Corporate Welfare

Townhall.com ^ | March 23, 2011 | John Stossel

[Kaslin]

In America today, the biggest recipients of handouts are not poor people. They're corporations.

General Electric CEO Jeffrey R. Immelt is super-close to President Obama. The president named Immelt chairman of his Council on Jobs and Competitiveness. Before that, Immelt was on Obama's Economic Recovery Advisory Board. He's a regular companion when Obama travels abroad to hawk American exports. (Why does business need government to do that?)

"Jeff Immelt is perhaps the CEO who is most cozy with President Obama," says journalist Tim Carney. "General Electric is structuring their business around where government is going ... high-speed rail, solar, wind. GE is lining up to get what government is handing out."

Businesses love to have government as their partner. There's safety in it. Why take chances in a marketplace full of fickle consumers and investors, when you can get secure money and favors from the taxpayers? It's an old story, and free-market advocates as far back as Adam Smith warned against it. Unfortunately, too many people think "free market" means pro-business. It doesn't. Free market means laissez faire -- prohibit force and fraud, but otherwise leave the marketplace alone. No subsidies, no privileges, no arbitrary regulations. Competition is the most effective regulator.

Left-wingers criticize corporate welfare until it's for something they like -- for example, "green technology."

"The government's going to invest in certain companies to pioneer new technologies. That, I think, is not corporate welfare," says Tamara Draut of the Progressive think-tank Demos.

I asked her if business is too dumb to pioneer without government direction.

"The private sector will only invest if they know for sure that there is a commercial marketplace."

But if everyone wants these products, that should be an incentive for greedy businesses to make them.

"Not always," she replied. "But the free market does not know anything unless we all collect our interests and say: This is of national import to us."

This is nonsense. How did Apple know we would want iPods, iPhones and iPads? It didn't know with certainty. It took a risk with its own and investors' money.

But for some reason, other products and services are different, according to people like Obama and Draut.

"We desperately need high-speed rail in this country," she says, meaning the taxpayers must be forced to finance it.

The government gives companies billions of dollars to develop new trains. Guess who receives some of that money.

GE.

The problem is that government has no wealth of its own. All it can do is move wealth from where the market would have channeled it to where politicians want it. Who knows what would have happened if free people had the money that goes to high-speed rail? Maybe cancer would have been cured.

"The private sector isn't going to cure cancer by itself," Draut says.

Greedy drug companies aren't going to cure cancer? I asked.

"They would have by now, if they could."

People with a central planner's mentality have what F.A. Hayek called "the fatal conceit."

I'd have thought the fall of the Soviet Union would have taught us that central planning is destructive, but the conceit of the central planners lives on. Maybe the problem isn't merely economic ignorance. Maybe it's something more sinister: a wish to keep the freeloading system going. After all, if politicians and business leaders admit that government cannot play a constructive role in the economy, what grounds would there be for subsidies, shelter from competitors and other privileges at the people's expense? The anti-free-market ideology is a vast rationalization for favoritism.

The favors, of course, go those who are best at lobbying for them, those with connections and the means to make big campaign contributions. So the government pours billions of taxpayer dollars into wind farms that are half-owned ... by GE.

I bet it's a waste of money.

"Well, maybe it is," Draut says. "But it should be one thing that we, as a nation, are investing in so that we aren't left behind."

This sort of nonsense provides intellectual cover for privilege and crony capitalism.

[ninonitti]

This is known as crony capitalism

"The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism — ownership of government by an individual, by a group, or by any other controlling private power" FDR (and he would know ;-) )

[GeronL]

crony capitalism

end all corporate and agricultural subsidies

[Dudoight]

If only Jack Welch was still heading up GE...this Immelt fool is just an idiot. I think he is putting his eggs in the wrong basket.

[Condor51]

It seems to me that John Stossel's beef is with GE, but he won't specifically come out say it. He lumps it/them under 'Corporate Welfare'. One of the pinko-commie's favorite anti-capitalist memes.

But if I recall my American History correctly, if it wasn't for 'Corporate Welfare', aka: Deal Making with the FedGov, the USA's westward expansion into 'Injun Country' never would have happened (Or occurred as fast as it did).

That said 'Corporate Welfare' I refer to was with those *evil* Railroad Barons. And where those *evil* Baron's tracks were laid, towns, people and families soon followed. Additional 'Corporate Welfare' for the *evil* RR Baron's gave us the First Transcontinental Railroad and the 'Golden Spike' - which ended the race between the Central Pacific and Union Pacific railroads.

So come on John. If your beef is with GE man-up and fricken say it. Don't hide behind an ambiguous 'Corporate Welfare' rant.

[DUMBGRUNT]

Regulatory capture is the objective.
A million here or there, whatever it takes.
Just so long as the spec our products.

[Adder]

That is very true and corporations go along with it because they think it make their competitors have to play by the same rules...[tho that isn’t working too well when the goods are coming from overseas, in some cases].

Plus, corporations, the larger ones anyway, don’t particularly care what the regulations etc cost anyone. They just shrug and point to government...and mark up the cost of complying.

[isaiah55version11_0]

Francisco's 'Money' Speech from "Atlas Shrugged"

“…when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.”

http://www.freerepublic.com/focus/f-news/2158115/posts

[Mack the knife]

But if I recall my American History correctly, if it wasn’t for ‘Corporate Welfare’, aka: Deal Making with the FedGov, the USA’s westward expansion into ‘Injun Country’ never would have happened (Or occurred as fast as it did).

---

Unfortunately, the American History you read was evidently sanitized by the big government crowd. I discovered a “History of the US Railroads” written in about 1900 in the UCLA library stacks, and it told a classic story of unintended consequences.
* Congress passed the Railroad Land Grant Act in the 1850s, giving the railroads alternate sections of land whereever they laid track.
* the Boards of Directors of most railroads formed track laying companies, laid track through every fertile valley they could find, and sold the track to their railroad, selling the land to land speculators (to make them, not the railroads, richer)
* the demand for track was so large that steel mills produced crappy steel rails.
* all the crappy rails began failing in the late 1870s, so all the railroads tried to sell bonds to replace the track ... couldn’t sell them, and every railroad that took a land grant went bankrupt in the great crash of 1881.
* Vanderbuilt saw this coming, sold his steamship line to the British, and used the cash to purchase all the railroads in their bankruptcy sales at 5 cents on the dollar of assets, and thus created a huge railroad monopoly.
* Vanderbuilt still needed money to replace the track, so he raised rates to the Kansas farmers shipping wheat to Chicago. For example, he would charge $15 per ton for shipping wheat from Kansas to Chicago, but $5 per ton to ship that same wheat from Chicago to California
* Kansas farmers cried foul, and Kansas Legislature passed legislation to control railroad shipping rates.
* the US Supreme court declared the laws unconstitutional, with only Congress having that power.
* The Kansas farmers started the Grange Movement to elect a Congress that would regulate the railroad rates.
* Finally, Congress set up the Interstate Commerce Commission to regulate the railroad rates - the first insertion of Federal Governement Regulation into the economy (except for the US Bank, which is a different story).

Thus, the “Corporate Welfare” aka Deal Making with the FedGov, led inexorably to even more government interference with the economy.

This happens all the time - government actions lead to bad outcomes that justify additional government actions. Current case in point: “Well meaning” politicians subsidize “green energy”, get critized because the promise of cheap clean energy is not realized, and pass legislation to demand power companies buy a quota of “green energy”, causing power rates to increase.

Whether it is ethonol, wildmills, solar, electric cars ... it is crony capitalism, where the government is picking winners and losers ... except that the taxpayers lose.

[freedomfiter2]

The end doesn’t justify the means. Taking people’s money and giving it to someone else is thievery.

[triumphant values]

You two are just the type of “conservative” this article was written to address.

[lentulusgracchus]

Corporations don’t pay taxes. Their shareholders and their customers pay the tax. Less hiring too.

That's a line. When sellers can't shove the tax to their buyers, they eat the tax out of their profits and their shareholders' returns -- they pay.

Signing up the public to pay business taxes directly and take full responsibility for that revenue handle has been a 40-year holy grail of the pigs at the trough.

IMHO, Corporations should be paying little or no taxes to the federal government.

Cant. Garbage. "IMHO you ought to be paying my property tax." -- How do you like that one? Hey, I got expenses!!

[lentulusgracchus]

You two are just the type of “conservative” this article was written to address.

Clarity bump, bears repeating. Ayn Rand used to puke on ideas like that -- at book-length.

[lentulusgracchus]

It seems to me that John Stossel's beef is with GE, but he won't specifically come out say it. .... So come on John. If your beef is with GE man-up and fricken say it. Don't hide behind an ambiguous 'Corporate Welfare' rant.

He did. He wrapped it around the Tim Carney quote, which pointed directly at GE and Immelt and said that GE is doing corporate welfarism under Immelt's guidance:

"General Electric is structuring their business around where government is going ... high-speed rail, solar, wind. GE is lining up to get what government is handing out."

Seems clear enough to me. You're just pissed at Stossel for calling out Fortune 500 companies that prefer to milk the public.

[KeyLargo]

I’m going to DVR Stossel tomorrow.

March 24, 2011 10:54 AM UTC by John Stossel
FREELOADERS: A John Stossel Fox News Special (10PM ET This Friday)

Some Americans actually make a living … begging for money. Professional panhandlers, they’re called, sometimes making more than $100 in a day. John Stossel tried it in Manhattan, and made over $11 in one hour—that would be $23,000 a year—tax free!

It’s a small example of why some said that the USA is turning into a nation of freeloaders. The Manhattan Institute’s Heather MacDonald says that beggars she’s encountered “have the most deep-seated sense of entitlement that I’ve ever come across.”

Read more: http://stossel.blogs.foxbusiness.com/2011/03/24/freeloaders-a-john-stossel-fox-news-special-10pm-et-this-friday/#ixzz1HYpQdINn

[WOBBLY BOB]

GE CEO: “We are all Democrats Now”

http://www.economicpolicyjournal.com/2009/11/ge-ceo-we-are-all-democrats-now.html

now I get what he meant! Charlie Rangel, Tim Geithner,
Tom Daschle...

[WOBBLY BOB]

end all corporate and agricultural subsidies

but you'll never win in Iowa with that "meanspirited" talk.