September 03, 2002
Ex-Im Bank -- The Biggest C...
Ex-Im Bank -- The Biggest Corporate Welfare Enabler?: Reader Scott Ross sends along this damning Sunday New York Times story about the Export-Import Bank of the United States. A sampling:
More fundamentally, there are questions about why the bank exists at all. Less than 1 percent of all American exports receive Export-Import financing, which comes in the form of direct loans, loan guarantees or export credit insurance. The bulk of Export-Import's benefits go to a small number of large companies that are sophisticated enough to get financing on their own: Boeing, Halliburton, General Electric, Northrop Grumman, Lucent Technologies, ChevronTexaco, Caterpillar and Dell Computer, among others. [...]
[T]here is a clear reason the bank thrives, no matter who occupies the White House or the top jobs in Congress. While the bank cannot lobby for itself, its beneficiaries can.
"You have an incredibly well-funded lobbying operation led by companies that are not only campaign contributors but also talk about creating jobs," said Thomas A. Schatz, president of Citizens Against Government Waste, a public interest group. "That's a big rallying cry for members of Congress. They think that jobs will help them get re-elected, and once you say that jobs are at risk in their district, they go running for cover."
These days, blue-chip companies have even formed a trade association, the Coalition for Employment Through Exports, whose sole job is to protect the bank from budget cutters. Members include Washington lobbying powerhouses like the United States Chamber of Commerce, the National Association of Manufacturers and companies like United Parcel Service, Verizon Communications, United Technologies, Bechtel, Oracle, Citigroup and Bank of America. [...]
For instance, the bank recently started a program to support one of the nation's strongest exporters, the film industry. Among the first four independent films to receive Export-Import loan guarantees is a story of troubled youth called 'The United States of Leland,' produced by and starring Kevin Spacey, the Oscar-winning actor. Other films with Export-Import backing are about a lethal virus, a military project gone awry and a reality show.
It goes on, and on, and on. President Bush, who once supported scaling the agency back, is now apparently trying to boost its loan-guarantee limit to $100 billion. Ross asks:
Can you find me a talented, responsible journalist to dig up the facts on this crap and get a few other people pissed off?
Well, I don't know about launching huge investigations, but the go-to guy on quasi-governmental lending institutions is Henry Copeland
, who has written memorably on the European Bank for Reconstruction and Development, and especially on the weird Hpyhenated-American Enterprise Funds in 1990s Central Europe.
Posted by at September 3, 2002 04:39 PM
I've said it more than once: if the liberal big-government paradigm had not prevailed, the enormously powerful club and pocketbook that government has now become would not be the honeybucket it is for every rich corporation. If our government was not so enormously rich and powerful, there would be no reason for companies to bribe its leaders for their own private advantage.
It is a primary tenet of some branches of libertarianism that, once any government reaches a certain size and power, it makes more sense for special interests to attempt to manipulate government for their own purposes than to try to achieve the same goals on their own.
One way this works is in corporte welfare, as you note. With a million dollar bribe donation, a big company can get its hands on ten million in government funding.
Another way is through highjacking the regulatory process. All big companies are in bed with the bureaucrats who run the regulatory agencies that govern the various industries. One result is the crafting of regulations that raise the cost of entry to new corporations to impossible heights. Thus General Motors can use government regulators to insulate itself from competition.
And so on.
It's an unintended consequence of liberal big government: Make it big enough, and of course special interests will try to hijack it for their own ends - and, most likely, succeed.
Rather ironic that Matt fails to mention another group that is ALWAYS ready to lobby for the Ex-Im Bank: the labor unions. Everytime there are threats of cuts to the bank, the aerospace mechanics locals here in Seattle go ballistic (Boeing, get it). But, oh, I forget, labor unions are never to be spoken ill of by the lefties.
Rather ironic, Crawford, that you have about as much insight into my opinion of labor unions as I do about your taste in music. Thanks for the additional info, though. That partisan loogie-hawking contest you were apparently looking for can be found, in spades, at Media Whores Online and FreeRepublic.com. Give my best to Hermokrates and Patriot4Ever.
I've said it more than once: It's the corruption stupid!
It knows no ideological boundaries nor size of of organization.
Its most glaring manifestation is in the abuse of the rule of law that is in reality responsible for all kinds of reactionary responses in the form of; labor unions, the left, the right, the middle, the anarchists, the libertarians, the socialists, the commies, etc., etc., and every other well meaning fix it group that has been formed because their dick head members just don't get it;
It's the corruption stupid!
American government and capitalism, free of corruption, rocks!
Stay on Bush and those Saudis!
Warren, you simply cannot avoid the corruption when you make the rewards of corruption so attractive. Dick head, though. Where can I learn to sling fancy invective like that? Did you go to school?
Damn, this thread getting *nasty*! Bill, your line of thought is interesting (you've left a recent comment along these lines, if I remember right). In this very specific case, though, it's not a strict regulation/lobbying dynamic, since the Ex-Im bank isn't really regulating anything, far as I can tell. Rather, it's just a matter of a big, well-funded government-run financial institution, which means that the usual tactics of lobbying apply here as well. Maybe it's even more insidious, because there isn't a specific citizen group to be outraged by the transgressions of regulation (i.e., Naderites pissed at a weak EPA).
Which brings up an interesting point -- I don't remember getting the impression from Nader & his supporters/fellow travelers that the very real regulations they pushed for would somehow *create* their own, ah, skirting (it's really hot down here, and I can't find vocabulary). That said, being a left-leaning Nader voter myself, I don't automatically assume that *all* regulation creates its own undoing by definition (Malcolm Gladwell had a pretty interesting argument along those lines in the New Yorker soon after Sept. 11, talking about airbag-safety, if memory serves, and I didn't fully agree with him then, either).
So yeah, it's an interesting topic, but it's also tangential to the Ex-Im Bank. Dave Crawford's comment, about labor lobbying heavy for Ex-Im, makes perfect sense along these lines -- it's presumably a well-funded behemoth that doles out cash at below-market rates, so everyone wants it to stay in business, except for some libertarian-minded good-government folk. I think Scott Ross is right -- institutions like this need some well-placed boots on the neck. I'd love to see a simple even-Matt-can-understand-it chart showing every such U.S. government-supported lending institution, their total loan portfolios, and a few other pertinent details....
I'm hoping Henry Copeland will have written about this before I wake up tomorrow....
Regarding your response;
"Warren, you simply cannot avoid the corruption when you make the rewards of corruption so attractive."
I was simply saying the rewards of corruption are attractive AT ALL LEVELS, AND TO ALL ORGANIZATIONS, many of which [of a political nature] owe their creation to a misperception of the root cause - the corruption. The charlatans among us are very good at what they do. The corruption, which negates and skews the normal political process, is responsible for the "liberal big-government paradigm" [ Your perception, not mine, I see only one party of self serving, puppet Repubocrats. ] prevailing in the first place.
I was taking issue with your limiting the phenomenon and your railing against what I view as more of an effect as opposed to the cause.
Matt would like to see where the corruption is when he states;
"I think Scott Ross is right -- institutions like this need some well-placed boots on the neck. I'd love to see a simple even-Matt-can-understand-it chart showing every such U.S. government-supported lending institution, their total loan portfolios, and a few other pertinent details...."
Right on! Its the corruption stupid! [I am merely paraphrasing here folks, please take no offense.]
No I did not go to school - it was all an indoctrination.
The fancy invective slinging, as well as my insensitive response - apologies to you Mr. Quick, it was not really meant to be personal - came from a three beer buzz.
Hope you slept well Matt. Gee, what's the phone number for getting a loan? We need to export Blogads to China! One billion bloggers + Blogads + nontransparent economy = revolution.
But seriously, the US backs similar programs for average folk called Fannie Mae (1968) and Freddie Mac (1970), which underwrite trillions in home morgages.
In theory this is good because it enlarges the pool for lending to home-buyers. In practice, no government hand-out goes unpunished:
a) FNMA and FHLMC engage in lobbying. (http://www.ncpa.org/pd/monthly/pd296i.html)
b) One could argue that their funding also unnaturally depress interest rates and thereby drive up housing prices. That's OK as long as prices keep rising, but if the economy faulters, plenty of housebuyer will find themselves with a nasty rash of negative equity.
c) It also means that banks don't pay as much attention when they lend since they can dump the morgages on FNMA and FHLMC. Watch the sh*t fly when default rates rise and the government has to bail out FNMA/FHLMC.
One congressman (Richard Baker) argues that the two institutions are underscrutinized and undercapitalized.
Re FNMA & FHLMC one could also argue that by driving down interest rates they lower the overall cost of housing providing a giant pork dinner for developers subsidizing urban sprawl roadbuilding SUVs hurrr huurrr also enabling white flight busing flight commuter culture mall culture stripmall culture and uh that free market we're all so proud of. Ahem.