Corporate Welfare and Government-Sponsored Enterprises (GSEs)
A Government-Sponsored Enterprise is when government is in the business of business, something which of course the founders (of the USA) did not want. The latest buzz on GSEs is the Pension Benefit Guaranty Corporation, which is liable for unfunded pensions of private companies to the tune of $350 billion and only getting worse. As Karl Marx said, give the capitalists enough rope and they'll hang themselves. We see this in our State-Capitalist system in many iterations.
A true capitalist system is one where the government does not favor one business enterprise over another, where an entity survives and prospers by creating value through voluntary exchanges and not where rent-seekers expend efforts towards getting special treatment from government.
In the case of the PBGC why should the taxpayer bail-out companies that don't adequately fund their own liabilities to their workers?
Why should the government, by insuring these pensions, create incentives for these companies to grow too big too quickly and not cover their own debts?
Why should responsible businesses and employers have to pay taxes to cover the pensions (and increase the profitability) of those companies that aren't responsible?
Why should the government get in the way of insurance companies who compete privately - with their own money - in the market to provide private insurance for pension funds?
In the US we have many examples of GSEs acting as creators of the ill-conceived 'corpocracy'. Workers of the World Relax would like to see this corporate welfare, as Marx and Lenin said about the state in the movement towards communism from socialsim, "whither away". In addition to the Pension Benefit Guaranty Corporation the worst offenders are:
1) Ginnie Mae, Fannie Mae and Freddie Mac. These GSEs give 100% government-backed insurance for repayment of private mortgages for the purchase of homes. Why should those further up the economic scale, those who can afford homes, have their mortgage rates subsidized by those earning less? Why should private mortgage lenders be supported by government insurance?
2) The Export-Import Bank. The Ex-Im Bank (as the name implies) provides insurance and financing for US business importing and exporting. Why should large companies whose products may be considered 'strategic' to the US foreign policy be given preferred (cheaper) financing than those who sell regular (eg not politically-connected) products abroad? Why should the US Government be competing with private banks and private insurance companies for trade financing?
3) Farmer Mac. This, our newest GSE, prioritizes lending to 'rural' America. The obvious question here is why should those in 'urban' America subsidize those who choose to live in 'rural' areas? And why should on the one hand the US government call for free trade - the economic growth and wealth of the world's poor depends on their ability to trade their agriculture products - and on the other hand pay people to stay "down on the farm" ?
And, "internationally" (eventhough the US is largest funder):
4) The International Finance Corporation. The IFC takes equity interest in companies in the 'developing world'. Isnt this, government owning stock, the very definition of socialism? Wasnt this model proved a failure with the collapse of the USSR? Why should the IFC be able to pick the low-hanging fruit of the best in-country investments and supplant private - local and/or international - capital for these investments? Why should external government actors chose which businesses should succeed or fail within a country?
5) The International Monetary Fund. The IMF guarantees that 'developing' country governments will make good on their debts borrowed from abroad. Why should a GSE guarantee the repayment of debt made by private individuals? Why should poor countries be given incentives to borrow more than they can afford? Again, the question is why should a GSE get in the way of private insurance markets? Why should taxpayers guarantee private investment?
As in any addiction, the first thing to do is admit there is a problem. GSEs are a problem and de-funding, quitting the habit, is the answer. Government should get out of the business of corporate welfare, the sooner the better: cold turkey or with "the patch" of a clear, phased privatization of the GSEs.