Below Market Interest Rate - BMIR

finance a la shmoop what are subsidies they're handouts pork donations [empty hands, man puts coins in homeless man's cup]

political vote buying that is when a given industry can't compete on a level

playing field either domestically like a US cattle producer not being able to [cattle in fields]

compete against cheap mad cow meat from central Russia well the US government

will give subsidies or free money to those American cattle farmers so that

they can you know keep on keepin on that is the world market for ground beef

might be two bucks a pound but the cheapest price at which US producers can

produce their meat is 220 a pound so the US government hoping to keep their

farmers employed and not wanting a repeat of the Joad Family Singers that [cowboy on cattle ranch]

you remember them from Grapes of Wrath will subsidize farmer meat production to

the tune of some f40 cents a pound in free money donations courtesy of the

American taxpayer given to farmers so that they can keep farming and compete [money from people going to government, then to farmers]

without actually having to slaughter and then maintain mad cow pastures just as [man cows with uni-brows]

they do southeast of the Chernobyl nuclear plant and it's the government [cows near Chernobyl]

policy that we want to keep our American farmers alive and well to meat produce

for another day all right well the same government handouts occur

internationally where US manufacturers have to compete against countries who [people working in labs]

allow all of their own countries companies to collude co-opt and work

together in aggressively competitive ways trying to dominate a world market

so think about the cattle industry in Russia where the Russian government is

an active supporter of its own Russian companies coming first ahead of those [Putin holding up patriotic signs]

from other countries you know yeah we're wondering why this is bad like why do

people act surprised when countries actually support their own companies

like their own companies or evil some out who came up with that idea anyway

those other countries work together from the wheat manufacturer to the water

piping distributor to the fertilizer company tapping their own politico's for

product to co-opting grinders are us when it comes time for the cattle to you

know come home well a subsidy is essentially a negative tax the

government is subsidizing supply which shifts the curve to the left like on

this little graph thing here that is input suddenly got cheaper

thank you hard-working taxpayer contributions lots of controversy

surrounding subsidies some folks support them while others claim they unfairly [happy people dancing in front of government building]

affect prices or give developed countries a big advantage over less [a group of unhappy people]

developed countries that might not have the cash to help their industries

there's a whole lot of corruption in unlevel playing fields that cloud the

story on both ends but no matter how mad some people are about subsidies just

remember that no one is as mad as these cows [mad uni-brow cow charges the screen]