Dr. Jeffrey Miron at Harvard explains a few myths surrounding capitalism. For starters, capitalism is good for consumers, but not necessarily businesses.
Christian Wade, a journalist for Newsday, details the vast amount of tax breaks that towns in New York are giving to corporations to entice them to relocate. Opponents note that these tax breaks are paid for by the small businesses and taxpayers who receive no net benefits from this process:
In an era of rising taxes, big government budget deficits and public-payroll layoffs, Westchester County cities and towns continue to give away millions of dollars in tax breaks to close development deals and boost local economies.
Mike Milke, a senior fellow at the Fraser Institute, writes an editorial for the Calgary Herald about the dangers of corporate welfare. The article is Canada-centric but the problems he describes are universal and universally damaging to free markets:
If business leaders ever wonder why a chunk of the public disdains business, and calls for higher corporate taxes or sector-specific increases (higher royalty rates for energy and mining, higher stumpage fees in forestry), or just increased business taxation in general, here’s a clue: too many companies are addicted to corporate welfare.
Bob Weeks from Watchdogwire.com has written the following article, analyzing the economic situation of Wichita. Wichita has been adopted economic development policies that on paper were supposed to help the economy and spur economic growth. These policies are misguided and ill-conceived and actually reduce the possibility of sustainable economic growth in Wichita.
There is a lesson to be learned: Economic development incentives have a cost. Other businesses (and people) have to pay these costs. That only increases the motivation to seek incentives from the city and state. In fact, it may make it necessary to receive subsidies in order to be competitive with those companies who have incentives…
Wichita needs to build a dynamic economy that is based on free enterprise and entrepreneurship rather than government planning and handouts. This is the way we can have organic and sustainable economic development that will increase jobs and prosperity for everyone.
Tax Payers for Common Sense has published the following Fact Sheet, emphasizing the problem with Corn Ethanol subsidies. The study analyzes the history of Ethanol subsidies and the current support of these subsidies on current legislation like the 2008 Farm Bill. The study also determines the Taxpayer’s cost and the Environmental cost of this form of corporate welfare and the conclusions of this form of cronyism.
“It’s time the mature corn ethanol industry survived on its own two feet without taxpayer support. After more than 30 years of federal backing, corn ethanol subsidies scattered throughout the federal tax code and farm bill energy title should be eliminated once and for all. Economic, environmental, and public health costs would also decline if unintended consequences of ethanol production were ended, benefiting drivers, consumers, and the general public.”
Andrew Evans from Free Beacon has recently covered the current state of policies that the Ex-Im bank is undertaking. The Export-Import Bank is a government agency that gives credit to companies, often companies with big political connections. This week the president of the Ex-Im bank announced that their effort to “support” the economy will not diminish if or when the U.S. economy improves, which means that they will still support their crony friends indefinitely.
Congress reauthorized the bank after a bitter fight in the House of Representatives last year. Part of the deal that won the bank reauthorization required the treasury secretary to initiate negotiations with other countries to reduce and ultimately eliminate export subsidies. The Treasury Department did not return a request for comment on the status of these negotiations.
Committee ranking member Mike Crapo (R., Idaho) raised several objections to the bank in his opening statement, including that the bank offers “corporate welfare” to businesses and some of its financing hurts domestic companies. The three Democrats who attended the hearing praised Hochberg’s work at the bank.
Todd Shields from Bloomberg.com has written the following article, stressing how the program that was supposed to help people to find jobs has actually helped the richest man in the world to become richer. The government ‘Lifeline program’ was intended to help people to find jobs quicker; the results are a big subsidy of $2.2 billion last year alone; a quarter of which went to Mr. Slim’s TracFone Wireless Inc.
Started in 1985, Lifeline pays companies $9.25 per customer per month. It disbursed $772 million in 2008 and $2.2 billion last year, according to the Universal Service Administrative Co., a Washington-based nonprofit that oversees the subsidies.
Largest U.S. telephone company AT&T Inc. (T) took in $274.9 million and third-largest wireless provider Sprint Nextel Corp. (S), based in Overland Park, Kansas, received $273.5 million, according to the FCC. AT&T’s share includes aid for wired phone customers.
Jackie Bodnar from FreedomWorks announces the launch of a new FreedomWorks initiative to expose corporate welfare and cronyism. Grassroots activist will start targeting crony corporations like General Electric, by exposing their relationships with big-government and the ‘stimulus’ funds they have received.
“General Electric has a long history of profiteering off the size and cost of the federal government. Under Jeff Immelt’s leadership, GE lobbied for almost $100 million in grants out of the 2009 Obama stimulus, and continues to cash in with $5 million from the Energy Department this year alone.”
FreedomWorks activists plan to gather outside of GE’s Annual Shareholder Meeting on April 24th ,[..] to demand that GE return its almost $100 million in Obama stimulus money. Deneen and Tom Borelli are GE shareholders and will represent FreedomWorks inside the shareholder meeting.
Diana Furchtgott-Roth, from Real Clear Markets, has written the following article stressing how Italy has substantial problems in their economy. The EU forces Italy to buy subsidized alternative energy at almost five time the cost of other sources, increasing the Italian deficit and on top of that their politicians have the highest salaries in Europe.
Italian electricity companies have to buy all wind power generated at $392 per megawatt hour. They must buy solar power at $520 per megawatt hour. In comparison, electricity generated by natural gas costs $95 per megawatt hour. How ironic that the European Central Bank is trying to get Italy to reduce its deficit, yet the EU insists that Italy buy alternative electricity at four or five times the cost of natural gas. Austerity obviously doesn’t apply to electricity production.
Italy’s politicians have the highest salaries in Europe, $250,000 a year, plus $20,000 annually in travel expenses. When they retire, their pensions range from $47,000 to $200,000 a year.