The government must find other ways of funding itself, which do not burden the labour market, make future generations pay for current expenditure with interest, decrease the value of investments or sell off assets. All of which seem to make up the main body of funding options currently used by the government.
Taxation, which is the confiscation of assets of the population, usually in monetary form, will limit the ability of the free market to operate due to business funding reductions if increased. Demand for goods will decline due to the lack of business and consumer funds, impacting profits and the ability to obtain products.
Debt, the borrowing of funds in agreement to be paid back at a later date, often with interest, leads to a reduction in future demand when the loan has to be repaid, also with the cost of future generations carrying the burden. Countries with high national or even private debt may suffer macroeconomic consequences, such as currency devaluation.
Quantitative Easing, the creation of additional money to enable transactions, which is often used as an economic stimulus, will lead to a redistribution of wealth. Whoever receives the new money will benefit, but existing asset owners and investors will lose out on a relative wealth level. It could also lead to inflation and currency devaluation.
Selling Off Assets, the sale of government owned property and other assets, military hardware for example, will take away the use of the assets and reduce the stock wealth of the government. Weakened stock and asset ownership of a government could reduce foreign interest in investment, making borrowing more expensive through higher interest rates.
The government needs to find other ways of funding itself, which are not dependent on outside sources. Taxation and debt put the burden of funding on the free market and the population. Quantitative easing will also burden the population by devaluing their personal wealth. The selling of assets will impact facilities available to the population.
Either way the population will lose out with the current funding options. There is however another way for the government to make money. The government is an organisation in itself with its own legal identity, which can generate its own income through its own business operations. The government is or could be a profit making organisation.
Rather than the government being dependent on sources of funding outside of itself, which often limit the population's resources. Generating its own funds through its own business operations is the new role of the government reducing the need for spending cuts, further tax, borrowing, another quantitative easing program or selling off assets.
The government's new direction should be to expand its business and money making operations instead. How? A change in thinking is needed, the government is now providing free market products. The British government is open for business and can make its own money, it is no longer dependent on the domestic population almost solely to fund itself.
Governments develop systems and technologies that can be sold to other governments. Consultancy, patenting, developing products for the 'old product' market or 'new product' development market. These are all methods of entering the free market, which the government can become involved in and get a share of the profits.
The foreign market will be key, even if the product is not used within the domestic economy it could be sold abroad. The government does not even have to develop the product itself, entrepreneurs will approach the government with ideas that can be patented, its role will be to act as the patent investor and legal enforcer. Shared ownership and rewards.
Providing products for the foreign market is imperative due to the reduced level of domestic demand the economy is currently facing, as a result of high levels of debt. Countries with more available funds will demand more products, if they are desired by the population. The article below explains this concept and methods of entering the foreign market.
Innovation is essential to increase demand in the domestic economy or to sell goods abroad. As a macroeconomist I develop economic tools, calculations, processes and software that can be patented, then used in the domestic economy and also sold abroad. I am willing to work with the government to do this. The article below explains the process.
With high levels of debt, high rates of taxation and a desire to avoid another quantitative easing program, the British government must look for other ways of funding itself. An expansion in its own business operations and generating its own income could be the best way, it could also avoid the need for further cuts in government expenditure.