Subsidies - What Do You Think?

[morriss003]

Do you consider the Panama Canal, NASA, and interstate highway system to have been subsidized? How about the Erie Canal, the continental railroad, or Tennessee Valley Authority? Were the land grants in the Northwest Territories subsidies? Are government guaranties subsidies? Like those given to the builders of the Golden Gate Bridge or Hoover Dam?

Subsidies are hard to define and harder to control. It's hard enough if the population is a million. It's much harder if the population is 325 million.

[Independent]

Quote:

Originally Posted by morriss003 Do you consider the Panama Canal, NASA, and interstate highway system to have been subsidized? How about the Erie Canal, the continental railroad, or Tennessee Valley Authority? Were the land grants in the Northwest Territories subsidies? Are government guaranties subsidies? Like those given to the builders of the Golden Gate Bridge or Hoover Dam? Subsidies are hard to define and harder to control. It's hard enough if the population is a million. It's much harder if the population is 325 million.

The OP says ..

Quote:

Let’s start with a definition: A subsidy is a form of financial aid or support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy. (Wikipedia)

Yes, that is plenty vague. I don't get hung up on words. There are "subsidies" that I think are Good Public Policy and subsidies that I think are Bad Public Policy. The OP, for example, said that tax and lending policies subsidize home ownership, and he thinks that is Good Policy. I think the thread was about opinions on good vs. bad.

I think we use "subsidy" two ways.

1. The gov't makes some private activity more attractive than it would otherwise be. (the definition above)
I buy and keep the house as a private asset, but the gov't makes it easier. That's a "subsidy".
This usage distinguishes between interstates and railroads.
The railroads were privately owned by profit seeking firms, the gov't made building them more economically attractive. That'a a "subsidy".
OTOH, interstates are publicly owned and operated, available to everyone as a tax funded public good. So that is just "spending".

2. The gov't has a spending program, but some group gets a better tax/benefit ratio than some other group.
The OP mentions SS. Every worker pays the same tax, whether you are single or married, have kids or don't have kids. But, "traditional" married worker with a stay-at-home-parent for a spouse and children gets higher benefits than a single, childless person. In this case, the single group "subsidizes" the traditional married group.
If we pay for interstates with gasoline taxes, then it seems that people who drive low mileage cars "subsidize" those who drive high mileage cars. That seems okay to me.
OTOH, I've seen things that say trucks do much more damage to the highways than cars. So much more, that the ratio of (damage done)/(taxes paid) is much higher for trucks and for cars. So car owners "subsidize" truck owners. I don't like that subsidy.

Again, I'm not that hung up on exactly what policy should be labeled "subsidy". I'm more interested in which seem to promote the Greater Good.

[NW-Bound]

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Originally Posted by Independent ... Again, I'm not that hung up on exactly what policy should be labeled "subsidy". I'm more interested in which seem to promote the Greater Good.

Even then, there's never a consensus.

People who directly benefit from a narrowly targeted subsidy still claim that the rest of society will also benefit.

A past GM CEO has claimed, "What was good for the country was good for General Motors and vice versa.”

[Huston55]

Quote:

Originally Posted by Independent The OP says .. Yes, that is plenty vague. I don't get hung up on words. There are "subsidies" that I think are Good Public Policy and subsidies that I think are Bad Public Policy. The OP, for example, said that tax and lending policies subsidize home ownership, and he thinks that is Good Policy. I think the thread was about opinions on good vs. bad. I think we use "subsidy" two ways. 1. The gov't makes some private activity more attractive than it would otherwise be. (the definition above) I buy and keep the house as a private asset, but the gov't makes it easier. That's a "subsidy". This usage distinguishes between interstates and railroads. The railroads were privately owned by profit seeking firms, the gov't made building them more economically attractive. That'a a "subsidy". OTOH, interstates are publicly owned and operated, available to everyone as a tax funded public good. So that is just "spending". 2. The gov't has a spending program, but some group gets a better tax/benefit ratio than some other group. The OP mentions SS. Every worker pays the same tax, whether you are single or married, have kids or don't have kids. But, "traditional" married worker with a stay-at-home-parent for a spouse and children gets higher benefits than a single, childless person. In this case, the single group "subsidizes" the traditional married group. If we pay for interstates with gasoline taxes, then it seems that people who drive low mileage cars "subsidize" those who drive high mileage cars. That seems okay to me. OTOH, I've seen things that say trucks do much more damage to the highways than cars. So much more, that the ratio of (damage done)/(taxes paid) is much higher for trucks and for cars. So car owners "subsidize" truck owners. I don't like that subsidy. Again, I'm not that hung up on exactly what policy should be labeled "subsidy". I'm more interested in which seem to promote the Greater Good.

This aligns with my thoughts in the OP. I was hoping to read others’ opinions on subsidies, the rationale for those opinions and, perhaps most importantly, the details/research/links to (hopefully) enlighten us on differing views.

I also share “Independent’s” view on the difference btwn a ‘Subsidy’ and ‘Govt Spending.’ My intent was to focus on the ‘Subsidy’ side of the discussion in this thread.

BTW, as a retired Civil Engineer, I can attest that trucks damage highways exponentially more than cars; and, proportionally, much more than the extra bit of tax/fees they pay.

[Independent]

Quote:

Originally Posted by Huston55 BTW, as a retired Civil Engineer, I can attest that trucks damage highways exponentially more than cars; and, proportionally, much more than the extra bit of tax/fees they pay.

Thanks. I've seen that before (typically, road damage goes up by the third or fourth power of weight per axle), but I never had a chance to talk to an expert.

I'd also think there is a significant difference in original construction costs. If I were building roads and bridges, and knew they would only be used by vehicles under 5,000 pounds, designs would be cheaper.

[NW-Bound]

Plus one of them semi-trailers splashed gravel on the Alcan highway, which broke my RV windshield.

Seriously, without the trucks, we would not have the life standards we do. In the Yukon, a high percentage of the trucks I saw plying the Alcan were tanker trucks, carrying either fuel or propane. Without them, a lot of people would freeze to death.

[Mdlerth]

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Originally Posted by Huston55 BTW, as a retired Civil Engineer, I can attest that trucks damage highways exponentially more than cars; and, proportionally, much more than the extra bit of tax/fees they pay.

Quote:

Originally Posted by Independent Thanks. I've seen that before (typically, road damage goes up by the third or fourth power of weight per axle), but I never had a chance to talk to an expert. I'd also think there is a significant difference in original construction costs. If I were building roads and bridges, and knew they would only be used by vehicles under 5,000 pounds, designs would be cheaper.

Quote:

Originally Posted by NW-Bound Plus one of them semi-trailers splashed gravel on the Alcan highway, which broke my RV windshield. Seriously, without the trucks, we would not have the life standards we do. In the Yukon, a high percentage of the trucks I saw plying the Alcan were tanker trucks, carrying either fuel or propane. Without them, a lot of people would freeze to death.

Enlightening series of posts.

Let me summarize what I just read: Everybody who drives helps pay for constructing and maintaining roads. Heavy freight trucks wear it out faster, while bearing only a small fraction of the cost. Translation: freight on roads is subsidized.

Are there alternatives? Maybe if hauling by truck had to pay its "full freight" (another example of my clever wordplay which causes DW's eyes to roll), it might justify moving cargo off asphalt and putting it on trains, so that the highways last longer. However, first you'd have to build the rail lines, which cost roughly the same per mile, but in practice don't command support for subsidy because only railroad operators are seen to benefit. So the rails don't get built and the highways crumble.

I submit that road vs rail is a good example of the slippery slope greased by subsidies. And why it's always perilous to get into the subsidy business in the first place.

[Huston55]

Quote:

Originally Posted by Mdlerth Enlightening series of posts. Let me summarize what I just read: Everybody who drives helps pay for constructing and maintaining roads. Heavy freight trucks wear it out faster, while bearing only a small fraction of the cost. Translation: freight on roads is subsidized. Are there alternatives? Maybe if hauling by truck had to pay its "full freight" (another example of my clever wordplay which causes DW's eyes to roll), it might justify moving cargo off asphalt and putting it on trains, so that the highways last longer. However, first you'd have to build the rail lines, which cost roughly the same per mile, but in practice don't command support for subsidy because only railroad operators are seen to benefit. So the rails don't get built and the highways crumble. I submit that road vs rail is a good example of the slippery slope greased by subsidies. And why it's always perilous to get into the subsidy business in the first place.

Actually, I didn’t make a judgment about transportation subsidies. I just stated that large trucks do most of the damage, which is factual. Also factual is that a smaller & smaller portion of highway/roadway costs is paid by “user fees”, with general taxes now making up a much larger portion than in the past. So, that means that, “Everybody who drives helps pay for constructing and maintaining roads.”

In my posts on this thread summarizing & quantifying subsidies, I’ve noted that I don’t know the details regarding Transportion Subsidies. If you’re so inclined, posting the info for items #1-4 in the OP for Transportation Subsidies would be useful.

[Texas Proud]

One of the other problem with trucks is that a number of them are overweight... overweight trucks cause a lot more damage than one that is loaded properly...


One of the reasons they have weigh stations along the highway...

[Independent]

Quote:

Originally Posted by NW-Bound Seriously, without the trucks, we would not have the life standards we do. In the Yukon, a high percentage of the trucks I saw plying the Alcan were tanker trucks, carrying either fuel or propane. Without them, a lot of people would freeze to death.

Sure. And, without ____ we'd all be worse off. That doesn't mean the gov't needs to subsidize anything we might put in the blank.

If trucks had to pay their proportional share of the cost of building/maintaining highways, the rest of us would pay a little less. We'd also pay more for goods shipped by trucks. Trucking would not end, it would be a little more expensive.

Maybe a few more things would move by rail. Maybe a few more things would be produced closer to where they are consumed.

IMO, the general rule is that the price of a good should reflect the entire cost of producing it, including transportation.

[Just_Steve]

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Originally Posted by Independent Sure. And, without ____ we'd all be worse off. That doesn't mean the gov't needs to subsidize anything we might put in the blank. If trucks had to pay their proportional share of the cost of building/maintaining highways, the rest of us would pay a little less. We'd also pay more for goods shipped by trucks. Trucking would not end, it would be a little more expensive. Maybe a few more things would move by rail. Maybe a few more things would be produced closer to where they are consumed. IMO, the general rule is that the price of a good should reflect the entire cost of producing it, including transportation.

I assume you know that trucks pay taxes to each state according to how many miles driven in each state and if I'm not mistaken thats on top of fuel tax.

[VanWinkle]

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Originally Posted by FUEGO I want to keep all the good subsidies I currently receive. Because I helped pay for them gosh darn it! All those other subsidies that I don't currently get only go to lazy good-for-nothings and should be eliminated immediately. Until I qualify for those same benefits, at which point they should be immediately reinstated. Because I helped pay for them gosh darn it! <this seems to summarize the mentality of most people>

+1 Great answer Fuego!!

[Independent]

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Originally Posted by Just_Steve I assume you know that trucks pay taxes to each state according to how many miles driven in each state and if I'm not mistaken thats on top of fuel tax.

No, I didn't know that. I tried Googling and got this. https://cdllife.com/2014/taxes-truck-drivers-pay/
And got just a few states that seem to have mileage taxes. The IFTA form seems to be about allocating miles and taxes properly between states. But, I could certainly be missing something.

I tried Wikipedia and got this: https://en.wikipedia.org/wiki/Fuel_t..._United_States

Maybe you can point me at something better.

[Just_Steve]

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Originally Posted by Independent No, I didn't know that. I tried Googling and got this. https://cdllife.com/2014/taxes-truck-drivers-pay/ And got just a few states that seem to have mileage taxes. The IFTA form seems to be about allocating miles and taxes properly between states. But, I could certainly be missing something. I tried Wikipedia and got this: https://en.wikipedia.org/wiki/Fuel_t..._United_States Maybe you can point me at something better.

It appears you are correct about allocation of taxes, but each truck on the road files IRS 2290 and pays up $550 depending on weight in addition to fuel tax, not as much as I thought.

[Independent]

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.

[Huston55]

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Originally Posted by Independent 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]

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]

Quote:

Originally Posted by Independent 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-...-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/repor...ent-and-future

I thought the Kansas Tax Cuts were a major disaster.

[MRG]

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Originally Posted by audreyh1 I thought the Kansas Tax Cuts were a major disaster.

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

[VanWinkle]

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Originally Posted by indiajust 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.