As I write in the book, Ken Lay and Lee Iacocca don't stand in line outside a building on the first of the month to get their cheques. Corporate welfare is typically committed in the name of some sort of national or local interest. The Export-Import Bank Ex-Im is an agency of the US federal government that lends your money or uses your money to underwrite private loans to foreign buyers--say, the Chinese government--so that the foreign entity can buy American goods.
The Big Ripoff: How Big Business and Big Government Steal Your Money
They tell us this creates jobs. Really, it transfers wealth from taxpayers or less politically-connected borrowers to Boeing, General Electric, and Halliburton. If we got to keep, spend, and invest our own money, we would create jobs, but maybe not in the industries that benefit from Ex-Im. It's Robin Hood in reverse.
Corporate welfare takes money from the taxpayers and gives it to the rich and politically favoured. Another example is eminent domain for corporate gain, where they force you to sell your house to the government and then hand it over to a Home Depot. The politicians and developers call it revitalisation.
The home owner calls it theft. I call it corporate welfare. MercatorNet: In your book, you take great pains to lay out the history of this phenomenon. In your estimation is this a disease mostly of liberal or conservative governments?
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Carney: Actually, Matthew, I think I took great pleasure to lay out the history of the phenomenon. To the extent "conservative" governments can become focused on the "ends" of growth and trade, they can get distracted from the principles of liberty and individual choice. This, I argue, harms the real ends of human happiness as well as real growth, as individuals, acting freely, would define it.
Confusing means for ends and means for principles are the standard pathologies of politics, and they drive conservatives towards this central planning mentality at the heart of corporate welfare. Liberal governments openly believe in central planning, and to the degree that they understand economics, they perceive that business is far more efficient than the government in what it does. They also believe that the state is, by definition, the will of the people.
Thus many liberals strive towards a circumstance where industry rows the boat while government steers.
This is a happy situation for industry and the bureaucrats both. If you really want an answer to your question, though, it's a left-wing mindset I hate to use the word "liberal" to describe such disdain for liberty that leads to this phenomenon.
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It's a belief in the state and a rejection of the market economy. This used to be called fascism, but maybe corporatism is a fine word, too.
MercatorNet: Is big business to blame? If not, then whom can we blame? Carney: The primary blame must rest with the politicians whose own hunger for power creates the current situation. This includes basically every President since at least Teddy Roosevelt. The Republican leadership in Washington DC since has had the opportunity to roll back the corporate welfare state and strike down the regulatory robber barons, and they haven't. I think it's cowardice and selling out, very frankly. Here are three names of guys who could have done something but didn't: President George W.
Most big businessmen are passive recipients of corporate welfare--the moral culpability of these types is a very interesting, but very long debate. Some businessmen, however, seriously lobby to increase government control over our lives, knowing it will increase our costs and increase their profits.
This is immoral activity. Public Enemy No. He has won a smorgasbord of subsides for ethanol, which I argue is a worthless product, but which is 20 per cent of his profits. He basically confessed to being a socialist on the matter. Enron was equally shameless in begging for government favours, but by disguising themselves as lovers of the free market, they may have done even more harm. MercatorNet: What about taxpayers? Is Joe Income-Tax in any way responsible for corporate welfare?
Carney: When we ask government to help us, or when we welcome its active help, we are often endorsing an assault on the liberty and the property of ourselves and others. The public pressure on politicians is to "do something" about our problems. This mindset is not congenial to a free-market system in which the invisible hand does something and the politician, at least concerning economics, should do nothing. Carney: To begin with, corporate welfare allocates resources according to political favour, while free markets allocate resources according to individual choice.
Second, corporate welfare creates an occasion of sin for politicians, giving them control over our liberty and property makes them targets for bribery. Finally, it is morally wrong to redistribute wealth upwards. The term came into vogue during the s. It makes much more sense as a liberal phrase because Republicans cozy up to business far more than Democrats do. That's why Perry is vulnerable to the accusation. Authentic libertarians can use it in good conscience, but real-world Republican politicians seldom reject business demands to suck on the government teat.
That Republicans are using the phrase now suggests that they're starting to worry that public is identifying them too much with the Wall Street barons who created the current financial crisis and no longer seem to be suffering much because of it. If congressional Republicans really disliked crony capitalism they would back off from their support for Medicare Advantage, the money-losing, government-funded private sector alternative to Medicare, and for-profit colleges, which they want to shield from default limits on student loans.
They would also stop trying to interfere with the implementation of the Dodd-Frank financial reform bill. Research assistance by Thomas Stackpole. Sign Up.