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Government Distrust

GOING DOWN TO DETAILS

Ahhh. But the OECD not content with this absolute breakthrough in government management keeps adding their sage views, overviews, suggestions and recommendations. And why not? If there is a fire the correct manner to put it out is to add gasoline!

Fiscal Management

One of such breakthroughs is their opinion on this subject. According to the OECD the budget:

 

 

  • is a central policy document of government showing how it will achieve its annual objectives.
  • is a contract between citizens and state
  • must be clear, transparent and credible

These notions are quite funny because if you actually bother reading any budget of any country in the world, you will notice that said document is:

  • A central policy document of government based on compromises, guesses and half-assed measures that attempts to achieve the annual political goals of the party in power. It has nothing to do with what people want or need.
  • Is not a contract between citizens and the state because a contract requires the voluntary agreement of both parties. It is simply an arbitrary imposition.
  • It is obscure, opaque and non-credible. It is so created on purpose to avoid scrutiny by the people thus allowing for privileges and special "considerations" to continue flowing to politicians and the power elite.

The OECD is not totally, completely and utterly deluded because they are indeed providing the correct advice. Yes…. properly understood. A budget is a tool to achieve government annual objectives, not peoples'. Governments are disconnected from people and as such budgets are government tools, not peoples' tools. Budgets are indeed contracts because governments must perpetuate the fraud of Social Contracts (see Social Contracts Are A Scam) and as such they must be framed as "contracts". And as to being clear, transparent and credible, they must seem so which is simply a degree of "being so". They must seem so because they are a political propaganda tool and as with any written tool, the devil is in the details… details that will of course never make it to the general public. Never forget that governments rule by the fraudulent "Principle of Authority" supported by people with badges and guns.

To follow in these steps they even came up with yet another useless document bombastically titled "Draft Principles of Budgeting Governance". But why stop there? They have an entire section of the OECD website (presumably a department or division) called "Budgeting and public expenditures" where they expand on the principle of the above mentioned document. As we don't really have a few months to shred them to pieces (metaphorically speaking) we will only deal with the principles of the document. They are:

Fiscal policy should be managed within clear, credible and predictable limits.

This section can be resumed as follows. When in good economic times, tax and save. When in bad economic times, tax and spend. This is the same advice that John Maynard Keynes (the inventor of Keynesian or monetarist or voodoo economics) provided in his "masterpiece" The General Theory of Employment, Interest and Money. The only problem is that politicians need to spend at all times in order to keep their jobs. As such this "advice" was never followed. However, it goes deeper. This advice is, of course, nothing short of idiotic. It says that when in good economic times, governments must remove working capital from the economy and do nothing with it hence weakening the economy. In bad times, governments are supposed to take this surplus and spend it (i.e. waste it) instead of allowing markets to use it as capital to improve the economic situation. A one-two punch. Yeah…that makes a lot of sense.

Top-down budgetary management should be applied to align policies with resources.

This is classic communism. Instead of having a 5 year plan, we have a 1 year plan. The OECD advice is that the "Central Budgeting Authority" -CBA- (no, we are not making this up) must plan budget targets to achieve objectives. The "budget targets" are simply the processes of taxing, borrowing and printing along with expenditures. It sounds very logical but it is not. As "income" can always be increased because taxing, borrowing and printing are unrestricted, any expenditure can be supported. As so, the CBA can plan anything and everything and reality is no problem. Exactly like in communism. The only difference being that communism had less resources while modern democracies have more and as such they can shift consequences well into the future; something communism was unable to do.

Budgets should be closely aligned with government-wide strategic priorities.

Sure. Why not. Now that we know that anything is possible (as long as we are not here when the bill finally comes), why not? Budgets must support political strategic priorities from the party in power at all times.

Budgets should be forward-looking, giving a clear medium-term outlook.

What this means is that CBA's should look at the medium term because many so-called government "investments" and "reforms" take many years to complete. As such budgets should take the medium-term into consideration even though they are yearly… particularly in election years. The only tiny problem with this "outlook" is that economists, particularly government economists, cannot accurately forecast 5 seconds into the future, much less "medium term". Of course, this won't stop governments to do so precisely because it is a propaganda tool. Forecasts are just that, guesses. Therefore it will make governments look good if guesses are rosy as opposed to gloomy. And what about next year when guesses do not materialize? Well… we will have new guesses. Tomorrow will never come. Good advice indeed!

Budget documents and data should be open, transparent and accessible.

Sure, why not? This will give governments a propaganda boost. You see dear reader, budgets are nothing more than make believe documents. They are not actual limits to what will or could be spent on certain goods and services. This will be determined later on behind closed doors by people "who matter". In other words, sure, go ahead and publish all the big print because the fine print will be decided later.

The budget process should be inclusive, participative and realistic.

The idea here is that people and parliaments will work together with technicians to come up with a reasonable budget. And the moon is made of cheese and chocolate towns exist in Germany. Right! Never happened and will never happen. The whole point of political jobs is power. Politicians do not, under any circumstance, share power. Much less with nobodies such as citizens. This is so even if (and this is a big if) citizens would actually be concerned and had the stamina and economic means to get involved in budgeting purposes. Not going to happen. Yet, the advice is sound in a roundabout way. You see, it is not really necessary that citizens be part of the budgeting process, just that they seem to be part of it. It looks darn good! Wonderful Public Relations…and so they shall.

Budgets should present a true, full and fair picture of the public finances.

Absolutely. Because key decisions will be made later on behind closed doors, there is no reason for the budget to be untrue, partial and unfair regarding public finances. As we mentioned above, since "income" is unlimited any objective is possible. As such, there is no reason to lie. The big lie covered by this "truth" is that governments will finance whatever they want to finance using the unholy trinity (tax, borrow and print) inducing all kinds of negative consequences to your economic health and there is nothing, absolutely nothing you can do about this. So, go ahead! Be truthful.

Performance, evaluation and value for money should be integral to the budget process.

The general idea is that government should explain to people not only state "income" but also state "expenses". In other words, to disclose what governments are taking from people and what they are giving back. In order to do so, "objective" evaluations and benchmarks should be used. And this is, again, sage advice. There is an old saying that goes like this: "Using statistics it is possible to prove anything that we may wish to prove statistically". In other words, there is no such animal as an "objective" evaluation or benchmark. They are all deeply subjective. As such, providing these elements gives budgets a patina of scientific objectivity while in reality is allows politicians to do whatever they want to do and prove them right. Go ahead! Objectivize away!

Longer-term sustainability and other fiscal risks should be identified, assessed and managed prudently.

This is correct. The unholy trinity can backfire (politically) if used as a blunt instrument. We know that it will inevitably backfire economically, but this is not politicians' primary concern because they can always shift the blame to "the economy". Should the unholy trinity backfire politicians will lose jobs and this is unacceptable. Therefore many things must be taken into consideration to ensure the road to economic oblivion has a nice slope and not a large fall.

The integrity and quality of budgetary forecasts, fiscal plans and budgetary implementation should be promoted through rigorous, independent quality assurance.

Good one! The main element providing "independent quality assurance" according to the OECD should be the Supreme Audit Institution (no, we are not making this stuff up)… which happens to be a government dependency. That's right! A department or division from the government should be tasked with being independent, subject to previous rigorous brainwashing training in the correct ways of auditing government books and forecasts. We agree. Excellent idea! As we have seen before any goal can be met and any measure justified, there is always political gain into making suckers citizens believe that everything is OK with the budget. Should any anomaly arise, even better! We can demonstrate that the system works! Meanwhile reality moves through the posh political and corporate offices of people "that matter".

Note: please see the Glossary if you are unfamiliar with certain words.

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