Showing posts with label subsidies. Show all posts
Showing posts with label subsidies. Show all posts

Tuesday, January 20, 2015

How Government Subsidies Can Harm the Economy

In living organisms, the effect of competition is more pronounced when there is a crowding of organisms of the same species over a limited amount of resources. Moreover, competition in living organisms affects each individual organism in a different way: the stronger individuals tend to have a greater chance of survival while the weaker ones tend to survive less as they are denied resources.

In the business world, a country providing subsidies and excess 'resources' to businesses might actually be harming the business ecosystem by allowing the weaker competitors to live at a time when resources are actually limited. A better approach would be to take the weaker competitors off life support and leave the more fit ones to take over particularly at times of limited resource availability. A business ecosystem composed of fewer but more fit individual businesses would be better on the long run than a business ecosystem full of weak competitors living on life support provided by intensive government subsidies and support.