Do we need the Export-Import Bank?
By: Colin Combs
General Electric’s Chief Executive Jeff Immelt recently claimed that closing the Export-Import bank would mean that
Is that true? If we close the Ex-Im Bank, would exports simply cease to exist? Is this really just, as the Financial Times claimed, part of “Tea Party attacks on big business”? Is GE, who happens to be one of the main beneficiaries of the bank, just looking out for the interests of the American people?
In a word, no.
In a free market, the government does not interfere with voluntary trade. The government cannot prevent people from exchanging their own property, but neither can it force them to make a trade against their will. This is, of course, equally true of international trade as it is domestic trade. So the free market position does not deny that exports are important at all. Indeed, having an international division of labor is extremely important in this mindset, as it promotes peace and prosperity between nations. Thus Frederic Bastiat, the great defender of liberty and the scourge of protectionists, is famously quoted as saying that when goods don’t cross borders, armies will.
What the Ex-Im Bank does is to subsidize corporations with taxpayer backed loans. The American people are taxed so that Boeing and GM can get artificially cheap money. It is one of the most blatant examples of corporate welfare out there today, an attempt by the state to pick winners and losers. Closing the Ex-Im Bank would not be an attack on free trade at all, but rather the defense of it. Business works by someone producing goods that consumers want, and engaging in a voluntary trade with them for mutual benefit. Subsidization works by robbing Peter to pay Paul.
The claim that not forcing people to subsidize exports with their tax dollars would mean that “we do not think that exports are important” is simply ridiculous. If people are forced to do something by law, that says nothing at all about whether they consider this thing important or not. They don’t have a choice. To really find out how important exports are to Americans, all we need do is end government tariffs and embargos against another nations and let them trade with other nations by themselves. If Americans think exports are important, they will demonstrate this by investing in business that exports their products overseas. If they choose to not support those businesses, it is not the role of government to override the people’s choices to invest their money in businesses which do not emphasize exports.
If anything, it’s the people who think that the American people need to be forced to support exports are claiming that we do not think that exports are important.
Allow for free exchange, and we will fulfill the Founding Father’s vision of peace, commerce, and honest friendship with all nations.
Campaign for Liberty continues to support ending the Export-Import Bank.