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Government failure - Smugglers profit from botched Lebanese subsidies

27th May 2021

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This is a brilliant example of why government intervention in the form of subsidies often fails, even if well-intentioned.

The Lebanese government hoped that subsidies would reduce the cost of living for ordinary citizens.

However, in this case, the subsidy program has encouraged smuggling of petrol, livestock and food, creating shortages, and had a number of perverse effects - French butter has become cheaper but other essential commodities have soared in price.

And the government has incurred a substantial opportunity cost in funding the subsidies too.

Government failure - Smugglers profit from botched Lebanese subsidies

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Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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Government failure - Smugglers profit from botched Lebanese subsidies

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Government failure - Smugglers profit from botched Lebanese subsidies

Graham Watson

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