‘The time has come’ the Warlus said ‘to talk of many things: of shoes -- and ships -- and sealing wax -- of cabbages -- and kings --’ (Lewis Carroll)
There are two ways of reducing the gap between revenue and expenditure. Our kings -- and queen(s) -- usually think of only one: increasing the revenue, which, is generally done through borrowing or taxation or both. Yet, another alternative has always been there: reducing the expenditure -- the wrong kind of expenditure.
Expenditure which either eats up the stock of capital goods more than it adds to it or adds such ‘items’ as make the rich few richer at the cost of the rest certainly needs to be curtailed, if not eradicated completely.
The problem is that the ‘unhallowed hands’ of the king’s vizier -- called modern economist -- have deliberately disturbed ‘the wisdom of our ancestors’ that all debt is evil (and therefore ‘the country’s done for’). The modern economist has told the king that borrowing may not be bad after all, for it can help to mobilise resources and stimulate activity. But he has forgotten that a king is a king -- the king is always more interested in his rule than in the economic wisdom necessary for following the vizier’s advice with discretion.
So the kings and queen(s) continue to borrow and tax for the wrong kind of expenditure -- palaces and courts and coaches and apparel and adornments and merry making. The kings and the queen(s) and the nobility live happily ever after. The subjects suffer. This is morally despicable -- and very bad economics, for there is no factor of production more important -- economically and socially -- than man. Who knows, the son of a pauper might turn out to be another Einstein or an Edison or a Lee Iacocca or, if nothing else, the average, very innovative entrepreneur who is so essential for the pervasive development of an economy. When a tiny fraction of the whole population, ‘the nobility’, uses the magic wand it has -- demand (which is not needs and requirements of the economy -- it is money votes to produce whatever is voted for) -- for palaces and adornments, while the majority, containing millions and millions of potential innovators, entrepreneurs, thinkers and skilled workers, cannot even get the share of resources to get out of the vicious trap of poverty, which confines their potential to the most menial of chores for the rest of their lives -- generation after generation, a lot of rethinking needs to be done. The problem then is not the budget. It is the structure of the economy -- and the kings and the queens and the nobility. The big question is: will we ever find an ‘Umar Ibn ‘Abd al-‘Azīz to get rid of the cruel traditions of monarchy?