What is a subsidy? How do they affect the free market? #tuttletwins #economics

[DRC-]

Subsidies come from taxes, so supporting entire industries with subsidies will lead to higher taxes and inflation, higher taxes, higher cost of living.
Ill take the $2 Poncho

[carkawalakhatulistiwa]

Subsidies are assistance provided by the government.(not just money)

The most famous example of a subsidy is a fuel subsidy, even though oil prices rise and fall, oil prices can be stable and cheap because of government subsidies. because oil prices are stable. can make it easier for businesses and people to carry out their activities without fear of not being able to pay transportation costs next month because they are in the Middle East

[pilyq]

This reminds me of the time I asked my mom about subsidies. And I'm from Argentina, here that one was taken to an extreme. Ultimately corrupt politicians will abuse subsidies for their own benefits

[purekiwi]

What a fun and interesting way to teach kids about subsidies! I sure hope they dont have any batshit insane takes on slavery in the US

[barricadedpurifier]

Subsidies could be used for good or for bad. Me personally, it should only be used to assist struggling businesses, or for use in emergencies and specific circumstances like war. Nowadays, subsidies are given to companies and corporations that don’t even need subsidies. Companies that make millions or billions or even hundreds of billions in revenue and profits, and many of those same businesses get tax cuts on top of that. The primary reason as to why they even get those in the first place is because they lobby to and have connections with the media and politicians who try to convince them that they need even more money on top of the money that they’re already generating. Might sound like a bad example but it is like if a fat, obese person weighing 900 pounds convinced the soup kitchen that he needs free food on top of the food he’s already eating over the others who probably need it more than him. As another example, let’s use McDonald’s who generate billions in revenue, many of which are profit btw, yet they have the gull to ask the government for billions of our tax payer money as if the money they’ve made and stored away is nonexistent. Crazy, crazy world.

[newdawngamingchannel]

The point of subsidies is for national and strategic usage. Most countries do this with food as it permits for independent action without fear of it being cut off……… also corruption but subsities are only bad when used improperly

[PelicanLands]

I could see subsidies being useful during wartime

[Pumaslayer]

Yes, so the reason subsidies suck is because now the Poncho business fails. Customers want cheaper and better. Instead the umbrella industry innovating and making better cheaper umbrellas, they do nothing and can sell at a less cost. How can the Poncho business compete with the gov?

[drache]

i feel like the business would now ask 5$ for an umbrella so that they can whine to the government to get more subsidys

[slickshooter]

This is not always the case because some companies will pocket that money or they will inflate the price due to high demand .

[tomcurl]

And if the subsidize business can charge less money than their competition, then they will outcompete them and drive other businesses out of business, which isn’t fair

[drphanisastry]

On paper subsidies, grants, special preferences, tax rebates, cess, etc are tools in the hand of government to stear the market in the right direction. Sometimes open market may favour a direction which does not resonate the political, environmental, security and economic outlook of the community but still happens because of competitive market forces. In such situations, governments must distort those forces to stear the market in the right direction that the community believes in.
Most of the governments mess things up at implementation level, thats a human thing.

[iondu]

How does a free market with strong competition law sound?

[kaligath]

Think of subsidies like a lottery vs someone who earned their money.

A person who won the lottery is reckless with the money meanwhile a person who earned their money see value in it.

Thus subsidies often always go to waste.

[TruthTeller]

they can also be uselfull as they can help your country keep unsustainable but vital for self defence industryes(like agriculture) competitive and increase a nation's security to natural disasters and such. Same as tarrifs that help local economy. Sometimes they are needed because the valur in case of a conflict is better than the short term cost.

[lukefarmer]

Subsidies for farmers are the only thing I'll support.

[retro_wizard]

I feel like this does leave out some nuances that really should be included. Some subsidies can be issued to create more jobs, or to fund industries that help the greater good. Say there’s a bus line that is the only public transit connection to a remote town. For them to break even on the route they’d have to charge passengers 50 dollars, but that’s a hefty fine for a bus ticket. The government can step in and give them a subsidy to operate this route, bringing the tickets down to 30 dollars a ticket! Subsidies CAN be good, though there is plenty of times where it isn’t.

[harvster]

Lol and menawhile these same guys loooove love love subsidies for pil companies

[wanderingstranger]

I looked at the video right. It isn't even bad. You need $2 to buy one or the other. The 2 kids in the clip are shown to have 2 dallers eatch otherwise the first part doesn't work.
And if the ultimate goal is to stay dry otherwise the best option is not to spend money the rain will pass eventually.
Soo with a market being supported you can an umbrella and some left over (Better for the costomer and is the second best saving prosses) or sense the 2 are there they can get 2 umbrellas and a poncho. So both of there needs are cover and for the same price there is also some utility.
So to speak the best money spending party is to not be involved with a total of $4 to use at will
Next best is both partys share one umbrella under the support of the government giving them
" $3 -being dry -and what ever else an umbrella can be used for"
And well so on. The worst one in this case for our customers is honestly if they want to keep dry and don't have any money left over

[calvinmcneil]

Like a business will lower prices because of getting money from the government, aside from some businesses being able to charge less in the poor neighborhoods