Nothing unites the left and right like opposition to corporate welfare. The left is traditionally skeptical of unabated corporate power, and the right, of wasting taxpayer dollars on matters that work themselves out absent government intervention. Ideologically, the average liberal and conservative are likely to find common ground on this matter. There happens to be a bipartisan consensus around this issue as well, but it’s entirely at odds with this area of left-right agreement.
Consider the Export-Import Bank. This little-known relic of New Deal-style command-and-control economics represents cronyism at its worst. Ex-Im, which is up for congressional reauthorization this fall, provides a select few corporations with taxpayer-funded handouts meant to buoy their exports. As Veronique de Rugy, a senior research fellow with the Mercatus Center, explains, “Economists have long known that these kinds of export credit subsidies will never raise the overall level of trade; rather, they redistribute wealth away from unsubsidized American firms, employees, and consumers and direct it toward a tiny number of subsidy beneficiaries.”
Despite this economic reality, advocates of the Ex-Im Bank claim that it creates jobs and poses little risk to taxpayers. This ignores the fact that ninety-eight percent of American companies engaged in exporting their products don’t receive these favors, making it difficult to compete and thus eliminating jobs and new economic growth. Defenders even say that the government-run bank makes a profit for taxpayers; however, this claim has been proven false. As Tim Carney, a Visiting Fellow with the American Enterprise Institute, points out, “The Congressional Budget Office reported that if Ex-Im used proper accounting methods, it would be budgeted as a $2 billion cost to the taxpayers per decade.”
The fact is, even if it were true that Ex-Im makes a profit, it wouldn’t justify elected officials picking winners and losers based on which companies peddle the most political influence. The point of having a free market is to place the most power possible in the hands of consumers. A marketplace distorted by politicians doling out favors to select corporate interests creates all the wrong incentives. Instead of innovating to earn the business of average people, companies will focus on turning a profit through the acquisition of government subsidies. When that happens, we all miss out. Not only do we lose great products that weren’t created due to a focus on pleasing politicians rather than the people making purchases, but we also forgo economic growth that could have been fostered if resources were allocated in a manner that actually reflected consumer desires.
Those concerned with issues of income inequality and the plight of the “99 percent” ought to be extremely disturbed by the transgressions of politicians who campaign on these issues and do the exact opposite in practice. When Barack Obama embraced a grassroots shtick in an effort to out-maneuver Hillary Clinton in 2008, he described the Ex-Im Bank as “little more than a fund for corporate welfare.” The president was right, of course, but now his rhetoric echoes those who act as if government-subsidized job creation doesn’t have a net negative impact on the small businesses trying to compete under the weight of an unjust corporatist system.
The same goes for the allegedly populist senator from Massachusetts, Elizabeth Warren, who is known for railing against the excesses of corporate America. Her spokesperson recently stated, “Senator Warren believes that the Export-Import Bank helps create American jobs and spur economic growth.” So much for protecting the little guy, who’s trying to compete without a guaranteed taxpayer bailout and can’t afford the K Street lobbyists needed to acquire one.
At the same time, an identical hypocrisy exists among politicians who say they support free markets yet consistently vote in favor of destroying that which they claim as gospel. In that vein, the Ex-Im Bank has long been supported by many conservatives and reauthorized when Republicans have controlled the presidency and had majorities in Congress. Fortunately, recent efforts in opposition to this hypocritical behavior have eroded support for this crony measure among Republicans – which goes a long way in explaining why politicians in leadership are looking to shadily attach Ex-Im reauthorization to a larger funding bill instead of presenting it as its own measure.
Ultimately, fighting against corporate welfare comes down to how organized the resistance is. Railing against something as obscure as the Export-Import Bank may not sound sexy, but the truth is, it’s a great place to start. Breaking the unjust corporate-government monopoly that determines who gets a leg up when it comes to international trade is something liberals, conservatives, libertarians, and moderates alike can get behind. Unless we force politicians to break the habit of treating their central planning as more enlightened than the choices of American consumers, the corruption inherent in a cronyist system will continue to flourish.