Subsidies - What Do You Think?

[Huston55]

Yes, that's a tax specifically on trucks. If a truck travels 90,000 miles per year and gets 6 mpg, that's 15,000 gallons of fuel. Then $550 is the equivalent of 4 cents per gallon.

My comment on subsidies was based on reading that road damage varies with the third or fourth power of weight per axle. An ordinary car might put 2,000 pounds on each of it's two axles. A semi, 10,000 pounds on each of its five axles. Now (10,000/2,000)^3 = 125. So each truck axle seems to do as much damage as 125 car axles. Then, the truck has 2.5 times as many axles, so I'm at 300 times the damage per vehicle.

Trucks get poorer fuel mileage. Maybe a semi burns 4 times as much fuel per mile as a car. And, not all the costs of roads are repair/replacement. The original construction costs include land acquisition and rough grading, for example.

Still 300 >>> 4. It seems that anything remotely close to equal tax per gallon must result in a "subsidy" for the trucks.

+1

And, your math is right on.

 

[indiajust]

The illusion/confusion of subsidies

Subsidies are a devils brew of rent-seeking, economic manipulation, and elitism disguised as public policy.


Consider the mortgage tax deduction and other homeowner tax advantages. Superficially, it appears to benefit homeowners at the expense of renters. But this benefit is known to the seller, as well as the buyer, and is recognized in the inflated price of all real estate. The only real beneficiaries of the subsidy are realtors and governments, since they get a cut of the inflated gross. Buyers and sellers get the differential, the net, which is unchanged by the subsidized inflation.


Once Pandora's box is opened, all the other subsidies are released as well. Controls and regulations on mortgages, lending practices, interest rates... there is no end to the manipulation of markets.


If the market distortions created by the subsidies succeed, they cause a market imbalance... society fails to supply the desired amount of something, either too much housing (as in the GFC 09) or too few doctors (as in healthcare). And so a policy that superficially supports homeownership actually destroys homeowners (and takes down much of the worlds financial markets too).



Bottom line, society takes a dead weight economic loss as a result of each and every subsidy. That is the true cost of subsidies. You hurt the ones you love.



Follow the money, if subsidies are such a bad idea, who benefits? Qui Bono?


The elites, the policy makers, are the sole beneficiaries, the 1%, the gub-mint. These folks are the very well paid middlemen that shuffle the money furiously from one pocket to another, while taking a 30% cut. Each subsidy is just another bet for the casino to skim its vig.


In a heavily subsidized society, what you know is irrelevant. Getting ahead requires credentials and connections, not knowledge or experience. There is more money to be made in the stealing and skimming and lobbying than there is in labor. This is how empires fall.


Subsidies concentrate power and money in the elites, and diffuse costs and responsibility to everyone else.

 

[audreyh1]

I was just vaguely remembering a couple pieces - one was on state level taxes. I think he was big on the Kansas tax cuts.
https://thinkprogress.org/trump-art-laffer-tax-cuts-kansas-7aa427240148/

I think he is still beating the tax cut drum. Here's a piece he wrote at heritage.org https://www.heritage.org/taxes/report/the-laffer-curve-past-present-and-future

I thought the Kansas Tax Cuts were a major disaster.

 

[MRG]

I thought the Kansas Tax Cuts were a major disaster.

Oh no. They are great, ask the people who are trying to pay.

 

[VanWinkle]

Subsidies are a devils brew of rent-seeking, economic manipulation, and elitism disguised as public policy.


Consider the mortgage tax deduction and other homeowner tax advantages. Superficially, it appears to benefit homeowners at the expense of renters. But this benefit is known to the seller, as well as the buyer, and is recognized in the inflated price of all real estate. The only real beneficiaries of the subsidy are realtors and governments, since they get a cut of the inflated gross. Buyers and sellers get the differential, the net, which is unchanged by the subsidized inflation.


Once Pandora's box is opened, all the other subsidies are released as well. Controls and regulations on mortgages, lending practices, interest rates... there is no end to the manipulation of markets.


If the market distortions created by the subsidies succeed, they cause a market imbalance... society fails to supply the desired amount of something, either too much housing (as in the GFC 09) or too few doctors (as in healthcare). And so a policy that superficially supports homeownership actually destroys homeowners (and takes down much of the worlds financial markets too).



Bottom line, society takes a dead weight economic loss as a result of each and every subsidy. That is the true cost of subsidies. You hurt the ones you love.



Follow the money, if subsidies are such a bad idea, who benefits? Qui Bono?


The elites, the policy makers, are the sole beneficiaries, the 1%, the gub-mint. These folks are the very well paid middlemen that shuffle the money furiously from one pocket to another, while taking a 30% cut. Each subsidy is just another bet for the casino to skim its vig.


In a heavily subsidized society, what you know is irrelevant. Getting ahead requires credentials and connections, not knowledge or experience. There is more money to be made in the stealing and skimming and lobbying than there is in labor. This is how empires fall.


Subsidies concentrate power and money in the elites, and diffuse costs and responsibility to everyone else.

Well thought out reply. I am guessing you are against subsidies......
and you made that perfectly clear.

It is not always the fault of the elites, but you may be on to something here.

 

[Ready-4-ER-at-14]

For some reason that I can't explain, the only one that really bothers me is Medicaid planning where people structure their finances so that taxpayers pay for their long-term care while subsantial assets get transferred to their children rather than having those assets used to pay for their long term care.

I have also have had this uneasiness. I suspect part of the reason it happens is the extreme costs families endure in hospitals and skilled nursing home until a family member dies. Possibly the governments payment rates keep the charge rate higher than people could or would pay if the government money was not present as a rate base.

My aunt who was financially astute and survived my mother, moved some of my grandmothers assets to her name to play by the rules (number of years before grandmothers insolvency) but avoid paying for nursing home care after that number of years. There was a curious intervention by fate in that the aunt died suddenly and possibly without a will and her assets flowed to my grandmother and soon thereafter to the state for Medicaid assets.


Aunt's church and the state got 100% of the assets. I got a tax credit for excessive dispersions to the church executor. I and my family had been shunned/disinherited for not being a believer in their church/(cult?) decades before.

 

[Fedup]

It doesn’t bother me. I’m firm believer that the above will give me more dough that I don’t need to even worry about hiding anything. Call me an optimist.

 

[indiajust]

I have also have had this uneasiness. I suspect part of the reason it happens is the extreme costs families endure in hospitals and skilled nursing home until a family member dies. Possibly the governments payment rates keep the charge rate higher than people could or would pay if the government money was not present as a rate base.

My aunt who was financially astute and survived my mother, moved some of my grandmothers assets to her name to play by the rules (number of years before grandmothers insolvency) but avoid paying for nursing home care after that number of years. There was a curious intervention by fate in that the aunt died suddenly and possibly without a will and her assets flowed to my grandmother and soon thereafter to the state for Medicaid assets.


Aunt's church and the state got 100% of the assets. I got a tax credit for excessive dispersions to the church executor. I and my family had been shunned/disinherited for not being a believer in their church/(cult?) decades before.

These are the not-so-hidden consequences of crude attempts by government to control people. Human behavior and response is rarely considered when laws are passed. FICA undermines and penalizes personal savings toward retirement, welfare creates baby mamas, dairy price supports waste cheese... I don't think that was the intent, but it is one of the consequences.



Once rights to benefits are created and are independent of payments, a system of economic costs and benefits is also created. And that system can be gamed, manipulated, and gambled with. It is human nature to try and get the best deal.

 

[Walt34]

For some reason that I can't explain, the only one that really bothers me is Medicaid planning where people structure their finances so that taxpayers pay for their long-term care while substantial assets get transferred to their children rather than having those assets used to pay for their long term care.

When FIL went into full time nursing care several years ago we were working with an elder law attorney who advised us (well, DW) to do exactly that. I won't list the details (it's a long story and probably only applicable in MD) but it was rather complex and involved, but doing what the attorney suggested would preserve half of the assets for distribution to heirs.

We'd had no idea this was even possible and were at first uncomfortable with the idea for exactly the reason you mention. Then we realized that this was no different than structuring one's assets to pay lower taxes, writing off a vacation to FL to inspect rental properties, or keeping income low enough to qualify for ACA subsidies. Working completely within the law and the rules we'd then be able to preserve half of FIL's assets. And to go further, as POA for FIL, DW had a fiduciary responsibility to do exactly that.

ETA:

As it turned out, he passed away a couple of months before the plan would have gone into effect and he'd have qualified for Medicaid so it became unnecessary.

 

[Kroeran]

The following is from direct observation of how the sausage is made, not ideological speculation.

Every government initiative creates a fire and forget bureaucracy of self interested careerists and unionized public employees. Each one of these souls requires HR, training, supplementary insurance, counselling, and all of this tail staffing requires the same in an endless invisible unaccountable fractal. Think about that.

The legislative parameters of any initiative are a lowest common denominator compromise flowing from a political process which is in the business of vote buying, by people with little knowledge of business and economics, and increasingly, hostility to job and wealth creators. Ponder that.

In any non merit non market arrangement, the worst people rise to the top. Von Mises / Hayek / Friedman explain the economics of this, and it is a keystone observation of small government ideology.

If you want more on this, google The Free Market Progressive Manifesto, written by a guy I know ; - )

 

[joeea]

Every government initiative creates a fire and forget bureaucracy of self interested careerists and unionized public employees. Each one of these souls requires HR, training, supplementary insurance, counselling, and all of this tail staffing requires the same in an endless invisible unaccountable fractal. Think about that.

Wow, "endless invisible unaccountable fractal"! Way to toss out those adjectives!

 

[razztazz]

The following is from direct observation of how the sausage is made, not ideological speculation.

Every government initiative creates a fire and forget bureaucracy of self interested careerists and unionized public employees. Each one of these souls requires HR, training, supplementary insurance, counselling, and all of this tail staffing requires the same in an endless invisible unaccountable fractal. Think about that.

The legislative parameters of any initiative are a lowest common denominator compromise flowing from a political process which is in the business of vote buying, by people with little knowledge of business and economics, and increasingly, hostility to job and wealth creators. Ponder that.

In any non merit non market arrangement, the worst people rise to the top. Von Mises / Hayek / Friedman explain the economics of this, and it is a keystone observation of small government ideology.

If you want more on this, google The Free Market Progressive Manifesto, written by a guy I know ; - )

Just like in the private sector. I've seen no difference in this phenom across the spectrum. Happens always and everywhere. No operation is immune. (It surfaces right here on this forum regularly) Some vague notion of "marketplace" cannot save us. Only it's operators can.

Mises, Hyek, Smith et al were theorists with no more reason to be believed as knowing persons than anyone else. They simply made observations and believed in them. (Yes, Virginia there is a Santa Claus.) They (Possibly excepting Smith) also showed little contact with the reality of how things actually work. I find it interesting that Marx's biggest weakness is also the main ingredient of capitalism. i.e. There ain't nuthin' that can't be called or explained as, economics.

 

[brett]

I view most subsidies as a way for politicians to either leverage votes or disguise bad policies/legislation that they have implemented at the behest of wealthy campaign contributors.

As long as there are politicians and elections we will, IMHO, always have subsidies. Some good, some not so bad, some awful. The bulk of the subsidy monies always seems to go to big business. No surprise. He who has the gold invariably makes the rules.

 

[Sojourner]

If the market distortions created by the subsidies succeed, they cause a market imbalance... society fails to supply the desired amount of something, either too much housing (as in the GFC 09) or too few doctors (as in healthcare). And so a policy that superficially supports homeownership actually destroys homeowners (and takes down much of the worlds financial markets too).

Why do you think that subsidies (or lack thereof?) in the healthcare industry are resulting in fewer doctors than we'd have otherwise? I've often wondered why there aren't more doctors, considering the incredibly high demand, lifetime job security, and lucrative pay. How are subsidies playing a role in this?

The elites, the policy makers, are the sole beneficiaries, the 1%, the gub-mint. These folks are the very well paid middlemen that shuffle the money furiously from one pocket to another, while taking a 30% cut.

Policy makers are taking a 30% cut of all subsidies? Could you explain this and give an independent reference for that number (assuming it's not just your personal opinion, which is fine)? I am no fan of politicians—especially federal lawmakers—but I don't see how they are directly or indirectly getting 30% of the hundreds of billions of $$ in subsidies being handed out year over year.

 

[ivinsfan]

Why do you think that subsidies (or lack thereof?) in the healthcare industry are resulting in fewer doctors than we'd have otherwise? I've often wondered why there aren't more doctors, considering the incredibly high demand, lifetime job security, and lucrative pay. How are subsidies playing a role in this?



Policy makers are taking a 30% cut of all subsidies? Could you explain this and give an independent reference for that number (assuming it's not just your personal opinion, which is fine)? I am no fan of politicians—especially federal lawmakers—but I don't see how they are directly or indirectly getting 30% of the hundreds of billions of $$ in subsidies being handed out year over year.

We have quit a few medical professionals on this board and they'll be the first to tell you it's not always about the money or the job security. Most people intelligent enough to earn an MD and study a specialty can find other less stressful ways to make a living.

 

[Independent]

We have quit a few medical professionals on this board and they'll be the first to tell you it's not always about the money or the job security. Most people intelligent enough to earn an MD and study a specialty can find other less stressful ways to make a living.

I'm sure that most people intelligent and diligent enough to earn an MD could have pursued other careers.

But, I don't see how this relates to "subsidies".

 

[ivinsfan]

I'm sure that most people intelligent and diligent enough to earn an MD could have pursued other careers.

But, I don't see how this relates to "subsidies".

Uh,a couple of posters were wondering about the effects of healthcare subsidies on the number of doctors...did you bother reading before you turned into the thread police.I agree with you that it's not connected.

 

[ajs56]

Read that Wiki agriculture link again. It says ag subsidies, including price supports, were $172 billion in 2010.

I saw this also. Unfortunately this often subsidizes large corporate farms. In our rural area we have large (industrial) dairy farm operations that produce so much milk that it can't be processed, and the excess is regularly dumped. This has been happening for years.

 

[ivinsfan]

I saw this also. Unfortunately this often subsidizes large corporate farms. In our rural area we have large (industrial) dairy farm operations that produce so much milk that it can't be processed, and the excess is regularly dumped. This has been happening for years.

What country do you live in, I don't think milk has been dumped in the US in years.

 

[ajs56]

What country do you live in, I don't think milk has been dumped in the US in years.

Michigan, USA. I haven't seen it with my own eyes, but according to relatives in the dairy business who are reluctant to talk about these things, it happens currently.

 

[ERD50]

What country do you live in, I don't think milk has been dumped in the US in years.

Michigan, USA. I haven't seen it with my own eyes, but according to relatives in the dairy business who are reluctant to talk about these things, it happens currently.

You do have access to the internet, don't you?

A little googling and it seems milk is being dumped in the NE. About 170M pounds, less than 0.1% of national production.

I'm not sure how subsidies fit into this, have not researched that yet, but it does seem like a free market would fix this. It seems that this is mainly due to production sometimes exceeding processing capacity. Sometimes, the butter is separated and the skim milk is dumped - not enough capacity to convert to powdered milk.

https://www.statista.com/statistics/194937/total-us-milk-production-since-1999/

Got Too Much Milk? Dairy Dumping Highlights Production Bottlenecks, Northeast Surplus | Vermont Public Radio

On the other hand, I bet plenty of industries have scrap rates higher than 0.1%.

-ERD50

 

[ivinsfan]

You do have access to the internet, don't you?

A little googling and it seems milk is being dumped in the NE. About 170M pounds, less than 0.1% of national production.

I'm not sure how subsidies fit into this, have not researched that yet, but it does seem like a free market would fix this. It seems that this is mainly due to production sometimes exceeding processing capacity. Sometimes, the butter is separated and the skim milk is dumped - not enough capacity to convert to powdered milk.

https://www.statista.com/statistics/194937/total-us-milk-production-since-1999/

Got Too Much Milk? Dairy Dumping Highlights Production Bottlenecks, Northeast Surplus | Vermont Public Radio

On the other hand, I bet plenty of industries have scrap rates higher than 0.1%.

-ERD50

If you are saying that some plants run into production problems and sometimes can't process all the milk they get that's most likely true. But milk isn't being dumped due to government subsides, was the point I was making and yes 0.1 is nothing more then normal scrap rates IMO. ..01 hardly qualifies as "dumping". In cold weather climates there is often a Spring flush due to better weather for calving and feed production which can result in oversupply certain times of the years. It you ship to a coop the dumped milk will come out of the bottom line and farmer will be payed less overall.

Often when one processor has an oversupply of milk or a production breakdown, they will ship milk to another processor to avoid having to waste milk. They have a gentleman's agreement to help each other.

I was responding to the post that said it was due to subsidies of large corporate farms and a normal occurrence. What's with posters not actually reading the intent of someone's post and then making snarky comments like "you do have access to the internet don't you/"

 

[ERD50]

...

I was responding to the post that said it was due to subsidies of large corporate farms and a normal occurrence. What's with posters not actually reading the intent of someone's post and then making snarky comments like "you do have access to the internet don't you/"

I understand your point, but if you look you'll see that I was responding to comments about whether dumping exists or not. That is separate from whether subsidies are the cause or not.

Before subsidies can be considered the cause for dumping, the first step is to see if dumping even exists.

What country do you live in, I don't think milk has been dumped in the US in years.

Michigan, USA. I haven't seen it with my own eyes, but according to relatives in the dairy business who are reluctant to talk about these things, it happens currently.

​

Those statements can be resolved with an internet search. Why 'argue' about it?

-ERD50

 

[audreyh1]

We have quit a few medical professionals on this board and they'll be the first to tell you it's not always about the money or the job security. Most people intelligent enough to earn an MD and study a specialty can find other less stressful ways to make a living.

There is a deliberate shortage created by limited access to medical schools by the AMA. But lo and behold, a bunch of foreign medical school trained doctors do residencies in the US, and become doctors here. So I always thought this system was shooting itself in the foot.

 

[ivinsfan]

I understand your point, but if you look you'll see that I was responding to comments about whether dumping exists or not. That is separate from whether subsidies are the cause or not.

Before subsidies can be considered the cause for dumping, the first step is to see if dumping even exists.

What country do you live in, I don't think milk has been dumped in the US in years.

Michigan, USA. I haven't seen it with my own eyes, but according to relatives in the dairy business who are reluctant to talk about these things, it happens currently.

​

Those statements can be resolved with an internet search. Why 'argue' about it?

-ERD50

We obviously have a different definition of the word dumped...my definition is that farmers produced milk knowing it will be dumped to get government money. And your first point is completely anecdotal ...and the dumping comment was made by a poster who said it was done so big "corporate" farms can benefit. The words you guys are looking for is some milk doesn't get processed due to production issues or a few plants in certain areas have trouble keeping up with milk production and so some milk doesn't get processed.


The logistics of processing a natural perishable product when you have ebbs and flows in production are staggering. A lot of co-ops are farmer owned and to expand creamery production to make sure you can always process every pound of milk that comes in is mind-blowingly expensive. You can't always work around storm related backups and such either, it's not possible. But to call a loss of .01 dumping is twisting the facts.

I have different opinion then you do despite the fact that you looked on the internet and I didn't.