The Ex-Im Bank Provides Grotesque Images of Corporate Welfare
It looks as though the Export-Import Bank is going to be reauthorized, which means well-connected companies will continue to have a money spigot to nuzzle on.
The goal of the Ex-Im Bank is to promote exports, but the actual impact is to pick winners and losers. The big problem is that government agencies simply cannot recognize a winner and cannot avoid a loser.
The result is not just an agency that picks winners and losers, but one that has done so incredibly badly. In 2010, the Ex-Im Bank lost $262 million. It has had even worse years in the recent past, such as when it lost a billion a year over the course of three years in the 1980s.
Ex-Im may hold a mirror up to to the American economy, but it is a funhouse mirror, providing some grotesque images in the service of corporate welfare. In 2014, for example, 40 percent of the bank’s authorizations went to one company; albeit a big and well-connected one: Boeing. House Financial Services Committee Chair Maxine Waters tried to impose disclosure requirements for large Ex-Im beneficiaries like Boeing that benefit the most from the bank’s financial guarantees. The move raised the ire of Seattle Democratic Rep. Denny Heck, in a state where Boeing employs about 70,000 people. Opposition to controls on Ex-Im seems to have united Democrats and the GOP, including free trading Republicans who recently opposed the Bank’s renewal.
Supporters of the bank assert that it creates jobs, a claim unvetted by the media, who have perpetrated the notion that it is unquestionably a key to the export market and the jobs they see as essential to economic growth.
But does Ex-Im actually promote growth? Perhaps to the extent it actually spawns new technologies. Otherwise it is probably not leading to more exports, but to different exports. After all, the United States has only so much production capacity, and without the benefit of new technologies it is unable to efficiently produce any more than it already does, in total.
Bank advocates seem to forget that because it picks corporate winners and losers, it may simply promote exports of some products at the expense of others.
Some argue that the United States needs Ex-Im, or something like it, because hundreds of countries that trade with the U.S have something like it. But if the idea is counter-productive, why continue to embrace it? If the Europeans decide to jump on the Atlantic, should Americans maintain a balance of power by leaping into the Pacific?
Companies that seek Ex-Im support would no doubt pursue exports even if the bank no longer existed. The funding supports they receive from the bank is gravy. But it is costly gravy, to companies that must compete with big players like Boeing for always-needed capital. Eliminating the bank would go a long way to level that playing field.