Yes I suppose theoretically an economic/mathematical model divorced from politics and opinion could exist without budgets etc. I'm not sure we live in that world though. I am constantly being surprised by how base human emotion drives most policy making ...and most of the time it seems to be based on quite self centered reasons as opposed to logical informed decision making.
I never studied economics and was rather handicapped in terms of maths (had to teach myself). But I would say that most people's theories on economics don't seem to work out that well when put into practice...just from a casual observation.
I understand, but what I said was just a simple matter of
accounting, instead of economic theories.
If we agree that if I give you $10 then the account would be
me + you = 0
-10 + 10 = 0
The truth of the equation depends only on the two simple facts:
(1) In every transaction, money comes from somewhere and goes somewhere, and the amount that comes (credits) equals the amount that goes (debits), i.e., the transaction balances.
(2) If you add up the same numbers two different ways, you’ll get the same answer both ways.
then my comment is correct.
- (I – S) + (G – T) + (X – M) = 0
(I – S) = private sector balance
(G – T) = public sector balance
(X – M) = foreign sector balance
I = investments
S = savings
G = Government Spending
T = Taxes
X = Exports
M = Imports
(See attached graph from the Office of National Statistics for how this looks in percentanges. Note everything balances to zero.)
Is how Government accounts are worked out. What people choose to take from that is a matter of politics, philosophy, sociology etc.
The fact that basic accounting is viewed by suspicion is a great example of the trouble economists cause. (Maybe they should spend less time theorizing about human nature and more time adding things up to see if they make sense)
I just mentioned it because to my view, the idea that taxes 'fund' spending is a very dangerous one in discussions of healthcare and ME research.
I understand that these simple facts look like gibberish or madness, but that is not my fault!
