Social Welfare Program Delivery and the Balance of Budget
Britannica better defines “the social welfare program, (as) any of a variety of governmental programs designed to protect citizens from the economic risks and insecurities of life. The most common types of programs provide benefits to the elderly or retired, the sick or invalid, dependent survivors, mothers, the unemployed, the work-injured, and families. Methods of financing and administration and the scope of coverage and benefits vary widely among countries.”
By extension, we add the government spending on education and healthcare as part of social welfare programs.
Beyond ideological spectrum, the commonsensical issue isn’t either “to have or not social welfare programs” or “to cut them or not”. The commonsensical debate is how as government you are going to fund them in order to ensure their efficient and sustainable delivery for current and next generations.
The first option is to run the social welfare programs on endless budget deficits.
If a government delivers its social welfare programs and others of its spending on the government endless budget deficits and the monetary creation; you end up to get the kind of situations that Venezuela 🇻🇪 or Argentina 🇦🇷 have experienced. As outcome, you won’t be able to ensure the long term delivery of those programs.
The second option is to fund, manage and deliver social welfare programs on revenues that you get from the investments and production in the economy.
To run the social welfare programs on revenues, it means that you have to balance the government budget so that you can get the surplus invested and generating those revenues that will be allocated to the financing of the long term delivery of these programs.
Norway 🇳🇴 has among the best social welfare programs in the world. Its government, no matter their position on the ideological spectrum, runs these programs on revenues generated by investments in natural resources; not on deficit of budgets.
The essential lesson for any economic agent (governments, firms and households) is that if you spend the money that you don’t have; you are ruining yourself. There will come the Minsky Moment when your limit of debt will collapse and lead you to bankruptcy. Government too can end up in bankruptcy that can put at high risk the delivery of its social welfare programs and its entire spending.
This is the reason why it is essential that the government supports the creation of wealth in the economy to produce revenues through investments of businesses and the work of households so that the economy can generate enough funding the government needs for the spending in its programs, including the welfare ones. Having a healthy economy and a healthy public finance management is the best guarantee of the efficient and sustainable delivery of social welfare programs.
It is essential to avoid the trapped and stupid debate of “cutting or not” social welfare programs. The debate should be to demonstrate how endless deficits put at jeopardy the efficient and sustainable long term delivery of those programs as well as of all the spending of the government.
From Europe, Asia to North America; aging population in the context of climate change will be an existential issue for their social, economic and political long term viabilityWe .
By synchronizing such challenge to the opportunity of investing in the younger population of Africa and Latin America to build productive and resilient global economy; the world can navigate the future with more confidence. This supposes that good people around the world be leading more positive change. Will it be the case?
The demographic transition making aging population the main demographic issue in Asia, Europe and North America means that Africa and Latin America with their younger population will become the solution for helping pension funds to deal effectively with their deficits.
Yet such perspective can be materialized only if only African and Latin American economies become the engines of global growth where investments from pension funds make the younger population working and producing revenues to deal with such deficits.
In the context of climate change, aging population and other coming disruptions; if there is no new globalization of solidarity to make humanity more resilient; it is not only the human civilization that is at risk; it could be the mankind species survival that could be at stake. Yet it is now that we should be designing and implementing solutions that will address challenges of the end of this century and beyond.
As descent of the builders of pyramids, we often consider the long time as the scope and scale in thinking about issues and the human fate…
Many are now requesting that developed countries fund climate change initiatives in the developing countries. That’s good intention. However facts show that many developed countries could be under huge financial stresses that will put at high risk their capacities to fund themselves and the developing countries.
Most of approaches of solutions to the world problems are totally disconnected from real world issues. Some of them are deceitful, the reason why they often end up in making disasters than solving real issues…
I have no doubt that finance is essential for Africa not only for climate change but also for transforming this continent into a land of opportunities for its people.
I also have no doubt that international funding is critical for Africa. However as long as African nations won’t stop the looting of their resources and set up efficient mobilisation and allocation of their own internal funding to investments for the economy and the public service delivery; there won’t be any miracle in Africa.
Many good intentions on Africa are unfortunately contradicted by very bad and reckless actions that make Africa a land of looting covered up by humanitarian aid.
If what is done in Africa was done in Europe and Japan after the World War II, in South Korea after 1950 or in China for the last 4 decades; these parts of the world would have been as disastrous as Africa. Now the question: why Africa is not treated like Europe and Japan were after the World War II, like South Korea or China have been treated? The answer is very clear: many interests want to maintain Africa as a land of looting natural resources.
Look at the amount of money invested in Ukraine 🇺🇦. Yet Congo DRC 🇨🇩 has been in a worse situation than Ukraine 🇺🇦. Some are already estimating that it will take more than $400 billion for the reconstruction of Ukraine 🇺🇦 and are already preparing for the mobilisation of such funding. Has anyone estimated how much it will take to rebuild Congo 🇨🇩? Of course no! Why? Because no one wants to stop the looting of Congo and set up its rebuilding. Each year an average of $50 billion to $100 billion are being looted and wasted in the Congo 🇨🇩. Never the world will bring such amount of capitals in the Congo 🇨🇩.
Often actions are the real test of good intentions. One of the outcomes of discussions in Paris on finance of climate change in developing countries is to reinforce financially the genocidal regime of Paul Kagame that is at the center of looting natural resources in the Congo 🇨🇩, which looting makes Congo 🇨🇩 and Africa losing huge opportunities of mobilizing enormous capitals that any outsourcing of financing cannot provide to Congo 🇨🇩 and Africa. Here is the evidence of the reason why the majority of Africans shows mistrust and discredit about this kind of forums and institutions…
Mass violence and looting of Congo 🇨🇩 natural resources that the genocidal regime of Paul Kagame has been organizing in the Congo 🇨🇩 have cost dozen million lives and surely a $trillion in almost 3 decades. Are losses in life in Congo from Kagame genocidal regime violence less human than those that will be caused by climate change?
Yet never the international funding to Africa will equal the losses in capitals or compensate losses in lives that mass violence and the looting of Congo natural resources have been making. Actually even Rwanda is far poorer although being abused as a transit road and office of the plundering of the Congo 🇨🇩.
Rwanda depends on more than 75% of its government budget on international funding, which is critical in organizing mass violence and looting in Congo 🇨🇩. In other words; the genocidal regime of Paul Kagame is granted with an average of $1 billion per year from international aid money for servicing the looting of an average of $50 billion to $100 billion per year in the Congo 🇨🇩 natural resources. So what is the meaning of Paris talks with this kind of criminal patterns? This is unacceptable and should be stopped.
Africa doesn’t need money because this continent has been exporting more capitals out of the continent than all of the international funding provided to African countries. Africa needs leaders, entrepreneurs and professionals capable of building states focused on the public service delivery to Africans and national economies that focus on investing, creating jobs and revenues for economic agents on the Continent. Yet everything is done from some interests involved in the looting of natural resources in Africa to destroy this kind of builders of nations in Africa so that any transformational dynamics in Africa be stopped.
Let stop the looting of Africa and help the emergence of very real players of change who will mobilize and allocate huge resources of Africa to nation building. Only in such contexte any international funding will make real difference in completing the internal one. Otherwise, it is just another cover up of the looting of Africa as it has been the case since 341 BC to nowadays.
