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The Morality of Government Subsidies



July 11, 2009 – Comments (22) | RELATED TICKERS: FMCC , E

Morality has become increasingly complicated in modern times. Not that long ago you probably would have been 100% aware if you were buying stolen goods. After all, you most likely were on a first name basis with your supplier, and you were probably very aware of his business practices. Then along came big government and interference into the marketplace, which made knowing where the goods you purchased came from a lot more complicated.


Most things you purchase today were probably the product of theft somewhere down the line. “How can that be?” you may ask. Well, let’s start with the most simple example: food.


A farmer hears that the government is subsidizing corn this year because it has the potential to be used as a fuel and thus an alternative to oil. Let’s say you buy your corn directly from the farmer. A transaction involving only two people (no middle men), the grower and the consumer, except there is an X factor in this equation: the government subsidy.


After all, where did the money for the subsidy come from? That’s right. You and me. Now you might be alright with subsidizing farmers to grow corn, but I’m not. I don’t even like corn! Yet, the government took my money and transferred it to the farmer, who then transfered it to you via lower corn prices.


You (and the farmer) have effectively stolen my money. You didn’t mean to steal my money; you just really like fresh corn on the cob, and so you decided to buy some. By now you are probably saying, “That’s not fair! I can’t be held morally responsible.”


And I ask, then who is responsible?


The government? The one that is supposed to be, by the people, of the people, and for the people? It’s your government. You elected the representatives. You sat idly by while they subsidized farmers to grow more corn than the market determined was needed.


But you only had the best of intentions, after all, our dependence on foreign oil funds oppressive dictators and terrorists! We needed a solution and what’s better than a homegrown solution?


Except…it turns out that making ethanol from corn is ineffective, it takes more energy to turn corn into ethanol than the energy gained from the fuel! Not only that, but we have also now burned up a great deal of the world’s food. Places that actually rely our corn so that they can eat are now starving...


Oddly enough the government in all of its infinite wisdom didn’t foresee any of this, but the free market would have foreseen it all. Because no farmer would have been growing extraneous corn without the government paying them to do so, and thus no imbalance in the corn market would have occured. And even if some farmer had been growing corn extra corn, no producer of Ethanol would’ve been dumb enough to waste money burning corn as fuel. And even if some business had been dumb enough the wouldn't last very long, as they would be out of business much more quickly with higher corn prices and ineffective methodology.


Even more absurd is the fact that there is a crop, which could be grown quickly and easily without chemicals, and would supply us with enough fuel to not even need foreign oil. But the government has made growing this plant illegal!


Yes. I’m talking about Hemp. If we were to grow 7% (that’s all) of the world’s Hemp we would no longer be dependant on foreign oil. Do you think that if it were not illegal to grow farmers would need subsidies to grow such a crop? Not a chance.


Farmers would grow what makes them money, just like Wal-Mart sells the products that make them money. You would think it was absurd if the government was subsidizing the sale of the Nintendo (NTDOY.PK) Wii. Yet, the majority of people never question our countries numerous government subsidies. Not to even mention the waste that occurs from lack of oversight of government funds.


So, the next time someone tells you that the unfettered free (redundant I know) market caused the economic recession, you should laugh in their face. Our market is no freer than the Chinese Press. Between congress’ laws (Cap and Trade), taxes (Corporate Income Tax and “Sin” Taxes), regulations (Like those put upon the Auto Industry), and monetary inflation (from The Federal Reserve) inevitably one section of the economy is harmed and another rewarded. My money and your money is stolen and given to someone else, and believe me it ain’t the poor people.


Government subsidies of any kind are not only bad for the economy, they are morally reprehensible.



22 Comments – Post Your Own

#1) On July 11, 2009 at 10:07 PM, DaretothREdux (52.64) wrote:

And as always comments, questions, recs, and rebuttle are always appreciated.

Also, if you wish to debate this I would prefer you stick the morality of the issue. I am not arguing that no good ever comes from government subsidies...

I think we have all learned what eventually happens when we reward failure.


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#2) On July 11, 2009 at 10:11 PM, DaretothREdux (52.64) wrote:

And it appears that my links within the article are all gone :-(

Link #1: Hemp

Link #2: Cap and Trade

Link #3: Waste that Occurs (Washignton Post)



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#3) On July 11, 2009 at 10:46 PM, DaretothREdux (52.64) wrote:

by Ronald R. Cooke
The Cultural Economist
Author, "Oil, Jihad & Destiny" and "Detensive Nation"
February 2, 2007

 A Great Read!


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#4) On July 11, 2009 at 11:46 PM, ralphmachio (< 20) wrote:

I thought this was excellent.

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#5) On July 12, 2009 at 12:00 AM, DaretothREdux (52.64) wrote:


Thanks. I appreciate that more than you probably know. I wasn't feeling comical today (hey everyone is allowed a lapse in judgement every now and then!).

 I tried the other day and instead of having writer's block, I had writer's diarrhea (I wrote but it was just a bunch of crap).

This sort of just came to me. 

Thanks again,


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#6) On July 12, 2009 at 1:51 AM, whereaminow (< 20) wrote:

Great points Dare!

One day, Michael Moore, Paul Krugman, and the left bloggers will blame skyrocketing corn prices on greed and the free market.  Millions of mindless idiots will call for regulation.  The Office of Corn Regulation and Oversight will be created and all will be right in their twisted world.

David in Qatar

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#7) On July 12, 2009 at 2:13 AM, DaretothREdux (52.64) wrote:


Sadly, I have no doubt that you are right.


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#8) On July 12, 2009 at 7:43 AM, Chromantix (90.86) wrote:


Rec for you.  Government should provide roughly 4 things, and corn subsidies isn't one of them.

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#9) On July 12, 2009 at 2:07 PM, DaretothREdux (52.64) wrote:


Agreed. But "general welfare" and "interstate commerce" have basically been interpreted as "the gov't can do anything it wants"...somedays I wonder why we still pretend to have a constitution.


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#10) On July 12, 2009 at 2:36 PM, IIcx (< 20) wrote:

Interesting headline DaretothREdux -- “The Morality of Government Subsidies”

Morality is a poorly defined term that appears to only have a single proof; “its better to tickle a baby then to torture one”. Most feel its Theology at the point philosophy fails.

What you are presenting as a premise isn’t about morality but is about the nature of the spaces between the law and the abuse?

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#11) On July 12, 2009 at 3:28 PM, DaretothREdux (52.64) wrote:


Very good. Would you call yourself a Theologian or a Moralist? Just curious...

Remember though I did start the article with "Morality has become increasingly complicated in modern times."

I was working from the premise that most people agree "theft" is wrong. I can of course, give a circumstance where most anyone would steal (i.e. to save the life of someone they love), but that would not mean stealing was "right." Because if we start to argue morality as relative we will all become Ultilitarian to the point of commiting unspeakable acts in the name of the "common good."

Certainly, we could go that way. I pray not. The easist morality (to prove) and the most efficent has always been: respect life, respect freedom, and respect property (in that order), and never out of malice strive to remove those from others.


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#12) On July 12, 2009 at 4:28 PM, Mary953 (84.21) wrote:

I was curious about your comment on hemp, clicked the link, and found a blog that I missed while on vacation.  The discussion was equally impressive.  (To anyone else who was ignorant of this plant/issue/etc, do yourself a favor and read through the linked blog.  You will come away from that link with a greater understanding of the biological, political, scientific, economic ramifications and, even more, an extreme respect - at least I did - for the intelligence and the range of ideas of the CAPSters adding comments)

Our society has become so complex and our government so invasive that we can no longer tell who is getting paid or subsidized.  We don't know where our tax money is going.  Our elected representatives don't even have time to read what they are voting on.  And if you can show me one single Congressperson in either house that could pass a "pop quiz"  without notes or aides to provide hints on the details of any of these mega-bills, then I wiould/will gladly publish a personal apology to that person!  I just don't think it is possible.

There are 'tax loopholes' for the vastly wealthy but only for those who are willing to do crazy things like buying a sheep ranch to get subsidies for the sheep - thus getting from the government an amount in excess of the amount paid in taxes (example provided courtesy of Sam Donaldson and may no longer be valid)  The only tax loopholes pertaining to the even moderately well -off are those reverse clauses that close the tax breaks given to everyone else.  To taxpayers who work harder and earn more, the only real change is the added AMT which is designed to take a larger portion of income, just in case you might have gotten away with keeping some of what you earned.

The result seems to be that we try to turn a blind eye to what is happening because we don't know how to fix it.  I try to care for my family, friends, community because I believe larger 'fixes' are beyond my ability.  If there were higher hopes for Obama following his election, it was because so many people heard him saying "I will change this for you!"  Anger is growing now because he has not waved a magic wand and indeed, his solutions have only speeded the rate of economic decay.

Dare, I realize I have missed several of your blogs while I was vacationing.  I need to catch up!  The debates are fascinating!

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#13) On July 12, 2009 at 5:14 PM, DaretothREdux (52.64) wrote:


You are one of my most loyal readers (along with a few others). I appreciate you and the others a great deal. I write for you all as much as myself. So, if you get behind on a few blogs it's no big deal because I know you will get to them eventually ;-) (just as I always get to yours).



P.S. I agree the discussion on Hemp was wonderful. I use CAPS to blog because I get a wide range of readers who are (mostly) intelligent. I feel that I learn more from reading my blog comments than I teach, so I think blogging here is a pretty good deal.

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#14) On July 12, 2009 at 11:30 PM, DaretothREdux (52.64) wrote:

I think that it is only fair that I link pencils blog on this subject since I linked my on his.


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#15) On July 13, 2009 at 12:09 AM, PragmaticBuckeye (< 20) wrote:


 I appreciate what you've written, and I agree with your end conclusion that government is not skilled at picking winners compared to the collective wisdom gained from the daily feedback of free markets.  However, I would take issue with phrasing the issue in moral terms, particularly on the basis that subsidies = theft.

Your argument, as I read it, is that subsidies are immoral on the basis that they are a transfer of one person's money to another by way of force, which constitutes theft.  The unspoken premise here is that all taxation is immoral as it represents the mandatory confiscation of wealth, and that the government can never be a legitimate actor so long as they are funded by taxes.  I don't think this is an argument you would make, but it's where your premise leads.

 I think the case against corn subsidies can be made using only sound economic principles, and it carries more weight as a result.  The morality angle is, IMHO, a weak one and easy to dismiss as hyperbolic.  I don't find corn ethanol subsidies to be immoral, but I sure would object to them on the grounds that they are stupid policy.

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#16) On July 13, 2009 at 12:37 AM, DaretothREdux (52.64) wrote:

PragmaticBuckeye says:

The unspoken premise here is that all taxation is immoral as it represents the mandatory confiscation of wealth, and that the government can never be a legitimate actor so long as they are funded by taxes.  I don't think this is an argument you would make, but it's where your premise leads.

Thank you for your comments. But I would actually argue that all taxation is a form of theft, at least all taxes on income for certain. If I am working the first 3-4 months of the year for the US gov't and they spend my money on things that I do not approve of (on moral grounds or otherwise) than that is theft, plain and simple.

You get +10 points though for being the first to draw my argument to its logical conclusion.

If you would like to show me how taxes are not a form of property theft, I will be willing to listen to your argument.


Sidenote: I think it is a travesty that my money is taken from me and used to fund wars of aggression or to subsize countries that commit unspeakable acts of violence throughout the world.

That is more than theft...I don't like being an accomplice to murder.

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#17) On July 15, 2009 at 4:01 PM, farmnut1985 (< 20) wrote:

Part of the purpose of government subsidation on agriculture in general is lower food costs.  However, most of the time, it just manipulates the markets and frustrates most everyone.  There were many years in the 90's that without governmnent subsidation and crop insurance, we would have been heavily in the red.  Part of this was due to the low price of corn which has not really risen much compared to inflation of inputs.  Yields have increased which increases profits but also reduces price because of a larger supply.  Ethanol production is good in smaller doses as you have stated before that you are removing a food source to use as fuel.  

If grain prices are higher, the subsidies are reduced.  There are also different programs that a person can sign up for that works different, but this is how the one we use typically works.  You register for you planted acres before spring by filling out lots of government paperwork.  There is a payment recieved then on those acres by a per acre basis and varies by the crop type.  This is a fairly small amount generally resulting in a couple dollars an acre or less.  Then you verify your crop acerage after planting, must be done by July 15th.  Then at harvest, you can apply for more subsidation if the grain price is below the PCP (posted county price) which is a cutoff limit of if the current market price is lower than the pcp you recieve a subsidy on a per bushel basis to raise the price to the pcp.  We have not had to apply for price subsidation in probably 6 years due to higher grain prices as well as low pcp's.  We don't really care for the system as we would just prefer a more stable market price to gauruntee a solid income.  These programs do not make farmers rich despite many of your beliefs and would like to just see solid markets in place of them.

You however can thank the goverment for your cheap food, because without subsidation it would not be.   

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#18) On July 15, 2009 at 6:40 PM, DaretothREdux (52.64) wrote:


Thanks for the insight! I would never argue that gov't subsidies "make farmers rich"....I know better than that. In fact, I agree with you that the subsidies hurt farmers by interfering in a market that would otherwise balance itself.


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#19) On July 16, 2009 at 10:50 AM, farmnut1985 (< 20) wrote:

Thanks Dare, lol, I missed your reference to your hemp blog, while you are pushing hemp I am pushing other biofuels, all in the right direction.

Growth of Biofuels 

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#20) On July 16, 2009 at 12:32 PM, Mary953 (84.21) wrote:

The following is taken from yesterday's news headlines in which the House Democrats decided that the appropriate way to pay for giving healthcare to the nation would be to levy a tax of up to 45% on the Americans who are making the largest salaries.  Charles Rangel termed it "the MORAL thing to do."  I am not one of those wealthiest affected, however I see nothing MORAL about a thief cloaking himself in the flag before he robs me.  I cannot be civil or logical on this topic as I see it as a wonderful way for the government to continue its policy of taking what it wants from us and trying to make us feel guilty for being angry - Therefore, I have put portions of the article here to be as objective as possible. 

House Democrats scrambling for ways to pay for overhauling health care would raise taxes on the wealthiest Americans to levels not seen since the 1980s, breaking one of President Barack Obama's campaign pledges.

The tax increase would be limited to the top 1.2 percent of earners — families that make more than $350,000 a year.

Democrats argue that high-income families fared well under President George W. Bush's two terms as their taxes dropped and their incomes soared, giving them the ability to absorb higher taxes. Republicans argue that the tax increases would hurt small business owners who typically pay their business taxes on their individual returns.

‘The moral thing to do’
Rep. Charles Rangel, chairman of tax-writing House Ways and Means Committee, called the plan "the moral thing to do."

"This innovative bill provides a uniquely American solution to control costs and put patients first without burdening future generations with debt," the New York Democrat said.


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#21) On July 16, 2009 at 4:37 PM, DaretothREdux (52.64) wrote:


Your comments are always welcome on my blog, and feel free to link anything you wish to promote.


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#22) On July 16, 2009 at 4:40 PM, DaretothREdux (52.64) wrote:


That article and those statements by a Rep. of this country actually make me sick to my stomach. I have written down his name and will shame him with a blog in the near future...


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