In order to protect the dairy farmers, the Canadian government has assured the provinces it will pay compensation to cheese producers, and that it will set up a marketing campaign for local cheese. This is essentially a government subsidy to dairy farmers.
Explain why the Canadian Government should not play the role of guardian of business in this way.

Question

Quizplus · Accepted Answer

The Answer is -The core problem of government subsidies (and protectionism) is the use of taxpayers' money to help one specific industry, fairness to other industries, the notion of 'letting the market decide' and ensuring open and fair competition, as well as the danger of industries becoming reliant on government for support.
-There are several theoretical points to consider: Protectionism, govt subsidies, bailouts, corporate welfare… essentially redistribute public money from the taxpayers to a few corporations. In other words, everyone pays so that a few can benefit. Why should cheese producers (mostly in Ontario and Quebec) get government subsidies and n
-Would these dairy farms survive on their own without government assistance? The competitive marketplace should decide which industries and firms are successful, not government.
-Subsidies also discourage firms from being more competitive, efficient, innovative… and result in higher prices for consumers (and possible retaliation from other trading partners).
-Great answers will push their thinking to explain how subsidies to dairy farms should not be used to favour some industries over others because it's very difficult for even the most astute investor to pick winning firms or industries, that it's foolish to think the government can do it. Spending public money on industries that turn out to be losers down the road is a wasteful and inefficient use of government funds.
-Subsidies are not merely harmless forms of assistance to businesses; rather, they constitute a form of trade barrier, just like tariffs, and they create unfair competition.
-Subsidies are unfair - they divert money away from more successful businesses and towards less successful ones (i.e., the dairy farms).
-Subsidies are contrary to the notion of capitalism - i.e., profitable companies should stay in business; companies that cannot compete should not be permitted to continue.
-Subsidies lead to higher taxes, government is simply redistributing public money to a few corporations.
-May be viewed as violating fair trade agreements (i.e, unfair to foreign competitors who must compete against government businesses)

In Order to Protect the Dairy Farmers, the Canadian Government