Submitted 2 months ago by fididosooe@lemmy.ca to [deleted]
You can’t use your GDP to pay off loans. Wouldn’t it be better if we used tax revenues?
Because the people utilizing debt want to measure it against the largest number they can find… also because, in an extreme situation, the GDP is essentially the value that a government could surrender to creditors.
Nope most of the GDP belongs to private sector.
The government has the force to seize that if they so choose… it’s unthinkable in America because of our liberties but it isn’t in other nations.
Government debt is not like your debt. It’s a monetary control tool more than anything. So the revenue in a lot of ways doesn’t matter, especially for countries with a lot of power in their currency.
Tried to answer, but it got very convoluted, here it is anyway as I typed it out…
Because that’s a less useful metric basically, to change their budget a government can:
This means that a budget can swing quite a bit in value quite quickly if needed (or if something goes wrong). This means the % could swing quite widely.
GDP on the other hand is effectively the value of the economy, so moves slower and is a better metric to compare different countries with different economies and tax systems (assuming they tell the truth about their GDP…)
Ultimately, if a government needs more money, most of the time it can get it… But whatever they do will have side effects. But those side effects depend on the size of the economy, the bigger the economy (measured by GDP) the more can be done/taken without causing a large effect.
Both of these fail to highlight countries that already have a high tax load though, so in practice a wide range of metrics will be used.
Because none of the tax revenue actually goes to paying off debt. There isn’t much left after it gets past all the politicians shoveling it into their own pockets.
I think it is measured and professionals who work in areas where this was relevant probably track this number among many others. I think the real question you are asking is why it is always framed as a % of GDP in public discussion and news reporting. Some people here point out how % of GDP can be more useful for comparing across countries with vastly different sized economies but I think we all know the real answer has more to do with how people perceive the value differently by using the larger number. Framing government debt as a % of GDP serves the zeitgeist, whatever that is.
The zeitgeist isn’t something that gets served, it is the resulting cultural mood from other things that are being served.
I think you mean it serves the status quo.
Correct me if I am wrong but isn’t this sort of the deficit.
Revenue-expenditures is deficit in the simplest terms I understand
In the guide below they don’t use gdp for national deficit but every thing I see for fiscal deficit has gdp. So I guess one is measure of nations economy versus the government budget. A nation’s economy it makes since to use gdp because that is all the money moved by productions so to show the economy of a nation’s is able to produce more than it indebts itself is important fiscaldata.treasury.gov/…/national-deficit/
yesman@lemmy.world 2 months ago
It’s a better way to compare countries apples to apples. Two countries with similar economies may have drastic different tax policy.
Measuring it as you suggest is absolutely done and is helpful to research policy inside a country, but between countries, it’d be a poor metric.