We
often hear that government can't pick winners and losers. History
tells us that the government has been picking winners ever since the
early days of the Republic.
In
1791, Alexander Hamilton proposed fostering our 'infant industries'
in his Report on Manufactures.
Over the years, a variety of methods has been used but the policy of
support has remained. Hamilton recommended that our manufacturers be
encouraged by a combination of subsidies and tariffs. In the
nineteenth century, the new railroads were given large land grants.
Early in the twentieth century the new airlines received lucrative
air-mail contracts and the oil companies were given generous tax
reductions.
A
more recent example is the story of the Mitchell Energy Company.
According to their former Vice President, Dan Steward, they developed
the method for extracting gas and oil from shale with the aid of
government research and government subsidies*. Without this
government help we would not be anticipating a gas and oil boom in
Appalachian Ohio.
The last two examples show
some problems with subsidies. The oil industry still enjoys their tax
break long after they have became mature and shale drilling is
believed to cause threats to public health and safety.
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