Are SUBSIDIES good or bad for an economy. In my video I explore arguments for and against subsidies.
Subsidies are simply a discount so you can buy or consume more of a good or service like petrol, food or water to name a few examples.
The key factor that drives the arguments for and against is whether you believe the economy is a free market.
In non-economic jargon, a Free Market is one free of corruption, has strong institutions and no monopolies.
Great article on the arguments for and against subsidy is by Amegashie and Schwartz and Clements. Please feel free to explore more on Google Scholar.
If you are in a non-free market, subsidies can improve your economy. Poor implementation, siphoning of funds and poor targetting can make subsidies ineffective. Examples are Holden and Davis show the downsides of subsidies.
Research & Development (R&D) is a great example where subsidies are seen as a positive thing! The benefits to the you from R&D are bigger than the private investment of a company.
For example, a medicine breakthrough not only helps you but the people you work for (not taking sick leave), your family (they spend more time enjoying your company or other activities instead of spending time of caring for you).
Hope you enjoy the video and happy exploring!