Importance of Public Expenditure

We can say that public spending is one of the most important elements that we find within the economic policy of a country. Thanks to this public spending, the state and its agencies are betting on meeting the needs of the collective, influencing, for example, the redistribution of the country's income and wealth among its citizens.

Thanks to public spending, a country can cover the costs of its own services such as security, defense, justice, health (if it is public) or education. Especially those services that cannot be managed by third parties, such as defense and justice.

Thanks to the investment in public spending by a government, it is possible reach a better distribution of income and national wealth. Thus, this public spending can become an excellent tool to address the problems of scandalous social inequalities between people with a lot and people with little.

Public spending also has among its goals try to keep prices stable as well as record low unemployment rates. Thus, by investing in employment, the state will be getting people's purchasing power to increase and therefore find a more dynamic activation of the economy.

Public highways, as well as the rest of the connections with the world, are essential to be able to count on an excellent economic development. Thus, public spending can also be focused on these networks, creating greater fluidity and at the same time creating new jobs and distributing wealth among the people in charge of building these services.

Many claim that this public spending can be seen as a drag on the market economy; and it is that there are certain governments that bet on other types of economic policies, thinking that said public spending prevents the economy from growing faster. However, there are many scholars in economic matters who assure that throughout history the economic growth has been inversely proportional to the increase in public spending. Something to take into account in the current economic policies based mainly on austerity and cuts.

Others bet on minimizing public spending and increasing private investment. Certain policies defend this action. However, the losses of public services, as well as the possible profit of private companies, is something that should never be lost sight of. It is better to find a good balance in which public spending is correct without abusing it.