COVID-19 shows us that corporate welfare has to go

Corporations are the biggest welfare queens in the world. I don’t say this to be hyperbolic, it’s simply true. 

In Canada, we spend over $29 billion a year on corporate welfare, according to a study from the University of Calgary. According to some less-than-recent numbers from the United States, in 2012 they spent $100 billion on corporate welfare.

With COVID-19 however, both of these numbers can be thrown out the window. The United States has been pumping $1 trillion a day into just the banking system alone since this whole thing started.

This money is often called corporate welfare because it is essentially free money. It’s meant to deride these corporations, who receive billions of dollars with no strings attached for them to spend on whatever they want, the same way many do to everyday people who receive modest amounts of social welfare (ironically, they often have harsher conditions on the small amount of money they recieve than the corporations).

Despite corporate welfare still being the norm in terms of how governments choose to give handouts to corporations, there have been some modest improvements to the formula as of late. For example, the US government recently announced that they would require businesses to actually give them equity in exchange for their endless amounts of cash (kind of like an actual investor, a crazy idea I know). 

While this is clearly a common sense and totally innocuous thing for the government to do (given that this is how actual investments work from any non-government entities) some weren’t too happy about this change. 

The CEO of Boeing (the now infamous aircraft manufacturer who was recently caught making shoddy commercial planes that were falling out of the sky so they could save a buck) chose to publicly whine and moan about the situation during an interview.

While he expected the government to simply help out Boeing out of the goodness of their heart, with this recent announcement he said that they would look at their MANY OTHER OPTIONS for funding.

I’m sorry, but if you have multiple other options to receive billions of dollars (amounting to about 90% of Boeing’s market value) then why are you demanding free corporate welfare from the government, when that money ought to be spent helping small businesses and working people?

This single comment from Boeing CEO Dave Calhoun serves to unravel the entirety of the proposed ‘logic’ behind the corporate welfare system as it exists today. Why should the government just submit themselves to being the fallback plan for all these businesses? They’re the ones that always talk about the importance of the free market and how important they are to the economy, meanwhile they are some of the biggest socialists in the country, just looking for an easy way out. I guess the free market is just a bit too free for them.

If anything, the government should be in a position of power at all times in negotiations with businesses. Given that they print the money, give them insanely lucrative contracts  on a regular basis (especially Boeing) and so on, businesses should have to bend over backwards to receive investments (not grants, investments) from the government. This setup, where the government acts more like the rich parents who bankroll the lavish lifestyle of these out of control businesses, only benefits these companies and their stockholders, leaving everyone else out in the lurch.

Many argue that they need this money from the government to stay competitive or viable. In some industries, like agriculture for example, this is true to some extent. But in others, including the airlines and even Boeing themselves, the money they get from the government is often spent on things like stock buybacks. This is when companies simply buy their own stocks back on the market, reducing the number of shares available, thus increasing scarcity and, more importantly, their value. While it may seem sketchy (because it is) this is an entirely legal practice that simply increases the payouts given to investors and the salaries of high level executives, as they are almost always tied to the market value of the company.

Stock buybacks do nothing to help the actual operations or viability of the business. They don’t protect a single job, they just artificially inflate their market value to increase the payouts for a select few people involved with the company (including the CEO).

This is what makes Calhoun’s comment so egregious, it’s so tone deaf when you hear highly profitable, multi billion dollar companies turn down mildly inconvenient deals from the government because it isn’t the exact kind of handout that they personally asked for. 

As his comments show, they really shouldn’t be getting any government money. According to Calhoun, they have ‘many other options,’ so if they aren’t interested in playing ball with the government they should let them walk. The government needs to use their massive leverage to set the rules of the game, not let themselves be talked down to by some out of touch corporate welfare queen on live TV. Without direct restrictions on what the money can be used for, the government might as well burn the money they spend on corporate welfare, it’ll do about as much good.

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