ORÇAMENTO PÚBLICO - Aula 02 - Funções econômicas do estado.

Summary

In this lesson, Professor Gustavo explains the economic functions of the State, which play a crucial role in public budgeting. He outlines three primary functions: allocative (where the State intervenes to produce or influence the production of goods and services), distributive (aiming to reduce income inequality through taxes and welfare programs), and stabilizing (ensuring a stable economic environment for private investment). The professor also touches on the regulatory function, where the government sets rules to protect consumers and the environment. These functions highlight the State's essential role in managing and guiding the economy.

Takeaways

• 😀 The state should intervene in the economy to ensure market efficiency or address structural issues. This marks a shift from classical economic theories, which advocated minimal government intervention.
• 😀 Classical economists like Adam Smith believed in the 'invisible hand' of the market, where supply and demand naturally regulate prices, with minimal state interference.
• 😀 The Great Depression of 1929 challenged classical economic theories, highlighting the need for state intervention to stabilize the economy, paving the way for Keynesian economic ideas.
• 😀 There are three primary economic functions of the state: allocative, distributive, and stabilizing. Each plays a key role in managing the economy.
• 😀 The allocative function involves the state directly providing goods and services or influencing economic decisions through incentives or disincentives (e.g., taxes on cigarettes).
• 😀 The distributive function (often called the 'Robin Hood' function) aims to reduce income inequality by redistributing wealth, typically through taxation and social programs like welfare.
• 😀 The stabilizing function ensures a stable economic environment by controlling inflation, unemployment, and creating policies that make the economy more attractive to investors.
• 😀 Some economists argue for a fourth economic function of the state: the regulatory function, where the government establishes rules to protect consumers and the environment, though this does not directly involve state spending or revenue.
• 😀 States that emphasize social welfare (e.g., Sweden, Norway) tend to have higher taxation and more comprehensive social programs but often have better quality of life and less inequality.
• 😀 Liberal states, which advocate for less state intervention in the economy, typically have lower taxation and focus on stabilizing the economy, but may struggle more with addressing economic distortions.

Q & A

What are the three main economic functions of the State discussed in the video?

The three main economic functions of the State are: the Allocative function, the Distributive function, and the Stabilizing function. These functions guide how the government interacts with and influences the economy.

What is the Allocative function, and how does the government use it?

The Allocative function refers to the government's role in allocating resources to ensure the production and provision of goods and services. The government might directly produce goods or provide subsidies to businesses, such as in the case of Petrobras or support for small farmers.

How does the Distributive function work in the context of public policies?

The Distributive function involves the redistribution of wealth to reduce economic inequalities. This function is exemplified by policies such as welfare programs, like Bolsa Família, which provide financial support to poorer populations.

What is the Stabilizing function, and why is it important for the economy?

The Stabilizing function aims to maintain economic stability by controlling inflation and reducing unemployment. The government can intervene through fiscal policies, such as adjusting taxes and government spending to stabilize economic cycles.

What is the Regulating function, and how does it differ from the other three?

The Regulating function involves the government setting rules and regulations that must be followed by economic agents. Unlike the other functions, it does not directly involve state spending or revenue, but rather focuses on setting laws to protect consumers, the environment, and promote fair competition.

Can you give an example of the government using the Regulating function?

An example of the Regulating function is the Consumer Protection Code (Código de Defesa do Consumidor) in Brazil, which sets rules for businesses to follow, such as providing product guarantees and the right to return goods purchased online within seven days.

How does the economy of a country like Sweden reflect the State's social intervention?

Countries like Sweden, which emphasize the social state model, feature high levels of state intervention in the economy, especially in areas like welfare, healthcare, and education. While this leads to a higher standard of living for the population, it also involves high taxes and public debt.

What is the key difference between a Social State and a Liberal State?

A Social State advocates for greater state intervention in the economy to ensure social welfare and equality, often involving high taxes and public spending. A Liberal State, on the other hand, favors a market-driven economy with less government intervention and lower taxes.

Why do some economists suggest that the Regulating function should be considered an additional function of the State?

Economists suggest the Regulating function as an additional role because it involves the creation of legal frameworks that regulate how economic agents behave. Unlike the Allocative, Distributive, and Stabilizing functions, it does not involve direct financial transactions like public revenue or expenditure.

How do the economic models of Social States and Liberal States impact public policies?

In a Social State, public policies tend to focus on reducing inequality and providing social benefits, leading to higher taxation and government spending. In a Liberal State, policies focus on economic freedom, reduced intervention, and lower taxes, which can result in less redistribution but more individual economic freedom.