Public finance studies the role of government in an economy. Evaluate government expenditures and revenues and the adjustment of one or more public institutions to obtain desirable effects while avoiding undesirable ones.
It can be said that public finance is somehow as old as civilization itself. When the human population began to grow during the middle stone age, the need for people to organize themselves into groups and have governing bodies emerged. Regulatory bodies, on the other hand, needed resources to carry out the tasks assigned to them, such as ensuring fairness and justice. As such, the ways to finance governments were coined and the largest was through taxation. Over time, these groups have evolved and become organized for current states that are complex and have enormous responsibilities in them.
The application of public finances differs from one economy to another, depending on the form of its governmental legislation regarding the market regulations that bind them. However, there are some aspects that are common at all levels. In any economy, the governing body collects money from its subjects using tools such as taxation and tariffs. Other sources of income include loans, grants, dividends, licenses and the sale of government bonds. The government then allocates resources to different sectors and distributes it. The assignment method varies from one country to another depending on the level of growth and the prevailing local conditions. The government is also in charge of supervision and supervision. Another function of the government is to guarantee the stability of the
Evolution over time
Public finance has evolved from simple ancient tax collections to emperors to rule their kingdoms to today’s governments that have vastly expanded their revenue scope. For example, the US government gets most of its revenue from taxation which includes income taxes, value added taxes (VAT), commercial tax, sales tax and import tariffs. The use of the money raised has also expanded and used to pay public employees, finance the armed forces, finance educational and research institutions, aid to underdeveloped countries, and even a percentage is sent directly to the states. The government also makes a deliberate effort to bridge the gap between rich and poor by subsidizing essential products. The study and analysis of public finances has become over time one of the most marketable career courses in universities and other learning institutions around the world. In the United States, public investments have been divided into matters such as public spending, government revenues, public debt, financial administration and federal finance.
Praise and criticism
The proponents of the study of public finance argue that it is the most effective instrument for guaranteeing equality and the distant dong with social class disparities. It also guarantees a collective development that in the long term is more effective than individual development. For example, governments will collect taxes from individual investment in security or the construction of an asphalt road. This is more effective than if each person employs his security guard or builds his part of the road. He also encouraged specialization and capitalism.
The government is also able to provide essential products to citizens that are too expensive for entrepreneurs to provide or have few profits. On the other hand, critics have argued that public finances have encouraged civil wars as different groups fight control over public resources. In some parts of the world, governments focus on some areas and neglect the others, causing huge regional imbalances and some of the citizens feel excluded. For example, in Rwanda, the minority community felt that the government was marginalizing them in development projects and took up arms to fight for their rights.
This led to a bloody genocide that killed over two million people. For example, in Rwanda, the minority community felt that the government was marginalizing them in development projects and took up arms to fight for their rights. This led to a bloody genocide that killed over two million people. For example, in Rwanda, the minority community felt that the government was marginalizing them in development projects and took up arms to fight for their rights. This led to a bloody genocide that killed over two million people.