Government earns income and spending through taxes, from the public consumption, wealth, and employment. With a
taxed income a government has more of the incentive to put the money back into public goods (health & education), creates consumer
confidence and a healthy economy. (Diversification of income) However there are lots of places where things could go wrong
government receives money from natural resources, loans, and foreign aid. This money becomes an excessive amount of
disposable income, which is usually spent on either private goods or the military. The public however is usually left out in this kind of
economy. The government has no incentive to be accountable, the "pot of money" the government has does not come from the public, much
less of an incentive to give back to the public. Depending on where a governments income comes from, the public or from resources and aid,
they will have a different opinion on public welfare and public goods spending.
2) Disposable income- Amount of money a government has for spending after income taxes. Military, private goods, public goods.
Untaxed Income - Accessibility & Mobility - Unstable Untaxed income economies -
creates less consumption, no public
goods, weak economies, commodity price shocks, not much diversification, economic fractionalization, no incentive to invest back in the
people, dependency on aid, resources, loans, wealth is more immediate, relative deprivation.
Stable untaxed income economies –
people aren’t taxed, they don’t care and they are less susceptible to shocks in the economy
* why is some untaxed income more dangerous than others? :