BOOK IX. PUBLIC FINANCE CHAPTER XXXII PUBLIC EXPENDITURES 1. THE TERM: PUBLIC FINANCE PUBLIC finance deals with the revenues and expenditures of governments and is a part of economics. In China, public finance has occupied nearly the whole field of economics, because statesmen and scholars have given their attention mostly to it rather than to private finance. Therefore, when the Chinese use the term economics (“administering wealth"), the hearer may generally narrow its meaning to public finance. But in the Chinese language there is a special term for public finance-" national expenditures (kuo yung). This term first occurs in the "Royal Regulations," and it is used by Ma Tuan-lin as the name of a book in his great encyclopedia.' It seems unscientific, because it indicates expressly only expenditures. But it includes revenue as well as expenditures, since there can be no expenditures without revenue. The reason why this term. includes only expenditures is because it is characteristic of the Chinese language generally to avoid using more than two characters to express a single concept. However, if we want to adopt a term more scientific than "national expenditures," we may use the more popular term national accounting" (kuo chi). (kuo chi). This term is very old, 1 General Research, chs. xxiii-xxvii. and it is used for the title of a book during the Tang dynasty. Or, we may use the word "accounting" only (kuei chi). This term is used by Confucius. Furthermore, we may adopt the term "wealth and expenditures" (tsʻai yung), a better translation being revenue and expenditures. It occurs in the "Great Learning" and the "Doctrine of the Mean," and is spoken of by Mencius. All these three terms may be used in the sense of the English term, public finance. The only difference among them is that, while the first denotes public finance only, the last two may be applied to both public and private finance. II. NECESSITY OF PUBLIC FINANCE The question may be raised, why should we have public finance at all? In other words, why should we have government? According to the theory of Hsü Hsing, the ruler should live individually by his own labor, and should not have granary, treasury, or arsenal. If a ruler has such things, he is an oppressor of the people for his own support.3 Although Hsü Hsing was not an anarchist, his theory is that, while there is a government, there should not be public finance. This is an impossible ideal. As we have seen, the government exists chiefly for the economic interest of the people. Now, if it is productive, why should they not support it? According to Confucius, government is the result of the division of labor, and public finances are necessary for the support of the public laborers Mencius says: There is the saying, "Some labor with their minds, and some labor with their strength." Those who labor with their minds 1 Classics, vol. ii, p. 383. Classics, vol. i, pp. 380, 409; and vol. ii, p. 483. 3 Cf. supra, p. 385. govern others; those who labor with their strength are governed by others. Those who are governed by others support them; those who govern others are supported by them. This is a principle universally recognized.1 III. PROPER PROPORTION BETWEEN SOCIAL INCOME AND PUBLIC EXPENDITURES Since public finance is necessary, we must ask, what is the proper proportion between the total social income and the part devoted to public expenditures. As the produce of the land is the chief source of income of the whole agricultural society, and the land tax is the only source of income of the government, we may say that, according to Confucius' system, the proper proportion is ten to one; that is to say, ten per cent of the total income should go to the state. This is a deduction from the taxing system of Confucius. The tax of one-tenth is the standard of Confucius' system, which cannot be made heavier nor lighter. The Spring and Autumn, the Great Commentary of the Canon of History, and Mencius, all stick to this point. Not only a heavier tax than a tithe is bad, but also a lighter tax. Chieh, the last emperor of the Hsia dynasty, was a tyrant; if the tax took four-tenths or five-tenths, it should be called. great Chieh; if two-tenths or three-tenths, it should be called small Chieh. Mo was a common name for the barbarous tribes on the north; if the tax took only one-fourteenth or one-fifteenth, it should be called great Mo; if one-twelfth or one-thirteenth, it should be called small Mo. In short, a heavier tax injures the people, so it is imposed only by a tyrant; and a lighter tax cannot defray the necessary expense, so it is found only among barbarians. Pai Kuei said to Mencius: "I want to take only a twen 1 Classics, vol. ii, pp. 249-50. |