Federal Gov't Corp. Welfare
Suppose for instance that you have two companies that produce dolls; Gheppeto & Matel. Gheppeto, though, is just one man who produces wooden dolls and sells them for a price of seven dollars. Matel, the large conglomerate, produces a plastic doll of the same quality and value, but because of their costs to produce the doll, they have to charge eight dollars for their doll. The government sees this and gets very concerned. If people can purchase Gheppeto’s doll for seven dollars, then what is their incentive to purchase the Matel doll? Because Matel is very large and hires many people, the government decides to help Matel by giving them a one dollar subsidy on each doll that they sell. Matel, knowing that they will now have revenue no matter what, and because they are so large, now floods the market with dolls. Because the supply exceeds the demand, prices for the doll reduce down to four dollars. By this time, poor Gheppeto has lost
Free trade could be something very lucrative if subsidies did not exist. Countries and Africa and of the E.U., for instance, can not compete with our farmers who receive government aid, and when the government is spending tax payers money to subsidize domestic agriculture, they are not going to be willing to allow another countries produce to hinder their efforts. Subsidies make it difficult for other countries to compete with our product and therefore force them to give up the race before even having the chance to compete. When the government distributes the subsidy, the farm that could not lower its prices because of its costs continues to produce. If we were in a free market, the company that could not lower its costs would be forced to find ways to lower its costs or else it would have to look into another industry. Interrupting the free market destroys the notion of survival of the fittest and helps those companies that maybe shou
Some topics in this essay:
Matel Gheppeto,
Africa EU,
,
free market,
lower costs,
produce dolls,
government paying,
decides help,
tax payers,
seven dollars,
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Approximate Word count = 638
Approximate Pages = 3 (250 words per page double spaced)
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