Even Indian Prime Minister realized the necessity to suggest Europe and the United States government to resolve their debt crisis. Obviously, this looming crisis is going to hurt every part of the world and specially India because of its own burden of huge national debt.1
What is this national debt crisis and how can it be solved out?
The figure below explains the dilemma of the United States and its government.
Same is the case with European countries and the Asian countries too. While this is true that at present, India is on a safer side of crisis line, but Indians have already experienced similar situations in 1991 and while it was the time for Indians to learn a bit more than the Western world, Indian government failed to learn its lessons properly and hence the fiscal deficit kept growing up every year. In 2009, India’s GDP was $2.55 trillion and its national debt was 78% of its GDP. This should be noted that the national debt of the United States in the same year was just 60% of its GDP, however, the US has an enormously bigger figure of GDP against Indian GDP and hence national debt of the United States is also much higher.
What causes this national debt?
The picture above explains a simple way of how a nation burdens itself with national debt. it is very similar to a household whose members spends much more than what they earn and likes to enjoy wastage. The major reason of the huge national debt of the US is ill-policies of the government that causes wastage of resources and malinvestment. The unnecessary wars against Iraq, Afghanistan and other countries, along with the war on terrorism at Pakistan borders is one of the major reason of this strikingly huge debt. Another big reason is the corporatism which is strictly against the free market capitalism. When the government enforces compulsory taxes and uses them to make their political vote banks by investing that robbed money in ridiculous social welfare programs such as No Child Left Behind, Education for All, Universal Healthcare, Universal/National Insurance and many more, the burden of national debt keeps piling up.
In addition to all social welfare programs which seems to be helping for the poor, yet harms the poor while causing tyranny against the producers, another way of increasing the national debt is through the provision of economic stimulus for the faulting corporate in the name of protecting jobs. In fact, the only reason for such economic crisis is the government interference in the market.
Such economic crisis cause global hazards, unemployment, poverty, hunger, riots and extreme conditions and in order to divert the minds of people from the actual cause of all this mess, governments often try to instigate wars to instigate jingoism.
How Government Does Succeeds in Increasing National Debt?
Government holds the monopoly on laws and implementation of these laws and along with this, government also holds the monopoly over fiat currency. In order to maintain their hold on government to dominate, rule and exploit poor citizens, politicians often use emotional politics by raising such issues such as poverty, illiteracy, lack of opportunities etc. In order to gain vote bank support, the government offers free lunches and various social welfare programs which are certainly not viable economically and hence are irrational, yet emotionally appreciative. Government can do so because it has the power to print money as much as it wants. However, government cannot produce goods and wealth, nor it can provide any service. As a result, whenever government promises and provides free lunches and services, it do so at the expense of our future. When government spends for the benefits of any sect of the nation, it increases the debt which the people will have to pay for in future. These social welfare programs keep increasing and the national debt also keeps taking a dangerous shape.
However, people often fail to realize the real cause of their problems and instead of solving the problem rationally; they tend to create further foolery by promoting such acts of socialist-capitalist (or Crony capitalist) agitations such as Occupy Wall Street.
The figure of this lady says a lot, she is supporting the Occupy Wall Street Campaign without actually knowing what is it or who is the culprit, she just wants to have a better world for her kids, but she has no idea how to make a better world. Not even 1 % of people agitating for Occupy Wall Street have any idea about how to save their future.
That’s because most American’s are illiterate in even the most general sense of how microeconomics, and especially macroeconomics, work, because they were educated in public schools, whose Socialist mind-set derided business in general, and, whose school teachers didn’t understand anyway because they were raised in the same Socialist systems.
It doesn’t help that the big banks and the U.S. government has acted, repeatedly, and openly, over and over again in a short period of time, to employ Crony/Socialist-Capitalism assets directed at funding massive banks and companies to the tune of trillions of dollars.
So, we see a population that has lost incredibly large sums of personal wealth, lose their jobs, or are deep in debt for such reasons as getting certain kinds of useless but expensive college degrees that they can’t use when they get into the real world, the mortgage collapse, etc, and have no clue about how to go out and start their own small business.
They haven’t been trained to understand business, they are used to be getting ‘directed’ their whole lives, and even for those who know something about business, the government creates mounds of confusing regulations, making all groups feel helpless to do anything but beg for handouts by…asking that the wealth creators give up their wealth. That’s all they can come up with, and so the numbers are swelling to dangerous levels, all stemming for Socialist practices from the time our children start school, until they get into government and make policies.
- India Urges Europe, US to Resolve Debt Crisis, India Urges US, Europe to Resolve Debt Crisis [↩]
