Business & Economics: May 2005 Archives
Maybe someone with more economic insight can clarify the issue, but my understanding of subsidies is that they're ultimately harmful to the economy of the country providing them. Obviously the recipient industry and its owners will benefit immediately from subsidies they receive, but the economy as a whole -- and the taxpayers who pay the subsidies -- will be harmed in the aggregate more than anyone will be helped. Ultimately, economies based on subsidies (i.e., Communism) cannot compete with free markets, but if subsidies are kept small as a proportion of the economy as a whole then specific industries can be built up without seriously threatening the survival of the rest of the system.
So, European Airbus subsidies hurt Europe more than they hurt America -- in total -- but they can do significant damage to the American commercial airline industry, and Boeing specifically. America doesn't want to hurt itself by subsidizing Boeing, but we also don't want Boeing to be put out of business by an opponent that doesn't mind hurting itself to hurt us. Aside from larger economic concerns, we have a national security interest in maintaining a domestic commercial airplane manufacturer, so we can't just sit idle while Boeing is put out of business.
There doesn't really appear to be any way to fight subsidies without using subsidies. The only comfort is that whichever side uses fewer will end up stronger economically in the long run.
Here's a perfect example of why the the opinions of celebrities are almost always completely worthless: "Coldplay attack 'evil' of profits".
Coldplay lead singer Chris Martin today launched an attack on his record label EMI and the company's shareholders.It came after EMI, the world's third-largest music company, warned that profits would be lower because the band took longer than expected to finish their first studio album in three years.
But as Coldplay prepared for a concert in New York to promote their new album, called X&Y, Martin said: "I don't really care about EMI. I'm not really concerned about that.
"I think shareholders are the great evil of this modern world."
And yet EMI's shareholders are the reason why his albums have been able to sell 20 million copies. Sure, he's a talented musician, but there are millions of talented musicians. It takes a huge investment to turn a talented musician into a star, and the shareholders who invested in him are right to expect a return on their investment. It's incredibly selfish and ignorant of Chris Martin to feel anything other than gratitude towards the shareholders who made his success possible, and that he equates his multimillion dollar record contract to slavery reflects how deep his foolishness runs.
Chris Martin and his fellow celebrity campaigners, beyond spreading idiocy and making themselves look foolish, can actually do real damage to the people they're trying to help. For instance, Eamonn Butler points to an instance of Chris Martin's stupidity covering for tyrrany. Writes Franklin Cudjoe of the Center for Humane Education:
Coldplay frontman Chris Martin has said that Ghana's rice, tomato and poultry farmers need to be protected from cheap imports. Yet the problems of Ghana's farmers lie elsewhere: they and other entrepreneurs are stifled by punitive tax regimes and the high cost of capital, not to mention our disarrayed land tenure systems which lead to low crop production. ...While these high-profile campaigns continue to blame western countries for our poverty, they simply give our [Ghana's] own politicians more excuses to delay badly needed institutional reforms. Poor Africans would be far better off without rock-star economics.
Celebrities should realize -- as I've had to do to a much lesser extent with this blog -- that the things they say can have substantial effects. If they don't know what they're talking about, they should keep quiet. Good advice for anyone, actually.
