Its wrong for the government to give loans or grants to business

To understand why the government shouldn’t be making loans or even giving grants to business lets look at the fundamentals of what it involves.

1. Hard working people go out and earn money to provide themselves and their families with a higher standard of living
2. The government takes some off that money off them in the form of taxes in the name of public services and welfare
3. The money is then given to business either as a loan or a grant. To be effective loans must be at a favourable rate to that offered by banks
4. The business then use the money to earn a profit

This means that the governments is forcing you to help someone else make themselves rich. Now of course it is in the interest of everyone that there is new investment in the economy but if you thought that the company the government has decided to invest in is going to make a profit you could lend it the money yourself (either directly or by entrusting it to a bank) and take the share of the profits you deserve for offering your own money that you could have used to improve your life at the moment.

It should be more efficient to leave it to the market to decide which firms to invest in. People with spare money (the money that would have been taken in taxes to fund the government loans) will put it where they belive it will earn the most money. This means that collectively we will invest in the companies that are the most productive and will hence help the economy the most. This means that the money will be better invested by individuals.

However there is a more fundamental objection to the government investing in business. This objection is about freedom. If you have earned money then you should be free to invest it however you like. Why should everyone else, which is what the government should represent in a perfectly democratic system, or a small group of powerful individuals, if our democracy isn’t quite working, get to dictate to you what you are allowed to do with your money. Furthermore is you have worked hard to earn the money you should get to enjoy the benefits of it directly. If the government invests it on your behalf in, order to allow someone else to enjoy the money you have worked hard to earn, then the only benefit you receive is a slight increase in GDP that benefits everyone however hard they are working.

The system amounts to taking money off one group of people in order to give it to another which, is deeply unfair when the people who are being given the money are no more deserving than the people it is being taken off. And when you consider this with the fact that the money is likely to be invested inefficiently so that the amount the people receiving gain is lower than they amount the people have the money taken off them lose it is just plain wrong.