Subsidy v Infrastructure....

Discussion in 'Free Speech Alley' started by JD, May 22, 2003.

  1. JD

    JD Founding Member

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    When Clinton campaigend in 1992, one of his major promises (and the only one he didn't deliver on) was to spend lots of money on infrastructure. In the end, ending the deficits were more important so, sadly, it did not happen.

    It needs to - we need modernized roads, bridges and, most of all, rail.

    It also helps businesses - it helps them a lot. It gives them the necessary tools with which to operate.

    BUT, it helps them democratically, versus the subsidy approach that is based on how well you grease politicians.

    Further, it doesn't skew markets, the infraststructure is available to ALL businesses, including start-ups. It doesn't buffer shareholders from economic losses - a risk that is inherent and necessary for free markets to perform the services to the nation and consumers that they are intended.


    You subsidize one industry and what happens? It loses all incentives to produce superior products; it gives the favored industries a huge economic advantage over a fledging industry or producer who might have the superior product, but can't compete because the competitor is flush with government funds protecting it from any economic penalty that it should sustain from pushing an inferior product.
    End these idiotic subsidieds.

    REbuild this nation's infrastructure.

    Let the consumers, not the politicians, decide which products and companies are worthy of support.
     
  2. Bengal B

    Bengal B Founding Member

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    While what you say makes a lot of sense in the long run would you deny federal subsidies to the airline industry? I hate it as much as you do that the airlines were run so ineffiencently that they are in the shape they find themselves now in the continued aftermath of 9-11 but it is crucial to the economy that we have a reliable air travel system in this country. Of course the situation most of the major airlines find themselves in is their own fault for not streamlining their basic method of operations and anticipating the effects of a major catastrophe like 9-11 but can we afford to let them go down the toilet without a way to provide a system of continued air travel service without a major interuption? Sure there are a very few airlines who have been basically uneffected by the situation and continue to make a profit without going into bankruptcy and without major layoffs. Southwest Airlines is the only one I can think of right now. So what happens if we cut off all federal support to United and American Airlines? Do we throw our support to the profitable airlines like Southwest to fill in the gaps in air travel coverage? If we did how would those airlines be able to afford to expand their services quickly enough to provide a seamless transition without major long term disruption to the basic fabric of the American system of reliable air travel? The surviving airline companies would have to be able to buy a hell of a lot of planes to be able to do it. That would take either massive govenment subsidies or massive loan guarantees.
    Even though it might seem attractive to let some of the big airlines go down the tubes the long term effect would be to put the control of air travel into the hands of just a few airlines. "Hey Buddy, you don't like the price of a round trip ticket from LA to Chicago? Tough Drive or take a Greyhound!
     
  3. JD

    JD Founding Member

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    The problem with those subsidies to airlines were that the best managed and most efficient airline, southwest, was flush with cash. It was a reward to inefficiency.
    I'd have given them short term loans.
    And when the prospects of "Bailing out" united, even via loans, were debated, their competitors claimed foul saying it gave them an unfair advantage, which it did.
    There is no easy answer, but, in general, the subsidy is bad economic policy.
     
  4. Bestbank Tiger

    Bestbank Tiger Founding Member

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    The airlines are in trouble because of gross mismanagement. The subsidies to American were simply a transfer of wealth from working people to Don Carty.

    JD is right--Southwest isn't in any trouble. Check out MoneyCentral--in the past 12 months they've turned a profit of a quarter BILLION dollars. American lost $3B and got rewarded with OUR money. If they knew they couldn't count on the taxpayers to bail them out, they'd either do things the right way or sell their planes and routes to their competitors.
     

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