Mexico, and other countries who can do this, are petroleum exporting countries. They can afford to do it, I understand that in Saudi, gasoline sells for well under $1.00. Exporting countries that could afford it (like the UK and Norway) often prefer to not subsidize gas because it would encourage wasteful consumption as it has done in the USA.
I personally favor an intermediate approach (if it can be fairly administered), no subsidies and high taxes on fuel for public use to encourage conservation, but with the option to reduce these costs for the transport industry to prevent inflationary pressures on other products or help other industries and employment. Economists could figure out the details and levels where it would do the most good, and have the optimum ripple-down benefit for the maximum number of citizens. And you could count on the business community supporting it whole hog once they sniffed the smells "subsidy" and "tax cut" in the air.
In general, I don't support the government interfering with the market, but there are times when it would be downright stupid not to. If cutting fuel prices helps keep unemployment and inflation down, or keeps the elderly from freezing to death, I'm all for it. If it just helps to keep SUVs on the highway, I say let 'em cash in their IRAs.
Current Events » in reply to Gas is cheaper in Mexico because of a government subsidy intended to keep inflationary forces in check.
What did Marie Antoinette allegedly say?
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- Gas is cheaper in Mexico because of a government subsidy intended to keep inflationary forces in check.
- What did Marie Antoinette allegedly say?
- You know...
- "If it just helps to keep SUVs on the highway......"
- "Economists could figure out the details..."
- What did Marie Antoinette allegedly say?