General Discussion
In reply to the discussion: Elizabeth Warren takes care of defense industry at home [View all]JonLP24
(29,322 posts)I have also posted this Politico link often. We need to end it with the corporate subsidies they are stupid, politicians keep quibbling over ways to improve spending -- balance the budget when the logical & best place to start is the corporate subsidies
Welfare for the Well-Off: How Business Subsidies Fleece Taxpayers
The Illogic of Corporate Subsidies
Proponents of federal subsidies to private industry maintain that a government support network for American firms promotes the national interest. A multitude of economic, national security, and social arguments are offered to justify corporate aid. For example, government aid to industry is said to preserve high-paying American jobs; subsidize research activities that private industries would not finance themselves; counteract the business subsidies of foreign governments to ensure a level playing field; boost high-technology industries whose profitability is vital to American economic success in the twenty-first century; maintain the viability of "strategic industries" that are essential to American national security; finance ventures that would otherwise be considered too risky for private capital markets; and assist socially disadvantaged groups, such as minorities and women, to establish new businesses.
But let's walk through the logic of corporate welfare subsidies and undress the argument in simple terms. Let's begin by accepting the proposition that if the federal government gives $5 million to IBM, that IBM will use the money for some productive purpose. The funds may be used, for example, to help IBM underwrite research and development for the next generation of computer products, expand a domestic operation, or increase its industry market share as it competes with domestic and foreign rivals. It would seem that everyone wins: American workers, IBM shareholders, and the U.S. economy as a whole.
But hold on. That is not the full story. If the federal government offers IBM a $5 million research grant, every other American firm and non-IBM worker would be disadvantaged because the rest of us have to pay the taxes or help underwrite the debt so that Uncle Sam can give IBM a check. The fact that IBM may produce something of value with the $5 million hardly makes a prima facie case for this income transfer. After all, if Congress were to send you or me a check for $5 million, we could no doubt find useful things to do with the money--many of which might have genuine societal benefits. We might give some of the money to charity, thus helping the poor. We might use the funds to start a new business, thus building up the local economy. We might build a swimming pool in our backyards, creating construction jobs for American workers. In fact, we could no doubt issue a compelling report to the relevant committee in Congress assuring the politicians in Washington that we had made good use of the tax dollars. If we can claim membership in some "disadvantaged" group--African-Americans, Latinos, women, disabled persons--we can make the additional claim that these funds are helping a downtrodden group in society. We could (and given human nature, probably would) advise Congress in our report that the government give us $5 million again next year, so we can even do more good things for our fellow man.
Hopefully the fallacy of our defense of our grant, and IBM's, is self-evident. It is based on a false logic that permeates the corporate welfare debate called "single-entry bookkeeping." It is the deceit of counting the seen but not the unseen. The Commerce Department--which is the command and control center of America's modern-day corporate welfare state--claims to have created 250,000 jobs through its business assistance programs. This is indeed an impressive number. It seems well worth the $5 billion a year we spend on the department's economic development activities. Where does the number actually come from? The answer is that Commerce officials count all the new jobs that have been directly created through the grant dollars it distributes to the IBMs and the Chevrons each year. Take away the grants and presumably the 250,000 jobs vanish.
http://www.hoover.org/research/welfare-well-how-business-subsidies-fleece-taxpayers
That said she still ranks behind Sanders on my list for President (she's not running so I default to the next candidate that emerges (tie between Clinton-O'Malley at this point don't trust neither). The sad thing is 99% of politicians push corporate subsidies.