Monday, May 16, 2016

"How to measure corporate welfare"


That's the title of an article over at Captain Capitalism's place.  Here's an excerpt.

I need statistics.  I need facts.  And I need good methodology so I know, as accurately as possible, precisely what the hell I'm talking about.  And one of the few economic stones I have left unturned with empiricism has been "corporate welfare."  Specifically, how much is there?

This is an important statistic to know because when debating leftists they always claim that if we "just got rid of corporate welfare" then we wouldn't have a budget deficit nor (consequently) a national debt.  That if we just stopped giving all those nasty corporations all that government cheese we'd be able to fund everything and everyone, from free education, to free jobs, to free house, and free healthcare.

Of course, when you try to peg them down on precisely how much in "corporate welfare" me and the other taxpayers give to these evil corporations, none of them have any figures.  And so, as always with leftists, you can't rely on any kind of constructive debate that advances our understanding and moves us closer to a practical solution, simply because the left has no freaking clue what they're talking about.  They're merely regurgitating talking points (usually lies) they heard from some other equally misinformed leftist and the real adult work of getting to the bottom of things and conducting research begins.

. . .

I have come up with a cool $225 billion in annual corporate welfare (it should be noted however, this does not include TARP as - hopefully - that was a one time anal raping of the American taxpayer).

There's more at the link.  Well worth reading.

I found it interesting to see how the Captain came up with his figure.  I think he's probably close to a minimum figure;  it wouldn't surprise me if it were higher.  In other words, it's probably at least one-sixth of the annual US budget, and possibly higher than that.  (I daresay companies such as Archer Daniels Midland, Lockheed Martin and Halliburton couldn't survive in their present form [or at their present size] without corporate welfare.  There are hundreds more like them.)

Something else that needs a budgetary axe, as quickly and as ruthlessly as possible.

Peter

8 comments:

Rusty Gunner said...

It's not generally a budget issue since a lot of what is termed "corporate welfare" is in the form of tax breaks, which are treated conversationally by statists as "subsidies". Much of the remainder can be accounted for by uncompetitive contracts and cost overruns.

Roy said...

The first order of business is to define what, exactly, IS "corporate welfare".

Tirno said...

Having been on the government side of military acquisition programs, I have to speak up for Lockheed Martin, General Dynamics, Halliburton, Raytheon, et ceteras. They are not so much the recipient of government cheese as a natural evolution of business as it adapts to the Federal Acquisitions Regulations.

First, review the purchase order for the first Wright Model A bought by the US Army.

Then compare that to the mountain of paper that specifies the complete purchase contract for the F-22, with all the parts, replacements, supply chain requirements, ad nauseum. It might be cheaper to take all that paper and transform it into a squadron of F-22s via alchemy.

Here's the underlying truth: All those well known government and military contractors are not fundamentally fonts of incredible technical expertise or logistical acumen. That is not their evolved role in this ecosystem.

Their fundamental and irreplaceable function is to put up with government bullshit. Much in the way that you hire a lawyer when you go to court because lawyer lobby groups have made the law so complex only specialists can work with it with success, if you have a fantastic new design for body armor, you do NOT bid for a US Army contract yourself. Not if you value your sanity. What you do instead is you put your design out for bid to multiple defense contractors, and then you pick one to license to exclusively, and have them bid for the contract. You're still doing the work and producing the product, and you're still getting paid, but the defense contractor is being paid vastly more. The 85% of the money they're absorbing is being spend dealing with change orders, testing, monthly status reports, work breakdown structure tracking, earned value management, program milestones and reviews, documentation, and repackaging what you made in US Army compliant packaging.

Complicated and unnecessary regulations? Not a problem for these guys! The more manpower it takes to comply with the regulations, the more they can bill, and of course take 2% off the top as profit.

When the second Gulf War kicked off, Halliburton got a bunch of no-bid contracts for logistical support. Were they just the best? Possibly not. But they were the ones with established contracts with the government and the right bunch of program management types with the right clearances to even know something was about to kick off. Oh, and they had the technical and logistic infrastructure. But if they hadn't, they'd have just subcontracted those requirements to somebody that did. The important thing was they were ready to execute a contract according to the FAR on a timeline the military needed and none of the government employees were in any danger of being censured for failing to follow all the regs.

Eric Wilner said...

A large part of defense spending is not about defense, but about spending.
Apart from the problems Tirno notes above, any big program has to be structured to spread the spending around among enough Congressional districts to get the appropriation. And the little programs get directed to various specially-designated vendors (by identity group or political connections), largely without regard to ability to deliver.
Then there's the idiocy of requiring $500 in paperwork on a $10 hammer, to prove that the hammer supplier isn't ripping off the government.
Plenty of blame to go around, and not much prospect of fixing the system.

Oh, yes. Sometimes the big boys will outsource small projects to small, nimble subcontractors. You don't want to be the subcontractor - or, if you do take such a thing on, make sure your payment isn't contingent on the megacorp getting the project signed off. Their management structure is built around big contracts, and, while your $100K project may be a big deal to you, to them it's not even a rounding error. (A small company I used to work for got into this situation several years ago. We got everything done, but the prime contractor kept forgetting to deliver the final documentation package to the government.)

mark leigh said...

To get an accurate measure of corporate welfare one cannot forget the massive effects of regulatory barriers to competition and innovation that benefit corporations by creating effective monopolies and oligopolies. Medicine for example, is vastly more expensive because licensing laws and drug regulations make providers harder to find and treatment more expensive. While the medical debate is about how we can force someone else to pay for the cost of healthcare by creating more costs to the system.

Anonymous said...

HEH.....so even the "right" thinking folks can't figure out what "corporate welfare" is.
Funny how great minds think alike; I was actually thinking these very same thoughts today. Although my thoughts were centered around, "if you could axe 5 federal departments; which ones would they be?"
My top one would be the Department of Education. Turn the responsibility for education back to the local folks. Seems like an innocent enough action.
The next one would be getting rid of the sugar subsidy and gradually phasing out any and all farm subsidies. (I groan when I say that; I grew up on a dairy farm in Wisconsin; and we certainly didn't live "high on the hog" even with farm subsidies.)
Steve

Xoph said...

As someone who has worked commercial roles within one of the large hated corporations I must say we pay plenty of taxes, and pass those on to the citizen in the form of cost. Corporations are collections of individuals. No corporation pays taxes, only individuals. When you hear politicians talking about corporations paying taxes they are talking how much hidden tax can we put in the cost of goods that citizens won't know they are paying.

Think about it.

This now sets up the motivation for corporations to buy influence.

Gives politicians a good talking point about evil corporations.

Political three fer as near as I can figure.

Wake up Mrs. Buler.

Chuck Pergiel said...

Calling someone 'left wing' or 'right wing', or any similar meaning terms, does not help at all because it doesn't mean anything other than you have imaginary enemies, and we all have those. If there is someone you disagree with, give us their name, and exactly what issues you disagree with. Well, unless you just want to fan the flames, then go ahead with your name calling.