The Corporate Welfare State

Last year, the US government handed out over $92 billion to politically favored corporations, according to Stephen Slivinski at the Cato Institute. This money didn't buy anything. It was a handout disguised by the use of the word "investment." It's more accurately called corporate welfare.

Frankly, this is the kind of thing that gives capitalism a bad name. The image of businessmen lining up in Washington with their hands out does not inspire great confidence in either business or the men themselves.

The usual arguments in favor of corporate welfare are:
1. Some businesses need help because of market failures.
2. Government can pick winners.

The track record of government success in "correcting market failure" is pretty poor. Sometimes, a business fails because it is simply the wrong business with the wrong management at the wrong time. To call that kind of failure a market failure is a cop-out. To hand that kind of business a big check from the taxpayer is nuts.

The track record of government picking winners is even worse. If government was really just as good as venture capital at picking winners, we wouldn't be using Google today, we'd be using Googleski -- invented in the USSR, a country that tried harder to pick winners than any other.

Check out Stephen Slivinski in this podcast.

Image property of Walter O. LeCroy