Why would we want the subsidy junkies?

We’re told that this is an economic terror of the ages:

Chancellor Jeremy Hunt says the UK doesn’t want to be dragged into a “distortive global subsidy race” but Biden’s Inflation Reduction Act is industrial policy on a previously unforeseen scale, and it has kicked off a fierce battle to woo international capital.

While Britain sits on the sidelines complaining about protectionism, the industrial giants and technology trailblazers of the world will vote with their feet, shunning these shores in increasing numbers for the promised land, and taking investment and jobs with them in large numbers.

It sounds rather excellent to us.

At any one time there are vast numbers of proposals being put forward. Proposals for businesses to do this, or that, or t’other. The interesting trick is to be able to sort through them to find which are worth doing, which are not. We have that method, the marketplace. Those which are worth doing are those which add value - make a profit. For that’s what profit is, the excess of revenue over the costs of the resources in their alternative uses.

This also tells us which are not worth doing. Like, those which require subsidy. For a demand for subsidy is, by definition, an admission right there at the starting gate that the business idea will not be value additive. It requires the subsidy exactly because it will not be profitable, will not produce revenues greater than costs.

So, others out there wave subsidy - the subsidy junkies will all go there. We will be left with only those business ideas which are profitable, which do add value. On the very simple grounds that they will be the only ideas that will prosper in our subsidyless economy.

Our economy will therefore add value - get richer - their economy will not. Bit of a blow to them, obviously, but sounds pretty good for us.