Why politicians add subsidies instead of removing costly government controls: It makes them look good.

Nick Gillespie of Reason.tv explains:

[The President’s] solution to every rising price is to subsidize its purchase (this is true for health care, education, you name it). But when you subsidize something with tax dollars, you’re likely to increase both aggregate spending on it and increase prices (this too is true for health care, education, you name it). And his nod towards “high-quality” child care suggests more rules and regulations on the practice, which also will like raise prices too.

This isn’t Obama’s failing alone, of course, but why do politicians rarely or ever talk about growing supply as a way of reducing prices? One of the most frustrating aspects of the Obamacare debate was that virtually no one on either side was talking about how to reduce prices by increasing supply. It was all about regulating prices by restricting or dampening demand.

That’s an ass-backwards way of looking at things, but it makes political sense, I guess: You want to be the person cutting the check to a specific beneficiary rather than fading into the background after deregulating an industry and letting innovators come up with new, better, cheaper goods and services.

Read the whole post.

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Filed under economics, public policy

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