James d. Gwartney

Avoid Subsidies Not Based on
Economic Logic
The tool of politics (which frequently becomes its objective) is to extract
resources from the general taxpayer with minimum offense and to distribute the
proceeds among innumerable claimants in such a way to maximize the support
at the polls. Politics, so far as mobilizing support is concerned, represents the
art of calculated cheating or, more precisely, how to cheat without being
caught.
(65)
— James R. Schlesinger, Former United States Secretary of Defense
There are two ways individuals can acquire wealth: production and plunder
(?)
. People can get
ahead by producing goods or services of value and exchanging them for income. This positive-
sum method of acquiring income helps both trading partners and enhances the wealth of
society. But sometimes people will try to get ahead through plunder, the taking from others
without their consent. Of course, the victims of plunder will lose what the plunderer gains. But,
in addition, where plunder is feared, potential victims will employ resources to defend
themselves against it. In a society in which burglary is common, for example, people will buy
more locks, use more security services, demand more police, and even design their homes in
ways to discourage theft. The costs imposed on the citizenry will be greater than the gains
obtained by those engaging in plunder. In contrast with positive-sum exchange activities,
ELEMENT 3.7
When governments become heavily involved in providing favors to some at the expense of
others, inefficiency results and improper, unethical relationships develop between
government officials and businesses.

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plunder is a negative-sum activity. It not only fails to generate additional income but also
consumes resources, reducing the wealth of the society.