Sunday, July 27, 2014

The Export-Import Bank Saves Small American Business - NOT!

Here is some more data about who the Export-Import Bank "helps". This data is from 2007 U.S. Census and from the Export-Import Bank...there may be some newer numbers out there somewhere but I have not found them yet.

There is a total of 69,676,837 small business jobs in the U.S. of which the Export-Import Bank claims to "support" 205,371 jobs [that is .29% of all American jobs]

There is a total of 6,723,226 small business firms in the U.S. of which the Export-Import Bank claims to support 2,390 [0.04% of all U.S.firms.]

The Small Business Administration and most federal/state agencies define a small business as having less than 500 employees but the Export-Import Bank has a different definition (can you imagine why?). The Bank calls small business those with less than 1,500 employees.

So much for the Export-Import Bank supporters claim that the Bank must be subsidized with taxpayer money for the good of small business in the U.S. Most of these supporters [politicians] receive substantial campaign support from big businesses such as General Electric, Caterpillar, and Boeing.

I am not sure about you, but I don't think that these three companies need the Federal government to loan money to companies in other nations to buy products from these companies. To me this is just a way to subsidize these companies by using a third party to transfer taxpayer money into the hands of these companies.

As far as the economic lesson we should learn from this it is that when the government subsidizes one company and not another company (picks winners and losers) then competition is stifled and the Free Market, such as it is, suffers and when the Free Market suffers, consumers suffer. Government intervention which reduces competition causes a net loss to society not only in monetary terms but also in the development of increased efficiencies.


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