Liberals Lovin’ on Corporate Welfare

Thursday, March 29th, 2012

A couple weeks ago, The Nation’s George Zornick rattled off a screed against “far-right Republicans” who want to eliminate the Export/Import bank, which is basically just a distribution center for corporate welfare and guaranteed loans. That the GOP would even dream of entertaining free marketeer fantasies of getting rid of the organization, Zornick wrote, “shows yet again the sway that far-right ideology has on the party.”

In a recent white paper published by those stooges at the Cato Institute, Sallie James gives some examples of exactly what it is Zornick is defending.

Boeing—the world’s largest aerospace company, earning over $64 billion in revenue in 2010, with $31 billion of that money from commercial airplane sales—alone accounted for 44 percent of total Ex-Im Bank loans and long-term guarantees in FY2010. It is difficult to argue that large multinational companies with large market shares and combined revenues of hundreds of billions of dollars are suffering from market failure or that they could not finance their own loans.

As Tim Carney points out, in fairness to Zornick, the organization does help out businesses beyond Boeing—mom ‘n’ pop setups like, for example . . . Wells Fargo and Bank of America!

Lesson: When free market types call for less regulation or lower taxes, they’re whoring for corporations. When liberals call for extending sweetheart loans to mammoth multinational companies (that also happen to be major players in the military-industrial complex), we should cut them some slack. They’re just looking out for American jobs.

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40 Responses to “Liberals Lovin’ on Corporate Welfare”

  1. #1 |  thomasblair | 

    We live in a bizarro world where any occurrence is prima facie evidence of the current narrative. Obviously.

  2. #2 |  Mattocracy | 

    A welfare state is a welfare state, corporations and poor people all included.

  3. #3 |  Vake | 

    Liberals do not understand public choice economics or regulatory capture, thus they are destined to remain ignorant of the long-term damage their policies havoc.

  4. #4 |  JOR | 

    #3, I think it’s a bit more complicated (and stupid) than that. Liberalism is an ideologically complex tribe. The corporate-welfarist technocrat wing have pretty predictable reasons for favoring the military-industrial complex and corporate plutocracy in general, but in selling this to all the various niches and clans that constitute The Left the reasons get diluted or transmuted altogether into the lowest common denominator, until at last the only reason any of them are for this stuff is because the Republicans are against it. When the Republicans get into power and pull the same shit the more egalitarian and libertarian leftists will have their coherent ideological reasons for being against it, but as the opposition trickles “up” the reasons behind it will get watered down to the lowest common denominator once again: “The Republicans are evil!”

    The same thing happens on the Right, of course. It’s a mistake to think of them as ideologically opposed. They’re tribally opposed. The actual ideological oppositions take place within The Left, or The Right. Think of it like the opposition between two monarchical regimes (monarchies fought each other all the time when they ruled the world); each side has its liberals and its authoritarians, its doves and its hawks, etc. and those conflicts are (sometimes) about actual ideas, but the conflict between the two different regimes is purely tribal or personal politics.

  5. #5 |  Nancy Lebovitz | 

    thomasblair, there was a brilliant little essay that came out soon after 9/11 about the event proving whatever the speaker already believed.

    Anyone have a link for it?

  6. #6 |  SJE | 

    Liberal’s weakness is that they assume that good intentions will yield good results, and that the nasty bits of life can be removed by enough well intended rules. Reality teaches otherwise.

  7. #7 |  JOR | 

    #6 Funny, that’s exactly what liberals (and conservatives) often say about libertarians (and everyone else they disagree with about anything).

    I think my explanation accounts for more of the data.

  8. #8 |  Chris | 

    So… It’s not funded by taxpayer dollars, it helps businesses compete internationally, and every industrialized nation has a similar export credit agency.

    What exactly is the problem here for libertarians? General ideology?

  9. #9 |  derfel cadarn | 

    The continuing duplicity of the Left again rears its ugly head.

  10. #10 |  Episiarch | 

    #3 JOR, excellent post. This is why, to an outside observer, there is no real difference between TEAM RED and TEAM BLUE. They are merely the two tribes, and a partisan picks one for various identity reasons, and that’s it: that’s their TEAM now, and anything the other TEAM does is bad.

    This is also why they have zero integrity. They may claim to believe in something, but the instant they need to change their position to oppose the other TEAM, they do it, no matter what. If TEAM RED became 100% pro-abortion tomorrow, TEAM BLUE would immediately oppose it, because opposition is what the tribes do.

  11. #11 |  hilzoy fangirl | 

    I think it’s more that liberals are less concerned about “economic freedom” or property rights and more concerned about sound policy. If the Ex-Im Bank is doing more good than harm then I’d be inclined to support it, and to oppose it if not. The fact that most of its loans are going to large corporations certainly makes me more skeptical of it, but it’s hardly evidence that funding the bank is bad policy.

    (Likewise, in situations where the evidence actually shows that reducing regulations or taxes will have a beneficial impact on the economy and on workers, I suspect [hope] you’d find that most liberals would be supportive of such efforts. But you actually need to have the evidence. Where’s the beef?)

  12. #12 |  Articles for Thursday in Late March, Still Cold Out » Scott Lazarowitz's Blog | 

    [...] Radley Balko: Liberals Lovin’ on Corporate Welfare [...]

  13. #13 |  Leon Wolfeson | 

    @3 – Oh yes, the long term damage in the Nordic…oh, wait, healthy, happy, prosperous.

    Keep up the Hate.

  14. #14 |  Leon Wolfeson | 

    @8 – Someone on the left liked it.

  15. #15 |  Nick T. | 

    Tribalism really seems to be showing up with this healthcare debate. The insurance mandate was an idea of the right’s for about 15 years. Then it was part of the Dem-supported/created ACA and now every Dem/liberal is out defending it and singing its praises – note, another policy that can accurately be described as corporatist.

    If Newt Gingrich had drafted this mandate and President McCain signesd it into law, I am just about convinced those same folks would oppose it, and vehemently.

  16. #16 |  Kevin | 

    @#11

    I think it’s more that liberals are less concerned about “economic freedom” or property rights and more concerned about sound policy.

    Hahahahaha…. Hahahahahahaha. Heh.

    That was pretty good.

    Back on topic, there was an excellent post along these lines over at Bleeding Heart Libertarians a few months ago (link below). We should be too surprised by this, really. As per median voter hypothesis, status quo policies are usually quite popular.

    http://bleedingheartlibertarians.com/2011/11/dear-left-corporatism-is-your-fault/

  17. #17 |  SJE | 

    @8:

    The problem with ExIm can be best explained by how it hurts american companies. ExIm subsidizes Boeing to export aircraft, which translates to a discount for foreign airlines, which gives them a competitive advantage against US carriers. Thus, ExIm bank helps Boeing, but hurts U.S. airlines, and costs the US taxpayer.

  18. #18 |  rmv | 

    @8 Chris

    Even if in the first-order, it is not directly funded by US taxpayers, it is paid by the US taxpayers in the second-, due to higher consumer costs for goods and services. Not to mention, like freddie and fannie, the Ex/Im is, at least, implicitly guaranteed by the US Federal Government.

    There’s also the false notions that imports are inherently bad and that exports are inherently good. Due to the way the balance of payments is formulated, having a current account deficit(trade deficit), by identity, is offset by an equal capital account surplus(investment surplus). All that tweaking the balance in a top-down manner does is upset the patterns of specialization and trade to a less economically efficient form. Lower economic efficiency = lower economic growth = everyone pays for corporate welfare.

    The last question basically amounts to, “Well, if Billy’s parents let him go to the party, why can’t I?”

  19. #19 |  awp | 

    @8,

    If they are not recieving any subsidy, then why does the govt. even need to be doing it.

    Fannie mea, Freddie mac, FHA, and all the too big to fail banks weren’t receiving an explicit subsidy.

    My guess is that they are receiving an implicit subsidy. If the market is not willing to give a trade loan for less than 6% but the EXIM bank is willing to go at 3% because it is backed by the government which only has to pay 1%, then there would appear to be no subsidy. On the other hand you have to convince me that the risk being taken is only worth the 3% interest and for some reason the private actors, who are playing with their own money, is wrong and the government, who is playing with other people’s money, has some better insight and is correct.

  20. #20 |  Mantooth | 

    From the headline I thought there would be more than just one guy at The Nation supporting this.

  21. #21 |  Leon Wolfeson | 

    @14 – Bob Dole campaigned for it back in 1996. Things have moved THAT far right since then. And hardly, it’s still better than the current situation.

    And hey, you could pass a sensible insurance-based system like the one in the Netherlands… (but no, better to bicker and ensure you get an expensive mess as a “compromise”)

  22. #22 |  rmv | 

    @19 Mantooth

    Liberals, like conservatives, love corporate welfare.

    http://www.democraticunderground.com/125124570

    http://www.dailykos.com/story/2012/03/29/1078814/-Bipolar-Schadenfreude-No-ROI-for-electing-Republicans-or-Democrats

    http://thinkprogress.org/economy/2012/03/16/446179/delta-cantor-export-bank/

  23. #23 |  Boyd Durkin | 

    Oh yes, the long term damage in the Nordic…oh, wait, healthy, happy, prosperous.

    The myth of Scandinavian socialism.

    1. Iceland success?

    2. Scandinavian countries are not nearly as socialist as leftist claim them to be. Most all have greater business freedom, monetary freedom, and property rights enforcement than the US currently “enjoys”.

    3. Most importantly? Scandinavian countries have much less corruption than the US at local, state, national levels in police, justice, and politics.

    There’s more, but I just included the easy-to-understand points. As usual, it is folly to declare socialism or “leftism” clearly superior (and therefore declare any number of inane ideas and policies superior) based on over-simplification of complex economic and societal interactions.

    The only way you can use Scandinavian “successes” as proof that socialism is superior to (USA) capitalism is if you promote the premise that all Scandinavian countries are purely socialist and the USA is purely capitalist. Neither of these is true and such a claim would mark you as a fool. A fool, I say.

  24. #24 |  CSD | 

    I think the Boeing high level of subsidies are a result of a battle with Airbus. It has become trade war of sorts between the US and Europe. Before you know you get all patriotic and there goes a few billion bucks.

    http://news.bbc.co.uk/2/hi/business/3722888.stm

    “The US claims Airbus has received the equivalent of $40bn (£22.4bn; 32bn euros) in subsidies since its inception in 1967, mostly in the form of government loans with advantageous repayment terms.

    The EU says Boeing has pocketed some $18bn in direct and indirect subsidies since 1992, including a $3.2bn tax break from the authorities in Washington state, where the firm has assembly operations. “

  25. #25 |  Leon Wolfeson | 

    @21 –

    Iceland screwed themselves over with their bank fiasco. Ask one of them about it – they’ll admit quite readily they managed to inflate a huge bubble which promptly burst on them. It was the only nordic to get into banking in a major one and the only one to be screwed by it.

    As to the Nordic nations – their system is “Folkesocialisme” (there are no “pure” political systems in this world outside North Korea)

    They have a highly redistributional tax system, a strong welfare net and a policy of individual help which enables individuals to be in free association.

    They absolutely have a very strong free market and associated tax policies. Folkesocialisme doesn’t rule that out, and there’s a strong mutual and cooperative movement within the Nordic nations which actively encourage free markets (and opposes, in many aspects, capitalism).

    Trying to slap a single label on something as diverse as socialism is a mistake.

    America? It isn’t capitalist. It’s corporatist. Capitalism’s flaws are magnified by corporatism.

  26. #26 |  Jerryskids | 

    Fun facts – Boeing is unionized. The International Association of Machinists & Aerospace Workers in Seattle, Washington gave $148,367 to Democrat campaigns (and $2400 to Republican campaigns). Not that this has anything to do with whether or not liberals would support the Ex-Im giving low-cost loans to Boeing.

    And a quick glance at the Ex-Im’s financial statement shows “Borrowings from the U.S. Treasury (Note 11) $8,279.3″ (figures in millions). That would be over $8 billion they borrowed from the Treasury while their total net profits for the year were ($207.4). That would be a negative $207 million dollars. Not sure how you can manage to lose money if your business is giving away government money.

  27. #27 |  Big Business Liberals » Right Thinking | 

    [...] Radley Balko points out, The Nation has come out swinging in favor of the Ex-Im bank, a New Deal relic that was [...]

  28. #28 |  JOR | 

    “If TEAM RED became 100% pro-abortion tomorrow, TEAM BLUE would immediately oppose it, because opposition is what the tribes do.”

    I don’t expect a reversal like that but it’s possible. Pro-abortion ideological seeds are already pretty deep in many segments of what we call The Right, even if they’re buried under the surface at the moment (obsession with parental authority and familial sovereignty being the biggest ones; abortion and outright infanticide are long-standing practices in traditional families). And of course the “bleeding-heart” morality or egalitarianism on many parts of what we call The Left, and always shaky relationship between mainstream liberals and serious feminism, could kick off leftist opposition to the Anti-Child Right.

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  36. #36 |  Nathanael | 

    Correct, JOR. And correct, hilzoy fangirl — though you only describe *some* of us liberals (the ones with integrity…).

    As for Radley, he really should ditch his corporate-whore buddies; he’d be happier as an independent. He’s really showing the Team Red behavior which JOR describes on every issue except civil liberties (where thank goodness he gets it).

  37. #37 |  Nathanael | 

    Regarding PPACA .”…Now every Dem/liberal is out defending it and singing its praises ”

    …not true at all. Go Google “single-payer”. You’ll find a lot of the liberals with integrity never approved of PPACA, certainly not of the mandates or propping up the private insurance companies (though it had some good stuff thrown in as “sweeteners”).

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