Allocating them elsewhere would lower their productivity and hence their earnings. By now it is clear that cheap loans and subsidies are a means by which favoured firms can bid factors away from more efficient lines of production. If this were not so, then these favoured companies would not need subsidies. We have also deduced that the firms who bid away the factors are also constructing less efficient capital combinations at the expense of efficient combinations elsewhere. There is also the little realised effect that subsidies have on the recipients decision-making processes.
Decisions are choices and choices are displaced alternatives.
To the entrepreneur decisions are displaced revenue. These are his opportunity costs. Subsidies of any kind will change his decisions and their direction, and hence his demand for resources, by changing his opportunity costs. Alternative actions that are economically rational in that they result in a more efficient allocation of resources will be abandoned in favour of an irrational allocation of resoures made profitable by government intervention. Industry lobbying will be substituted for entrepreneural activity, as has already happened in Australia to a considerable extent.