The State is Not a Family (Le Journal de Montréal / IRIS)

By Simon Tremblay-Pepin
Originally published on February 26, 2015
See original French text here:
The President of the Treasury Board recently said on the radio that although a family and a state have size differences, the budget of the one and the other must be understood in the same way. This coming from the mouth of someone who has taught economics is highly surprising. When that same person has important political responsibilities, these words become downright irresponsible.

Of course, the state budget has a column for expenditures and one for income, like that of any family. But as Mr. Coiteux knows, the similarity ends there. Let’s see why.

The state has control over the money supply in circulation. If a family tries to print money to do the same, it will have problems with the law. Putting money in circulation is a complex and risky game, but can have important consequences on the level of debt of a country. Quebec does not have this power (some would add: for now), but yes the Canadian government does, through the Central Bank.

The state may see their income increase due to some expenses. Buying a basket of groceries will never increase your income. When the state invests, it creates jobs and provides contracts. It follows an economic stimulus that can increase its tax revenue. On the other hand, and the Quebec government had the painful experience in recent years, when the state constrains its expenses, it can end up with a lower income than it expected.

The state can borrow from its own population. A share of the interest the government pays on its debt is used to fund our pension plans. If you pay the interest on your debt to your family, does it change your perspective on debt? Let’s just say it does not have the same impact as paying 19% of your spending to a bank for your credit card.

The state sets its income level according to his own will. If you could not only determine your salary yourself and you could put your employer in jail if he does not pay you, would the situation be different? By setting the level of taxes itself and having control over the drafting of laws and law enforcement,this is precisely what the state can do.

The State does not have a life expectancy of 80 years. If you were thinking of your household budget considering that it will still be there in two centuries, does your view change? Maybe you would view inflation, debt and the purchase of infrastructure in a different light.

All this does not mean that the state is acting in a world without constraints. Imposing too much or printing too much money has consequences that can be harmful to states; this much is obvious. However, the challenges facing states and households are profoundly different and, ultimately, incomparable. It is laughable to defend the opposite.

Translated from the original French by Language and Dissent, a collectively-run blog supporting the anti-austerity struggle in Quebec. These are amateur translations written by volunteers; we have done our best to translate these pieces fairly and coherently, but the final texts may have their flaws. If you find any important errors in any of these texts, we would be very grateful if you would share them with us via email (languageanddissent [at] gmail [dot] com). Please read and distribute these texts in the spirit in which they were intended; that of solidarity and the sharing of information.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s