| Sunday, September 21, 2008 - 10:20 pm |
The GDP avoids the "problema da mÃºltipla contagem" (don't know how to translate it). It only measures the wealth created.
What you are refereeing to is market volume, which accounts trade volume.
It is not precisely easy to explain the problems which spring from national debt, but they are serious and several.
When a nation enters in debt, a financial hole, an error, is created. It is an error in the full meaning of the word, for it should never be.
I ask some time to clarify a notion most obscure: who is the state? What is the state? What does he do?
In the classic sense, the State is divided into three elements:
- the organs of sovereignty (government et al);
- the land;
- the people.
The people established in a land, entrust the Govt to administrate, satisfy and ensure stability, equity and - guess what? - efficiency.
This is to notice and clear the state is mainly financed by you. If it lacks money, he'll get it from you and other (groups of) economic agents. The State, including his companies, do not have a purpose of generating profit. It does have the obligation to run a zero balance budget.
Unfortuantly, more than often enough, that budget runs into deficit. And this is when our problem begins.
Such a deficit, such a debt, is a flaw that cannot persist, because the State has the duty to pay what he consumed (among other things), in the same way we do.
How to resolve then? Credit is contracted and obligations(?) emitted. From here, you know, with the interests, the state will have to pay more than it originally should.
When the debt becomes too large, other entities begin to refuse to lend money... you can reason why. And when the money ends... No money. No services. No services... no health, no education, no roads, no army... The government begins to fail in his purposes. He can no longer satisfy collective needs. He can no longer assure stability. The private sector follows and the economy implodes. He loses his image and might before the international community. You get the rest of the picture, do you not?
Whatever your government does for you, he will no longer do it.
This is the worst scenario possible. At moment its unrealistic for things reach such magnitude, but that is the tendency when the debt of a nation reaches untold amounts.
In the end of the day, the cause resumes down to pure, simple and devastating irresponsibility. The consequences flourish into poverty, distrust and chaos. Your society ends and despairs.