Corporate Subsidies and their Impact
Corporate subsidies are legislative programs that require the government sponsorship of companies and major organizations. Subsidies are amounts of money that are normally granted by the government or public bodies in order to minimize the price of manufacturing for particular goods (Buigues and Sekkat 3). The primary purpose of offering subsidies is to assist businesses in achieving a comparative edge by getting comparatively cheaper cost goods in contrast to rivals.
Government Spending on Corporate Subsidies
The US government is expected to spend about $100 billion a year on corporate subsidies, both directly and indirectly (Buigues and Sekkat 5). Although the primary aim of the grants is to reduce the purchasing costs of specific items, which is an advantage to the general public, there are some problems associated with the process. The ever-rising government spending and massive deficits keep pushing the nation towards a looming financial crisis. Some policymakers find the subsidies rather wasteful and unnecessary. These policymakers claim that most large American Companies are stable and very competitive in the global market hence do not need the financial aid (Buigues and Sekkat 12). Reforms are therefore important as they will reduce this unnecessary government spending and ensure that the funds are used in places of actual need.
Effectiveness of Corporate Subsidies
Corporate subsidies are relatively ineffective in the sense that most companies receiving these funds spend more time lobbying instead of creating more marketable products. The corporations receiving these funds also end up forming strong ties with the government, thereby creating a serious threat to democracy. These connections are usually the source of corruption scandals in various states. There needs to be an absolute change in the system so as to ensure that the government ceases misspending public funds in the name of corporate subsidies.
Work Cited
Buigues, Pierre-André, and Khalid Sekkat. “Public Subsidies to Business: An International Comparison.” Journal of industry, competition, and trade 11.1 (2011): 1-24.
