Re: Positive externalities - Big gov\'t supporters argument sought
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My econ prof said the other day that subsidies were needed to solve externalities. For his example he said that there was a positive externality problem with teaching hospitals because they teach doctors who leave very quickly and then benefit the rest of society. To make up for this, he claimed, the government had to provide subsidies to the hospital to ensure enough doctors get trained.
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He believes this and he's allowed to teach? Scary.
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Yeah, I don't really understand why he thinks this. When I emailed him my 6 objections he said that he thinks I'm right and that he opposes almost all subsidies for the reasons I listed. I just don't understand why he's making an exception for hospitals. It's not even an externality. If they're providing such a great service then the doctors should be paying them to go there - like a continuation of med school.
Edit - I wonder if anyone is actually willing to defend subsidies for positive externalities... Maybe I've underestimated the big gov't folks...
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