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Are government subsidies justified or should they be discontinued?

Updated on January 30, 2013

Subsidies by the federal government and possibly state governments is a topic which has surfaced with the battle over the fiscal cliff. One news report identified that if an agreement is not reached the federal government would be required to pay twice the rate for a gallon of milk. This stems from a law passed in 1949. The principle of supply and demand is not dead but is alive and well and has been serving our economy for years. Subsidies today is a controversial topic with various aspects of our society as they have come to be dependent upon government subsidies. The question of whether this is good or bad for these segments and the economy as a whole needs to be answered.

Subsidies in the world economy we now live in is present in many foreign countries some of which have an impact on the sale of products our country produces. Subsidies in foreign countries reduce the cost of goods manufactured which directly impacts the price of the products being produced. The subject of subsidies can be a good thing or a bad thing dependent upon the reason for their existence in certain segments of our economy.

Some examples of government subsidies involve energy and agriculture. Both these segments are important elements of our society and our country. They are an integral part of our society but the need for subsidies in these segments needs to be reviewed. Granted there were times in the past that many organizations/businesses required subsidies to continue their existence. I am not against keeping certain segments of our economy afloat if without them it would have a drastic impact on our economy. In regards to the energy segment of our economy it is clear there are large profits being made by oil companies according to some reports. It is however a fact that developing new resources of energy is expensive and there may be some justification to subsidies in this area. The present political and economic climate our country now finds itself in will perhaps question the philosophy of subsidies for a variety of segments in our country. With regards to our energy resources subsidies may be justified dependent upon if they do not exists our supply may be less making the price we pay higher. The issue in this segment may not be about the existence of subsidies but the costs.

Many segments of our economy will be evaluated as to the extent of government involvement not only with subsidies but legislative actions. Our economic climate and position as a country must be evaluated as to the importance of subsidies for any segment and the impact without them. Criteria needs to be established if it has not been, to determine which areas of our society have the justification to provide subsidies and with that if the criteria is not satisfied then subsidies should be discontinued. As previously mentioned I am not against the philosophy of subsidies but the justification for them. Let us hope the issue of subsidies will be thoroughly examined to determine the justification for them based on sound, complete and accurate information. It is part of creating a sound fiscal policy and/or culture.


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    • Dennis AuBuchon profile image

      Dennis AuBuchon 5 years ago

      Thanks for stopping by and adding your opinion. Subsidies and their need/justification need to be reviewed to eliminate government costs that have lost their original purpose.

    • NMLady profile image

      NMLady 5 years ago from New Mexico & Arizona

      When an important future biz is building, they make sense. Not after the biz is profitable......hence the oil industry subsidies are just plain stupid.

    • Dennis AuBuchon profile image

      Dennis AuBuchon 5 years ago

      H Schneider

      Thanks for your comments. I agree our subsidies are outdated and changes need to be made.

    • Dennis AuBuchon profile image

      Dennis AuBuchon 5 years ago


      Thanks for your comments.

    • profile image

      Howard Schneider 5 years ago from Parsippany, New Jersey

      Excellent Hub, Dennis. Subsidies have their place for a growing economic sector or a suffering one. Our agricultural and oil subsidies are outdated and serve no purpose right now except to enrich wealth mega corporations.

    • investments-tech profile image

      investments-tech 5 years ago

      Subsidies are out of control in many countries. A lot of places brought agricultural and energy sector subsidies after WW2, when people realised that a little bit of self sufficiency is essential to national security. But since then they have become less about national security and more about buying off special interest groups in various industries.