Why do we need corporate welfare?

Question

BILLIONS of dollars are spent on corporate welfare, but why? After all, the big corporations already make billions of dollars, so is it really necessary?

Answer 1

Corporate welfare is a term coined by Ralph Nader in 1956, describing a government's bestowal of grants and/or tax breaks on corporations or other "special favorable treatment" from the government[1][2]. Usually these actions are at the expense of the citizens, although they often disadvantage other corporations as well. The term is meant to create a satirical association between corporate subsidies and welfare payments to the poor, and perhaps imply that corporations are much less deserving than the poor. It is important to remember, however, that many forms of government subsidy fit into the general category of welfare. Some object to the term "corporate welfare" on the grounds that the term plays on negative stereotypes about welfare payments to poor people, and may suggest that the poor are as undeserving of government "handouts" as corporations are. Corporate welfare is a symptom of regulatory capture.

Corporate welfare is applied in a number of different situations. A classic example is the granting of the use of broadcasting rights to TV stations at nominal fees, when other companies are willing to pay substantially more to use these frequencies. Increasingly common with the rise of globalization is offering incentives to locate in an area. For instance a company intending to build a manufacturing plant, or even a sports stadium, will frequently declare interest in two areas, and then let their respective governments attempt to "outbid" each other with promises of tax breaks, free land, and infrastructure developments. Critics charge that this skews the free market, giving a competitive advantage to large corporations, and shifts tax burdens away from these large companies to smaller ones and to individuals.

Another and unhappy voters often means the government will step in to help a faltering behemoth, to an extent that would not happen with a small business. For example, the airline industry has survived ongoing losses through government aid.

Critics of corporate welfare charge that many cases are nothing more than "pork barreling" and even examples of corruption. Examples might include defense contracts given to inefficient businesses in a politician's district, or giving assistance to a major campaign donor.

Some forms of corporate less widely criticised because of their positive externalities. For instance, most countries heavily support their domestic film companies, arguing that the preservation of national culture would not be ensured by a free market. A number of countries have used corporate welfare as a form of investment, to get industries started that would go on to pay great dividends for both the government and society in the long run.

Answer 2

I suspect is needed from time to time to stabilize certain sectors of the economy in rough spots... like the airlines after 9-11... and I guess even farm subsidies could be considered cooperate welfare to a degree, and I agree with those...

but, it seems to be abused in certain situations, like oil companies making record profits getting tax breaks and grants from the government... do you know how much a tax break for a company making billions would turn into? it would be millions of dollars the government would be losing...

so for the billion dollar corporations, I wouldn't think it would be needed, except in circumstances where their business would be destroyed by outside events...

but in other areas like small businesses, I think it could be quite helpful... so where they don't use it, it could help, and probably doesn't help as much where they do use it...

Answer 3

It ISN´T. More often than not the argument comes that if the company goes under it will cost American jobs. This argument is becoming weaker as more corporations continue to outsource production and personnel in spite of overwhelming taxbreaks and government contracts. It also costs alot of politicians campaign donations when they don´t pander to the bigger corporations. This is especially prevalent in goverment defense contracts. It´s the only excuse for some projects being upwards of 2 years late. But it all comes back to the argument that Politicians want to get reelected and you can´t do that on the wrong side of big $.

Answer 4

No it isn't-- they should be getting by on Free Enterprise. But unfortunately they've corrupted the political process: They give hundreds of thousands in campaign contributions to their lapdogs, who reward them with government handouts. It's a profitable system.

Answer 5

The benefits will trickle down to the masses, someday. At least that's the unproven and well disputed theory.

Answer 6

We don't. And it is not necessary at all. It's an ideology that has become so pervasive that no one has the brains or the balls to question it.

Answer 7

We don't.