Gary Forbis
6/27/2011 1:33:00 PM
On Jun 25, 11:30 am, Beam Me Up Scotty <Then-Destroy-
Everyth...@blackhole.nebulax.com> wrote:
> On 6/24/2011 10:35 PM, Buster Norris wrote:
> > Economists offer two principal explanations for why stagflation
> > occurs. First, stagflation can result when an economy is slowed by an
> > unfavorable supply shock, such as an increase in the price of oil in
> > an oil importing country, which tends to raise prices at the same time
> > that it slows the economy by making production less profitable.
>
> They mean like energy prices "Necessarily skyrocketing" but Obama has
> said that is what he is doing to promote green energy....
Recovering the cost of production and profits from the consumer
doesn't
increase the cost to anyone but the consumer. Removing the subsidies
for coal and oil doesn't increase their price but merely shifts it to
the
consumer. This makes alternatives more attractive.
Sometimes subsidies help and sometimes they don't. They help if they
are a form of investment used to establish a new lower cost norm.
This
can happen when lots of sunk costs need to be recovered and this
stifles
investment in new technologies. Most of the time subsidies just keep
existing power structures entrenched.
Subsidies can also be used to affect the maket for social good. An
example is medicaid. There are negative externalities from medicaid
but the nation thinks they are worth it to help those in need.