Tuesday, September 10, 2019

What Steps a Progressive Government Do to Eliminate Unemployment and Enhance Economy?

Some nations in this world are now decades ahead of several others with regard to material progress and human development index.

Some are fast moving ahead while some others are stagnant or even in reverse growth.

But why? Have you ever thought about it? Why some communities are progressive while others are not?

Now let us see the common explanations that we make to explain this situation if we find our own nation in degenerative growth:

-Our leaders are corrupt (Why are they?)
-We had been exploited in the past decades by others (Only you? )
- They have all the resources and we don't have that much.(Really?)
-We have been poor and illiterate (Why?)
-Our numbers are much more than we can sustain (Really?)
-We are multi-linguistic,multi-cultured and multi-religious (So?)

Whatever be the excuses, the fact is that some nations are more advanced than several others.

But what is the secret of some nations progress at a faster pace than others? To understand that one must understand the basics of economic growth and the role of money.

Now let us examine some of the basic concepts of economics and money.

Money is the measure of the value of quality and quantity of materials or work or certain special situations required by humans for satisfying their multifaceted needs.

Here value is something arbitrary and depends on the people involved in the exchange (giving and taking) of the materials and the work or situations or services.

Let us consider a few examples:

If I do some cultivation and produce say 100 kg of potatoes that I do not need for my use, I can either give away those to some one free or sell to some one after fixing some mutually agreeable unit for value. The mutually agreeable unit for value as legally defined and controlled by the government of a country is called the currency of that country.

In India it is called the rupee. In the US it is the dollar. If I find a buyer for my potatoes who is ready to buy the potatoes for a value of say fifty rupees a kg then I get 5000 rupees for my produce of potatoes. Suppose we make a deal for a work or service for transporting and supply of the potatoes from my place to the buyer's place for say 500 rupees, this will become the service charge for transportation of the potatoes.

This way we can identify materials (goods) and work (services) or even situations (for example rent for a room or house) or entertainment ( cost of watching a show) or time ( an amusement ride for an hour) and the like. 

When an exchange of money takes place between a provider and a procurer (seller and buyer) for a value for any goods or service or other human need we can say that an economic activity has taken place.

The total of all such values for the economic activities taking place in a nation is called it Gross Domestic Product (GDP). Since the government is the umpire of the game of economics, it is bound to charge a small fee for its supervision. It is called the taxes. Taxes are a small percentage of the value in transaction or the profits made in the transactions.

Now if the GDP of a nation and the corresponding wealth of the nation as gained from taxation can increase when the number of economic transactions and the value of goods and service in transaction increase. When GDP grows, opportunities of employment and more opportunities for economic activities grow.

When humans remain underdeveloped human needs are also limited. If human needs are limited to basic needs of food, shelter and clothing there cannot be much value to several things and services that we see today. Thus human progress and economic activities and its value are all interrelated. The more we progress, the more the chances of economic activities and the more the potential for higher value for services and goods.

Now how can the government enhance value, economic activities and wealth of the nation? In fact it all depends on the government, the umpire of economics of a nation.

If the umpire is clever, the game can be continued even when the players do not know how to play well. So here the umpire needs to be practical and pragmatic. If the umpire is too strict or too lazy, the game can stop abruptly without anyone enjoying the game!

In a similar way, the government or the leaders who form the government needs to be practical or broadminded people for a nation to become wealthy and prosperous.

Such a government knows the fundamentals of economics, value and wealth and the tricks for enhancing GDP even when they make and enforce rules!

Now the foremost thing that the government needs to ensure is that all the citizens have opportunities for fulfilling their basic requirements for survival. It is the governments' primary responsibility that the citizens have food, shelter, clothing, means of education, healthcare, entertainment and the like.

The second thing should be to enhance the amount of excess money that the individuals have over and above the money needed for essential goods and services for survival. When the number of individuals with excess incomes grow the demand for not so essential goods and services grow thereby enhancing more economic activities.

The taxation laws made by the government should not be instrumental in killing economic activities, rather it should be made carefully in such a way that both saving and spending of people are encouraged. 

In the earlier example, imagine that the individuals have enough excess money to buy potatoes even at 100 rupees rather than 50, my income by selling potatoes double from 5000 to 10000. If the tax rate is say 10% the governments' income too double. 

But when there is much difference in the values from nation to nation, the economics involving international trade becomes complex and the governments need to be more shrewd and practical. This is where intelligence of leadership becomes more and more important.

In such a scenario, the clever governments becomes more wealthier and stupid governments lead their people to doom. 

Stupid governmental acts are those acts that kill opportunities for economic activities to grow. Analyze any government act of say new law, rule, taxation etc. If it is directly or indirectly causing economic activities of people to decrease, it should be stupid as far as economic growth is concerned. When I say economic activity, I exclude those activities that are potentially dangerous for the safety and security of the people and the nation as a whole.

When the people are also economic novices, their leaders too are likely to be like that. And such situations enhance economic disparities to grow among nations of this world.

And factors like greed, corruption, stupidity and desire for controlling others and such other evils take control of human mind both in the people and their leaders. When that sets in, unseen evil forces take control of human minds in more and more numbers.

Humans collectively suffer in the clever acts of evil!