SUBSIDY LESSON NO 2: When govt give subsidy to one group, it will have to consider other group with almost similar situation will be asking for the same subsidy. Subsidy is also addicted, once given, it is difficult to take it away or reduce it without some protest or threat of govt will lost vote. Take for example in Thailand. Since Thaksin, they receive a price guarantee and in last two years it has been tough on its govt as they could not sell the rice to international buyers at the price they pay the farmers. So govt lost billions and rice stockpile fill the warehouses to the brim. Yingluck try to reduce the guarantee price because it is a financial burden as the global economy slow down, but met with protest and the possibility of over 10 million rice farmers support the opposition. So she backed down. Two years ago rubber farmers have a great time as prices were high but now it is different. Looking at the generous subsidies to rice farmers, they rubber guys also asked for the same price guarantee. Govt refused and so they protest which now have going on for almost three weeks.
Posted on: Sat, 07 Sep 2013 07:44:39 +0000
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