Kerr+-+Government+Subsidies

Chris Kerr **Government Subsidies and Their Part in the Matrix**

Although there are many issues which can be targeted specifically as environmental sustainability problems within their own context, there are a few which help to hold this system of issues in place. One of these key structures holding together our network of incredibly efficient earth destroying systems is one created by government subsidies. A government issued subsidy is a paid reward to a specific business or industry. Subsidies are designed to spur industrial and economic growth in a specific sector and will either artificially shift the supply curve up or the demand curve down, depending on where the subsidy falls. Although this counteracts the capitalist “free market” idea, it has in the past been shown to aid in the growth of specific necessary industries and, in turn, benefit every party involved. Other times, however, subsidies have been known to do much more harm than good. This is a very powerful tool, and problems arise when one considers the true beneficiary of the subsidy, as opposed to the recipient.

Take the passenger railway system, for example. During the 1800’s, it was clear that constructing railroads between the east and west coast would go great lengths in aiding the budding United States economy. Much money was then subsidized by congress to help spur the production of this railroad, and soon after trade between the two coasts began (STAFF). Rail subsidies are still in great effect to this day, and are the reason train tickets can be sold at a competitive price against other travel industries (Barnett). Although the money does still come out of our own pockets, we have access to cheap rail transportation around the US and the industry is able to stay in business, as demand increases with price drops.

This is one of a few examples of a “successful” subsidy. There are many other subsidies, however, which are aiding industries that destroy the earth in a variety of ways. A prime example of this is the oil industry. Even though huge companies such as Exxon Mobile and Chevron report absurd quarterly profits ($6.05 billion $3.07 billion respectively during spring 2010 (Mouawad)), the United States government continues to pour tax payer money towards these companies in the form of subsidies; more than $6 billion, in fact (Weissman). These facts only leave ones head spinning: not only do these oil companies contribute to the destruction of the earth, but they are using our taxpayer dollars to do it.

Another area in which subsidies are hurting more than they are helping is in the corn industry. In our countries search for new energy, some believe ethanol may one day be the green alternative we need to fossil fuels. Unfortunately the most common way in which it’s currently collected, which involves the breaking down of corn into hydrogen through a variety of chemical reactions, actually uses more energy (which of course comes from fossil fuels) than the ethanol returns. It has been shown that the production of ethanol, using its current methods, requires a whopping 46 percent more fossil fuel than is yielded by ethanol (Pimentel). Even with this knowledge, congress subsidizes corn for its specific use in ethanol creation. Between 1995 and 2009, the corn industry was subsidized almost $73.8 billion, a third of which went towards the creation of ethanol (Group, Environmental Working). All the while, 60 percent of the world goes hungry every day. Not only are these subsidies “destabilize global food prices, degrade the land and exhaust vital energy sources in production” (McNall), but they are going towards creating a fuel which takes more energy to create than it produces.

The examples go on and on. Subsidies in the sugar industry, welfare subsidies and student load subsidies all have their own complications and are upsetting the economic balance on a variety of levels. Some are debatably necessary, but others are clearly doing more harm than good.

Although subsidies have been shown to spur industry in a positive way, benefiting everybody involved, subsidies are also artificially upsetting economic equilibrium and benefiting companies that are destroying the earth. Perhaps if our government took another look at which industries tax payer dollars were being poured into, we could incentivize those industries which will actually benefit the payer of the subsidy: the American people, for now and future generations.

=Works Cited= Barnett, Cynthia. ""Freight State"." 1st March 2010. __Research Library, ProQuest.__ 2 11 2010 . "Group, Environmental Working." 2009. __Corn Subsidies in the United States totalled $73.8 from 1995-2009.__ 2 11 2010 . McNall, S. "Rapid Climate Change: What Is to Be Done?" __Contemporary Sociology 39.4 (2010): 406-411__ (n.d.). Mouawad, Jad. ""Exxon Grew as Oil Industry Contracted"." 1 February 2010. __nytimes.com.__ 2 11 2010 . Pimentel, D. ""Corn Ethanol as Energy: The Case Against US Production Subsidies." __Harvard International Review 31.2 (2009): 50-52. ABI/INFORM Global, ProQuest.__ 2 11 2010. STAFF, NPR. "Rival Railways Race Across The Continent." 23 October 2010. __NPR.org.__ 2 11 2010 . Weissman, S. Kretzmann and R. __"The Best Congress Oil Could Buy".__ 28.4 (2007): 19-23. 2 11 2010 .