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The author or concept searched is found in the following 1 entries.
| Disputed term/author/ism | Author |
Entry |
Reference |
|---|---|---|---|
| Subsidies | Stiglitz | Henderson I 58 Subsidies/Stiglitz/Henderson/Globerman: Stiglitz often advocates government intervention to "solve" market failures. But a careful reading of his 1988 textbook Economics of the Public Sector(1) shows that even he at least grappled with the problem of inducing government institutions to carry out effcient policies rather than politically popular policies or policies driven by interest groups. Example: (…) after noting that most of the benefits of federal rice subsidies go to rich rice farmers, he pointed out that a more effcient policy to help rice farmers would be simply to give each rice farmer a fixed sum that does not depend on the amount of rice the farmer grows. Although Stiglitz did not elaborate on why this would be a more effcient policy, economists know the argument well. Such a policy would end the artificial incentive to grow more rice. Problem: The problem with a straightforward subsidy, noted Stiglitz, is a political problem: such grants "would expose the true distributive implications of the program, that is, that most of the benefits accrue not to the poor rice farmers, but to the rich" (Stiglitz, 1988(1): 167). In other words, the political system purposely hides the facts about who benefits. Efficiency: It should be noted, though, that even though a fixed sum payment to each rice farmer is more effcient than the system that Stiglitz criticized, it is less effcient than the policy of not subsidizing rice farmers at all. Taxation/inefficiency: The fixed payment would require taxes and all taxes that are used in the United States today distort people's consumption and or production decisions and, thus, create an ineffciency that economists call deadweight loss. Subsidies/VsStiglitz: Moreover, Stiglitz did not address why the subsidies exist in the first Place. The fact that they exist or, at least, did exist when he wrote, is itself evidence of the inefficiency of the government sector. Natural monopolies/Stiglitz/Henderson/Globerman: In discussing natural monopoly, [Stiglitz] noted a policy that economists have advocated for about a century: have the government "provide a subsidy and insist that the firm charge a price equal to marginal cost." He continued: „Such a policy is sometimes referred to as "first-best." It ignores, however, the question of how the revenues required to pay the subsidy are to be raised; it assumes, in particular, that there are no distortions associated with raising this revenue. Moreover, it assumes that the government knows the magnitude of the subsidy that will enable the firm to be viable.“ (Stiglitz, 1988(1): 185) Later Stiglitz stated: „[T]he political mechanism is a far from perfect means for allocating resources, since it is subject to manipulation by special-interest groups. Further, any regulations and rules devised in the public sector have to be enforced by a bureaucracy with all of the limitations noted earlier. (Stiglitz, 1988(1): 220) >Interventions, >Interventionism. 1. Stiglitz, Joseph E. (1988). Economics of the Public Sector, 2nd edition. W.W. Norton. |
EconStiglitz I Joseph E. Stiglitz Anthony B. Atkinson The design of tax structure: Direct versus indirect taxation 1976 Henderson I David R. Henderson Steven Globerman The Essential UCLA School of Economics Vancouver: Fraser Institute. 2019 |
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