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Thread: If you completely eliminated all government financial subsidies...

  1. #1
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    Default If you completely eliminated all government financial subsidies...

    what would happen? I couldn't even begin to guess accurately, but it would have interesting economic implications for farmers, who would no longer be subsidized to not raise crops. I guess dairy farmers receive subsidies as well, etc.

    The immigration debate would probably be moot, as without subsidized housing, AFDC, etc., the corporations wouldn't be able to hire anyone without paying enough to live in the area where a corporation's operations are located.

    And as a tip of the hat to the minimum wage debate here on this forum, a "natural" minimum wage would no doubt be established without the economic meddling of both governments and corporations.

    To close, just as a "thought experiment," what if Lord Keynes had never been born, and his theories never existed?

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    Banned Melonie's Avatar
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    Default Re: If you completely eliminated all government financial subsidies...

    ^^^ that would entirely depend on whether or not other financial 'luminaries' such as Karl Marx or Ludwig von Mises disappeared right along with Keynes.

    Also, if you completely eliminated gov't subsidies in the form of social welfare programs, subsidized housing, AFDC, the earned income tax credit, subsidized utility bills, medicaid etc. the CANADIANS would be talking about building a border fence !!!

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    Last edited by Melonie; 06-11-2007 at 04:59 PM.

  3. #3
    Jay Zeno
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    Default Re: If you completely eliminated all government financial subsidies...

    It's hard to find a business that doesn't owe something to the flow of government money.

    My thought experiment would have to do with a flat tax rate. No deductions. It would have a huge impact on accounting industries that have been built upon the quagmire of tax law, and there would be a redistribution because of the elimination of deductions and loopholes, but society would be much less brain-damaged and much more simplified. At least, in my opinion.

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    Default Re: If you completely eliminated all government financial subsidies...

    Quote Originally Posted by Jay Zeno View Post
    It's hard to find a government that doesn't owe something to the flow of business money.
    fixed that for you. =P

    there's always going to be gov't, even rudimentary tribal type, and there's always going to be business (because human greed is basic).

    if you eliminated most gov't controls i think you'd find a harsher environment which allows personal ability to shine thru more though. essentially, a animal pack mentality of alphas and omegas.

    there wouldn't be any artificial retention of have's versus have not's as there wouldn't be controls to regulate that artificial spread like you note, i.e. redistribution of wealth.

    unfortunately, "equality" and "fairness" would suffer enormously. there would be starvation and exploitation. imo a kind of warrior caste society depicts the brutish aspect of this and is the likely result of less gov't. e.g. warring periods of japan versus the centralized gov't of the various shogun eras.

    if you eliminate violence (somehow) an agrarian-dominated society develops, i.e. food-source control. amish-type, tribal gov't. but i doubt there'll be much advancement or growth possibility in such.

    as for keynes, i think his theories would've been thought up eventually/anyways. just like how literary concepts re-occur no matter the society, eastern or western, etc.. the human mind will think up the concept eventually imo. keynes just happened to put it down and resist the criticisms that probably silenced others before him and contemporaries (that's just my unsubstantiated pov though).

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    Jay Zeno
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    Default Re: If you completely eliminated all government financial subsidies...

    Quote Originally Posted by Jay Zeno View Post
    It's hard to find a business that doesn't owe something to the flow of government money.
    Quote Originally Posted by Snoopy Fixing Jay Zeno View Post
    It's hard to find a business that doesn't owe something to the flow of government money.
    I think both are correct. It's part of the Circle of Life. (or of Money)

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    Default Re: If you completely eliminated all government financial subsidies...

    If you're going to eliminate government subsidies, start with those that are barriers to free international trade...subsidies paid to prop up inefficient local industries and protect them from international competition. It just becomes a huge economic black hole.

    The money would be better spent providing incentives to those inefficient businesses to exit the industry and re-skill in another more economically viable industry.

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    Default Re: If you completely eliminated all government financial subsidies...

    considering that corporate welfare is the biggest subsidy around (social programs are like 2 percent of the budget, if that), we might actually have a healthier environment for small business owners, who are currently penalised for not being international megacorps and thus get hit from all sides tax and fee wise.

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    Default Re: If you completely eliminated all government financial subsidies...

    social programs are like 2 percent of the budget, if that
    actually, social programs like Social Security / Medicare / Medicaid are in the ballpark of 1/3rd of all federal spending. Social Programs account for more than half of gov't spending in most states. I have no idea where you got a 2% figure, unless it was from a 1950's history book.

    considering that corporate welfare is the biggest subsidy around
    It's not the biggest subsidy, but granted it is major. However, the recipients of gov't largesse to corporations may not turn out to be the companies you'd expect. Tops on the list this year are ethanol refiners and windfarms, neither of which would be profitable at ALL without gov't subsidies.

    we might actually have a healthier environment for small business owners
    Small business owners do indeed get hammered from both sides. On the one side, they are stuck following mandates to pay a higher minimum wage, high workers comp and unemployment insurance, high taxes, high energy prices etc. On the other side, they are too small to afford the army of attorneys and accountants necessary to 'game' the US tax code or take advantage of lower cost offshore activities (which remains the playground of the 'very rich', either personally or corporately)

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    Default Re: If you completely eliminated all government financial subsidies...

    A very good book about big business in America and the destruction it is sowing.

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    Default Re: If you completely eliminated all government financial subsidies...

    ^^^ Before commenting, let me state that I don't mean to imply that US corporations still have 'consciences', 'loyalty' to their work force or to their home city, or any other motivations that also cost the corporation stockholders profits. However, on the subject of US subsidies to corporations as discussed in your book...

    A. The whole idea of handing out tax abatements, publicly funded infrastructure improvements that benefit particular corporations, publicly funded grant money etc. started with politicians not corporations. But once started, corporations who must compete with other corporations already enjoying such publicly funded benefits have no choice but to seek similar publicly funded benefits for themselves. Today's politicians realize that, without such incentives, their local economies have zero chance of attracting new corporations and little chance of retaining those corporations that are already operating.

    B. Reduced tax rates on US businesses vs tax rates that existed 40 years ago were enacted by politicians as a 'band aid fix' for problems created for those US businesses by those same politicians. By this I'm referring to the much higher costs to today's corporations of complying with US gov't mandates re accounting, minimum wage, comp & unemployment insurance, workplace safety, environmental, social security etc. versus their offshore competition. The initial defeat of this year's minimum wage increase bill serves as proof ... it wasn't passed until an amendment was added to give new tax breaks to small businesses in order to offset the higher mandated cost of labor for those small businesses.

    Seemingly every time that gov't mandates create new and/or higher costs for US businesses in an attempt to achieve some 'higher purpose', those new and/or higher costs result in a loss of competitiveness between those US businesses and their foreign competition. Over the past 40 years this differential in costs has killed off many US businesses altogether by making the differential in mandated costs so large that foreign competitors can make products offshore, retain a hefty profit margin, import them into the USA, and still sell them for less money than it costs US businesses to produce the same product. Unfortunately, it was only after such mandated cost programs were enacted by politicians and allowed to grow into MAJOR new costs for US businesses that the 'unintended consequences' of plant closures, loss of jobs, loss of fed/state/local tax revenue were realized by those same politicians. Thus, sadly, we have now reached the point where it is necessary for state and local politicians to 'raise' taxes on local residents and other local businesses in order to provide publicly funded subsidies to FOREIGN corporations in order to add 'decent' jobs in their area.

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