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[Descan]

If you're talking about the gas subsidy, the behavior stimulated is not "burning of fossil fuels". If they wanted that to happen, they'd do it themselves. The behavior being stimulated is "heating your home so you don't freeze". The "burning of fossil fuels" is a by-product, and if there was a better method that was cheap, or (this is a little political from here) wasn't suppressed by gas companies, they'd use that instead.

[GlyphGryph]

Isn't "not freezing" honestly enough of an incentive, there? It just seems pretty weird as an "incentive". Do they offer an even greater incentive to properly insulate your home? Because it seems like that would be more effective - fixing leaks, increasing heat retention - at lowering costs overall, since the normal response to subsidies for various corporate products, by the corporations, is to raise their prices. (Basic economics says this is almost always the right course of action)

Usually it's not enough to offset the subsidy, leaving a heating subsidy as a valid option, but it hardly seems like the best one unless other methods are subsidized as well?

[MonkeyHead]

In the UK there are a number of grants availiable for improving home insulation (espcially for pensioners), but suprise suprise they are pretty much always means tested.

[Leafsnail]

Yes, exactly.  I suppose the actual thing we're incentivising is "allowing gas companies to make greater profits" though really.

[GlyphGryph]

MonkeyHead, what's the difference between a grant and a subsidy, in this instance?

[MonkeyHead]

Grant: Given cash to pay for a specific thing (by government?).

Subsidy: Money off a good or service paid for by someone else (government?).

I am sure there is some subtle functional difference someone more versed in economics than I could elaborate upon.

[GlyphGryph]

I was under the impression a subsidy involved the giving of money. Otherwise that would just be a discount. And I don't think the government has the authority to force discounts on private goods... Or at least the willingness to hurt private providers in the wallet like that.

[MonkeyHead]

I think that in some cases the goverment might waive taxation to lower the apparent price. All I know is that when I applied for lower price insulation I got told "No!" as I earn too much and am too young. *shrug*

[Leafsnail]

Subsidies tend to go to businesses, and may come with a requirement that they keep their prices down or hire more people.

Grants tend to go to people, and have some kind of requirement and are usually means tested.  The examples that immediately spring to mind are grants for people in education, to help them continue studying without having to take on a job instead.

So I suppose the key difference is that one goes to businesses or organizations wheras the other goes to individuals.  Economically subsidies are meant to cause a lot more issues due to the way they distort the values of things.

[GlyphGryph]

So how does the subsidy for pensioners for heating work? Does the government give companies money in exchange for offering a lower price to the elderly? Why isn't THAT handled as grants?

[lordcooper]

IIRC (it has been quite a few years since I worked at British Gas) the government pays gas companies (or possibly lets them off some tax, it's basically the same end result), who then apply a set amount of credit to the accounts of every eligible customer come winter.

[palsch]

So how does the subsidy for pensioners for heating work? Does the government give companies money in exchange for offering a lower price to the elderly? Why isn't THAT handled as grants?

Just because people are calling it a subsidy doesn't mean it is one.

Technically it's the Winter Fuel Payment and it's best categorised as a benefit (or rather a supplementary payment in addition to benefits).

[Sheb]

Cyprus reached a slightly less stupid deal over its banks. Actually, pretty much a picture of how majors banks collapse should be handled: Small depositors are insured, other creditors loose some cash and what is savable is saved.

What is frightening me is that the media message seems to be that the EU forced Cyprus to close its bank, wheres what the EU did was lending 10 billions to save as much of it as possible. Of course, the message is clear: finance is no way to build an economy, as the bank's liabilities are also the state's.

[Zangi]

Ah... the wonders of private entities handing their debts over to the public? 
Or are Cyprus banks federally controlled?

[Sheb]

No they're not. They've been bailed out, at great cost to everybody.