Tag Archives: subsidies

Time to End All Corporate Welfare

It’s of little surprise that House Speaker John Boehner rejected attempts to end oil subsidies, considering the entrenched ties the GOP and the oil industry share. Companies like Chevron, Exxon, and ConocoPhillips all donate large sums of money to overwhelmingly Republican candidates and PACs. Make no mistake, I believe campaign donations are a form of free speech, a right of which a company should not be excluded from. Further still, Republicans are not the only party tainted by special interests. Democrats themselves have invested interests in maintaining the favorable position of labor unions and green energy companies. My contention here is the perverse incentive that exists as a result of oil subsidies.

Consider this model: politicians use their political power to expropriate taxpayer money towards favored interests causing a cyclical phenomenon of continual handouts for continual electoral support. Not too hard to comprehend or deny, is it? But look further and find a inherently immoral and unconstitutional weave.

First of all, on what moral basis does the government have to donate our tax money to a specific industry or company? Aren’t businesses a competent of  the economy? Of a free market? Of capitalism? Shouldn’t those businesses succeed for fail based on the level of satisfaction they provide to their customers (as opposed to their preferred politician)?

Corporate welfare, then, undercuts you and I, the taxpayer and customer. For example, AT&T, the nations largest telecommunications provider, is in the process of eliminating its unlimited mobile data service plans. Call them indulgent, but many Americans (including myself) have become accustomed to not paying by the bite and will find little reason not to switch to one of AT&T’s competitors that does offer unlimited plans. In large enough quantities, customer drops in turn might persuade AT&T to upgrade or expand its infrastructure to compensate for larger bandwidths. But introduce federal subsidies into the equation and AT&T can compensate for this hypothetical precipitous drop in customers.

Subsidies distort market signals and rest on the premise that the government can invest capital better than the private market could. Government, however, lacks the same market signals that private capital markets benefit from. Private investors are much more capable in determining what products and services have the greatest return on investment.

Take a quick glance over the Constitution and you might have a hard time finding Congress’ ability to fund businesses or form public-private ventures with financial behemoths or automakers. Such moral hazards are a gift from the Supreme Court’s generous and far-reaching interpretations of the General Welfare clause (to which we tip our hats) which has allowed Congress to expropriate money that is rightfully supposed to go to little things like protecting our rights as Americans.

It’s high time we end corporate welfare; not just for oil companies, but for all companies; not just because of times of austerity, tough choices, or constitutional reawakening, but because morally, the government has little sanction to spend our money on favors.

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