Public finances are managed by state authorities.
The study of the circulation of money is known as finance . This branch of economics is responsible for analyzing the obtaining, management and administration of funds. Public , for its part, refers to that which is common to the entire society or is generally known.
Public finances are made up of the policies that implement public spending and taxes . The economic stability of the country and its entry into deficit or surplus will depend on this relationship.
Public finances, responsibility of the State
The State is responsible for public finances. The main state objective through public finances is usually the promotion of full employment and control of aggregate demand.
State intervention in finances, therefore, occurs through the variation of public spending and taxes. Public spending is the investment made by the State in different projects of social interest. In order to make investments, that is, maintain public spending, authorities must ensure that they collect taxes, which are paid by all citizens and companies of a nation .
Public spending , on the other hand, can function as a stimulus for consumption . The State is in a position to generate jobs, which will provide people with salaries and money to consume.
Taxes are usually linked to people's income: the higher the income, the more taxes to pay. There are taxes that are considered recessive, since they affect the population with lower incomes and the upper classes in the same way.
Sometimes, to balance public finances, privatization of companies and services is used.
The eternal discussion: the public and the private
There are many controversies around the activities that belong to the public sector and those that should be represented by the private sector .
Some people think that the government's job lies solely in intervening and investing in issues related to the administration of justice and security ; Others believe that both the services and the administration of the geological resources of a place should be administered by their States . A conflict has been established for decades around this discussion that has not yet been resolved: privatize or nationalize.
Nationalization or nationalization refers to the set of decisions taken by a State to take over the administration of a company that until now belongs to a private entity. This concept comes from the ideas imposed by socialism , where an attempt was made to eliminate private capital and where the State would be in charge of managing the entire industry .
Privatization is the opposite concept of nationalization, where the State leaves a government asset in private hands. This concept can be related more to capitalist proposals, where capital belongs to private hands . It is necessary to clarify that in some countries like the United States, certain services that should belong to the state order have been privatized, such as health , it is important that societies fight against this type of privatization that could result in some of their citizens not being able to receive attention to your most essential needs.
Public finances and sustainability
Today one of the main responsibilities of this sector of the economy is to promote sustainable living, social and environmental balance and invest to achieve these objectives . To do this, they must investigate the ways in which the system works, analyze whether the decisions of the State or any other entity with public power regarding the use of material and financial resources, and the way in which the wealth obtained is distributed . of the exploitation of said resources.
Unfortunately, this responsibility is not fully fulfilled and those who are directing the work of public finances tend to turn a blind eye while those who belong to the aforementioned entities enrich themselves by embezzling funds or taking advantage of public order assets .
As stated by the authors Schultz and Harris, public finance is understood as the study of the facts and the technique used by a State to obtain and spend funds from government bodies . That is to say, it is a science in which all government finance management is organized and understood.