Anonymous
Anonymous asked in Politics & GovernmentPolitics · 1 decade ago

If private companies are so efficient, why do they need so many subsidies?

Think of it like this, if your mother went into huge debt so that she could give money to you, and you went out and bought nice cars, clothes, and things with that money, while your mother languished in poverty, crushed underneath debt, you would also look like you ran your life efficiently while your mother would look like she ran her life inefficiently. The whole time however, it is your mother making you look good. This is the same relationship between the private sector and the public sector.

Update:

Many argue that health care reform would be bade because the government cannot run things as efficiently as the private sector.

OK.

If that is true, and the private sector is so efficient, why do they need so many government subsidies to remain competitive? These private companies make the claim that they cannot operate in a global market and compete with cheaper producers without subsidies. Why can't private companies become efficient enough to compete in a capital market? Why do they need the government's help if they are so efficient?

The cotton industry received over 3 billion dollars in subsidies in the 2007 crop year. The total yield of cotton in that same year was only 2.5 billion dollars. Which means that they received .5 billion dollars more than they produced. Is that efficiency?

The oil companies get 39 billion dollars in subsidies, yet cannot be efficient enough to drop gas prices.

Coal gets 8 billion

Natural gas and other fossil fuels get 2 billion

Nuclear gets 9 billion

Ethanol gets 6 billion

Why do these private companies get subsidies if they are so efficient? Why do they need it?

Agriculture (corn, sugar, and other foodstuffs) gets 171 billion dollars. I thought that the Republican Farm belt were the hardest working, most efficient people on earth, why do they need an extra 171 billion dollars to remain competitive? Are they really that inefficient that they cannot survive without government help?

Other subsidies for private companies, (because they just can't survive without government help.)

Kimberly Clark got 197 million is subsidies

Proctor and Gamble got 194 million

Allied Signal got 665 million

American Home Products got 720 million

Eastman Kodak got 189 million.

Furthermore, they got all these subsidies when times and the economy were "good".

If the private sector was so efficient, then they would not need these billions of dollars in subsidies and the country would be in better shape.

It seems that the inefficient institution, the federal government, which runs the Army, Navy, Air Force, and Marines (which are all very efficiently run government organizations) is the one who is making the private sector appear to be so efficient with its massive subsidies.

I guess when the private sector gets so many billions of dollars in corporate welfare, subsides, free money, whatever you call it, it looks really efficient.

So the question: Is the private sector so much more efficient than the government that continually supports it? If the government didn't spend hundreds of billions of dollars to support the private sector, it would appear that the private sector would collapse and the government would become much more efficient.

8 Answers

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  • Will
    Lv 7
    1 decade ago
    Favorite Answer

    You make some very good points. But as you can see by some of the postings here. Many of these subsidies are blamed on the current administration. When in fact they have been around for many years. Example=Farmer subsidies( Soil Bank). And yes with these subsidies the efficiency of the private sector can be very misleading. You failed to mention all the perks that these privately owned companies receive from state and local governments for relocating or staying located here.(deferment of property taxes for example)

  • Pfo
    Lv 7
    1 decade ago

    The truth is the private sector DOES NOT need so many subsidies for it to function. These subsidies are not a life line, they are pocket change. Subsidized industries get subsidies for several reasons, most often because they make enough money to lobby congress for them (oil companies). Another is so that they can lower the cost of the products and services so they are more affordable (public transportation is a good example of this, so are oil companies).

    "The oil companies get 39 billion dollars in subsidies, yet cannot be efficient enough to drop gas prices."

    We consume much more oil than the rest of the world, and yet we pay less for gas, tell me again that they aren't efficient enough to drop gas prices. We can't get a better deal on gas than what we already get. 1 gallon of gas is cheaper than a gallon of milk, we use way more oil than milk per day and if we play our cards right, milk is an infinite resource, whereas oil is finite. You seriously don't think gas is cheap?

    "Agriculture (corn, sugar, and other foodstuffs) gets 171 billion dollars. I thought that the Republican Farm belt were the hardest working, most efficient people on earth, why do they need an extra 171 billion dollars to remain competitive? Are they really that inefficient that they cannot survive without government help?"

    Democrats subsidize agriculture, it gives them a political advantage. Don't believe me? Look at Obama's earmarks, most were subsidies for agriculture. I used to work in agricultural policy, I know this for a fact.

  • Anonymous
    1 decade ago

    Great question. I believe that the subsidies need to stop! Essentially it is politicians redistributing wealth to help their campaign contributors.All it does is insure that the competition can't compete or can't win. We don't even know what a real free market is in this country.

  • 1 decade ago

    Some of those figures you cited seem high. But I'll give you the benefit of the doubt.

    The problem here, which you are missing, is government. Why is our government giving out all these goodies to business that don't really need them?

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  • 1 decade ago

    You're forgetting that the people who oppose national health care also oppose those subsidies you mentioned. Despite your attempt to show otherwise, we are not hypocrites.

  • Anonymous
    1 decade ago

    Good lobbyists

  • ?
    Lv 6
    1 decade ago

    subsidies are un-american

  • Anonymous
    1 decade ago

    Because we have crooked politicians.

    And you want to give them MORE power over us?

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