Subsidies: close to a best case.

[kajarainbow]

B is better for the general population than A. Government subsidies B to give it an extra advantage over A. Later, C comes along and is better still than B, but B still has the subsidy. In effect, the inferior B is given advantage over the newcomer C.

Now consider this: In World War II, the USA government created a subsidy for a kind of cloth used by our troops, in order to increase production of that cloth. Our troops no longer use that cloth. The subsidy still remains. In short, it was easier to just keep shovelling the public's money into that industry's mouth than lift a finger to change the law.

This sort of thing seems to happen a lot.

Comments

[ocean-state.livejournal.com]

This kind of thing disgusts me because I genuinely believe in a free market and capitalism -- as the lesser of available evils, as Winston Churchill supposedly said -- yet government subsidies for agriculture and protected industries continue to exist. No one is going to help the person whose manufacturing job went to the developing world, because the magic of the marketplace only applies to certain people...?

While I am still ranting about free trade, let me add that I think most of the horrors in China are a result of the international community turning a blind eye to the currency manipulation, corruption, and despotism of the Chinese government. They may have lower wages to attract businesses, but China is not playing by the rules, does not have free and transparent markets, and forbids its citizens from protesting outrageous working and environmental conditions. India has many of the same labor and environmental problems, but is a paradise of freedom and progressive social policy in contrast.

Some politician once said that subsidies and entitlements, once established, are almost impossible to completely abolish. I read this in a more conservative magazine that was complaining about things like social security, but the same argument goes for industry subsidies. I love hearing millionaire tycoons bitch about the plight of "the farmer."