The Effects of Subsidies

It touched briefly on subsidies in my earlier post today but I came across a story that demonstrates my point all too well:

Every day some 3,000 Indian children die from illnesses related to malnutrition, and yet countless heaps of rodent-infested wheat and rice are rotting in fields across the north of their own country.

It is an extraordinary paradox created by a rigid regime of subsidies for grain farmers, a woeful lack of storage facilities and an inefficient, corruption-plagued public distribution system that fails millions of impoverished people.

Once again the state not only allows thousands of downtrodden individual to die but they actively increase the number of starving by artificially increasing the price of foodstuff. Why doesn’t the state just give the unused grain to the starving? Simple, the receivers of the grain may being to trade it in exchange of other needed goods. This trade would increase the supply which would decrease the price. As the price decreases the farmers make less and therefore have less for the state to take.

2 thoughts on “The Effects of Subsidies”

    1. I borked the link up when I wrote the post, it’s fixed now. Thanks for pointing it out.

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