Thu, 27 Dec 2007

Subsidies are bad for you

John Woolman was a Quaker who counselled other Quakers not to keep Negroes. If you read the wikipedia page, there's no hint that Woolman was concerned about slave owners. If you read his journal, however, you will see a continual appeal to the welfare of the slave owner. "How could you do this, if the circumstances were exchanged?" That's not a concern for the fate of the slave. That's a concern for the fate of the slave owner.

Similarly, I do not believe that subsidies are good for the recipient. Everyone knows that when you build a cost structure into the operation of a business, it's extremely hard to reduce those costs should business conditions change. During the Dot-com boom, companies were renovating offices with frivolities. For example, Xoom.com's network wiring was colored, not for purposes of identification, but because it matched the NBC Peacock, owner of Xoom.

Well, a subsidy is just a profit structure. A subsidy is the equivalent of a single customer. If your business's profitability is dependent upon a single customer, then you aren't running your business. That customer is running your business.

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