How to cut expenditure strategically: Swaziland and the United States
May 24, 2011
Last week the World Bank told Swaziland to cut its spending in order to curtail its sprawling deficit. And how should this be done? Well, by simply administering an across the board pay cut to civil servants. Not too sophisticated. Expect trouble.
When the USA had its own fiscal crisis earlier this year, David Brooks of the New York times suggested a much more rational approach to reducing expenditure. In a nutshell, this is what he said:
“Trim from the old to invest in the young. We should adjust pension promises and reduce the amount of money spent on health care during the last months of life so we can preserve programs for those who are growing and learning the most.”
If spending cuts are unavoidable, surely it would be more prudent to cut strategically? The World Bank’s advisors tell poor countries to allocate funding on the basis of policy priorities. Surely cuts in spending should be made on the basis of policy priorities as well? And not through indiscriminate measures like across the board cuts in civil servants salaries?