I Looked at the West’s Finances to Determine If It’s Really Bankrupt

Here’s what I found.

Photo by Miquel Parera on Unsplash

There are two ways to judge whether a country is financially bankrupt or not.

1. Is it running a deficit? That is, does the government spend more money than it earns?
2. Is its commercial balance positive or negative? That is, does it sell more stuff abroad than it buys abroad?

Let’s find out who’s bankrupt, and who’s not.

1. Is It Running a Deficit?

Running a deficit means that the governmental budget is bigger than its revenue.

The equation is Revenue - expense = “net profit”.

How do states earn money?

States predominantly earn through taxes, but they also earn when they sell stuff (Eg: rights to energy contracts, gold, state companies, shares of companies, etc) or when these assets are earning money (dividends from shares in companies).

Alternatively, states also earn when they invade new territories to extract resources, the military equivalent of “conquering new markets”.

Here’s a ranking of 148 countries based on their surplus/deficit expressed in GDP points.