Subsidies

Lets see if we can talk about this without it going poof.

Call it what you want.....
Subsidies; welfare; grants; kickbacks; under the table pay offs; cut rate insurance prices.
But here is a GREAT example why subsidies are not good for anyone.

You are the average John and Jane Doe.
You build or buy a nice house along a river or in a coastal state. Heck everyone like living next to the water. Your house note is $1000 a month; taxes and insurance is $200 a month and flood insurance is $100 a month. Not bad you can afford $1300 a month easy.
The sad parts is (and you may not even know it) the government is subsidizing your flood insurance to make it affordable.

Fast forward to today. After making 20 years of payments on this house (only 10 more years to go) you find out the government is doing away with flood insurance subsidies. Your flood insurance rates will go up 500 to 1000 percent over the next few years to reflect the true cost of the insurance.

So what happens now.....
Your mortgage just went from $1300 a month to $1800 or even $2300 a month. You can not afford this amount; and selling your dream house is impossible now because no one wants a $2000 a month note on a $1000 a month house.
You have lost everything all because of a government subsidy.

And this is why government subsidies are not good for anyone. You base your business; home; farm; service on a set plan or budget. You have set parameters to follow because you know the income and out going cash flow. Then one day the government says.... oops... we are out of money so there goes your subsidy. Not after years of hard work you are left with nothing because you can not make your financial budget work with out a hand out.
homeowners brace for U.S. flood insurance hike

well said!

Like your article says, the new rates are to make people living in high flood areas pay true risk of living in a high flood area. Doesn't sound to bad to me. You should be happy you got 20 years at other policy holders expense. Now if there were no government support for rebuilding coastline houses after floods and hurricanes that would be alright too. You moved there knowing the risks and property values should go down also because of the risk.

Massey
Do not think for one second that just because my name has La in it that I disagree with any thing you said.
The story was not about me but rather a way to explain how subsidies can hurt you even though they sound great when you are on the receiving end.

I am against any form of subsidy or hand out. Be it flood insurance for city dweller in his beach house; to oil companies; to farmers crop insurance.

I agree 100%, sorry!

I worked in the crop ins. industry for 30 years. Back in 1986, when the APH program was announced, all we heard was that the program was to be "actuarially sound" . Well, they tried for a year or two. Then they started tweeking the rules, messing with coverages, dates, exclusions and everything. They messed it up so bad that there was no way it would be sound.

Now if the govt. were to get out of it, and turn it over to private companies, they could sell the product for 1/2 the current rate and probably make a big dent in making it pay its own way.

Very few of the people in charge were real insurance people, who really knew how insurance was supposed to work. Multi-peril Crop Insurance is "insurance" in name only. The feds messed with it so much that it is not insurance.

Gene

Subsidies.

John, I may not like them, but can understand them. Granting subsidies is in effect picking winners, especially if not all parties are getting them. Is that fair? Not really. But, here is an example of where I can see turning a blind eye to them. Just yesterday on the news, I heard that a major U.S. food manufacturer is moving to China, but didn't hear which one. Now, it could be a Canadian food manufacturer, European, whoever. It seems to me, and please don't anyone get upset or bent out of shape, that when most anyone competes with the third world living condititions and pay that chinese people are being paid low or almost no wages to turn out and export junk worldwide, its pretty hard to compete with that on face value, especially if one is used to living in a home with windows, plumbing, heating, a refridgerator and wants to keep it, which will require higher wages, yet cheaper prices to compete with cheaper priced imported junk. So how is that accomplished? Well, subsidies are one way. Does that make them right? I guess that it depends upon...

John, I did my best to try and not get this poofed by offering an example that may or may not justify subsidies.

Good luck in your quest.

Mark

This subject always makes me laugh. On one side is the guy getting the subsidies who thinks they are great and on the other side is the guy who isn't getting/taking them who thinks they are evil.

One of my SIL's is an electrical engineer who works for a large corporation. They have (the company) been getting paid by the government to have people setting around in a think tank coming up with ideas. Ideas that they develop and then try to sell....to the government. Well I think that if this company wants to stay at the top of it's game they should pay to come up with the ideas themselves. But no, money got cut so they laid a bunch of people off. Now it's a maybe if they can stay competitive. That's what killed Hostess. They couldn't compete. That's why other companies move stuff off shore. Sure you can blame the government for some of this but the buying public is part way a fault too always looking to get more for less. Lot of young guys have been on here wanting to get into farming and can't. When the BTO's are getting big time subsidies they can afford to pay more for rent and land buys. Prices the start up guy right out of a dream. FYI we do not feed the world. Not even close. We import a lot of food to include meat and milk. If we truly fed the world the only foods we would import would be foods that can't, because of climate be grown here.

Rick

The purpose of subsidies is to encourage certain behavior. That might be for people to build and buy houses, produce ethanol from corn, get married and have kids or (here comes the poof) buy health insurance. It would be nice if the subsidized behavior was always actually desirable.

In my opinion, it's not Gov'ts place to "pick winners" via subsidies or to compensate or underwrite anything that isn't purely a gov't entity- grants to your local Volunteer Fire Co. for instance. What it becomes is a political tool used as a way to buy votes or to pay back a desired behavior. It's called "pork" for a reason, no offense to swine!

That is a very nice explanation of things, John. I haven't looked at the replies, as that might poison the well for me, but in general that is how it goes for all classes of subsides to everything.

We no longer know the real cost, or deal with the real costs, of anything.

Paul

Smithfield Foods?

pork producers.

I understand that they bought Smithfield , but it's not going to China . I'm avoiding their products for sure......

Were the old grain price supports and milk price supports wrong too?

Yup

The 160 acre homesteads were a gov't subsidy to the railroads and to encourage settlement of the plains states.

How about the southern states subsidizing foreign car companies to build plants in America, knowing that it will put other Americans out of work and on to the unemployment rolls? See! Only counts when it hurts my pocketbook.

Edd, if the other companies can't compete then too bad. That's why we got the nightmare cars and trucks of the mid 70's-mid 80's. American car companies built cheap junk that they were sure would sell because Americans would buy what they were offered. That's how Toyota, Datsun/Nissan and Honda got their foot in the door. I don't agree with the subsidy idea, but I don't think the American car companies should have had a captive public with no choices either. Otherwise we'd all still be driving Pintos and Vegas and Pacers.

I agree. As a nation we need to decide if we truly believe in capitalism. It certainly isn't "fair" in the sense of everyone getting the same "stack of stuff". However, the alternative is "fair" only in the sense that everyone gets to equally share the misery (unless of course you are a government official).