Well, here we would have to go into the analysis of communist societies. Where providing services for all can lead to high taxes, driving away foreign investment; consequently, ensuring that the entire population has access to basic needs such as education, health and adequate infrastructure, translates into a challenge to give rise to long-term sustainable development, creating a more equitable environment that, in turn, would attract more responsible and higher quality investments.
What would be the way to find a balance between financial sustainability and the need to provide essential services for all? I imagine that is the question that governments around the world ask themselves regardless of whether they are of one ideology or another.
The fundamental basis of the relationship with the market, education and money is that it is useful to us and allows us to live with dignity. Why do I talk about education? For most students of any career, their idea of paying tuition and accessing scholarships to finish their studies is centered on the fact that by having a degree they will achieve better salaries, they must make use of their knowledge to be adequately paid for it.
The reality is that depending on what they study, if the market is saturated with that profession, they will have to diversify their activities to achieve the objective or learn to live like great card players with their cards, not of chance, but of credit.
It is useful to the market that people build a credit history, which they have to pay cards in a winner in the market of purchase and sale of services and goods.
The rich countries, which could be fewer and fewer in the face of this reality that we live in 2024, have managed to get their governments to stabilize with the collection of taxes the offer of services such as transportation and medical services, as well as road infrastructure and automated mechanisms for the use of rental houses, cars or electric scooters.
Underdeveloped countries offer medical services and also education in public schools… The most interesting thing is that each one, without considering that some economic systems or others are more profitable than the others, each lifestyle stabilizes itself to the extent of its possibilities with what it has, until it stops having it.
Then, depending on its international relations, it will achieve stabilization with the debt that it can grow in the IMF. What are the differences between the World Bank Group and the IMF?
Both institutions, which were created at the Bretton Woods Conference in 1944, have complementary missions. The World Bank Group works with developing countries to reduce poverty and increase shared prosperity, while the International Monetary Fund (IMF) is responsible for stabilizing the international monetary system and acts as the supervisory authority of the international monetary system. .
The World Bank Group provides financing, policy advice and technical assistance to governments, and also focuses on strengthening the private sector in developing countries. The IMF monitors the global economy and that of its member countries, makes loans to countries facing balance of payments problems, and provides practical assistance to members. To be eligible for membership in the World Bank Group, countries must first join the IMF; each institution currently has 189 member countries.
Now, remember on a micro level what I explained to you about professionals and their credit cards and now look at this example, but on a macro level:
Japan’s debt has a significant impact on its economy. Despite being the most indebted country in the world, with public debt reaching 266% of its GDP, Japan remains an attractive option for international investors. This is due in part to confidence in the country’s economic stability and its ability to pay its debts.
In addition, the Japanese government has implemented growth-enhancing monetary and fiscal policies, allowing the country to manage its debt more effectively. The low interest rates that the Bank of Japan has maintained for years have also helped keep the debt burden manageable, allowing the government to continue to fund essential projects and invest in infrastructure.
However, rising debt poses long-term risks, and policymakers must balance economic growth with fiscal sustainability to ensure the nation’s future stability.
This part can also be observed closely at the micro level, but the macro explanation is vital and creates an alert that must be considered:
The high level of debt is due to several reasons, including the aging of the population, which increases the costs of social security and health care. This demographic phenomenon not only puts pressure on government finances, but also poses significant challenges for the pension system and health services.
In addition, the Japanese economy has experienced periods of recession and slowdown, which has led the government to implement fiscal stimuli to maintain economic activity. These measures have been necessary to boost growth and avoid prolonged stagnation, but, ironically, they have also contributed to a greater accumulation of debt, which generates a cycle that is difficult to break.
The combination of these factors creates a complex environment, where each fiscal decision becomes a delicate balance between stimulating the economy and properly managing debt. Despite all this, their focus on domestic spending to stimulate demand emphasizes a certain level of success, culturally they have created an approach and they follow it.
https://www.bancomundial.org/es/about/history/the-world-bank-group-and-the-imf
https://www.bbc.com/mundo/noticias-64297210
https://www.weforum.org/agenda/2015/03/how-is-japan-managing-its-debt/
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