who are born today and the babies who will be born in the future. We are shifting the entire costs of our massive spending schemes to our living children 46 per cent of whom are malnourished and to the children who are yet to be born. These children, when they will grow adult, will have to pay off our debts through their noses. Who under the sun has given us the right to mortgage our children, born or yet to be born, to make a deficit budget of our nation with a view to meeting the current expenditure the fruits of which will not effectively reach our posterity?
Our government can spend here and there money we are earning through raising taxes as much as they wish. That's fine. But, the government must not spend future money that our children or grandchildren would be earning unless that money is spent on long-term investments the fruits of which would be reaching the future generations, the forced creditors whose money is being borrowed without their consent. We may invest future money, for an example, in a nuclear power plant which will not be depreciated into zero value during our lifetime use. But we must not spend a single Taka borrowed from future, in the form of subsidy or otherwise, on account of something temporary like our foods, drinks or cosmetics. The current spending must come from current revenues generated from current resources. Every single Taka, even if borrowed, has to come from the living people's pockets -- not from someone who has not yet been born.
For gaining cheap popularity among people, every opposition political party in our country cries foul chanting slogans and marching in angry protests against rises in taxes immediately after a national budget is announced. But none in the opposition, none in the government and even none among the economists ever question with a loud voice why the budget had to be a deficit one as usual, why the government cannot cut their coat according to their cloth, why should we borrow money that our children have to pay back!
Deficit budgeting paves the way for coercive wealth transfers from future taxpayers to future governments. So, why should an opposition party, which has a prospect to form a government in the future, support a tax-based budget and oppose a deficit budget? Why should the government in power earn unpopularity by raising taxes when it is much easier to borrow money mortgaging our children's future? Why should we, the stupid citizens, protest deficit budgeting if we can splurge on luxuries on forced credit from our grandchildren? Why should we sacrifice our today for the sake of our children's tomorrows?
There is no dearth of pundits in our society who will present 505 logics and 101 theories to justify that at times 'selling milk for buying wine' is a necessity to serve a greater interest. Those pundits in most cases are hired by people, who are already in power or aspiring to go to power and are intent upon blackmailing the deaf and the dumb who don't know how to protest -- the deafest and the dumbest being our children and grandchildren who have no trade union to organise a 'hartal' on their behalf to protest a crime against them.
The learned economists, who framed our deficit budget, will undoubtedly ridicule the idea of adopting a tax-based budget discarding the concept of deficit budgeting. They will laugh at the notion of a balanced or a surplus budget in an age when factories have to remain open round the clock to produce articles and to keep people engaged, no matter how the money should be managed -- borrowing from the unborn children and getting the debt repaid by the unborn grandchildren or borrowing from the World Bank in US Dollar to repay in SDR (Special Drawing Right) at a rate much higher than the prevailing normal exchange rate.
I dare not say that a deficit budget is bad altogether, nor should anyone vouch for a deficit budget terming it the best for an economy. A deficit budget can in an ideal situation generate employments for people who need money to nurture themselves and their children, if not their grandchildren.
Proponents of deficit budget will point out that a highway for rapid and mass transportation of people or a giant irrigation project will not follow us to be buried in our graves but rather will be there to be used by our children and our grandchildren. Why not then should we go for deficit budgeting for a grand project like a long bridge over a turbulent river?
Yes, deficit budget is good when money is spent on such long-term projects that last long enough to serve the next generations. Yes, deficit budget is good, and even necessary, to deal with a severe recession or a depression, to help self-defence, to spend on infrastructure, education, basic research, public health etc.
The advantages of deficit budgeting may be good in Germany where one cannot find a single German evading his or her due taxes and where the Chancellors behave more like statesmen with long vision than like politicians with myopia and where the citizens would never disagree to bear some pains for the pleasures of unborn Germans. But deficit budgeting in Greece, and for that matter in Bangladesh, may not be as good as most of the citizens avoid tax and care not much for their next generations.
Given the recent cataclysm in Greece for reducing deficit by curtailing public expenses and the similar economic storms brewing up in Spain and Portugal in Europe, our government should weigh all the pros and cons of deficit financing before proposing such a gargantuan national budget of Taka 1, 34, 170 crore with about Taka 40,000 crore in deep red.
Of course, there are some apparent beauties in the proposed budget: about 24 per cent of the allocations in areas of human development like education, health, science, technology and related avenues and about 30 per cent in physical infrastructures like in agriculture, rural development, communication and power.
Sounds pretty good! We should rejoice at the prospect of 6.7 per cent growth in the coming year. We have reasons to congratulate our government to present such an ambitious budget to usher in such a bright future provided our country is not full of teachers who themselves are not aware enough about the subjects they teach to the students, public servants who will treat their salaries defrayed from tax or borrowings as an extra income and their silent incomes under their tables as a regular one, contractors who will mark up extremely high their biddings to grease too many palms from top to bottom -- and provided natural resources and minerals are not extracted very rapidly leaving the agricultural fields barren and bowls of the mineral pits empty.
E-mail : maswood@hotmail.com
WHENEVER I hear about deficit budgeting -- call it household or national -- I remember a joke that tells about a borrower's trick to dodge a moneylender. In response to a lender's insistence on adjusting an overdue loan a borrower, according to the joke, said: "Don't worry. I will pay back your money in a month's time because my father will be dying within a week or at best two, the doctor has assured me. Mind you, I am the only successor of all my father's cash and property".
I wish while framing our national budget of Taka 1, 34, 170 crore with a deficit of Taka 39, 323 crore the budget policy framers made sure that all of us living in Bangladesh who are above 50 years of age had enough personal bank balances to cover the deficit and immediately after our deaths all our money in the forms of bank balances and the savings bonds etc. would go to the government's exchequer to adjust the deficit of our national budget the way the naughty borrower in the joke was planning to pay off his debts.
But the scenario in our deficit national budgeting is just the reverse. Here, the old, the dying and the dead will remain unscathed. We are rather forcing our future generations to pay for our debts that we are now using to spend for satisfying our greed for a plethora of creature comforts with little or no benefit at all trickling down our economic system to reach the babies who are born today and the babies who will be born in the future. We are shifting the entire costs of our massive spending schemes to our living children 46 per cent of whom are malnourished and to the children who are yet to be born. These children, when they will grow adult, will have to pay off our debts through their noses. Who under the sun has given us the right to mortgage our children, born or yet to be born, to make a deficit budget of our nation with a view to meeting the current expenditure the fruits of which will not effectively reach our posterity?
Our government can spend here and there money we are earning through raising taxes as much as they wish. That's fine. But, the government must not spend future money that our children or grandchildren would be earning unless that money is spent on long-term investments the fruits of which would be reaching the future generations, the forced creditors whose money is being borrowed without their consent. We may invest future money, for an example, in a nuclear power plant which will not be depreciated into zero value during our lifetime use. But we must not spend a single Taka borrowed from future, in the form of subsidy or otherwise, on account of something temporary like our foods, drinks or cosmetics. The current spending must come from current revenues generated from current resources. Every single Taka, even if borrowed, has to come from the living people's pockets -- not from someone who has not yet been born.
For gaining cheap popularity among people, every opposition political party in our country cries foul chanting slogans and marching in angry protests against rises in taxes immediately after a national budget is announced. But none in the opposition, none in the government and even none among the economists ever question with a loud voice why the budget had to be a deficit one as usual, why the government cannot cut their coat according to their cloth, why should we borrow money that our children have to pay back!
Deficit budgeting paves the way for coercive wealth transfers from future taxpayers to future governments. So, why should an opposition party, which has a prospect to form a government in the future, support a tax-based budget and oppose a deficit budget? Why should the government in power earn unpopularity by raising taxes when it is much easier to borrow money mortgaging our children's future? Why should we, the stupid citizens, protest deficit budgeting if we can splurge on luxuries on forced credit from our grandchildren? Why should we sacrifice our today for the sake of our children's tomorrows?
There is no dearth of pundits in our society who will present 505 logics and 101 theories to justify that at times 'selling milk for buying wine' is a necessity to serve a greater interest. Those pundits in most cases are hired by people, who are already in power or aspiring to go to power and are intent upon blackmailing the deaf and the dumb who don't know how to protest -- the deafest and the dumbest being our children and grandchildren who have no trade union to organise a 'hartal' on their behalf to protest a crime against them.
The learned economists, who framed our deficit budget, will undoubtedly ridicule the idea of adopting a tax-based budget discarding the concept of deficit budgeting. They will laugh at the notion of a balanced or a surplus budget in an age when factories have to remain open round the clock to produce articles and to keep people engaged, no matter how the money should be managed -- borrowing from the unborn children and getting the debt repaid by the unborn grandchildren or borrowing from the World Bank in US Dollar to repay in SDR (Special Drawing Right) at a rate much higher than the prevailing normal exchange rate.
I dare not say that a deficit budget is bad altogether, nor should anyone vouch for a deficit budget terming it the best for an economy. A deficit budget can in an ideal situation generate employments for people who need money to nurture themselves and their children, if not their grandchildren.
Proponents of deficit budget will point out that a highway for rapid and mass transportation of people or a giant irrigation project will not follow us to be buried in our graves but rather will be there to be used by our children and our grandchildren. Why not then should we go for deficit budgeting for a grand project like a long bridge over a turbulent river?
Yes, deficit budget is good when money is spent on such long-term projects that last long enough to serve the next generations. Yes, deficit budget is good, and even necessary, to deal with a severe recession or a depression, to help self-defence, to spend on infrastructure, education, basic research, public health etc.
The advantages of deficit budgeting may be good in Germany where one cannot find a single German evading his or her due taxes and where the Chancellors behave more like statesmen with long vision than like politicians with myopia and where the citizens would never disagree to bear some pains for the pleasures of unborn Germans. But deficit budgeting in Greece, and for that matter in Bangladesh, may not be as good as most of the citizens avoid tax and care not much for their next generations.
Given the recent cataclysm in Greece for reducing deficit by curtailing public expenses and the similar economic storms brewing up in Spain and Portugal in Europe, our government should weigh all the pros and cons of deficit financing before proposing such a gargantuan national budget of Taka 1, 34, 170 crore with about Taka 40,000 crore in deep red.
Of course, there are some apparent beauties in the proposed budget: about 24 per cent of the allocations in areas of human development like education, health, science, technology and related avenues and about 30 per cent in physical infrastructures like in agriculture, rural development, communication and power.
Sounds pretty good! We should rejoice at the prospect of 6.7 per cent growth in the coming year. We have reasons to congratulate our government to present such an ambitious budget to usher in such a bright future provided our country is not full of teachers who themselves are not aware enough about the subjects they teach to the students, public servants who will treat their salaries defrayed from tax or borrowings as an extra income and their silent incomes under their tables as a regular one, contractors who will mark up extremely high their biddings to grease too many palms from top to bottom -- and provided natural resources and minerals are not extracted very rapidly leaving the agricultural fields barren and bowls of the mineral pits empty.
E-mail : maswood@hotmail.com