Friday, July 15, 2011
Who should subsidies go to?
Subsidies should go to no one. Anytime the government give a subsidy, it is disrupting the marketplace. An example would be ethanol which has been added to our gas. The cost to produce a gallon of ethanol is about the same as the cost of a gallon of gas, But this is because the ethanol producers receive a subsidy to produce it. Ethanol produces less energy than gas, so you will most likely getting less mileage in your vehicle. With the subsidy for ethanol many farmer are growing more corn and selling it to the ethanol producers. They are not selling it to cattle ranchers or to pig farmers, in other words less corn is coming to market, driving up to price of cattle, pigs and corn. So the subsidy benefits the ethanol industry but punishes the rest of the market place. This is true of all subsidies.
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