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Path: utzoo!laura
From: laura@utzoo.UUCP (Laura Creighton)
Newsgroups: can.politics
Subject: Re: The non-interference society; judgement in haste?
Message-ID: <4257@utzoo.UUCP>
Date: Wed, 22-Aug-84 09:39:36 EDT
Article-I.D.: utzoo.4257
Posted: Wed Aug 22 09:39:36 1984
Date-Received: Wed, 22-Aug-84 09:39:36 EDT
References: <8712@watmath.UUCP>, <179@looking.UUCP>
Organization: U of Toronto Zoology
Lines: 59

IAN!'s ``saved needy factory'' is precisely the sort of thing which
politicians use to play ``show and tell''. You can have a lovely
song and dance about ``what a good thing has been done'' but it is
what they *aren't* telling you that is significant.

Consider the situation where a company needs 20 Million dollars or
it will go bankrupt. Suppose the 20 Million dollars is available
in tax money. And, to take IAN!'s example, suppose (worst case?)
nobody pays for the needy factory and everybody pays car payments.

What has happened? Well, first off, that needy factory goes bankrupt.
But at the same time the auto manufacturers get a lot of money - because
people who otherwise would not be able to afford cars will be buying them.
The auto manufacturers will have to increase production. They will hire
more people. There will be increased demand for steel -- the steel
industry will get a lot of money. And the banks will get a lot of money
to invest where they see fit.

Actually, it is unrealistic to assume that everybody will be buying cars.
But they will be buying *something*, or leaving their money in the
bank where the banks can invest it, or investing it themselves. The
``needy factory'' benefits -- at the expense of all the other industries
who are competing with it for as much of the 20 Million dollars as they
can acquire. However, from a politician's point of view this can be
used to great advantage. First you bail out the factory, and then you
watch the auto industry decline, and then you offer to bail them out
as well. You don't have to worry about the smaller companies who will
also be effected by the subsidies to the needy factory -- if 
the software company that I run out of my basement goes out of business
because nobody is buying games for the Apple ][ because they are all
paying taxes to support the needy factory -- well, Laura only has one
vote anyway. If all else fails you can get up on your soapbox
and talk about the econony in the same way that you might describe
a hurricane, or an earthquake, or the magic of the witch-doctor in
the next tribal village. Using this technique you can either
proclaim that ``my magic is stronger than the next guy's''
(and launch a new government scheme with a lot of rhetoric) or
completely hide the fact that the government is in some way
responsible for any of it. If you are really slick, you can
do both at once -- say launch a government program to combat
unemployment while at the same time not making any connection
between ``deficit spending'' and ``inflation''.

Is it really a good idea to bail out the Frozzbozz computer company
(especially for the Nth time, as keeps happening with many companies
I could mention)?

The demand for the goods produced by the companies that would receive
the money that the government wants to allocate to Frozzbozz is
demonstrably real. The demand for the goods which Frozzbozz claims
it is going to produce may only be a figment of some politician's
imagination -- or something which he thinks will look good on his
record next time he goes campaigning, or next time he wants to outdo
another elected politician for a government position. And what if Frozzbozz's
real problem is that it can't compete with the Gimpex computer company
because Gimpex received a 15 Million dollar grant last year...

Laura Creighton
utzoo!laura