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overlook the huge direct cost of administering the subsidy 

 program and the indirect costs due to administrative errors 

 in directing production, distribution, and consumption. 



The problem is further complicated by the fact that the 

 direct costs are only partially met by taxation and that these 

 taxes are based upon what can be collected and not on what 

 should be collected. The greater part of the cost is met by 

 borrowing, which of course, like taxation, is inequitable. To 

 the extent that the government borrows and borrows inequi- 

 tably in order to pay subsidies and maintain low ceiling 

 prices, it merely deducts income from the small number who 

 save and adds to the incomes of the large number of spend- 

 ers, thereby impounding a larger inflationary lake behind the 

 weakening dam of fixed prices. Rising prices of food would 

 soak up much of the unspent incomes; low prices, insuffi- 

 cient and inequitable taxation, and payment of subsidies put 

 more money into people's pockets at a tune when goods are 

 scarce. 



Incomes are now the highest in history. The advocating 

 of subsidies in order to keep the cost of food low is an admis- 

 sion that even with his high income and at a time when sac- 

 rifice is in order, the consumer lacks the moral fiber, though 

 not the money, to pay a competitive price for the food that 

 goes onto his table. Subsidies do not in the least deal with 

 basic causes. They are like cleaning a room by sweeping the 

 dirt under the kitchen sink, to appear later in a more digni- 

 fied form as a deficit in the United States Treasury. They 

 merely postpone the appearance of inflation. 



It is impossible to combat inflation by keeping down 

 prices through subsidies while at the same time granting 

 increases in incomes to consumers and failing to inaugurate 

 a taxation policy that wipes out increased purchasing power. 

 Under such a subsidy policy, the government is in reality 

 encouraging increased consumption, which is antisocial in 



