The gloomy light called subsidy.

[Poker Player]

~snip

The forum memberer to whom you are responding is one of those who does not see the overall picture. In healthy and productive economies a certain level of subsidy can be maintained. But the country's economy works in spite of the subsidy, not because of it. To think then that subsidy is good by system would take us to the extreme to a planned economy where if something is expensive for the people, either it is massively subsidized, or maximum prices are set causing shortages. That was seen in many countries in the 20th century, and it is still seen in some in the 21st century, little variety of products, queues, rationing cards, years to get a durable consumer good like a car, etc.

In general, people who defend this economic vision are too simple. Is anyone poor? We give him a subsidy. Is money needed? We print more. The price of a certain good or service is too high or too expensive? We set prices by decree.

In the end, there are natural laws such as supply and demand that cannot be controlled by decree, and this is what leads certain economies to disaster.

[1714246825]

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[1714246825]

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[Patrol69]

When the country falls into financial crisis, taxes are increased on the people of the country to ease the financial crisis, which makes the people suffer to subsidize the government. The government has created the idea that every product must be purchased by the people, so it has become a habit of the government to constantly increase the tax on that product. When the country is in financial crisis, instead of dealing with the financial loss by putting pressure on the people, the government should think of an alternative so that pressure is not created on the people.

[Fortify]

There are lots of things as citizens that we've enjoyed especially when it comes to essential things that government of our various countries have subsidize.
For some countries, government has helped in subsidizing food production, electricity, education,  transportation, health care services etc.
This subsidy goes ahead in reducing financial burden on the citizens.

 for some it is one way the government has helped them directly, because government gives them grants to support their businesses.
So I ask, what will happen if the government remove subsidy from some of the essential things that they helped citizens to subsidize, for example, fuel, electricity, food production, health care services etc.

Because I leave in a country, where the subsidy for PMS(petrol) has been removed, and almost immediately, the citizens are feeling the effect of the petrol subsidy removal.
The shocker this singler act has sent to the  spine of the economy of my country is second to none.
At this point, I've realised that, subsidy is one gloomy light that shouldn't be dimmed further  by any government.
Cause what other better ways can the citizens benefit from her government if subsidy is taken off from those essentials that directly touch the standard of living of the citizens.

What do you think? Is government removal of subsidy from essentials products, services at this period of economic hardship people are facing the best policy a  government can embark on in the process of building her dwindling economy?

Subsidies can be very helpful as long as they are engineered correctly and generally set up to last a specific period of time. The thing to look out for is malicious arbitrage which can occur when certain actors will take the subsidized product and resell it elsewhere at much higher rates, to the detriment of the government and the originally intended beneficiary. If it's funded in the right way, for example from a slice of the richest it can be helpful in balancing out things like poverty. However people naturally try to personally gain from such regulated markers, so it requires constant vigilance and regular tweaking.

[Mauser]

What do you think? Is government removal of subsidy from essentials products, services at this period of economic hardship people are facing the best policy a  government can embark on in the process of building her dwindling economy?

I don't think it's the best time to remove subsidies during times of crisis hardship. If a government wants to remove subsidies for certain sectors they should be doing so during boom times, when it's much easier to find a new job. Families are still hurting from the covid aftermath and the rising inflation, no point in making it worth by removing subsidies. Another question is if the country can really afford to remove subsidies in the first place. For example the agriculture sector in western countries are no competitive anymore, wages are too high to produce cheap food. But can a country really stop producing any food and only rely on imports? With more wars happening now, rising number of droughts and general food prices already very high, I think that every country needs to have some farms. Subsidizing the sector seems like the only option for the government to keep farmers happy and not quit their job. When it comes to necessary and essential products, some form of autonomy is important in case of larger conflicts.

[flyingcarpet]

What do you think? Is government removal of subsidy from essentials products, services at this period of economic hardship people are facing the best policy a  government can embark on in the process of building her dwindling economy?

I don't think it's the best time to remove subsidies during times of crisis hardship. If a government wants to remove subsidies for certain sectors they should be doing so during boom times, when it's much easier to find a new job. Families are still hurting from the covid aftermath and the rising inflation, no point in making it worth by removing subsidies. Another question is if the country can really afford to remove subsidies in the first place. For example the agriculture sector in western countries are no competitive anymore, wages are too high to produce cheap food. But can a country really stop producing any food and only rely on imports? With more wars happening now, rising number of droughts and general food prices already very high, I think that every country needs to have some farms. Subsidizing the sector seems like the only option for the government to keep farmers happy and not quit their job. When it comes to necessary and essential products, some form of autonomy is important in case of larger conflicts.

Do states have the power to do this? It is very difficult for us to see such moves when things are getting more difficult in shrinking economies. The state needs to support some production areas. Many countries have now turned to imports. Many products began to be monopolized as they turned to imports. This led to prices being determined by a single location.

States were late for such a move. Since they thought that many things will not be the same during the covid process, they withdrew many of their support. But when we came to the present day, they saw that they made a mistake for the support they withdrew. Now the cost of a production is more expensive than importing it.

[Jamala]

The subsidy idea in countries has been to alleviate the financial burden on importers so that the retail cost won't be much on her citizens. But some govt officials have turned the gestures to a scheme, enriching themselves with almost zero service delivery.

[justdimin]

I do believe in the social welfare state, so I think that the taxpayers' money should be used to provide or at least make more accessible essential services, but the subsidy isn't a great measure because it can be removed. It can only work as a temporary measure, and I guess that's how it's often introduced, but removal of the subsidy should be planned in advance, and occur gradually to allow people to adapt. I think proper programs of social security are better than measures like subsidies, unless we're talking about the state subsidizing certain industries (like public transportation, for example), which is different because it's not on the level of individuals and can be a long-term commitment.

That's the way it should be, to lift a sector to its feet when it's having a trouble but if it's constantly requiring it then there is a problem with it. We should try to subsidize things as much as we can to help them and then cut it, and we should have an ending for it at the same time as well meaning that we should be able to tell them "we are going to give you tax breaks and money help for a year, but then you are on your own" and if they can fix it that's great, if not then they are bound to die.

Let the market take care of itself I would say, if you do not do that and just do with welfare state for companies, then that's going to hurt. Welfare should be for people, not for companies and that is the most important part.

[STT]

the subsidy for PMS(petrol) has been removed

Petrol is not deemed essential in the majority of the world that I know of, this is going to vary by country and the geological layout vs the population centers I suppose.  The most many can hope for is cheap public transport like buses to be provided, I think subsidy on petrol would indicate either a commodity rich country or just a very helpful government as I've never had something like that in my favor.  
   In any country without alot of oil, massive taxes on oil, energy and car usage are often levied and its been like that for decades.   Its a big burden and almost equal to income taxes for some people.    I have mixed views on subsidy because it normally is paired with massive government and the larger the government that exists the greater the possibility for losses from that behemoth weight on the economy.   Theres always the chance of perfect government, ideal efficiency and perfect assistance to those that need it but I dont especially believe in such a dream hence subsidy is for food only and that is the essentials to the young and old imo.

[Wimex]

Certainly removing subsidies from essential products and services can be a controversial and complex measure...indeed, it is a measure that governments sometimes take to reduce spending, ease the tax burden, and address economic problems. But I think that this decision has important implications for citizens and the economy in general.. Well, simply eliminating subsidies for essential products and services means a significant increase in costs for citizens. In addition to disproportionately affecting low-income people, as they might find it difficult to cope with the higher prices, and not only that, but it would trigger an increase in the prices of the affected goods and services, which could lead to a general increase in inflation.. which, in turn, can erode the purchasing power of the population and negatively affect the standard of living.

[Silberman]

Certainly removing subsidies from essential products and services can be a controversial and complex measure...indeed, it is a measure that governments sometimes take to reduce spending, ease the tax burden, and address economic problems. But I think that this decision has important implications for citizens and the economy in general.. Well, simply eliminating subsidies for essential products and services means a significant increase in costs for citizens. In addition to disproportionately affecting low-income people, as they might find it difficult to cope with the higher prices, and not only that, but it would trigger an increase in the prices of the affected goods and services, which could lead to a general increase in inflation.. which, in turn, can erode the purchasing power of the population and negatively affect the standard of living.

And it is because of this that if a subsidy is applied then a long term plan to keep the prices low once the subsidy is withdrawn should be mandatory for governments to implement, this way even if the plan was not perfect at least it will reduce the increase on the price once the subsidy was over, but a politician that cares about what it may happen once they are out of office is very rare and this makes the implementation of plans like that very unlikely.

[wmaurik]

The subsidy idea in countries has been to alleviate the financial burden on importers so that the retail cost won't be much on her citizens. But some govt officials have turned the gestures to a scheme, enriching themselves with almost zero service delivery.

If there are government officials who change something to enrich themselves, it is usually done by officials who like corruption and never care about the difficulties that exist in their people. That's why if you or anyone who is currently or wants to choose an official to be placed in a government agency, it's good to see how his behavior was in the past and you have to be able to make sure the person is really good so that he can be very suitable when in a government agency.

Because subsidies that can help the people or ease the burden on the people's lives are very reasonable subsidies for the government to maintain, because with this the economy of a country will always run smoothly because no one experiences difficulties. You yourself can see how the wheels of the economy rotate from the lower classes to the upper classes, where retail traders are traders who must also be considered because they are customers for traders in large quantities or wholesalers.

[Franctoshi]

There are lots of things as citizens that we've enjoyed especially when it comes to essential things that government of our various countries have subsidize.
For some countries, government has helped in subsidizing food production, electricity, education,  transportation, health care services etc.
This subsidy goes ahead in reducing financial burden on the citizens.

 for some it is one way the government has helped them directly, because government gives them grants to support their businesses.
So I ask, what will happen if the government remove subsidy from some of the essential things that they helped citizens to subsidize, for example, fuel, electricity, food production, health care services etc.

Because I leave in a country, where the subsidy for PMS(petrol) has been removed, and almost immediately, the citizens are feeling the effect of the petrol subsidy removal.
The shocker this singler act has sent to the  spine of the economy of my country is second to none.
At this point, I've realised that, subsidy is one gloomy light that shouldn't be dimmed further  by any government.
Cause what other better ways can the citizens benefit from her government if the subsidy is taken off from those essentials that directly touch the standard of living of the citizens?

What do you think? Is government removal of subsidies from essential products, and services during this period of economic hardship people are facing the best policy a  government can embark on in the process of building her dwindling economy?

Truly Removal of the fuel subsidy I don't think it is a problem because, in a system where the government is working fine, Subsidy removal will enable the market forces to determine the price of petroleum in a competitive market, but rather the problem is the government's removal of fuel subsidy without keeping things in place to cushion the effect on its citizens, such as buildings more refineries or repairing already existing ones.

[Alpha Marine]

The big question is, can such a move save an economy that is already in shambles?

This is my point exactly. These people are only making matters worst for the citizens of their country. They won't put the money saved to good use. Instead, they just mismanaged these funds even further. The excuse that they can no longer pay for subsidies is trash. They are just looking for excuses to stop paying.

What's the point of stopping subsidies if everything in the country would become so expensive and increase inflation even further? Most of these politicians don't suffer the policies they make so they go about making any kind of policies they want.

[romero121]

The big question is, can such a move save an economy that is already in shambles?

This is my point exactly. These people are only making matters worst for the citizens of their country. They won't put the money saved to good use. Instead, they just mismanaged these funds even further. The excuse that they can no longer pay for subsidies is trash. They are just looking for excuses to stop paying.

What's the point of stopping subsidies if everything in the country would become so expensive and increase inflation even further? Most of these politicians don't suffer the policies they make so they go about making any kind of policies they want.

Agreed, most of the politicians and the rich won't suffer any difficulty out of this. So, without proper understanding about the common man's life they just lift the subsidy provided to the suffering people. This shouldn't be done and surely those funds could've been redirected for something else that's unnecessary.

Really these subsidies play a major role in common people's life. In my region fishing is done and for the same fishermen were provided with subsidy on fuel for the boat, at times it looks like whats the need for subsidy. In reality the income varies depending on the season and by those days this used to be a big favour.

[dothebeats]

The big question is, can such a move save an economy that is already in shambles?

This is my point exactly. These people are only making matters worst for the citizens of their country. They won't put the money saved to good use. Instead, they just mismanaged these funds even further. The excuse that they can no longer pay for subsidies is trash. They are just looking for excuses to stop paying.

What's the point of stopping subsidies if everything in the country would become so expensive and increase inflation even further? Most of these politicians don't suffer the policies they make so they go about making any kind of policies they want.

Agreed, most of the politicians and the rich won't suffer any difficulty out of this. So, without proper understanding about the common man's life they just lift the subsidy provided to the suffering people. This shouldn't be done and surely those funds could've been redirected for something else that's unnecessary.

Really these subsidies play a major role in common people's life. In my region fishing is done and for the same fishermen were provided with subsidy on fuel for the boat, at times it looks like whats the need for subsidy. In reality the income varies depending on the season and by those days this used to be a big favour.

I'm sure it depends on each country and how the government handles the system of giving subsidies to the people, but this aspect can either be really good or cause bad effects on the general public. In my country, it has two contrasting effects. First, the positive one, is the people are able to use subsidies to allow them to have a better lifestyle (support for education, business, food, and daily needs). The negative one, on the other hand, pushes people to either be too reliant on these subsidies that they do not even work anymore or use the money for negative things (gambling, buying drugs).