“Often…those against corporatism seem to favor the existence of large government-sponsored enterprises that fill a void left by the imperfection of the market. But the justification for these institutions usually goes beyond helping Americans, with supporters citing evidence that these institutions give money back to the Treasury…

…So there is a market where firms can make a profit, and private institutions are driven only by profit, but somehow those markets are left open for GSEs to fill the gap? I don’t quite understand the logic. Mr. McDevitt and others who support corporate welfare should lose the rhetoric about saving American jobs and engage in a serious debate concerning the role of these institutions. Is there a market failure? What is a market failure? Is taxpayer-guaranteed debt the correct solution to remedying this market failure? Cheap debt spurs asset bubbles. It doesn’t matter if it’s Fannie Mae subsidizing mortgages, the Federal Reserve subsidizing all credit or the Ex-Im Bank guaranteeing loans for a variety of products from oil rigs to Solyndra. The burden of proof is on those beneficiaries of the Ex-Im Bank to show that there are fundamental reasons that we need it around, not protectionist arguments that appeal to vote-seeking politicians.”, Gabriel Wittenberg, Bethesda, Md.

Letters

Yes, the Ex-Im Bank Helps Some, but Is That Enough?

I wonder how many of these critics of the Ex-Im Bank have ever actually labored in the export market, and whether they appreciate the importance of export revenues for our domestic economy?

James McDevitt makes the real-life business case for the Export-Import Bank amid conservative cries to eliminate this unnecessary “corporate welfare” for U.S. exporters (“My Company Depends on the Ex-Im Bank,” op-ed, June 26). I wonder how many of these critics have ever actually labored in the export market, and whether they appreciate the importance of export revenues for our domestic economy.

It is true that one company, Boeing, is the biggest beneficiary of the bank, but it faces a very large competitor, Airbus Group. It’s not a level playing field when you sell in other countries. Airbus has an elaborate government support system that includes subsidized government financing. Airlines and other export customers buy where they can get the best deal. Do we want to lose our commercial airplane industry?

Critics should also remember that there are thousands of small businesses supplying Boeing, which also benefit when Boeing wins a hard-fought sale, and export dollars have special value because they grow our economy faster than domestic dollars.

Elsewhere in the same edition, Dan Henninger quotes Ronald Reagan, “We cannot play innocents abroad in a world that’s not innocent.” My small company had customers in 90 countries, and I assure you those words ring especially true when you are selling capital equipment in export markets.

Gordon O.F. Johnson

Alexandria, Va.

I’m not quite sure why Mr. McDevitt needs financing from a taxpayer-backed institution if his rigs are in as high demand as he believes they are. I have no doubt that consumers of his rigs need to finance the multimillion-dollar investments, but why hasn’t a private institution taken on the risk? His answer that they aren’t “large enough for large banks to provide finance options” doesn’t pass the sniff test. Banks are hungry for returns and if they believe his customers to be good bets, I would think the banks would want to take advantage of the opportunity to reap greater profits.

This thinking is symptomatic of a problem that faces those in favor of corporate welfare. Often, although not always, those against corporatism seem to favor the existence of large government-sponsored enterprises that fill a void left by the imperfection of the market. But the justification for these institutions usually goes beyond helping Americans, with supporters citing evidence that these institutions give money back to the Treasury. So there is a market where firms can make a profit, and private institutions are driven only by profit, but somehow those markets are left open for GSEs to fill the gap? I don’t quite understand the logic.

Mr. McDevitt and others who support corporate welfare should lose the rhetoric about saving American jobs and engage in a serious debate concerning the role of these institutions. Is there a market failure? What is a market failure? Is taxpayer-guaranteed debt the correct solution to remedying this market failure? Cheap debt spurs asset bubbles. It doesn’t matter if it’s Fannie Mae subsidizing mortgages, the Federal Reserve subsidizing all credit or the Ex-Im Bank guaranteeing loans for a variety of products from oil rigs to Solyndra. The burden of proof is on those beneficiaries of the Ex-Im Bank to show that there are fundamental reasons that we need it around, not protectionist arguments that appeal to vote-seeking politicians.

Gabriel Wittenberg

Bethesda, Md.

 

Posted on July 7, 2014, in Postings. Bookmark the permalink. Leave a comment.

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