Quote Originally Posted by Dayuhan View Post
Nothing there indicating a "vast majority".
Actually,

After the factory closure, the annual employment rate of the study group showed a steady rise to a maximum level of 44% within 6 years, but even after 10 years never matched the employment rate of the controls.
AND I didn't only refer to unemployed, but rather wrote

...the vast majority of those workers will often end up unemployed or employed in such poor jobs that keeping them in their old job means a vastly higher productivity even before taking subsidies into account.
Now look at my emphasis, please.


I don't believe that you think about the same as I do. I think of the economy as something that creates goods & services, sustains itself and distributes the goods and services (and there are some trade effects).

To close a factory in a distressed sector usually means to reduce the goods produced in the country, for the workers don't simply move to another factory.

It's a strange idea of efficiency to favour substantially less output and substantially less consumption only because a company failed on the market.
This makes sense when there's a lot of flexibility, when workers get a new job of at least equivalent productivity and when capital is simply allocated to a better use.

The reality in Germany is that the former doesn't happen and the latter takes the shape of capital export that helps nobody but a handful of big ticket capital owners.
The reality in the U.S. and UK is more about the former, while the latter cannot be said as long as the macro picture includes a substantial net capital import.


Keep in mind that the economic theory that says 'bad' companies shall be liquidated to free up resources for better uses is a very primitive one (early 20th century) and so very basic that it doesn't include the substantial limits on those "better uses".
Moreover, economic theory is not nationalistic-egoistic, but rather totally fixated on efficiency. Studying macro and micro basically means a three to five year indoctrination of aversion against waste of resources.
A nation has different priorities than to optimise the global economy.


Some developing countries have used subsidies to horrible effect (example low oil prices in Iran) while others have become the foundation of the countries' new prosperity (example electronics and shipyard industries in South Korea).
Subsidies aren't only good for attack (gaining market shares), but also for defence (keeping market shares).

Western countries can use subsidies (and other privileges, as subsidies are IIRC a problem under the WTO regime) to help the development of all-new sectors (biochemical technology etc) and to sustain old sectors in order to avoid the after-effects of losing them.