James d. Gwartney

Video:
Politics, Economics, and Farm Subsidies
Read:
Energy Production versus Conservation by Dwight Lee
Increasingly, the governments of high-income democratic countries use taxes and
borrowing to provide subsidies and other favors to specified voting blocs in exchange for
political contributions and support. In a statement widely attributed to Scotsman Alexander
Tytler, the following argument is made:

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A democracy cannot exist as a permanent form of government. It can only exist
until the voters discover that they can vote themselves largesse from the public
treasury. From that moment on, the majority always votes for the candidates
promising the most benefits from the public treasury with the result that a
democracy always collapses over loose fiscal policy...
Once businesses and other interest groups become heavily involved in providing
politicians with support in exchange for subsidies and favoritism, these forces will be very
difficult to restrain. As government favoritism grows and both the recipients and politicians
become more dependent on it, transfer spending will grow and resources will move away from
productive activities. Moreover, deceitful behavior, unethical relations, and even corruption
will become commonplace. There will be upward pressure on taxes, budget deficits will
expand even further, and the politically manipulated economy will stagnate. Unless the
constitutional protection of property rights and limitations on the spending, subsidizing, and
borrowing activities of government are restored, democratically elected politicians will
continue to enact programs that waste resources and impair the general standard of living. As
illustrated by the case of Greece—whose government overspent itself into a debt crisis in 2015
—this path will eventually lead to excessive debt and economic collapse.