Subsidies- Good, Bad or Both? Essay Example
Subsidies can be advantageous and disadvantageous, but it mainly depends on the person you're promising a subsidy to.
Subsidies for the rich tend to be a good thing, since if they're rich, they're most likely living in an MEDC, meaning the government will pay them a good amount of money for their products, because that's what the producers from the MEDC's expect, unlike the LEDC's. The people from MEDC's can afford to rebel against the government, by refusing to sell them any products, unless they get a decent pay. This isn't the case with people from the
LEDC's who can't afford to refuse selling people products, since most of them are living in poverty and they need all the money they can get, to sustain their family. The buyers can take advantage of this in a bad way, by paying the producers from LEDC's very poorly on purpose, just to save money. At least these people know they're getting money, without worrying about financial security, no matter how little the pay might be. This problem continues to keep the gap of development between MEDC's and LEDC's.
The producers from LEDC's are very disadvantageous, because buyers purchase a lot of products, by spending very little, so the producers might not gain much profit at all. These products might be made to a very good value, compared to other producers, but the pay will still be unfair, because the money is invested in advance.
There are some advantages and disadvantages for the buyers as well. The advantages are- there's less money spent on production cost and the firms will make their prices quite affordable, since there will be competition between them, to make more profit than the other firms. There are some disadvantages as well, such as- Subsidy money can make the workers inefficient and the products not to a very high quality, because they know they'll receive the money no matter the end product. There could be a mass production of a particular item, so the price of it goes down, which is very
Subsidies for the rich tend to be a good thing, since if they're rich, they're most likely living in an MEDC, meaning the government will pay them a good amount of money for their products, because that's what the producers from the MEDC's expect, unlike the LEDC's. The people from MEDC's can afford to rebel against the government, by refusing to sell them any products, unless they get a decent pay. This isn't the case with people from the
LEDC's who can't afford to refuse selling people products, since most of them are living in poverty and they need all the money they can get, to sustain their family. The buyers can take advantage of this in a bad way, by paying the producers from LEDC's very poorly on purpose, just to save money. At least these people know they're getting money, without worrying about financial security, no matter how little the pay might be. This problem continues to keep the gap of development between MEDC's and LEDC's.
The producers from LEDC's are very disadvantageous, because buyers purchase a lot of products, by spending very little, so the producers might not gain much profit at all. These products might be made to a very good value, compared to other producers, but the pay will still be unfair, because the money is invested in advance.
There are some advantages and disadvantages for the buyers as well. The advantages are- there's less money spent on production cost and the firms will make their prices quite affordable, since there will be competition between them, to make more profit than the other firms. There are some disadvantages as well, such as- Subsidy money can make the workers inefficient and the products not to a very high quality, because they know they'll receive the money no matter the end product. There could be a mass production of a particular item, so the price of it goes down, which is very