With its authorization charter expiring at the end of September, the U.S. Export-Import Bank has come under increased scrutiny from rabble-rousers and the hum-drum alike. An otherwise obscure fixture in the grand scheme of federal-government corporatism, Ex-Im finances and insures (i.e. subsidizes) foreign purchases of U.S. goods for those who wouldn’t otherwise accept the risk.
So far, we’ve seen a variety of good arguments made against the bank. It privileges certain companies over others. It doesn’t meaningfully improve national exports, despite many claims to the contrary. It will surely yield losses for taxpayers. And so on.
But there’s a bigger and broader reason to reject such schemes that has less to do with line-item analyses of exports vs. imports or how much Boeing will benefit vs. General Electric, and more to do with how they distort, inhibit, or prevent the efforts of those aren’t on the radar in the first place, but perhaps should or could be — the “unseen,” as Bastiat would call them.
Over at Economic Intelligence, Veronique de Rugy does us a service in highlighting this aspect, noting that Ex-Im and other corporatist schemes tend to cramp the economy at large by distorting signals and inhibiting innovation and possibility outside of the privileged few:
However, the real problem with Ex-Im pertains to the many groups who are affected by Ex-Im activities but have been ignored so far. These people don’t have connections in Washington, and they don’t have access to press offices and lobbyists. But they matter, too.
It is difficult, but extremely important, that we consider the unseen costs of political privilege, whether they take the form of market distortions, resource misallocation, job losses, destroyed potential or higher prices… (more…)