That teacher of political economy of the current public treasury that is the university professor José Luis Pérez de Ayala, pointed out in one of his works that the whole of budgetary politics has traditionally been demonstrated around two contrary principles: budgetary balance or imbalance. If we leaf through the classic writings about the problem one can observe that the principle of budgetary balance is maintained. It defends the understanding that National Debt policy, dependent from the deficit, would subtract saving from private production, and from this it is deduced that the forgotten principle of balance is supported by the necessity for respecting and not curbing expansion of the global offer.

In the serious current situation of our government finance, it is easy for a deep rational feeling of nostalgia towards the classic budgetary pattern to spontaneously arise. There, far from governmental ideology, the State is politically neutral in the sense that as for its objectives, it only spends to produce the necessary goods and services for its existence and operation as well as for public organization and law and order of society. It is also neutral with regard to the age-old market economy. This neutrality is inspired by the supposition of the private company's effective performance and based on the fact that the determination of the products that it is necessary to manufacture, the services that are used, and the prices and revenue that must be paid are determined by the free enriching game for all of supply and demand. It is assumed that the market economy guarantees a balanced growth of national production, in the medium term, in conditions close to those of a situation of full employment of the productive resources that the economy possesses.

"Say's Law" contributes the theoretical demonstration of these theses where supply creates its own demand. Company costs in producing each and every one of their products guarantee the sales of those same companies in the global group because production expenses are incomes for the workers and proprietors of the capital employed. Those incomes are used, to acquire goods directly from the same companies, or to contribute them to these companies so that they buy, in turn, goods from others. Since this process takes time momentary "shortcomings" can take place, but they will be corrected automatically by the selfsame game of supply and demand. The whole balancing mechanism entails full mobility of factors and products and urgent correction of antiquated structures, dead weight, inefficiencies, routine, bureaucracy and incompetence.

Derived from these conditions, the basic economic principles of ordination of the State Budget will be: 1) that the State should only spend on real political objectives of an ordinary nature and 2) that these expenses must be paid by the Government with tax collection. The classic "golden rule " that unites these two principles is that of budgetary equilibrium where taxes should cover the Government's recurrent expenditure, and the government should only spend to maintain the normal necessities of structure and operation of the political and legal institutions consubstantial with the existence of the State and society. Any extraordinary public investment expense should be exceptional, and carefully calculated before being carried out, for the simple reason that it could only be covered either by very high taxes that would discourage private economic activity - that is considered more effective than public -, or through National Debt that would absorb a necessary saving for private investment and that mortgages the future. If the extraordinary public expenditure of investment is carried out it should be "self-financed"; it should be profitable, providing enough income to the State so that it can pay the interest and redeem the debt that it contracted to pay for the investment. It is therefore necessary to avoid the tyrannical deliriums of greatness of those who govern us because in the end all of us pay for them; or our children and grandchildren will pay for them, with interest.

Joseph John Franch Menéu
Gaceta de los Negocios, Thursday June 24th 1993