Say No To Corporate Welfare Slush Fund

A blog about business and economics.
March 12 2013 3:43 PM

Let's Not Create a Giant Federal Corporate Welfare Slush Fund

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Manufacturing jobs are well and good, but that doesn't mean we should bribe companies to stay in the U.S.

Photo by David Paul Morris/Getty Images

There's a fair amount I agree with in Anne Kim's Washington Monthly article on American manufacturing, but she also endorses a terrible proposal to create a large federal slush fund the executive branch can use to randomly subsidize politically powerful firms:

And the president could go further still. He should ask Congress for a several-billion-dollar “war chest” to meet or beat any incentive offered to a company by a foreign government to lure production there.
As iffy as it sounds under current trade laws, the reality is that America’s competitors routinely engage in this behavior, and the United States would only be leveling the playing field by doing the same. By entering the game, Washington could use the opportunity to argue for clearer and more restrictive rules on such recruitment activity, which would be the best outcome.
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I was going to object that the record of this kind of initiative at the state and local level is terrible. But she acknowledges that a lot of this already happens at the state and local level and it's terrible. Her claim is that creating a federal slush fund would "minimize this beggar-thy-neighbor dynamic among states and cities," but provides no evidence for the claim. Most likely it would just create an exciting new level of waste and bribery.

This is all very boring, but all the other stuff Kim says about the importance of having good infrastructure and good schools and a reasonable tax code is really important. Diverting funds from those purposes to create a bribes fund makes very little sense.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.