The Official Publication of the Batten Brother's Debate Group

Corporate Welfare: Killing Our Freedom, Society, and Planet July 14, 2009

By Josiah Batten

Stephen Slivinski, Director of Budget Studies at the CATO Institute, defines corporate welfare “as any federal spending program that provides payments or unique benefits and advantages to specific companies or industries” (Slivinski, 2007).  Things like subsidies, tax breaks, and bailouts (of which we’ve all become painfully aware) qualify as corporate welfare.

What’s incredibly interesting about corporate welfare is that it’s an issue upon which several unique groups should be able to agree.  Libertarians, environmentalists, and social welfare advocates, as much as they disagree on other things, should all be able to say in a unified and authoritative voice “corporate welfare is wrong!”

For Libertarians, the issue at hand is the free market.  A free market minimizes government intervention.  Corporate welfare assures that 1.  We never attain equilibrium of supply and demand and 2.  Businesses receiving corporate welfare face strict regulation.

Corn subsidies are a fine example here.  As supply goes up, price generally goes down.  As price goes down, demand generally goes up.  As demand rises, prices generally rise.  So in this model, with no government intervention, let’s assume the price of corn is $2.00 a bushel.  At that price, the American people will demand 10,000 bushels (this is just an example, figures aren’t accurate).  However, at that price, farmers will produce 12,000 bushels resulting in a surplus of 2,000 bushels.  So what happens?  In a free market the price drops to encourage people to buy the surplus.  Not in America.  Here good old Uncle Sam conveniently subsidizes, buying up the surplus.  Farmers are encouraged to produce more than is needed and the government intervenes to ensure that the market has not say and a large farming conglomerate will get its money.  Equilibrium is not achieved; prices remain higher than they should be because demand remains artificially high.  From a free market perspective, it’s a disaster.

At this point those who support eliminating global poverty should be outraged.  “American and European Union farm subsidies spur growers to produce gluts that depress crop prices throughout the world” (Barrionuevo, 2005).  Essentially, as we encourage our super-growers to produce too much, Ravi and Punta over in India absolutely can’t compete.  The poor are made poorer and the rich ensured that they will become richer regardless of the cost to or wants of the world.

We might ignore that fact, however, to focus on the reality that the recent government bailouts outspend social welfare by many times.  That doesn’t even include our consistent yearly corporate welfare built into the budget.  Money that could have gone to schools, the homeless, stopping genocide, etc… served as corporate welfare.  Oddly enough, for the first time in human history 1 billion people will go hungry this year.  The problem is not a lack of food, the problem is they don’t have the money to compete with corporate welfare.

If this wasn’t enough, the environmental costs of corporate welfare are astounding.  Many of the companies benefiting from corporate welfare thrive by destroying our planet.  We are paying companies to rape the world and produce products for prices not reflective of market demands.

For these reasons I argue corporate welfare kills our freedom, society, and our planet.  The cost of corporate welfare now is astounding, but if it’s not stopped it will continue to have uncounted non-monetary costs in regards to human life, dignity, and stewardship of the planet.

It is my hope that you will consider the costs of corporate welfare; costs that go well beyond several hundred billion dollars.  This issue quite literally transcends party affiliations or political ideologies.  We as the American people need to take a principled stand to restore the fundamental beliefs and practices upon which our country was founded.  Doing so will not only encourage a fair and free market, but benefit society’s poorest members and protect the planet we rely on for survival.

Works Cited:

Barrionuevo, A. (2005, November 9). Mountains of Corn and a Sea of Farm Subsidies. Retrieved June 6, 2009, from The New York Times: http://artsci.wustl.edu/~anthro/articles/09harvest.html

Slivinski, S. (2007, May 14). The Corporate Welfare State: How the Federal Government Subsidizes U.S. Businesses. Retrieved June 6, 2009, from The CATO Institute Web Site: http://www.cato.org/pub_display.php?pub_id=8230