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Finance: What are Subsidies? 6 Views


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Description:

Subsidies are government donations given to industries who cannot operate profitably with the goal of keeping American citizens employed on the taxpayer's nickel.

Language:
English Language

Transcript

00:00

finance a la shmoop what are subsidies they're handouts pork donations [empty hands, man puts coins in homeless man's cup]

00:08

political vote buying that is when a given industry can't compete on a level

00:13

playing field either domestically like a US cattle producer not being able to [cattle in fields]

00:17

compete against cheap mad cow meat from central Russia well the US government

00:21

will give subsidies or free money to those American cattle farmers so that

00:26

they can you know keep on keepin on that is the world market for ground beef

00:31

might be two bucks a pound but the cheapest price at which US producers can

00:36

produce their meat is 220 a pound so the US government hoping to keep their

00:40

farmers employed and not wanting a repeat of the Joad Family Singers that [cowboy on cattle ranch]

00:46

you remember them from Grapes of Wrath will subsidize farmer meat production to

00:50

the tune of some f40 cents a pound in free money donations courtesy of the

00:54

American taxpayer given to farmers so that they can keep farming and compete [money from people going to government, then to farmers]

00:59

without actually having to slaughter and then maintain mad cow pastures just as [man cows with uni-brows]

01:04

they do southeast of the Chernobyl nuclear plant and it's the government [cows near Chernobyl]

01:08

policy that we want to keep our American farmers alive and well to meat produce

01:12

for another day all right well the same government handouts occur

01:15

internationally where US manufacturers have to compete against countries who [people working in labs]

01:20

allow all of their own countries companies to collude co-opt and work

01:24

together in aggressively competitive ways trying to dominate a world market

01:29

so think about the cattle industry in Russia where the Russian government is

01:32

an active supporter of its own Russian companies coming first ahead of those [Putin holding up patriotic signs]

01:36

from other countries you know yeah we're wondering why this is bad like why do

01:40

people act surprised when countries actually support their own companies

01:44

like their own companies or evil some out who came up with that idea anyway

01:48

those other countries work together from the wheat manufacturer to the water

01:52

piping distributor to the fertilizer company tapping their own politico's for

01:57

product to co-opting grinders are us when it comes time for the cattle to you

02:01

know come home well a subsidy is essentially a negative tax the

02:05

government is subsidizing supply which shifts the curve to the left like on

02:10

this little graph thing here that is input suddenly got cheaper

02:14

thank you hard-working taxpayer contributions lots of controversy

02:17

surrounding subsidies some folks support them while others claim they unfairly [happy people dancing in front of government building]

02:22

affect prices or give developed countries a big advantage over less [a group of unhappy people]

02:26

developed countries that might not have the cash to help their industries

02:30

there's a whole lot of corruption in unlevel playing fields that cloud the

02:34

story on both ends but no matter how mad some people are about subsidies just

02:38

remember that no one is as mad as these cows [mad uni-brow cow charges the screen]

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