President-Elect Trump has thumbed his nose at the conservative wing of the Republican Party with his announced the $8m subsidy bribe to Carrier to stop them moving 1,000 jobs from Indiana to Mexico … plus a gentle leaning on reminding the company just how many defence industry contracts they currently hold … wot God givith, God can taketh away.

A certain irony in that for years the Republicans have blasted the Democrats over subsidies given to promote wind-farming and solar energy production … presumably those industries didn’t create jobs. 

I am against subsidies simply because they promote inefficiency and stifle innovation … short term gain for long term pain.  New Zealand is a far better place from having moved on from the ‘glory’ days where the State picked winners (and losers) using taxpayer money to keep players that should have long gone to wall afloat.     Having said that I accept there will always be exceptions to the rule in order to retain a strategic industry like Tiwai Point or the Marsden Fund established to facilitate fundamental research on a contestable basis.   

But there is a limit as to how far government (any government) can go in subsidising failure.    At some point the ‘House of Cards’ will come tumbling down as it did in New Zealand in 1984.    I see America under Trump as much more insular and inward looking … sure, the US economy has huge resilience but, for it be able to compete with the world, it has to be efficient and if it isn’t the world will go looking elsewhere … that is the danger of institutionalised subsidies … there is less an  imperative for innovation and efficiency and, at some point, the government funding will run out.

You couple that with the US National debt and their inability to balance the budget and Trump’s short term gain may be very short indeed.