Having a budget without debts is like sitting at an expensive cocktail bar drinking tap water.
Making debts in annual and long-term budgets is part of politics. It always has been. However, what European debt crisis has taught us is that they are never fully paid back.
Having a budget without debts is like sitting at an expensive cocktail bar drinking tap water. You would be the (w)healthiest person in the room (next to the bar owner) but you would also then be blamed that it is your responsibility that the bar is not earning enough money to hire more staff which means that it is your fault that the unemployment rate is rising.
You could argue that you spend the money you saved from not drinking cocktails to stop climate change or to help alcohol addicts. But that is not the topic of this cocktail night. The topic is that because of you the whole party of bar owners is not amused.
Making debts in annual and long-term budgets is part of politics. It always has been. Only thing that has changed is the method – because they were never fully paid back.
Medieval kings also had problems of finding their outcome with taxes, even though they could raise the taxes at their will. But they either didn’t have the power to control their subjects honestly or the kings were spending all the money on people that would take taxes by force. So the kings needed more money and they had a lot of problems finding people that would lend it to them. Catholics were not allowed to lend with an interest rate. So they didn’t lend. (Except the order of the Templars which got pretty soon forbidden because they got too powerful – positive side effect – the kings never had to pay back their debts to them)
So the kings only got money from people out of their culture. And they had to give guarantees for getting this money, like the right to exploit mines and land. But with giving these rights to others the kings lost their primary source of income (tax-free).
On the other end of the continent, Spain got so much silver from its new territories in the new world that it got rich. But with the silver came the world’s first hyperinflation. They also invested the money in ships. When the English ships burned this Armada, Spain’s forest got lost on the ground of the British canal and its silver was lost in the hands of the pirates. Most of Spain’s regions still suffer from the lack of trees that were never planted again.
Nowadays there is no (silver or gold) standard on currencies any more. Money is printed on demand but the debts are rising as the currencies are connected to each other. No one knows why but it seems to work. Whether this will still work when China joins with its currency will soon be evident.
But back to the history. How did the Emperors solve the problem of getting money? Under a smart empress in the 18th century, the so called cadastral land register was developed. Everyone in the empire who owned land had to name his or her (even women had to declare) property and were taxed by it equally. The same empress introduced a law that everyone had the right and duty to go to school. Both were highly disputed topics when introduced. But these inventions are valid until today and no one is trying to start a discussion about it. There are even voices saying that these two reforms were as important for the following long-term peace in Europe as the contract of the Vienna congress signed a few years later was.
European Debt Crisis : Germany starts a new discussion.
Nowadays, Germany started a new discussion. It’s the discussion about a register book for companies on where they pay taxes. A logical step you might think. But like it was with the cadastral land register nearly a quarter millennium ago there is no clear majority for this German proposal today.
Today, the outcome of a nation (or supranational construction like the European Union) is more complex than ever. And even if a worldwide register book for taxing companies will be founded there will always be tricks. The only other solution is banned like a no-go and as a declared enemy of the WTO: Tolls.
So where should come the money from to finance nations? Are today’s democratic nations going to vanish like medieval landlords? Or do nations find a new income? By taxing products where they are consumed? But isn’t that another form of tolls? By preferring local produced products? This would be good for creating working places and for the environment as products would not have to be shipped around the world. But this is clearly against the law and after TTIP out of discussion (and to convince people to buy local stuff is like telling them that they are responsible for the things that happen in politics. It is true but no one believes it).
Taxing the nation’s resources would be logical. Water is cheaper than oil but more important than it. Nestle, Heineken and Coca Cola and Co do know about this resource. But the nations don’t. Taxing water to preserve European welfare states and to guarantee that everyone could afford clean water sounds like a paradox but would be worth a discussion and the water drinker in the cocktail bar would not have to argue with the others any more.
The question is: Who will win the resource water? Will companies benefit like in the past with the water product on which they are not paying the true value in taxes? Or will it be the nations that will define their most important resources? If so they should remember Spain’s destiny and invest the money better than in (container)ship(certificates).