Student Post Week 1

Comment on the economic theory underlying governmental budgeting and financial management. Does it appear that the economic theory is the driving force or is there something else?

American government has three features, the combination of which is extremely rare (and perhaps unique). These features are: federalism; separation of powers; and popular sovereignty. What are the characteristics of these features? Comment on how you think these features impact on how American government operates in general and specifically how they impact budgeting.

Adam Smith's economic theory - capitalism - is frequently assumed to be the only economic theory there is. It is also interwoven with democracy so that it often seems there can't be one without the other. Comment on this phenomenon and describe the impact you see of this combination. Can democracy exist without capitalism and vice versa?

Student 1 Post

Talking specifically about governmental budgeting and financial management is best worded by the father speaking in the original independence day when the President asks how the government had enough money to build an underground alien laboratory, “You don’t actually think they spend $20,000 on a hammer, $30,000 on a toilet seat, do you?”

Given I had served in the military I can tell you a very popular take on government spending is, “if you don’t use it you lose it,” which resulting in a lot of waste at the end of the fiscal year. I watched as colleagues would dump whatever supply ort attempt to use it all in the last minutes of the fiscal year. The economic theory of it all sadly, is sound in many ways, for the trend of assets using a source of something it needed that they asset or agency has the founding a supplies for next year. This can be hard because it does a poor job of accounting for immediate trends in supply and demand. Often given many larger agencies the trends have come and past before there is a steady increase of the necessary items. 

Speaking of three features of the American Government, and from a historical perspective and from the teaching of the course, this combination is extremely rare and has been attempted to be replicated both by within other governments around the word and by force as well. The portion of the three-part system most people tend to leave out is the culture that keeps that government in place and it’s also why it has been attempted but not succussed in other part of the world. Federalism, separation of powers and popular sovereignty also has a huge cultural aspect to it all and it’s the only reason that it works. It is not perfect, but it is the best the world has ever seen. To stay on top of relevant news, many up and coming Democratic leaders are talking about “Packing the court,” which as I read from a historical and current point of view is a violation of the separation of powers, it is one power attempting to rule over another. While this has no bearing on budgets, I believe it was still an important piece of current information. 

As far as the impact on budgeting the three-part system aids extremely well with budgeting, for example the separation of powers enables that the at any given time anyone power attempting to seize more then allotted can be controlled by the majority vote. This is also the same for the popular sovereignty, by nature it is set up as a checks in balances of the trends on the time, meaning not one majority can seize power of the other. The last and the not least by any means in the Second Amendment that usures no one can actually seize power. But as far as budgeting goes it’s a good checks and balances system. 

Adam Smith’s economic theory is as far as it refers to capitalism is exactly how the founding fathers wants the system to work. With a free open market capitalism and basic freedom exist in harmony, the only thing that could potentially wreck a perfect system such as that would be the current existence of a monopoly much like Amazon or something similar. 

Democracy cannot exist without the freedom to make your own choices and do what you want to do in life as a career. Democracy in many ways is Capitalism and by nature when you hear politicians state things such as Democratic Socialism it by nature is an oxymoron. 

Student 2 Post

Incremental budget process is not best theory for actual government budgeting. Although it helps us for a long time to make easy and stable budget, it also has made more waste and inefficiency. For these reasons, new budgetary model has been applied to government to make up those drawbacks. It was zero-base budgeting, and it seems more powerful model in budget administration. It also has drawbacks, but it still better than incremental budgeting. 

Federalism speaks to organizing government based on a geographical division of power. It keeps the concept that the national government has final authority over all entities. But it still recognizes that states have power within their borders over issues that are not defined on the national level. Separation of power is a concept that seems elementary, but many governments have missed this necessary fact. The three-branch organization of the US government has an inherently built in strength that most pay no attention. The organization of the legislative, executive, and judicial branches allows the United States an almost foolproof (yet cumbersome) method of government and Popular sovereignty is a basic fundamental of democratic rule. It basically states that the people are the core root of rule, and they are the source of all, real legal authority. Incremental budgeting speaks of budgeting future periods with historical periods as a base for comparison. Performance budgeting is creating budgets on the basis and evaluation of the efficiency of an operation. A program budget is creating the budget on the evaluation of the effectiveness of an operation. It is worth nothing that the words ‘efficiency’ and ‘effectiveness’ cannot be used synonymously in these two cases. ‘Effectiveness’ gives to the concept of not only doing the right thing, but doing the right thing well. The final case is a zero-base budget, which is simply a complete re-justification of all activities within the budget planning.

In an isolated scenario, capitalism has its benefits. But the nature of capitalism is not isolated and this is the reason why it’s dysfunctional. On the other hand capitalism is very powerful. 

Capitalism has made our means of production very efficient. There are new technologies being created every day that allow us to live longer and consume more variety of goods. The earth’s population is growing. With every passing day, the eco footprint of the human species is growing. Capitalism has leveraged human ingenuity to advance much faster than the earth can adapt. Most of the production that is the result of capitalism is based on non-renewable resources. When we exhaust these natural resources, what are we to do.  There is one unique feature of capitalism. When our society allows individuals to do as they wish, we are very quick to adapt. If natural resources are exhausted, it won’t take us long to find renewable resources or natural resources on other plants. Capitalism provides the platform for human ingenuity that allows us to overcome extreme challenges. Even though it is not fair for all.