Should the Government Subsidize…Silly Walks?

Release Date
June 28, 2013

Topic

Role of Government
Description

Would developing more silly walks benefit society? Possibly. But who will pay for them? Professor Art Carden regrets that the only way he can come up with to receive payment for creating silly walks is through receiving a subsidy from the government. If the government subsidized the creation of silly walks, there would surely be more silly walks around. Prof. Carden points out, however, that if people aren’t willing to pay for silly walks voluntarily, they must not be worth the value they create.
This draws into question subsidies in general. Are subsidies for more serious things, like food, valuable to society? Some argue that without farm subsidies the United States would have a shortage of food. But is that the case? Prof. Carden suggests that while subsidizing food will lead to more food production, it also leads to the production of foods that cost more to produce than they are worth to society. This indicates that resources are wasted.
Economists argue that subsidies are useful when they increase something that creates positive externalities, or spillover benefits for society. Some would argue education should be subsidized, for example, because society benefits from a better educated work force. But is the government really a good judge of what deserves subsidies and what doesn’t? Even if we assume that markets will produce too little education, for example, this does not imply that government intervention will make things better.

Art Needs No State Subsidies [article]: Bruce Walker at the Foundation for Economics Education argues that the State is inept at picking winners and losers, especially when it comes to the arts
Farm Subsidies – Stossel in the Classroom (video): John Stossel offers a lesson in cronyism with this segment on the farm bill and agricultural subsidies
Paying for Farm Subsidies [article]: Morgan Rose at Econlib describes the economic effects of subsidies and offers parameters for subsidization policies
30 Stupid Things the Government Is Spending Money on [article]: Because we need more “Celebrity Chef Fruit Promotion Road Shows” in Indonesia…

Should the Government Subsidize…Silly Walks?
ART CARDEN: Sorry to have kept you waiting. It’s just that I’m afraid my walk has become rather sillier lately. It’s taking me longer to get to where I’m going. I wish someone would pay me to spend more of my time silly walking. This would add greatly to my happiness and possibly yours too, at least I think it would. But I haven’t figured out a way to get paid for silly walking, unless I could get a government grant.
[VIDEO CLIP: Monty Python’s Flying Circus, 1970]
SILLY WALKER: I have a silly walk, and I’d like to obtain a government grant to help me develop it.
GOVERNMENT MINISTER: I see. May I see your silly walk?
SILLY WALKER: Yes, certainly, yes.
[END CLIP]
CARDEN: If there were government subsidies for silly walks, if they gave me money to develop new walks for example or promised to buy a certain number of walks I created, there would be more silly walks than there are now. Isn’t that a great idea?
[VIDEO CLIP]
GOVERNMENT MINISTER: It’s not particularly silly is it?
SILLY WALKER: With government backing, I could make it very silly.
[END CLIP]
CARDEN: You probably think it’s not a great idea because silly walks serve– well, they’re silly. But even if you agreed with me that silly walks benefit society, there would be good reason to oppose subsidies for them. If people aren’t willing to pay me to develop silly walks with their own money, it says people don’t value them as much as other things I could do. I could flip hamburgers, walk dogs, sell used cars, or teach economics: things people would pay for voluntarily. We’ll get more silly walks with subsidies, but they’ll be worth less to people than they cost to produce. That means the subsides would waste resources.
But what about other more serious subsidies?
[VIDEO CLIP]
GOVERNMENT MINISTER: There’s defense, social security, health, housing, education, silly walks!
[END CLIP]
CARDEN: What about subsidies for food? You might have seen a bumper sticker that says, “No farms, No food” or something like that. Some people have argued that food subsidies are necessary to ensure food security. Without subsidies, they say, we won’t have enough food. But subsidizing food production is a lot like subsidizing silly walks. Yes, we’ll get more food. But the subsidies will waste resources. There will be food that costs more to produce than it is worth.
[VIDEO CLIP]
GOVERNMENT MINISTER: You’re really interested in silly walks aren’t you?
SILLY WALKER: Oh, rather, yes.
GOVERNMENT MINISTER: Well take a look at this then.
[END CLIP]
CARDEN: Maybe we should subsidize things that produce what economists call positive externalities or spillover benefits. One example might be education. Don’t we all benefit from having an educated citizenry? As a college professor, I know I benefit from having more students who pay for my services. Another example might be solar energy, which might improve air quality by reducing the amount of fossil fuel we burn.
How do we know what to subsidize? Even if there are spillover benefits in theory, governments are really bad at figuring out which companies and technologies to subsidize. Even if we grant that markets might produce too little education and too little green energy, this hardly implies that government intervention will make matters better.
[VIDEO CLIP]
GOVERNMENT MINISTER: Ah, here’s the coffee.
[END]