Corporate welfare

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Corporate welfare is a term that analogizes corporate subsidies to welfare payments for the poor. 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. In practice, the term is often used virtually interchangeably with crony capitalism. To the extent that there is a distinction, the latter term could be considered broader, including all types of governmental decisions that favor the "cronies" (big businesses and industry lobby groups providing the bulk of political campaign contributions), while corporate welfare might be restricted only to direct government subsidies.

Contents

Origin of term [edit]

The term "corporate welfare" was popularized by Ralph Nader in 1956.[1] 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.[2]

United States [edit]

Background [edit]

Subsidies considered excessive, unwarranted, wasteful, unfair, inefficient, or bought by lobbying are often called corporate welfare. 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.[3]

Alan Peters and Peter Fisher (Associate Professors, Graduate Program in Urban and Regional Planning, University of Iowa)[4] have estimated that state and local governments provide $40–50 billion annually in economic development incentives,[5] which critics characterize as corporate welfare.[6]

Some economists consider the recent bank bailouts in the United States to be corporate welfare.[7][8] 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.[9]

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.[10][11] Subsequent analysis by the institute estimated that number to be US$100 billion in the 2012 federal budget.[12][13][14] It should be noted, however, that Cato's criteria, which are not clearly defined, do not include tax loopholes or trade barriers.

Independent [edit]

Daniel D. Huff, professor emeritus of social work at Boise State University, published a comprehensive analysis of corporate welfare in 1993.[15] Huff ratiocinated that a very conservative estimate of corporate welfare expenditures in the United States would have been at least US$170 billion as of 1990.[15] 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.[15]

Huff noted that deliberate obfuscation was a complicating factor.[15]

Commentary [edit]

In 2002, Bernie Sanders scrutinized corporate welfare policies in the United States, which he considered to total US$125 billion annually.[16]

See also [edit]

References [edit]

  1. ^ Chapman, Roger (2010). Culture Wars: An Encyclopedia of Issues, Viewpoints, and Voices. M.E. Sharpe. p. 119. ISBN 9780765617613. 
  2. ^ Lewis, David. Louder voices: The corporate welfare bums, Lewis & Samuel, 1972
  3. ^ USDA: American Farms www.USDA.gov
  4. ^ [1] Professors
  5. ^ Alan Peters and Peter Fisher, "The Failures of Economic Development Incentives", Journal of the American Planning Association, Volume 70, Issue 1, March 2004.
  6. ^ Economic Development or Corporate Welfare
  7. ^ Stiglitz, Joseph (December 8, 2010), "US could cut deficit and gain, but that's unlikely", Sydney Morning Herald, retrieved 2010-12-22 
  8. ^ Folbre, Nancy (April 20, 2009), "Welfare for Bankers", New York Times, retrieved 2011-04-28 
  9. ^ Schroeder, Peter (December 1, 2010), "Sanders uses 'jaw-dropping' Fed disclosures to call for further inquiry", The Hill, retrieved 2010-12-15 
  10. ^ 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. 
  11. ^ "The Corporate Welfare State". The Wall Street Journal. 2011-11-08. Retrieved 2012-09-09. 
  12. ^ DeHaven, Tad (2012-07-25). "Corporate Welfare in the Federal Budget" (PDF). Policy Analysis (Cato Institute) (703). Retrieved 2012-09-09. 
  13. ^ Bandow, Doug (2012-08-20). "Where to Cut the Federal Budget? Start by Killing Corporate Welfare". Forbes. Retrieved 2012-09-09. 
  14. ^ Hinkle, A. Barton (2012-09-05). "The Worst Welfare Benefits the Best-Off: Corporations". Richmond Times-Dispatch (Reason). Retrieved 2012-09-09. 
  15. ^ 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. 
  16. ^ 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]

  • Johnston, David Cay. Free Lunch (The Penguin Group, New York, 2007.)
  • Jansson, Bruce S. The $16 trillion mistake: How the U.S. bungled its national priorities from the New Deal to the present (Columbia University Press, 2001)
  • Mandell, Nikki. The corporation as family : the gendering of corporate welfare, 1890-1930 (University of North Carolina Press, 2002).
  • Glasberg, Davita Silfen. Corporate welfare policy and the welfare state: Bank deregulation and the savings and loan bailout (Aldine de Gruyter, NY, 1997).
  • Whitfield, Dexter. Public services or corporate welfare: Rethinking the nation state in the global economy (Pluto Press, Sterling, Va., 2001.)
  • Folsom Jr, Burton W. The Myth of the Robber Barons (Young America)
  • Rothbard, Murray N. Making Economic Sense, Chapter 51: Making Government-Business Partnerships ISBN 0-945466-18-8 (1995)

External links [edit]

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