Huffing And Puffing Ideologically Over The Export-Import Bank

Tyler Cowen at Marginal  Revolution has sympathetically linked to an article in the latest issue of Econ Journal Watch by Veronique de Rugy, Ryan Daza, and Daniel B. Klein that argues that libertarian/conservative bloggers have been frequently and firmly critical of the supposedly awful Export-Import Bank, whose charter was renewed not too long ago, even while they admit that at least a few leftist bloggers have criticized it, most notably Dean Baker, who was all over its case today (perhaps in response to this article, although he made no mention of  it or Cowen's post).

While some commenters at MR attempt to criticize the methodology of the authors, it looks to me like they are basically correct.  Dean Baker is one of the lefty bloggers to post multiple times to criticize the Export-Import Bank as a protectionist subsidizer of big corporate interests, most notably Boeing and General  Electric.  OTOH, many righty bloggers have complained about its rechartering frequently, with Donald Boudreaux at Cafe Hayek leading the pack with 72 such posts, followed by Daniel Mitchell at International Liberty at 43. For the authors this apparently shows some kind of hypocrisy by statist protectionists on the left, even though the only blogger identified as supporting the Ex-Im Bank outright is Barry Ritholtz, a professional financial adviser whom I have not yet heard of presenting talks in URPE sessions at conferences.

For the record, I agree with Dean Baker about the Ex-Im Bank.  It does not deserve to exist, and it clearly exists solely to help out some big corporate interests, even if one wants to argue as some have that workers may be involved here as well (the heart of leftist protectionist arguments).  So, why have most lefty blogs been silent on this, and I am posting on this at least partly because this blog is listed in this article as being one that has never had a post about this issue, accurately as near as I can tell, so this is the first such post.  I cannot speak for others here, but why have I not personally so posted in the past on this wicked evil big government protectionist protector of giant corporations?

Well, I had not paid much attention to it, frankly, and the main reason is simply that I have never  thought it was much of a big deal.  I have sympathy with libertarians and conservatives when they point to  the many government programs that engage in questionable activities and that also cost taxpayers a lot of money, think agricultural price support programs (although conservative politicians from agricultural states will rush to support them, and even supposedly "clean" centrists and liberals, such as the late William Proxmire of Wisconsin who when asked why he was attacking wasteful programs but supporting dairy import quotas replied that, "After all, I am the senior senator from the state of Wisconsin").  But, not  only is Ex-Im not costing a lot of money, it is making a profit.  In this regard it looks like the much-derided TARP, which I also find myself having trouble getting too worked up about.  Maybe the financial system would have been just fine without TARP and we would not have fallen into another Great Depression, but even if it had no positive effect, at least it did not cost any money in the end.

Also, in the case of its biggest beneficiary, Boeing, we are not talking about a free market.  It is part of an effective duopoly with Airbus.  And the subsidies and support from governments that Airbus gets for trade support far exceed the penny ante amounts that having slightly lower interest rates for some of its borrowing provides for Boeing.  (General Electric arguably operates in a more competitive environment).  The amounts involved are piddling, in the millions, not billions, per year, although supposedly without Ex-Im Boeing might have lost a $1.1 billion deal with South Africa.

But there is a bigger  issue here that nobody has talked about, not the authors of the articles, and not even any of the conservative or libertarian critics of Ex-Im, and for that matter, not even Dean Baker or any of the leftier critics either.  That is that both Boeing and General Electric have received much greater subsidies that do come out of the taxpayers' pockets from another source in the US government, the DOD.  Boeing is the second largest defense contracter in the US, receiving on the order of  roughly $18 billion in contracts annually, with General Electric a good deal further behind, but also receiving several billions in contracts annually as well.  Now it may be that people ignore this because they are presumably providing services, even though we know such contracts have very nice profit margins padded into them.  Conservatives may love this, but good libertarians should be down on DOD subsidies as should good lefties like Dean Baker.  This is the real subsidy the US government gives these behemoths that helps them in trade wars, not the penny ante dribblings that they get from the money-making, if indefensible, Export-Import Bank. 

I shall take all these people getting all bent out over Ex-Im, both the bloggers and these authors, more seriously when they point out these massive subsidies from the DOD.  But, I am not going to hold my breath over this.

Barkley Rosser