"Econ 102" with Noah Smith and Erik Torenberg cover image

AI, Software, and White-Collar Jobs

"Econ 102" with Noah Smith and Erik Torenberg

NOTE

Subsidies Should Foster Growth, Not Waste Resources

Investing in emerging industries, such as electric vehicles, can potentially lead to the development of a competitive market. However, the value and effectiveness of subsidies must be critically assessed. While creating industries like ride-hailing may result in durable markets, the approach mirrors venture capital strategies, and not all investments yield high returns. Subsidies should not be used indiscriminately or viewed as a means to merely increase production; they represent a cost to resources. Effective subsidies ought to identify and support promising companies, allowing underperformers to fail, thus optimizing resource allocation and enabling sustained growth of successful entities.

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