The Dangerous Downsides of Government Subsidies

From today’s WSJ, a quote from law professor Glenn Reynolds that originally appeared on his InstaPundit blog:

“The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits—self-discipline, the ability to defer gratification, etc.—that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them.”

MP: Another downside of government subsidies for middle class markers like homeownership and higher education is that those subsidies have distorted those markets and help fuel housing and college tuition bubbles, see chart above.

About Mark J. Perry 262 Articles

Affiliation: University of Michigan

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.

Visit: Carpe Diem

Be the first to comment

Leave a Reply

Your email address will not be published.