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Diversity and Occasional AnarchyOn Deep Economic and Social Contradictions in Hong Kong$
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Yue Chim Richard Wong

Print publication date: 2013

Print ISBN-13: 9789888139446

Published to Hong Kong Scholarship Online: January 2014

DOI: 10.5790/hongkong/9789888139446.001.0001

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Simple Ideas in Political Economy

Simple Ideas in Political Economy

Chapter:
(p.131) 13 Simple Ideas in Political Economy
Source:
Diversity and Occasional Anarchy
Author(s):

Yue Chim Richard Wong

Publisher:
Hong Kong University Press
DOI:10.5790/hongkong/9789888139446.003.0013

This chapter offers a prism through which readers can compare a subsidy-in-cash with a subsidy-in-kind. A subsidy-in-kind not only provides people with no choice or lower flexibility, but also results in misallocation of resources which in turn gives rise to economic inefficiency. Nonetheless, the majority of public policies take the form of subsidies-in-kind rather than in-cash, and the adoption of such a less efficient option has something to do with the stimulation of market demand for the providers’ services. This chapter also illustrates how the adoption of subsidy-in-kind schemes is closely intertwined with politics. Economists have long warned about the adverse effects of these schemes, and they prefer directly giving cash to those in need of help in society. Yet, ironically, this method is simply not the way of politics.

Keywords:   Subsidy-in-cash, Subsidy-in-kind, Misallocation of resources, Economic inefficiency, Political economy, Policies, Hong Kong, China, Economy

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