Tag: subsidy

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moral hazard subsidy

For Some Reason

Yesterday, the House voted to extend the legal ability for the Export-Import Bank to run . . . for another nine months. The people’s legislature passed the “stop-gap” measure, 319-108, with both bipartisan support and bipartisan opposition.

Just last month, President Obama expressed dismay that Republicans would be against it.

“For some reason,” he intoned, “right now the House Republicans have decided that we shouldn’t do this. . . .” He pretended to incredulity and puzzlement. He gave the usual reasoning for the subsidized financial guarantees, and insisted that “every country does this.”

“When,” he asked, “did that become something that Republicans opposed?”

Obama could’ve asked all those members of his own party who opposed it.

But then, he could have asked himself. Back in 2008, he very clearly put the Ex-Im Bank on the theoretical chopping block. Candidate Obama gave the big business bank up as a program that “didn’t work” and one that had become “little more than a fund for corporate welfare.”

So why the change of mind, Mr. Obama?

Has the Ex-Im ceased being a fund for corporate welfare?

No. It’s still there, propping up big businesses doing business abroad — indeed, multinationals abroad, the kind of companies that Obama’s Occupier friends despise so deeply.

What has changed? He’s in power, now. And that power derives from the mighty federal purse, filled by taxing hundreds of millions of Americans, and used to give hundreds of millions and billions in benefits to the few, the insiders.

President Obama and the congressional leadership of both parties are tighter than ever with special interests.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Corn Subsidies Fail Big

America has a problem: obstinate politicians, the Obstinacy in Chief, especially.

Almost any policy high-lighted at some point in the last few years could serve as an illustration of this point, but let’s choose the once-popular “green” pro-ethanol policies.

George W. Bush pushed ethanol, and Barack Obama doubled-down on the subsidy, making it a centerpiece for his low carbon-footprint notion.

It has not worked.

What it has done is create what environmentalists are now calling “an ecological disaster.”

How?

It created a land rush that swallowed vast tracts of land sporting alternate uses, including millions of acres of conservation land, including wetlands. And the huge amounts of insecticide and fertilizer used in the effort have poisoned wells and water supplies as well as rivers and the Gulf of Mexico.

All to plant more corn than the market demands.

But is it doing what the government wants, and Obama demanded — the whole reason for this goofy program after all?

“The government’s predictions of the benefits have proven so inaccurate,” write Dina Cappiello and Matt Apuzzo for the Associated Press, “that independent scientists question whether it will ever achieve its central environmental goal: reducing greenhouse gases. That makes the hidden costs even more significant.”

Over-production, higher costs, externalized burdens — typical for a government subsidy. But what can we do about it?

In early 19th century Britain, Richard Cobden and John Bright started the Anti-Corn Law League, which successfully opposed the biggest protectionist program of the age. We could use another such vital force, this time to oppose the idiotic subsidies that raise food prices internationally as well as wreak havoc on land in the Mid-West.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Affordable [sic] Healthcare [sick]

The Pelosi-Obama Affordable Care Act was passed as a pig-in-a-poke. Now with that poke open, with the pig fully emergent as of next year, what do we know about “Obamacare”?

  1. It’s not socialized medicine, but it is heavily regulated- and subsidized-medicine, almost designed not to work. Its inevitable failures will be said to require more government as “fixes,” eventually (some Democrats hope) going all the way to, yes, socialized medicine.

  2. It’s chockfull of new subsidies, which raise medical costs by making demand for services even more inelastic . . . and thus can only increase taxpayer burdens and more strain on budgets. The original reason so many Americans opposed the reform was that promoting a new “entitlement” even as the old entitlements of Social Security and Medicaid teetered further into insolvency was the very opposite of common sense.
  3. It’s filled with new “mandates” at every level, for businesses as well as individuals. A few have been postponed, but the bulk of the increased regulations are indeed going into effect next year. That will generally raise prices.

But by how much? Well, a new all-state study predicts that

insurance premiums will increase under the first year of Obamacare in 45 of 50 states. This finding flies in the face of President Obama’s promise that his health care overhaul would cause premiums “for the typical family” to fall by $2500.

Why the decrease in five states?

Those had already embraced the goofy over-regulations that Democrats just seem to love.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Billions to Billionaires

I began the week talking about opera. If I end the week discussing football, you can be sure that I’m closer to my home turf.

Which doesn’t make this any easier, for, though many operas stay afloat with taxpayer funds, far more taxpayer money goes to football.

The National Football League, owned by billionaires whose product rakes in big bucks through ticket sales and eye-popping broadcast fees, could certainly support itself. And yet these rich folk don’t merely pass the hat, they wave guns under the table, extorting money out of taxpayers across the country.

Writing in The Atlantic, Gregg Easterbrook surveys the damage. He might as well channel Carl Sagan, for the answer to “how much do taxpayers waste on football?” is “billions and billions.”

Santa Clara’s new “home” for the 49ers is a $1.3 billion stadium, which, writes Easterbrook, although largely “underwritten by the public,” will drive revenue that will mostly “be pocketed by Denise DeBartolo York, whose net worth is estimated at $1.1 billion, and members of her family.”

So much of subsidy ends up helping mainly the rich. Opera? Mainly an upper class thing. Football? It may reach the lowbrow, but boy, do the rich make out like bandits, off the taxpayers.

Indeed, argues Easterbrook, this is worse than the bailouts. “Public handouts for modern professional football never end and are never repaid.”

If you don’t oppose subsidies to football, which are obviously unnecessary transfer payments from the poor to the super rich, what subsidy would you oppose?

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets ideological culture too much government

A Shrill Note

The New York City Opera — the one that just produced an opera about Anna Nicole Smith — may close its doors soon unless it comes up with seven million dollars. That’s the gist of a New York Times story that doubles as an appeal to philanthropic opera buffs.

From comments at the site we learn that some readers feel that the opera house has been mismanaged. Others issue instructions to various deep-pocketed luminaries, telling them that here’s their chance do something for the city and their own legacy. Others heatedly defend the “Anna Nicole” opera against detractors.

Then we have this remark, from someone who calls himself BullMoose: “Tell me again how private charity works better than government subsidies.” That’s it. No argument, just a hit-and-run exclamation of ideological discontent with private enterprises, which don’t invariably succeed. Government-subsidized enterprises don’t necessarily succeed either; but the dole can keep them in operation regardless of whether they are doing something worth doing and doing it well enough to please customers willing to pay.

Private charity works better than funds forcibly extracted from me and other taxpayers because private charity is voluntary. When our contributions are voluntary, it means we don’t have to support artistic or other projects that we have no interest in and may even oppose. We are free to use our own judgment, devoting our limited resources to the things we care about . . . instead of the things BullMoose cares about.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Slow Times for a Fast Car

How economical are electric cars? It’s hard to know. We don’t have a free market setting in which to judge the question.

Their obvious advantage? They don’t pollute.

But, skeptics remind us, their electricity does have to be first produced, and the most likely additional source? Coal. Dirty coal.

But isn’t it easier to put on scrubbers at a central plant rather than on millions of cars? Maybe electric cars really are a promising low-pollution transit option!

In any case, electric tech’s progress (or lack thereof) remains fascinating. When I wrote about the Tesla Motors electric sports car back in 2006, I was enthusiastic. But since then the car has not exactly “taken off,” and the company has received a huge, huge hunk of money in the form of loans from the Department of Energy in 2009, so it looks like just another Solyndra-like boondoggle.

But wait: It turns out that the company has faced an uphill battle: government.

The states heavily regulate auto dealerships. You know, “for the consumer” (read: for a few privileged dealers). Indeed, this regulation at the state level has plagued America’s auto industry for years. And dealers, privileged by these protectionist laws, really, really hate Tesla Motors’ marketing model: direct-to-customer.

In Colorado, car dealers got the law changed to prohibit direct-to-customer auto sales.

I hope Tesla sues to overturn the state dealership laws as illegal under the Constitution — after all, they do precisely what the interstate commerce clause was designed to prevent.

More likely, though, Tesla will seek and get an exemption from the Energy Department. And American mercantilism will continue.

This is Common Sense. I’m Paul Jacob.