Sunday, June 10, 2012

Political Liars - Economic Edition - Tax Subsidies

I've been on an economics kick for the last couple of years, learning all I can. One issue that gets under my skin is is subsidies to industries through theft (taxation, since I is not voluntary). Some politicians believe that subsidizing markets, services, or products will help the economy, but this is a falsehood. Here is why we should end subsidies and involuntary taxation.

By subsidizing those costs to consumers, the public believes that those costs are lower. This is false, since costs are actually higher, but only the direct costs are experienced in transactions. Indirect costs round out the overall transaction, with producers receiving the balance of their revenue from the state, which extorts through taxes that revenue which drives costs and production higher.

This theft from consumers through forced coercion (taxation is theft) affects all taxpayers, even those who do not directly consume those goods or services. By ending subsidies, producers will lower costs to equilibrium and consumers will pay directly or indirectly pay for those goods and services they choose to. In turn, taxation can decrease, since need for taxes is negated by the market.

Beyond that problem, subsidization leads directly to increase costs to consumers, since producers see it as an increased demand (which we know not to be the case). By artificially driving up demand, producers see that demand can go higher, so in turn increase costs to consumers. Subsidies actually increase the total cost, rather than decreasing them.

No comments:

Post a Comment