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To: TimF who wrote (14705)	6/11/2002 8:28:51 PM
From: Dayuhan	Read Replies (2) \| Respond to of 21057

subsidies that decrease prices are also almost always a bad idea. Subsidies do not decrease prices. They just shift part of the price onto the taxpayer. As you say, not a good idea. The US imposes quotas on sugar imports. These allow US sugar producers, with a cost of production higher than almost anywhere in the world, to keep a portion of the market. They also keep US sugar prices artificially high, and prevent money from moving to poor countries that desperately need it. Then we wonder why the poor countries can't pay their debts....

To: TimF who wrote (14705)	6/12/2002 4:05:26 AM
From: jttmab	Respond to of 21057

In any case subsidies that decrease prices are also almost always a bad idea. As a basic economic principle, I agree that subsidies are not a good idea. Though there may be interests, such as maintaining a national capability in a particular area that could give one justification for subsidies. I'm making no claim that any specific subsidy is justified, merely that there may be other national interests. On an economic basis, subsidies cannot increase prices. You might find that there are instances where a subsidy exists in concert with a price rise, but that doesn't establish a causal relationship. I don't believe that the buying up of excess farm products is a 'subsidy' in economic terms. The action is intended to reduce supply, which causes prices to rise. A subsidy in economic terms is, I'm paying you to grow a crop, e.g., soybeans. The more soybeans you grow the more I'll pay you. The price has to decrease, because you're both increasing supply and partially funding the production. However, if you wish to say that buying excess products is, in effect, a subsidy, I don't have a major problem with that definition. It justs causes us to separate in a discussion which type of subsidy we're talking about. A subsidy that increases supply or a subsidy the decreases supply. One will artifically force prices up, one will artifically forces prices down. I think, semantically, you could call trade trade tariffs, 'subsidies', though that's not the typical terminology that's picked. jttmab