ShmoopTube

Where Monty Python meets your 10th grade teacher.

Search Thousands of Shmoop Videos


Credit Videos 265 videos

Finance: What is a Dividend?
1777 Views

What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...

Finance: What does "Breaking the Buck" Mean?
7 Views

What does “Breaking the Buck” mean? Breaking the buck means that a money market fund’s value has dropped to less than $1. This happens becaus...

Finance: What is Collateralized Mortgage Obligation (CMO)?
65 Views

What is Collateralized Mortgage Obligation (CMO)? A CMO is a mortgage bond that consists of a large number of different individual mortgages bundle...

See All

Finance: What are Subsidies? 6 Views


Share It!


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]

Related Videos

GED Social Studies 1.1 Civics and Government
39794 Views

GED Social Studies 1.1 Civics and Government

Fake News
11938 Views

How do you tell fake news from real news?

Finance: What is Bankruptcy?
260 Views

What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...

Finance: What is a Dividend?
1777 Views

What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...

Finance: How Are Risks and Rewards Related?
589 Views

How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...