Public finance principles and applications

Public Finance

The inability of the general population to govern themselves have relegated this group to the subjection of the government and those who have the power in society. It is blaringly obvious that people in general have very little competence when managing finance and public financing operations should only be performed by those who are in the elite public arena and have been educated to do the right thing. The purpose of this essay is to discuss and highlight the major principles of public finance. This essay will discuss the relationships between this practice and its participants and incorporate key information that is useful for making budget decisions

Public Finance

According to Laws.com, public finance is "a description that looks at the governmental effects, efficient resource allocation distribution of income, and macroeconomic stabilization of the expenditures and revenue of public authorities." The word "government" is also important to investigate. The word itself means from its Latin roots " to control the mind." Government is a coercive force that is used to get people to do what the government needs them to do and finance is one method or tool to accomplish this task

Certain principles are important within the realm of public finance. The equimarginal principle is one that helps to guide this process. This term is defined as the point at which consumption or production minimizes spending per unit consumed or produced. In environmental economics, the point at which desired emissions reductions for different firms are achieved at the minimum possible cost. Those responsible for creating public budgets must keep this principle in mind at all times. The Pareto Criterion is another aspect of public finance that is integral in understanding its functions. According to Gordon (2012) "the Pareto criterion is a value-free statement. All it says is that if one person in society is made better off by a change, and no one is made worse off, then social welfare has increased."

Public finance is used to govern people who cannot govern themselves and find a need to use a collective method to navigate the experience of daily living. The public essentially chooses to be governed and willingly participates in these events. Those who wish to remain outside of the reach of public government are also afforded this option as well and simply do not have to participate in many of the demands that appear mandatory.