On finding the capital use and the capital financing in different countries state economy!

source

The state can organize the use of capital and the financing of capital in different ways, and the capital use is about how a country is using the capital on different purposes like for instance roads, schools, and health and many more things. And the financing of capital is how we acquire the capital for instance through taxes and oil and gas.

The general budget equation in a nation’s economy is the following:

R = Cp + Ip + G + A – B

where:

R is the net national product, Cp is private consumption, Ip is private investments, G is public consumption and investments, A is export and B is import.

This equation is used when we shall make a state budget, and we need to know how the capital should be acquired, and how the capital should be financed. The capital is acquired through the sales to the private businesses minus the cost to produce the revenues, and we can also import articles, goods and services from other countries. And we are using these money, when doing all the kinds of different buyings in the shops and in the outlets, and we are using capital for private purposes when buying cars, houses, cottages, savings and more. The public expenditures are froom use of money on building things for instance buildings and bridges. And finally we can use money on exporting goods, articles and services to other countries.

So, this equation can be organized in several ways. We can write as we want following the ordinary rules in Matematics when treating equations, and hence we also have:

R + B = Cp + Ip + G + A

And this equation shows us that values are distributed in a society by using the things on the right side, and that things are created in valutes through net national product and import. And we are doing these things automatically when being actors in firms in different societies around the world. So, this equation is equal for all countries in the world, and the countries can vary in how large the private sector is, and how large the public sector is.

We should use the money as the monetary analysis by Milton Friedman is telling us. And people are making money on using information, marketing and strategy. And we are acquiring money by working in firms, and the public organizations are just use of capital. Real economies are consisting of exchanges of articles and goods and services. Acccounting and generation accounts and accounts are consisting of revenues that are used to different purposes.

We can use different programs to measure the general budget equation, and we are often making the state budget in the government and in the parliament. There are many discussions among the politicians, and for choices one is making for the state budget from time to time. The state budget cannot be made in infinitely ways, and there can nor be a state budget for zero. But the politicians should first make the monetary cake as large as possible, and after that they should distribute the state cake to different purposes. And there should be made priorities about what to use the money on, and hence, there will be disagreements on how the money should be used for! We cannot just quarrel on using the money, but we should use them in sensible ways, and in such ways that we are getting convenience in different internal and in external markets. In the beginning, there were markets, and raising of capital and use of capital is always important in a national economy. And all people cannot agree in all things and in all choices.

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Sverre Larsen

Kristiansand, Norway

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