Subsidies--Can we survive without that? No we can not.

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   pramodgokhaleposted 11 years ago

   Subsidies--Can we survive without that? No we can not.
   
   Modern economics and it's ills then subsidies provided by governments across the globe is an issue
   In India at present central government is slashing subsidies on many items and people are unable to cope with it. Fuel, fertilizer, power , these items citizens were getting at subsidized rates because they can not afford to buy at market rate. Grass root  people in India will be hurt badly if subsidies removed or curtailed. I heard, in USA farmers are getting subsidy 200% Experts can tell us whether is it right? wrong?
   What is the solution to survive without subsidies or with welfare schemes?

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   My Esotericposted 11 years ago

   It depends on your definition of subsidy, I suppose.  I am in the middlle of listening to a lecture on economics and the professor is in the process of covering the impact of various types of subsidies, including those to which you refer.  Oy thers are minimum wage, rent caps and the like.
   
   By and large he understands the public necessity for such things but, from a purely economic view, thinks governments go about it entirely in the wrong way and they end up being counterproductive to varying degrees.  He isn't saying something should be done by the government, just done differently to work with how the economic system actually works and not against it.
   
   Minimum wage is one where he changed my mind, I used to be for it, now I am against it.  (He talked about the subsidies you mention, but I forgot the solution for the moment.)  He understands the need for a minimum earning by a worker to afford the basic food, clothing, transportation, housing, utilities, and child care; but, he also understands the counterproductive impact on the supply of low paying jobs as the minimum wage goes up.  (It was initially established in the US to protect low paid White jobs in the North from lower paid Black jobs in the South, btw)  The professor's answer is doing away with the minimum wage and increasing the Earned Income Tax credit to accomplish the same goal.
   
   It is a win-win-win because 1) it incentivizes people to work, because they can earn more money than what they get from public assistance alone, 2) they are incintivized to earn more since the more they work and move up the pay scale, the more they earn until the EIT "fades" away, and not suddently disappears, and 3) businesses can higher more because they no longer have a cost disincentive at the lower wage.
   
   The professor goes on to apply the same idea to other "subsidy"-type situations.

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      pramodgokhaleposted 11 years agoin reply to this

      sir,
      your answer is informative and got information which i was unknown. Third world nations do not have efficient administration and governance so it is difficult and scarce job opportunities and tranditinal way of income small business and farming

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      My Esotericposted 11 years agoin reply to this

      The first thing you have to have, it seems to me, is a gov't who truly cares, without that, a nation is lost.  Next, is you need a gov't who truly understands economics, and not quick fixes.  Both are almost unknown in the world today.

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      WillWynn2posted 11 years agoin reply to this

      This sounds like your professor is in favor of the free market. With "proper" education, many problems of wages, prices and lifestyle would be answered.

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