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Corporate welfare

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Corporate welfare is a phrase usually used as a criticism of government interference in the free market to the direct or indirect financial benefit of a particular corporation, a group of businesses or business persons, or an industry in general. The most blatant examples and the ones most likely to raise the ire of libertarians are economic development incentives, such as a state waiving taxes for a certain number of years in exchange for a corporation relocating to or constructing a factory in that state, which may also be considered protectionist in some cases.[1] Other, grayer areas of “corporate welfare” include import tariffs, no-bid government contracts, publicly funded infrastructure (including some, but not all, projects considered pork), and facilities that mostly benefit select companies or individuals, such as taxpayer-funded sports stadiums. In addition, there’s the type of government subsidies to low wage employees that arguably allows companies to skimp on wages; one notorious US example being the numerous cases of Walmart workers earning so little that they also qualify for welfare programmes, such as foodstamps, Medicaid, subsidised housing etc. One 2014 report calculated these welfare costs associated with low wage Walmart’s workers as amounting to $6.2 billion annually.[2][note 1] At the same time, Walmart boasted in its 2013 annual report that it had paid out an average of $12 billion annually since 2009 to its shareholders through dividends and stock buybacks.[3]

Sometimes these efforts at economic development work out well and create jobs and an expanding local economy; sometimes corporations or people take the money and run.[4] When things don't work out so well, taxpayers are left holding the bag; thus, a portion of the corporation's risk is assumed by the government. Such an act is usually referred to as "privatising profits and socializing losses."[5]

Similarly, government bailouts of bad corporate debt would be considered by some to be corporate welfare.[6]

Though many environmentalists may agree with libertarians on the problem of corporate welfare, it's likely for different reasons. Naomi Klein in This Changes Everything cites[7] a 2012 report by Elizabeth Bast, et al, that estimates worldwide fossil fuel subsidies to be at least US$775 billion annually.[8] Oil Change International estimates U.S. fossil fuel subsidies to be $37.5 billion annually, as of 2014, including $21 billion in production and exploration subsidies.[9] And environmentalists usually take the concept further, to include negative externalities for which corporations might not be held to account, such as health impacts of pollution.[10] A modern example is the bailout of banks after the 2008 financial crisis.

Some even consider US naval domination of international waters and global power projection to be corporate welfare, which may have some basis in truth and be a valid criticism of the US's disproportionate military spending, but begins to look like a rabbit hole that never ends, as far as calling this “corporate welfare”.[11] After all, a similar argument could be made regarding taxpayer-funded police arresting shoplifters.

Other possible candidates[edit]

  • Farm and ethanol subsidies
  • Government R&D

See also[edit]


  1. This is similar to some of the criticism about the potential effects of various basic income schemes.