ShmoopTube

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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for another day all right well the same government handouts occur

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

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

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together in aggressively competitive ways trying to dominate a world market

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

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

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

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people act surprised when countries actually support their own companies

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

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

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

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

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

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

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this little graph thing here that is input suddenly got cheaper

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thank you hard-working taxpayer contributions lots of controversy

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

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

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

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

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

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

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