FacebookTwitterRedditEmail

The Export-Import Bank: a Government Subsidy “Free Traders” Love

I have long had fun with the folks who call themselves “free traders.” Essentially, these are people who argue it is a high moral principle to eliminate any barrier to trade that might support the income of working class people, but suddenly get really stupid and defensive when we talk about barriers that support the income of professionals and the wealthy.

This means that a 10 percent tariff on imported steel is an outrage against all that is good and decent in the world. But when it comes to protectionist restrictions that prevent highly qualified foreign doctors from practicing in the United States, and bringing the pay of our doctors more in line with other rich countries, they suddenly have no idea what you’re talking about. (FWIW, we spend far more money on doctors than steel.)

The same story applies to patent and copyright protection. (Yes,that is “protection” as in protectionism.) These government-granted monopolies are treated as part of the world’s natural order. Instead of recognizing them as forms of protectionism, countries that don’t have patent and copyright rules as strong as in the U.S. are treated as being violators of free-trade.

In other words, “free trade” is a make it up as you go along rationale for ways to redistribute income upward. This is why I got a big kick out of seeing Charles Lane’s column today on the Export-Import Bank.

The Export-Import Bank is a mechanism for the U.S. to subsidize its exports by providing below market interest rate loans and loan guarantees for exporters. There actually can be some argument for this sort of support in cases where small and medium size firms are just getting into the export market. (It’s still a government subsidy.)

However, that was not the story with the Ex-Im Bank. The overwhelming majority of its loan money (in the neighborhood of 90 percent) went to a tiny number of multi-nationals like Boeing, Caterpillar, and GE. This is not a help the upstart story, this was a subsidy to politically connected corporate giants.

Incredibly, the vast majority of the self-proclaimed free traders were big advocates of the Ex-Im Bank. They would go along with the absurd games pushed by the hacks.

For example, they would tell people that some very high percentage of the loans went to small businesses. (Yes, this is in Econ Stupid Tricks 101 — a high percentage of the loans go to small businesses, a tiny percentage of the dollars go to small businesses.)

And, we got the story that some huge number of U.S. jobs depending on the Ex-Im Bank. In this story, we assume that the U.S. would lose all the exports supported by Ex-IM loans or guarantees, as opposed to some realistic number like 2-3 percent.

Anyhow, with pushing from the free traders, the Export-Import Bank was reauthorized by Congress. I had thought the free traders had won and got their government subsidies.

But as Lane points out, Republicans in Congress refused to approve new members for the bank’s board. This meant that the board lacked a quorum. And, without a quorum, the board could not approve loans of more than $10 million. This meant the bank was actually in the business of making loans to small and medium size businesses, rather than subsidizing Boeing and Caterpillar.

It turns out the big companies were still able to export without the subsidy, although I’m sure they made somewhat less money. Anyhow, it’s a nice story. It shows how free trade can be better than “free trade.”

This column originally appeared on Dean Baker’s Beat the Press blog.

More articles by:

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

bernie-the-sandernistas-cover-344x550

June 19, 2019
Matthew Stevenson
Requiem for a Lightweight: the Mayor Pete Factor
Kenneth Surin
In China Again
Stephen Cooper
Abolishing the Death Penalty Requires Morality
George Ochenski
The DNC Can’t Be Allowed to Ignore the Climate Crisis
John W. Whitehead
The Omnipresent Surveillance State
William Camacaro - Frederick B. Mills
Guaidó’s Star Fades as His Envoys to Colombia Allegedly Commit Fraud With Humanitarian Funds for Venezuela
Dave Lindorff
What About Venezuela’s Hacked Power Grid?
Howard Lisnoff
Try Not to Look Away
Binoy Kampmark
Matters of Water: Dubious Approvals and the Adani Carmichael Mine
Karl Grossman
The Battle to Stop the Shoreham Nuclear Plant, Revisited
Kani Xulam
Farting in a Turkish Mosque
Dean Baker
New Manufacturing Jobs are Not Union Jobs
Elizabeth Keyes
“I Can’t Believe Alcohol Is Stronger Than Love”
June 18, 2019
John McMurtry
Koch-Oil Big Lies and Ecocide Writ Large in Canada
Robert Fisk
Trump’s Evidence About Iran is “Dodgy” at Best
Yoav Litvin
Catch 2020 – Trump’s Authoritarian Endgame
Thomas Knapp
Opposition Research: It’s Not Trump’s Fault That Politics is a “Dirty” Game
Medea Benjamin - Nicolas J. S. Davies
U.S. Sanctions: Economic Sabotage that is Deadly, Illegal and Ineffective
Gary Leupp
Marx and Walking Zen
Thomas Hon Wing Polin
Color Revolution In Hong Kong: USA Vs. China
Howard Lisnoff
The False Prophets Cometh
Michael T. Klare
Bolton Wants to Fight Iran, But the Pentagon Has Its Sights on China
Steve Early
The Global Movement Against Gentrification
Dean Baker
The Wall Street Journal Doesn’t Like Rent Control
Tom Engelhardt
If Trump’s the Symptom, Then What’s the Disease?
June 17, 2019
Patrick Cockburn
The Dark Side of Brexit: Britain’s Ethnic Minorities Are Facing More and More Violence
Linn Washington Jr.
Remember the Vincennes? The US’s Long History of Provoking Iran
Geoff Dutton
Where the Wild Things Were: Abbey’s Road Revisited
Nick Licata
Did a Coverup of Who Caused Flint Michigan’s Contaminated Water Continue During Its Investigation? 
Binoy Kampmark
Julian Assange and the Scales of Justice: Exceptions, Extraditions and Politics
John Feffer
Democracy Faces a Global Crisis
Louisa Willcox
Revamping Grizzly Bear Recovery
Stephen Cooper
“Wheel! Of! Fortune!” (A Vegas Story)
Daniel Warner
Let Us Laugh Together, On Principle
Brian Cloughley
Trump Washington Detests the Belt and Road Initiative
Weekend Edition
June 14, 2019
Friday - Sunday
Michael Hudson
Trump’s Trade Threats are Really Cold War 2.0
Bruce E. Levine
Tom Paine, Christianity, and Modern Psychiatry
Jason Hirthler
Mainstream 101: Supporting Imperialism, Suppressing Socialism
T.J. Coles
How Much Do Humans Pollute? A Breakdown of Industrial, Vehicular and Household C02 Emissions
Andrew Levine
Whither The Trump Paradox?
Jeffrey St. Clair
Roaming Charges: In the Land of 10,000 Talkers, All With Broken Tongues
Pete Dolack
Look to U.S. Executive Suites, Not Beijing, For Why Production is Moved
Paul Street
It Can’t Happen Here: From Buzz Windrip and Doremus Jessup to Donald Trump and MSNBC
Rob Urie
Capitalism Versus Democracy
Richard Moser
The Climate Counter-Offensive: Secrecy, Deception and Disarming the Green New Deal
FacebookTwitterRedditEmail