As a business major, I know that the cornerstone of a successful business is basic – you need to have more profit (tax revenue and other funds in the case of a government) than you are spending on expense. Every company, from a local café to a multinational corporation like McDonald’s, understands this crucial balance. That being said, why do 129 countries have a public debt as a percentage of their gross domestic product as of 2009?
When are bailed out, they continue a cycle of dependence that is difficult to break. Instead of countries being forced to face their own poor fiscal futures, they know that they will receive aid because as global community, we refuse to let a country fail. Whereas countries could work to cut their own spending and programs, they instead keep spending the way they always have instead of making necessary changes.
Most recently, Greece was at the receiving end of this. Even with the loans from the Eurozone countries, there is no guarantee that the loans will even be effective. With Europe, among other areas of the world, still struggling with a reception, it will be difficult for citizens to pay the higher taxes they are required to pay as part of the terms of the bailout as well as for Greece to meet their interest payments.
In a business (excluding those bailed out by the United States government), those in charge will cut expenses, reduce hours of operation, amount of goods produced, and etc. Essentially, they do anything that may be needed, including making tough cuts, to balance their budget to ensure continued success.
This type of decision making must be applied on the global level to ensure the continued stability of countries. By individually securing the economy of a country, they are able to break their dependency on their neighbors. They must learn how to develop their resources and work forces in accordance with their budget.
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