Disadvantages Of A System Of Subsidies Economics Essay

Disadvantages Of A trunk Of Subsidies Economics EssaySubsidy brush off be said has advantages and disadvantages to granger and consumer. Subsidies disposed(p) to force producers to develop to a greater extent efficient for agriculture field. regimen encourages an industry by reducing impo lives. The regimen provides housing subsidy for the poor families. However, they whitethorn encourage inefficiency by relying much in the subsidy money that offered by the giving medication. Raising the income turn prices ar rising will ca office the final products to lose their competitiveness in the international market. Subsidy sometimes is delicate to decide on who may receive a subsidy and the government has poor in bodyation well-nigh the service and how much to subsidies.Table of ContentContentsPages1definition of subsidy2Advantages of a administration of Subsidies from the Point of gather in of farmer3Disadvantages of a constitution of Subsidies from the Point of View of Fa rmer4Advantages of a System of Subsidies from the Point of View of Consumer5Disadvantages of a System of Subsidies from the Point of View of Consumer6ReferencesDefinition of SubsidyEconomic social welfargons (such as allowances or valuate rebate), or the benefits disposed by the government, groups or individuals are usually paid in cash or the form of tax cuts. Subsidies usually remove some type of burden to reduces salute of drudgery and expansion to increase supply, maintain the income of the producers of certain products and maintain employment levels. iodine industry that commonly receives government subsidies is the agriculture industry. Agricultural subsidies are given to farmers in order to support its business because shoot to be moderate that countrys self-sufficiency in food supply. Government subsidies to farmers can take the form of capital (to ensure that they abide enough money to invest in their own farm) or to buy the excessive drift the warehouse after( prenominal) are filled. In addition, the government also indirectly subsidize the bribe of personal or family that we can common see such as allowing the a cheaper house built housing subsidies. By reducing the address for low-income families, the government ensures that more families are in homes. It makes individuals in their attempt to come about a stable job, and also provides more disposable income of poor families.Advantages of a System of Subsidies from the Point of View of FarmerSubsidy is an economic benefit that consumes lot of advantages to farmer. In order to help the old and the forward-looking energy development and exploration, the federal government has the pursuit of these initiatives on corporate subsidies. Subsidies granted to energy producers to develop more efficient, more economical fruit and distribution process. For example, the government provides the agriculture subsidies to the farmer to mend their method of production. Most of the farmers do non have enough money to buy a refreshful and modern machine to increase the speed of production. With the subsidies, they are able to use the money to buy a high technology machine to improve their production during their working times. It helps them a lot to save the damage of production and time. Improvement in technology will make supply increases. This is because the farmer has more efficiency to produce more agriculture products based on the necessitate of consumer. It can be seen in the interpret below.Government subsidies of countrified industrialization, can also take a less direct way. Government encourages industry, an industry or a certain product or new labor and employment taxes related to the drop-off in the case of some(prenominal) wage and subsidy funds by reducing taxes. These types of subsidies usually are in the form of tax credits for specific industries. Therefore, although it may not have the same look directly provide funds and purchase the product, wage s ubsidies and capital still has the same purpose to provide excess funds to promote a particular industry such as farm subsidies make agricultural production more profitable by increasing and stabilize farm prices and incomes.Disadvantages of a System of Subsidies from the Point of View of FarmerSubsidy can be said will bring certain disadvantages to farmer and consumer. Farmer subsidies can be intended to be consumer-friendly and taxpayer-friendly. However, they may encourage inefficiency by relying more in the subsidy money that offered by the government.The farmer still can receive the subsidy that offered by the government even though their agriculture has no gain all profits. Farm subsidies also control the normal market cycle. Raising the income while prices are rising will eventually raise commercial and industrial costs, causing the final products to lose their competitiveness in the international market. For example, if the cost of production of tomatoes increases, the supp ly of tomatoes will decrease.In the graph above, we can see that the higher price of factors of production, higher cost of production, the supply of tomatoes decreases. This is because the producer cannot hold the higher cost due to the hire of tomatoes. The cash from farm subsidies save the normal fluctuation in price due to supply and demand. accord to the Environmental Working Group Farm Subsidy Primer, this makes the price totally dependent on government intervention in addition to the defrayment of the disaster. Agricultural subsidies are to correct low crop prices, and increasing farmers incomes. With controvert subsidies, farmers are encouraged not to produce a particular crop or product. Farm subsidies are benefits to help poor and trouble family farmers. Instead, they ravish them by excluding them from most subsidies, financing the consolidation of family farms, and increasing land set to levels that prevent young people from entering farming. Subsidy sometimes is d ifficult to decide on who may receive a subsidy and the government has poor information about the service and how much to subsidies.Advantages of a System of Subsidies from the Point of View of ConsumerThe government provides funds for reoceanrch and loans at flourishing rates and repayment terms for the poor families. Datuk Seri Najib Tun Razak adds 1Malaysia book voucher (Figure 1) for students from look institutions, universities previously from RM200 to RM250. Student who has been registered as higher education students need to compile their name on the voucher to avoid the issue of abuse in voucher dealings. Its main purpose is to allow the higher education students make better access to books and stationery that would help ease their burden throughout their studies.( parvenu flip Times Online) Datuk Seri Najib Tun Razak also announced a half-month bonus, the civil service and the income tax is reduced by one percentage point to RM50, 000 of taxable income.( calculate 20 13 Tax breaks, affordable housing and cash for the needy, The Star Online)Disadvantages of a System of Subsidies from the Point of View of ConsumerIt had been stated that the well-situated and the forgedgest beneficiaries of the enterprise, rather than the poor. The sugar milling machinery has informed retailers to raise sugar prices by 20 cents. This price reduction is always slow, but when it comes to raising prices, which is lighting fast. According to New headland Times, it had mentioned that sugar subsidy reduction should be no excuse for businessman to increase prices of goods. When price of sugar rises, the quantity demanded of sugar will fall and it will make a movement down along the demand curve.It has been shown in the graph above. The price of sugar in Malaysia is amongst the lowest if compared to Singapore, Philippines, Thailand, and Indonesia. Therefore, the cost of ingredients of coffee is cheaper if compare with other. Coffee and sugar are considered as comple mental goods. If the price of sugar falls, the quantity demanded of sugar will increase, and therefore the demand for coffee will increase too. It can be shown in the graph below.Subsidizing diesel and flatulence have been smuggled and abused. In The Star New Online which stories by M. Struart, weighterman had been caught are selling subsidized diesel and petrol to others or using it for their personal use. Some of them just sell the burn down at higher price in order to earn more profits. In the news, a pekan Mohd Rokbi Daud was unsatisfied with the current system in Fisheries Development Authority of Malaysia (LKIM). He said that he go to sea everyday but does not get any fish because of the handsome weather. Some of the people just can claim for the subsidized supply but they do not go to the sea to catch fish and just sit down to get the subsidy that offered by the government. Those fisherman who really hardly to survive because of poor catch they really need the subsidy i n order to survive their family. Therefore, government needs to jazz who the real fisherman and give the subsidy to the rights one. Rich people with big cars can enjoy more subsidies for fuel compared to the poor small car. some(prenominal) off-road vehicles and four-wheel drive vehicles also consume diesel. The rich and the poor have to pay the same tax rate. The poor cannot afford the luxuries products, but the rich people may have bought a lot of luxuries things. Eventually the subsidies are given to the rich rather than the poor. From 2010 to July 2011, the government had allocated for various subsidies and assistance, including the establishment of the KRIM, the bill Rakyat 1 Malaysia and the 1 Malaysia clinics that the rich one can also be enjoyed these benefits. (Alex Wong CPA Australia Melbourne University, 2012)AppendixFigure 1 1Malaysia book voucher sagacity CRITERIA (30%) -No.Evaluation of Written WorkRaw MarksWeightage concluding marks1Demonstration of KnowledgeDemons tration of knowledge and intellect of the topic assignment0-2.5 poor, out of topic, no understanding of topic 3.0-5.0 average, prevalent discussion of topic 5.5-8.0 good, clear understanding, 8.5-10.0 excellent, deep understanding of topic,/252Good reasoning and critical analysisClear line of reasoning. contention is sound and substantial, with significant elements of originality. Ability to identify and use concepts and theories studied to curve his/her opinions. Evidence of critical appreciation and evaluation of relevant theory and research and a systematic and creative attempt to relate it to the topic.0-2.5 poor, 3.0-5.0 average, 5.5-8.0 good, 8.5-10.0 excellent,/253Clarity The whole thread of the argument is clear. The structure is very clear. Shows coherence. subject to and integrate material from other sources in a clear manner.0-2.5 poor, 3.0-5.0 average, 5.5-8.0 good, 8.5-10.0 excellent,/204Evidence of Wide Range of ReadingsShows evidence of having read wide by using arguments and facts from various and relevant sources0-2.5 poor, 3.0-5.0 average, 5.5-8.0 good, 8.5-10.0 excellent,/205boilersuit Presentation Grammar, style of writing, structure, spelling, referencing and appendices.0-2.5 poor, 3.0-5.0 average, 5.5-8.0 good, 8.5-10.0 excellent,/10 congeries 100%/100Total marks for this component is 30%/30