It’s an irresistible temptation for most politicians: If something seems desirable, why not promote it with government subsidies?
Ah, but if you think through the long-run effects, you discover that subsidies tend to backfire. The lovely original objective is not attained, and there are pesky side effects that the politicians hadn’t figured on (or hope that nobody will blame them for).
For a lesson on the impact of subsidies, I recommend this AIER article by Anthony Gill. He analyzes two subsidy programs: one for electric cars and the other for college tuition.
When a government decides to help save the planet by subsidizing purchases of electric cars, the result is higher prices for the vehicles. When government chooses to push educational “attainment” higher by subsidizing college, the result is higher tuition (as well as lower-quality education).
Gill sums it up: “The best ‘free thing’ government could give us is not a bevy of subsidies and handouts, but the freedom to allow entrepreneurs, big and small, to figure out what is best for all of us.”