The Problem

I put together a simple graphic to depict an entrenched and growing problem in American Democracy – the requirement that the electorate subsidize a particular political party:

The Problem

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5 Responses to The Problem

  1. Bettawrekonize says:

    That’s half of the problem. The other half is the fact that we live in a corporate plutocracy, whereby the govt (both republicans and democrats and probably the tea party since they are simply the republicans rehashed) give big corporations all these legislative subsidies that prevent competitors from entering various markets.

  2. jackhudson says:

    I am not a big fan of government subsidies, though to be clear there are some differences. If for example businesses grow, then it’s good for the economy and such subsidies would presumably pay for themselves in the form of increased tax revenues – no such benefit accrues from the growth of government; there is only a larger debt.

    And the vast majority of ‘corporate’ subsidies go to agriculture in one form or another – this is in part because Americans like cheap abundant food, and because it supposedly helps American food producers compete with cheap foreign producers.

  3. Bettawrekonize says:

    “then it’s good for the economy”

    Subsidies are never good for the economy. Limiting competition prevents the economy from growing by preventing those competitors from participating in the economy. This reduces aggregate output. Econ 101.

    “and such subsidies would presumably pay for themselves in the form of increased tax revenues”

    Competitors pay taxes as well. and even if it results in more tax revenue, which it won’t (just in more campaign contribution revenue) this makes bad economic sense. The free market is better equipped to determine how resources should be allocated than the govt. On the one hand you want fewer taxes, on the other hand you claim that more taxes are a good thing.

  4. Bettawrekonize says:

    Don’t get me wrong. I completely understand how these subsidies benefit those who receive them. That’s why those who benefit from them contribute a lot towards campaigns to receive them.

    But that’s about all they benefit. No one else benefits. The free market looses aggregate output (since less competition leads to less aggregate output), they lose jobs (since competitors can’t enter the market and compete, creating more jobs. More aggregate output requires more jobs) and, if anything, the govt loses tax revenue (since there is less being sold to tax. Less aggregate output also means the value of what is taxed can buy less product, meaning it’s worth less). Everybody loses. The only people who win are the monopolists.

    “If for example businesses grow”

    But the businesses don’t grow. Locking businesses out of the economy via legislative subsidies (note, I am not referring to monetary subsidies. When I use the term legislative subsidies I am referring to laws that explicitly lock others out of a market or limit others, such as patents, cableco company right of ways, preventing competitors from entering the hotel and taxi cab business in various states, among the others I’ve listed here before. In economics the effects are the same as a subsidy) doesn’t help businesses grow. It only helps the company that benefits from these legislative subsidies.

    “And the vast majority of ‘corporate’ subsidies go to agriculture in one form or another”

    When it comes to monetary subsidies towards farmers this is true and the reasoning behind it was supposedly so that if we ever get into conflicts with other countries and they should decide to stop providing us with food, we should have our own food supply. At least that’s what the agriculture industry argued. Not sure I disagree or agree.

    A good percentage of our budget also goes to pharmaceutical corporations as well in the form of medicare (about 3 – 5 percent depending on who you ask).

    “As of the end of year 2008, the average annual per beneficiary cost spending for Part D, reported by the Department of Health and Human Services, was $1,517 [23], making the total expenditures of the program for 2008 $49.3 (billions).”

    http://en.wikipedia.org/wiki/Medicare_Part_D

    The govt also doesn’t negotiate prices.

    In Canada prices are much lower because Canadians pay for drugs themselves. In the U.S. the customer usually never sees the bill, insurance companies or the govt pays.

    Of course none of this contributes to R&D (much of which is funded by the govt and then patents are issued on govt funded R&D, another form of subsidy) just to pharmaceutical profits.

    The fact is that in the U.S. we live in a plutocracy. There is no denying it. We don’t live in a meritocracy (though I admit we are still better than many other countries, much better in fact), we very much live in a plutocracy. You don’t see it in the media because the media is corporate controlled. But many blogs cover the issue pretty well. Competition is practically regulated out of existence in very many industries by incumbent businesses that have undue influence over our politicians.

  5. Bettawrekonize says:

    loses *

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