by Michael Graham Richard, Gatineau, Canada on 07. 2.08
Econ 101: Subsidies
One of the many problems with subsidies is that they are almost impossible to repeal. That's because they usually give big benefits to a small group of people at a relatively small cost to a huge number of people. For example, corn-ethanol subsidies are going to be very hard to phase out because they might mean hundreds of thousands of dollars to farmers, while their cost is spread over the rest of the population and almost invisible. Farmers are a lot more motivated to lobby politicians than the average taxpayer, even if they only represent 1% of the population. The green impact of this is that corn-ethanol, a biofuel that would not necessarily be used much otherwise, is now made competitive with taxpayer dollars (and by putting tariffs on the greener Brazilian sugarcane ethanol), and that makes it harder for other alternative fuels to supersede it (and it also drive food prices up, something that affects most the poor).
Hidden Oil Subsidies
The real price of gasoline is what people actually pay for it, not just what they pay for it at the pump. That might seem subtle, but there's a big difference. (read more)]]>