Taxes vs Subsidies

cropped-bob-shapiro.jpg   By Bob Shapiro

There’s a truism in economics that, if you want more of something you subsidize it, and if you want less of it then you tax it. A quick look at government policy here in the US shows that this is as true today as it ever was.

But, since Americans have been taught to have knee jerk reactions, let’s try just to look as dispassionately as possible, not considering whether any of the policies are “needed desperately,” “are for a good cause,” or some other worthwhile purpose. Let’s just look at what is.

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Government vs Standard of Living

cropped-bob-shapiro.jpg   By Bob Shapiro

Back in the days of the American Revolution, there was a Scottish economist by the name of Adam Smith, who wrote a book called The Wealth of Nations. In this classic, Smith uses the Pig Cycle to help explain why economies go through ups and downs, commonly referred to business cycles.

Pig farmers raise pigs to make a profit. Not just a profit, but the best profit available through the several choices they can invest in. If the

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