Why Subsidies Don't Work: Government Failure in Economics

In this video I explain why subsidies don't work which is a common problem with government failure in economics. Socialists and quasi-socialists alike fail to comprehend capitalism, that it is not a system of guaranteeing business success and more often than not, it is a result of their government intervention through regulation, taxation and subsidies that result in business failure, which leads them to believe that capitalism is somehow failing, therefore, capitalism needs to be bailed out.

This is an erroneous argument as it ignores what capitalism is. Capitalism is not about an over-regulated private sector nor is it relative to government taxation. As history proves and as I explain, the internal improvements [corporate subsidies] were being financed by heavy protectionist tariffs imposed on the market. The evidence stacked against the subsidies illustrates why subsidies don't work.

Throughout the 19th century, whether it was the turnpike industry, steamship industry or even the railroad industry, you would see hundreds of private companies that took on the corporate subsidies by government going under facing bankruptcy. I have noted numerous times about the North Pacific Railroad company and James J. Hill, you can also check out Burt Fulsom's excellent talk on the failure of Edward Collins steamship company and why Cornelius Vanderbilt gave him a showing up here:

https://www.youtube.com/watch?v=RsCptN_F1OA&t=8s

Time and time again, folk, regardless of whether you talk about the lead up to the Sherman Antitrust Act of 1890, the Great Depression of 1929, or even the Banking Crisis of 2008, you will see why subsidies are destructive. It was the fault of the government subsidies that resulted in bad banks getting away with legally protected fraud because the government through subsidies took away the risk of the creditors.

Risk is something important, as are losses which play an important role in the economy as profits do. I have explained in detail for why this is.

You can also check out my explanation on the banking crisis of 2008 for a better understanding on why it happened here:
https://www.youtube.com/watch?v=FCHahZ2e6kU

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