5 ms·

> It's OK if country X decides to subsidize sector A or B -- it's just free money for the world. Tell that to the American steel industry.

• paganel 4y ago
  It's actually a theory that I've first read in Jean-Baptiste Say's works. He was mentioning it in connection with the French government of the time (I think he wrote all that down during Napoleon's reign, even though it could have been during the Restoration, too lazy to check) subsidising the export of their "luxury" products, the Sèvres porcelain if I remember correctly. He was explaining that, in effect, the French government was putting money in the pockets of foreign clients/entities. As such, the same thing will happen (happens) when it comes to US steel industry, even though in this case one also has to take into consideration the opportunity costs of losing the knowhow of that industry for good if it is allowed to die in the face of foreign competition. One could say that today's US taxpayers, by in effect subsidising the US steel industry, are paying for future generations to have the opportunity to build tanks and munitions and other war-related stuff without having to worry about having enough steel stocks at hand.