Home
/
RELIGION & LIBERTY ONLINE
/
‘Reverse’ subsidies
‘Reverse’ subsidies
Jun 27, 2026 6:46 AM

A couple weeks ago the NYT magazine ran a piece by contributing writer Tina Rosenberg, which attempts to outline some of the ways in which “everyone in a wealthy nation has e the beneficiary of the generous subsidies that poorer countries bestow upon rich ones.”

What does she mean? In “Reverse Foreign Aid,” Rosenberg asserts that there are five major forms of poor-to-rich international subsidy. The first is the tendency among poorer nations to build-up great reserves of hard currency, often in the form of T-bills. The problem here is that there is an opportunity cost in holding the low-return but ultra-secure US Treasury bills: “All the money spent on T-bills — a very substantial sum — could be earning far better returns invested elsewhere, or could be used to pay teachers and build highways at home, activities that bring returns of a different type.”

A second form of subsidy is in the WTO requirements that member nations abide by copyright and intellectual property protections. “There are good reasons for countries to respect intellectual property, but doing so is also an overwhelming burden on the poorest people in poorer countries,” writes Rosenberg.

So-called “tax holidays” form a third kind of subsidy, in which poorer nations offer tax incentives and various other breaks to multi-national corporations to entice them to bring their operations to their country. Rosenberg writes, “Since deals between corporations and governments are usually secret, it is hard to know how much investment incentives cost poorer countries — certainly tens of billions of dollars. Whatever the cost, it is growing, as country after country has passed laws enabling the offer of such incentives.”

Rosenberg also describes brain drain as a form of subsidy, in which skilled professionals who are trained in poorer nations emigrate to wealthier ones. She also points out the adverse effects that domestic subsidies of various industries, such as agriculture, can have on poorer nations. Somehow or other this direct subsidy es a “reverse subsidy” because “corn, rice or cotton exported by rich countries is so cheap that small farmers in poor countries pete, so they stop farming.”

And finally, Rosenberg calls the disproportionate negative effects of climate change on poorer nations the “ultimate subsidy.” She writes, “American energy use is being subsidized by tropical coastal nations, who appear to be global warming’s first victims.”

The essay is really a bit uneven. It’s hard to fathom why, for example, cheaper imports of modities from wealthier nations should be seen as “reverse” subsidies. Just because a certain practice or policy negatively affects a poorer country doesn’t mean that it is a “reverse” subsidy. And just because wealth is created in the first world doesn’t mean that es at the expense of someone in the third world, although there are good reasons to see that Rosenberg is right about the consequences on agricultural sectors in developing nations.

With respect to the second form of “reverse subsidy,” Rosenberg is really describing a kind petition between developing nations, and the beneficiaries aren’t so much wealthier governments but large multi-national corporations. Of course, many critics of the developed world can’t or won’t distinguish between these two (all the better to fit into the picture of a growing neo-liberal “empire”).

Brain drain is a real problem for the developing world, but as is the case with so many of these instances of “reverse subsidy,” Rosenberg is pointing to a legitimate issue or concern but failing to ask the right kinds of questions, and thus providing some questionable solutions (a neo-Keynesian answer for T-bill stockpiling?). Why, for instance, are professionals leaving developing nations to work in places like the United States? In many, if not most, cases money surely is a motivation. But there certainly are other factors at work, and the potential for greater e isn’t a sufficient explanation as to why so many people leave their home, friends, and family to go live in a foreign country. Indeed, large-scale migration out of a nation is a pretty reliable indicator that something is wrong in the native country.

And maybe the fact that poorer nations don’t respect copyright and IP rights is as much a contributor as it is an effect of their lower economic status. How can you expect to be a country that fosters innovation if there are no legal protections for innovation and invention?

A recent NBER paper, “Globalization and Poverty,” examining some of these issues makes the case that globalization is plex phenomenon and that in some cases segments of the poor can be made worse off. This is no doubt true, and the merit of Rosenberg’s piece is that it points out some of the real-world issues that a globalized economy faces. The question remains, however, whether at least some of these negative effects might be mitigated by a freer and more liberalized system of trade rather than one which relies on subsidies, tariffs, and protectionism.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Bernie Sanders, AOC would ‘cure’ COVID-19 with ‘short-term’ socialism
California Governor Gavin Newsom raised eyebrows last week when he told Bloomberg News that he sees the global coronavirus pandemic as an “opportunity” for “reimagining a progressive era as it pertains to capitalism.” As if to flesh out this notion Bernie Sanders, Alexandria Ocasio-Cortez, and socialists on both sides of the Atlantic have unveiled multi-trillion-dollar programs suggesting that the best antidote to COVID-19 is short-term socialism. Sanders’ operatives made one last push to breathe life into his presidential campaign by...
How to keep your bearings in a crisis
As the COVID-19 epidemic continues to sweep the world, people are experiencing rapid changes in all spheres of their lives. Change is mon thread of my writing on this epidemic: changes people made to protect others, changes we are called to make to grow in wisdom, and changes we are called to make to our knowledge and skills in order to meet new economic challenges and serve our neighbors’ needs. Change in all of these dimensions of life is both...
Coronavirus shows us how work impacts civilization
Many Americans are already struggling due to the ripple effects of the COVID-19 lockdown. Just last week, more than 6.6 million Americans filed unemployment claims. Some economists predict that total job losses could reach 47 million. In turn, much of our focus is rightly set on the material devastation—lost salaries, declining assets, and so on. Yet the economic lockdown brings significant social costs as well, reminding us that our economic activity has social value to our civilization that goes well...
Bernie Sanders drops out, but socialism marches on
Senator Bernie Sanders suspended his presidential campaign on Wednesday. Sanders faced insurmountable problems in the Democratic primaries, but his socialism was not one of them. Arguably, the substance of his campaign, with his enthusiastic speaking style, was his greatest selling point. Had the 78-year-old white male belonged to a different sexual, racial, or age demographic, he almost certainly would have cleared the field. Even suffering from the burden of “privilege,” it’s not totally inconceivable that Sanders could have closed his...
The Great Gaetano Rebecchini: Italy’s hero succumbs to the coronavirus
Gaetano Rebecchini was a great Italian, an extraordinary witness to our traditional national values, while challenging politically correctness and representing the best of our country. Today, Italy lost a good, honest, courageous person, an example for present and future generations e. Read More… Today was the first time I learned of someone I know and respect who lost his battle to the novel coronavirus (COVID-19). He was a 95 year-old political warrior and defender of freedom: Gaetano Rebecchini. He returned...
Thomas Aquinas versus Adrian Vermeule
The relationship between law, morality, and liberty is one of those topics that invariably generates fierce debate. And it usually plays out in very predictable ways. On the one hand, there are some whose first instinct is to lurch for prehensive legal response to any number of moral evils to which legal coercion may not be the most optimal or even just response: “There ought to be a law against that!” The free choice to lie, for example, is always...
Innovation vs. intervention during the coronavirus crisis
What sort of innovation, rather than government intervention, e from the current crisis? What sort of long-term changes might we see in medicine and education? Rev. Robert Sirico, president and co-founder of the Acton Institute, shares his views on what e. Be sure to check out the other videos in this series, linked below. Thoughts from Rev. Robert Sirico during the coronavirus pandemic How freer markets can help during the coronavirus crisis with Rev. Robert Sirico Government bailouts and debt:...
13,000 children are being denied an education over a funding fight
Millions of schoolchildren are currently out of school under state orders intended to slow the spread of the coronavirus. However, in Oregon, at least 13,000 students are being unnecessarily denied an education to benefit traditional public schools’ monopoly over education. Earlier this month, Gov. Kate Brown ordered all Oregon’s public schools closed until the end of March. She then extended that deadline to April 28. This would be unexceptional if not for the fact that she also closed online public...
‘They want to punish the Church’: Italian priest fined for procession to fight coronavirus
The following translation is an exclusive interview that appeared in the weekend edition of the northern Italian daily La Nuova Bussola Quotidiana, which has fiercely defended Italy’s religious freedom throughout the ongoing coronavirus pandemic. Correspondent Andrea Zambrano interviewed a Roman Catholic parish priest, Rev. Domenico Cirigliano, who was slapped with a €400 fine by local police for processing with a “miraculous” crucifix. Rev. Cirigliano said he was performing essential “work” by blessing the town of Rocca Imperiale in order to...
Acton Line rebroadcast: Russell Kirk and the genesis of American Conservatism
Russell Kirk has long been known as perhaps the most important founding father of the American conservative movement in the second half of the twentieth century. In the early 1950s, America had emerged from the Great Depression and the onset of the New Deal, and was facing the rise of radical ideologies abroad; the American Right seemed beaten, broken, and adrift. Then in 1953, Russell Kirk released his masterpiece, The Conservative Mind. More than any other published work of the...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved