Hacker News Reader

Comment by grecy | Hacker News Reader

Its interesting to see so many here have the opinion that the subsidies were wasted and the governments should have let GM fail, not spend taxpayer dollars to bail them out.

And yet, most on HN seem perfectly happy to give Amazon huge tax breaks to setup in NY, which is exactly the same thing.

View on HN

My impression was that HN largely felt that the tax breaks were unnecessary and pointless. Maybe I misread?

The highest comment in that discussion thread said it was good, and I got a lot of arguments when I disagreed.

Thread here https://news.ycombinator.com/item?id=18454215

They need a basic lesson on economics.... Umployment rate is probably the one metric that government looks at most attentively, no government will let it go up unless they cant help with it. If GM fails, the economical activity it brings would also cease, people lose their job, the people who serve those people would also suffer. They will stop paying their debt and mortgage, and government will lose their tax revenue. They economy is likely running into a halt, and social services and new investment take years maybe never to begin to be profitable. How could people think the, bailout is wasted is really baffling, it surely isn't, it is life saving..

They're definitely NOT exactly the same thing.

In no way is "here's billions of dollars, hopefully that'll save you!" the same thing as "move here and we'll cut your taxes by 20% per year for the next 25 years, up to a maximum of $x, as long as you hire this many people and pay them at least this much, and also x, y, and z."

One is highly speculative, one is essentially guaranteed.

It's remarkable that you can say they're the same with a straight face.

Most here are totally for wealth redistribution so long as it suites their needs. They don't understand how subsidies distort the market and lead to consolidation of power by the few, which in turn drives down wages for the many. It seems most would prefer to be wrong than change their perspective and view themselves as a hypocrite.

GM should have been allowed to fail, but not because they were going to turn out to be ungrateful. They should have been allowed to fail because liquidation is the best medicine when the patient is insolvent and bankrupt.

I cant understand why some people conflate tax breaks and subsidies. They're not the same thing. Whether amazon should be given tax breaks is a separate debate.

How are they not the same thing?

It's not exactly the same, though. Bailout uses the money that government already has, and that could be used on something else. Tax break is using the money that you don't have yet - and, crucially, will only have if the company actually is there!

You are forgoing the tax revenue that would've been earned by the workers as well as any benefits that they claim.

In Australia it was estimated that each auto job produces 6 other jobs through network effects [1]. All up that number would be fairly substantial and likely enough to justify some subsidies/bailouts.

[1] - https://www.aph.gov.au/Parliamentary_Business/Committees/Sen...

Bailouts also use money that the government doesn't yet have.

In 2008 and its aftermath the U.S. ran up huge budget deficits, and the Federal Reserve for the first time monetized enormous amounts of debt. That was all money that the government did not have.

Besides, money is fungible. It doesn't matter if an entity has the money or can quickly raise it, especially if when it has the money it was already earmarked (or soon was going to be) for some other particular purposes.

Not necessarily, the government might not have that money, they will likely raise debt to do so. It is technically not the tax payers money

In the end, either taxpayers pay for it, or all holders of the currency of equivalent instruments do (through inflation).

Reply on news.ycombinator.com