An Argument Against Corporate Welfare

Essay by istealpants October 2009

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Upon hearing the term “welfare” in American society people automatically visualize a poor family that is struggling to get by on meager means. In reality, some of the most subsidized recipients of public assistance are not welfare recipients housed in public tenement apartments. They are not even poor or ailing at all; in fact, they’re far from it. America's most costly welfare recipients today are Fortune 500 companies. In 2007 the Fortune 500 corporations recorded best-ever earnings of $785 billion, yet incredibly Uncle Sam doled out nearly $127 billion to them in taxpayer subsidies. These welfare payments come in every conceivable shape and size: government grants, sweetheart business deals arranged by the Commerce Department, cut-rate insurance, low-interest loans, protective walls against foreign competition, exclusive government contracts, and a mind-boggling maze of special interest loopholes in the tax code. It is hard to conceive our government distributed handouts such as these after the recent bailout crisis.

The government has already spent approximately $2 trillion in money for failing companies, and has a total of approximately $8 trillion committed towards these corporations.

This manipulation of the American economy creates a huge shift in the equilibrium of our demand based economy which always results in negative effects: lower efficiency, over-inflated profits, and a poorer product. Subsidizing American companies creates a lack of competition globally as well and results in the deprivation of many of the world’s poorest third-world countries that rely on agriculture as their main industry; the farmers in these countries can often do their work more efficiently but because of American farm subsidies they can’t compete with exported products. Some subsidies can be useful to encourage development, such as those aimed towards the development of new energy sources, but at some point the citizens of this country need to ask themselves...