Czech president approves austerity measures

Source: http://www.forbes.com/feeds/ap/2010/11/23/business-eu-czech-economy_8159023.html

PRAGUE -- Czech President Vaclav Klaus has signed into law a package of unpopular austerity measures designed to reduce the country's deficit.

Tuesday's approval comes after the measures were approved by both houses of Parliament earlier this month.

The package - strictly opposed by the nation's unions - includes welfare cuts and a 10 percent reduction in the money allocated for public sector employees.

The measures aim to reduce the budget deficit from 5.3 percent of gross domestic product this year to 4.6 percent in 2011.

Angered state employees plan a one-day protest strike for Dec. 8.

In September, tens of thousands of public workers rallied in Prague to protest such cuts.



Read more: http://www.forbes.com/feeds/ap/2010/11/23/business-eu-czech-economy_8159023.html

What is going on? Every country is cutting back in ways that will only hurt either the poorest or the functioning of the government. This looks like an epidemic in stupid decisions.

Actually, the question should be what is the ratio of tax revenue or government revenue to the national deficit.

Some countries have chosen to be socialist. This insistence that countries measure their debt not against their government's income but against their GDP as a whole seems to me to be an attack on socialist countries and governments. If your government owns, let's say, the train company, and subsidizes train travel for everyone in part out of the revenue from the train company, then the government's expenditures compared to GDP will be higher than in a country in which the trains are owned by private countries. Losses of private train companies can be hidden or dealt with in bankruptcy courts. Losses in government train companies will show up in the country's national debt.

We had huge losses in private companies, and our government made them good. That's the worst of the two systems in terms of affecting the debt to GDP ration. The government shows the losses as its debt although in fact the debts were incurred by the private sector. That skews this whole ridiculous way of looking at government debt.