Subsidies as a Gift from all other industries
| Subsidies are 99.461% economically detrimental. Economist rarely should state 100% and never so precise as to use decimal points. Subsidies come in many forms. Most subsidies come in the tax code. The tax code is so long because subsidies such as exemptions, deductions, and credits are so numerous. Every tax subsidy means the tax rate for the fully taxable transactions must be higher to make up for the transactions that have a reduced tax rate. Higher tax rates for the fully taxable transactions creates a higher disincentive to do the fully taxable activity. |  |
Subsidies as a Gift to other countries using tax money
 | If China subsidizes steel in an effort to gain market share, they are giving America a significant gift. China is taxing all the people of China to pay for the labor of people in China to provide America with products. If it cost China $2 billion to create and transport a certain amount of steel to America, and only charges Americans $1 billion for that steel. China can now only demand $1 billion worth of products from America. China sends $2 billion in subsidized products to America, and Americans send China $1 billion of products. The country of China and the people of China gave Americans a gift of $1 billion. |
Subsidies interfere with the role of prices.
| The role of prices takes everything into consideration. Billions of people from around the world, making trillions of decisions create a price for everything. Ignorance is costly, and knowledge is valuable. Knowledge also has thousands of inputs. Every person’s moral values are factored in. Personal preferences are enormous factors. The factor of time is massive. Personal relationships play a significant role. Laws and regulations seriously hamper the role of prices. Every change in circumstances changes prices. Trillions of circumstances change constantly, thus reinforcing the importance and value of knowledge and the detriment of ignorance. |  |
 | Subsidies interfere with the role of prices. Politicians state that certain things are good and try to encourage that thing by giving subsidies. Note: let’s = let government. Kids are good, so let’s give a tax exemption and tax credit for children. Family farms are good, so let’s pay a portion of food costs. Homeownership is good, so let’s allow tax deductions on mortgage interest. Having a spouse die in combat is sad, so let’s exempt the surviving spouse from real-estate taxes. Clean energy is good, so let’s require direct government entities buying energy to buy clean energy. It is sad to be poor, so let’s give poor people money. Renewable energy is good, so let’s force everyone to add it to gasoline. Education is good, so let’s give teachers tax credits for classroom supplies. Research and development are good, so let’s pay companies that do the research. |
| The role of prices already factored in all the good and bad. Politicians have extremely little knowledge compared to the role of prices. Billions of people using their own brains, knowledge, values, planning, and preferences possess tremendous information. One or a relatively few politicians and bureaucrats could not even approach 1% of the knowledge, experience, planning, or caring known by the invisible hand using the role of prices. Having government add to or subtract from the cost of one side of the transaction adversely interferes with the role of prices. |  |
An economy cannot grow without eliminating jobs.
 | Any American may outbid low wage immigrants or technology if they wish; although labor law often forbids competition on price. Americans will leave a job if someone else outbids their lowest hourly wage. If the money is sent overseas and returns, there is a demand for services somewhere. If the immigrant earns wages in America, they want services in exchange for their labor. The demand always comes back. If one hundred out of work Americans team up to start serving each other, they can start their own small economy. Any out of work American is freed up to start producing something of value and offer to sell it to the world of 8 billion people. No American must wait to be hired. In the free enterprise system, anyone can produce or offer their services to trade. There is not a set amount of jobs. |
No one likes to be outbid
| The free enterprise system is a competition to serve others. The person turning over their money decides who wins that competition; however, there must be a bid for that service. All transactions are two-sided agreements. No one can force someone to accept an offer to be served. No one can force someone to serve them. If someone has been making a product or providing a service for a long time and receiving a price that supports a decent lifestyle; that person does not want the competition to take away their business. Whether it is a competitor that charges the same price but takes half the customers or a competitor that charges 10% less. The person’s income is adversely affected. |  |
 | A competitor with a different product can also attract the business of consumers. A business or employee can attempt to change the business model to seek to regain the business or employment. However, at a certain minimum pay level, they need to seek other opportunities. This is true whether it is products from your neighbor, from an overseas business, a low skilled immigrant, or business model that mass produces the product with new equipment and machines. No one likes to be beaten; however, in the free enterprise system, every time someone is beat, everyone else benefits. People notice the thousands lost by the one or the few people being beat and not the pennies saved by each of the millions of consumers. A study of those that lost their jobs due to lower costs in one industry, often find better opportunities and pay. Of course, the concentration by many is on those that do not thrive long term. |
Higher productivity
| This paragraph assumes relatively free markets; however, realizing the people of the world have a long way to achieve a free market. Government intervention in the markets almost always diminishes an increase in productivity. The vast percentage of time when Americans send a job overseas, Americans and people of other countries increase their level of productivity. Additionally, people have to work in their jobs a shorter period of time to buy the items created with higher productivity. Some people will contend that it takes 10 working hours in India to create the same product America could produce in 5 hours and claim that the overall productivity is reduced. That reasoning seems to make sense; however, it does not hold up under a full examination. The increased productivity of Americans selling products to whoever brings that money back to America will increase overall productivity. Remember the overwhelming truth of free markets; both sides of a trade become better off. |  |
