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Quotation of the day on the inefficiency and immorality of the very, very costly Export-Import bank….
From Mark Perry.
"…. is from Veronique de Rugy writing in Reason.com:
In many ways, the Export-Import Bank is repeating the
tragic mistakes of the early 21st century housing bubble on an
international scale. Since 1996, the International Monetary Fund and
World Bank have maintained a list of Heavily Indebted Poor Countries
(HIPCs), which face debt burdens their governments cannot sustainably
manage. Since fiscal year 2007, the Export-Import Bank has added to the
debt levels of 20 of the 39 countries listed in some phase of the HIPC
Initiative’s debt management process.
Just as Fannie Mae and Freddie Mac convinced low-income Americans to
take out risky loans to purchase homes they otherwise wouldn’t dream of
buying, the Export-Import Bank sways governments in developing countries
to splurge on shiny new air fleets, futuristic wind farms, and
unnecessary luxury tour buses-all made, of course, in the U.S.A.
Super-wealthy companies such as Boeing, with its market
capitalization of $91 billion, and Lockheed Martin, with its $50 billion
profit in 2013, are the Ex-Im Bank’s true masters. The program allows
them to sell more of their products abroad without the headache of doing
the hard financing work themselves. Obviously, these companies do not
need the U.S. government to seal foreign deals. Boeing has a financing
arm worth $4 billion and could easily extend loans to prospective
clients.
At their worst, Ex-Im loan programs introduce political incentives
into business decisions, creating the conditions for companies to seek
financial rewards by pleasing political interests rather than customers.
The economic costs this cronyism imposes are real and inexcusable.
HT: Warren Smith, who asks: “Why do some US firms
need export subsidies because domestic firms are allegedly so vulnerable
to foreign competition….like lower foreign costs due to lower corporate
tax rates all around the globe…but simply lowering US corporate taxes
would somehow not improve the competitive position of American
businesses competing internationally?"
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