How You Are Subsidized

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There are subsidies or entitlements we can all see. These are programs like food stamps, Medicaid and regular welfare. Normally these kinds are treated as the only subsidies  in the economy. So, being against government subsides comes down to opposing food stamps and other subsidies for the poor. especially when the recipients are in the country illegally.

Compared to subsidies and entitlements overall, programs for the poor are only a small portion of the total. So, what subsidies are received by the middle class and above? These subsidies are camouflaged just below the surface of what citizens are prone to notice.

Probably the biggest subsidy higher income citizens receive is that of discounted interest rates on borrowed money. Due to government policy upper income borrowers are subsidized approximately $120 per month on their interest expense for every $100,000 they borrow. When an upper income American owes $500,000 on a mortgage he is paying around $600 per month less than would be his cost were he paying the free market rate. The low interest rate policy of the Federal Reserve is a huge subsidy to everyone with a high enough income to borrow money. Government created low interest rates also keep profit margins elevated so that all consumers pay more for everything they buy. The beneficiaries are the businesses which provide the goods and services. Their profit would be a lot less in a free market setting. Interest rates are only one item on which higher income Americans receive government benefits.  Many industries lobby and have laws passed for the purpose of forcing everyone to buy what they produce.

The wealthy are in fact subsidized more so than are the poor. There are many ways I am not taking the time to mention. A typical higher income conservative household in Texas is a two income family. Almost without fail one or both husband and wife have a high income government job. Government work now days pays more than the same work in the private sector. So, while Texas is a conservative red state, hardly a soul has a personal incentive to reduce the size of government.

In Texas and in other states, it is a mistake to think of conservatives as wanting less government and liberals wanting more in government benefits. The truth is that there is no meaningful incentive to use free market principles. Both sides work endlessly to extract personal benefits out of government. In red states, liberals are just not effective at using government as the source of their essence. Although, they do try very hard.

Sadly, when the the free market system is dismantled it is not the poor who benefit. The fastest way to eliminate poverty in the United States is to use government to enforce free market discipline. Were this done today, the comfort level at the bottom of the food chain would be lifted to a much higher level. The first beneficiaries of free market principles are those with little or no political power. With political power benefits go first to those who personally prosper from dismantling the free market system.

So, why is it that there are no ongoing conservative initiatives in the world today? The ones who have the power and money to reduce the size of government benefit from its growth.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

 

 

About Fantasy Free Economics

James Quillian is an independent scholar,free market economist, teacher and originator of the Fantasy Free approach to economics. Contact: news@quillian.net
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