Corporate welfare

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Corporate welfare is a term that analogizes corporate subsidies to welfare payments for the poor.[1] The term is often used to describe a government's bestowal of money grants, tax breaks, or other special favorable treatment on corporations or selected corporations, and implies that corporations are much less needy of such treatment than the poor.[1] The term is used interchangeably with crony capitalism; to the extent that there is a difference, the corporate welfare might be restricted only to direct government subsidies of major corporations, excluding tax loopholes and all manner of regulatory and trade decisions, which in practice could be much larger than any direct subsidies. The term, "Corporate Welfare", was reportedly invented in 1956 by Ralph Nader;[2] conservatives like Grover Norquist prefer "Crony capitalism".

Origin of term[edit]

The term "corporate welfare" was coined by Ralph Nader in 1956.[3] The Canadian New Democratic Party picked up the term as a major theme in its 1972 federal election campaign. Its leader, David Lewis, used the term in the title of his 1972 book, Louder Voices: The Corporate Welfare Bums.[4]

Alternative adages[edit]

"Socialism for the rich, capitalism for the poor"[edit]

Believed to have been first popularised by Michael Harrington's 1962 book The Other America[5][6] in which Harrington cited Charles Abrams,[7] a noted authority on housing.

Variations on this adage have been used in criticisms of the United States' economic policy by Vice President Joe Biden,[8] Martin Luther King, Jr.,[9][10] Gore Vidal,[11][12][13] Joseph P. Kennedy II,[14] Robert F. Kennedy, Jr.,[15] Dean Baker,[16] Noam Chomsky,[17] Robert Reich,[18] John Pilger[19] and Bernie Sanders.[20]

United States[edit]

Background[edit]

Subsidies considered excessive, unwarranted, wasteful, unfair, inefficient, or bought by lobbying are often called corporate welfare.[1] The label of corporate welfare is often used to decry projects advertised as benefiting the general welfare that spend a disproportionate amount of funds on large corporations, and often in uncompetitive, or anti-competitive ways. For instance, in the United States, agricultural subsidies are usually portrayed as helping honest, hardworking independent farmers stay afloat. However, the majority of income gained from commodity support programs actually goes to large agribusiness corporations such as Archer Daniels Midland, as they own a considerably larger percentage of production.[21]

Alan Peters and Peter Fisher (Associate Professors, Graduate Program in Urban and Regional Planning, University of Iowa)[22] have estimated that state and local governments provide $40–50 billion annually in economic development incentives,[23] which critics characterize as corporate welfare.[24]

Some economists consider the recent bank bailouts in the United States to be corporate welfare.[25][26] U.S. politicians have also contended that zero-interest loans from the Federal Reserve System to financial institutions during the global financial crisis were a hidden, backdoor form of corporate welfare.[27]

Comprehensive analyses[edit]

Cato Institute[edit]

Policy analysis conducted by the Cato Institute, an American libertarian think tank, argued that United States fiscal policy allocated approximately US$92 billion in the 2006 federal budget toward programs that the authors considered to be corporate welfare.[28][29] Subsequent analysis by the institute estimated that number to be US$100 billion in the 2012 federal budget.[30][31][32]

Independent[edit]

Daniel D. Huff, professor emeritus of social work at Boise State University, published a comprehensive analysis of corporate welfare in 1993.[33] Huff reasoned that a very conservative estimate of corporate welfare expenditures in the United States would have been at least US$170 billion in 1990.[33] Huff compared this number with social welfare:

In 1990 the federal government spent 4.7 billion dollars on all forms of international aid. Pollution control programs received 4.8 billion dollars of federal assistance while both secondary and elementary education were allotted only 8.4 billion dollars. More to the point, while more than 170 billion dollars is expended on assorted varieties of corporate welfare the federal government spends 11 billion dollars on Aid for Dependent Children. The most expensive means tested welfare program, Medicaid, costs the federal government 30 billion dollars a year or about half of the amount corporations receive each year through assorted tax breaks. S.S.I., the federal program for the disabled, receives 13 billion dollars while American businesses are given 17 billion in direct federal aid.[33]

Huff noted that deliberate obfuscation was a complicating factor.[33]

Commentary[edit]

In 2002, U.S. Representative Bernie Sanders scrutinized corporate welfare policies in the United States, which he estimated at a total of US$125 billion[clarification needed] annually.[34]

See also[edit]

References[edit]

  1. ^ a b c Kristof, Nicholas (March 27, 2014). "A Nation of Takers?". New York Times. Retrieved March 27, 2014. 
  2. ^ Ralph Nader on Corporations, OnTheIssues, retrieved 2014-09-03 
  3. ^ Chapman, Roger (2010). Culture Wars: An Encyclopedia of Issues, Viewpoints, and Voices. M.E. Sharpe. p. 119. ISBN 9780765617613. 
  4. ^ Lewis, David. Louder voices: The corporate welfare bums, Lewis & Samuel, 1972
  5. ^ Harrington 1962, p.170, quote: "socialism for the rich and private enterprise for the poor"
  6. ^ Robert P. Engvall (1996) The connections between poverty discourse and educational reform: When did “Reform” become synonymous with inattention? in The Urban Review Volume 28, Number 2 / June, 1996, pp. 141-163
  7. ^ Michael Harrington (1962) The Other America, p.58, quote: This is yet another case of "socialism for the rich and free enterprise for the poor," as described by Charles Abrams in the housing field
  8. ^ [1]
  9. ^ King's Light, Malcolm's Shadow, January 18, 1993
  10. ^ Thomas F. Jackson, Martin Luther King: From Civil Rights to Human Rights: Martin Luther King, Jr., and the Struggle for Economic Justice, ISBN 0-8122-3969-5, ISBN 978-0-8122-3969-0, page 332
  11. ^ Gore Vidal: Reflections Upon a Sinking Ship, Little, Brown, 1969
  12. ^ Gore Vidal: Imperial America, September 1, 2004
  13. ^ 'Free enterprise for the poor, socialism for the rich': Vidal's claim gains leverage, irishtimes.com, September 20, 2008
  14. ^ Kennedy: U.S. oil companies profit; Citgo helps the poor, MetroWest Daily News, January 24, 2007
  15. ^ Mark Jacobson: American Jeremiad, New York Magazine, February 5, 2007, see page 4
  16. ^ Baker, Dean (2006). The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer. Washington, D.C.: Center for Economic and Policy Research. ISBN 1-4116-9395-7.  Reviewed in: Scott Piatkowski: Socialism for the rich, www.rabble.ca, May 25, 2006
  17. ^ Noam Chomsky, "The Passion for Free Markets", Z Magazine, May 1997. Reproduced on Chomsky's official site.
  18. ^ Interview with Jon Stewart, The Daily Show, Oct 16, 2008: Available at The Daily Show Site
  19. ^ Full transcript of the John Pilger speech at the Sydney Opera House to mark his award of Australia's human rights prize, the Sydney Peace Prize: [2]
  20. ^ http://www.c-span.org/Events/Sen-Sanders-Held-a-Tax-Cut-Filibuster/20338/
  21. ^ USDA: American Farms www.USDA.gov
  22. ^ [3] Professors
  23. ^ Alan Peters and Peter Fisher, "The Failures of Economic Development Incentives", Journal of the American Planning Association, Volume 70, Issue 1, March 2004.
  24. ^ Economic Development or Corporate Welfare
  25. ^ Stiglitz, Joseph (December 8, 2010), US could cut deficit and gain, but that's unlikely, Sydney Morning Herald, retrieved 2010-12-22 
  26. ^ Folbre, Nancy (April 20, 2009), Welfare for Bankers, New York Times, retrieved 2011-04-28 
  27. ^ Schroeder, Peter (December 1, 2010), Sanders uses 'jaw-dropping' Fed disclosures to call for further inquiry, The Hill, retrieved 2010-12-15 
  28. ^ Slivinski, Stephen (2007-05-17). "The Corporate Welfare State: How the Federal Government Subsidizes U.S. Businesses" (PDF). Policy Analysis (Cato Institute) (592). Retrieved 2012-09-09. 
  29. ^ "The Corporate Welfare State". The Wall Street Journal. 2011-11-08. Retrieved 2012-09-09. 
  30. ^ DeHaven, Tad (2012-07-25). "Corporate Welfare in the Federal Budget" (PDF). Policy Analysis (Cato Institute) (703). Retrieved 2012-09-09. 
  31. ^ Bandow, Doug (2012-08-20). "Where to Cut the Federal Budget? Start by Killing Corporate Welfare". Forbes. Retrieved 2012-09-09. 
  32. ^ Hinkle, A. Barton (2012-09-05). "The Worst Welfare Benefits the Best-Off: Corporations". Richmond Times-Dispatch (Reason). Retrieved 2012-09-09. 
  33. ^ a b c d Huff, Daniel D.; David A. Johnson (May 1993). "Phantom Welfare: Public Relief for Corporate America". Social Work 38 (3): 311–316. doi:10.1093/sw/38.3.311. Archived from the original on 2012-11-06. Retrieved 2012-11-06. 
  34. ^ Sanders, Bernie (2002-05-15). "The Export-Import Bank: Corporate Welfare At Its Worst". United States Congress (Common Dreams NewsCenter). Retrieved 2012-11-06. 

Further reading[edit]

External links[edit]