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A Few Corporate Welfare Examples

The following are just a few of the many examples of corporate welfare I could report on. You can find an explanation of the term on the page:

Redistribution From Poor to Rich.

The Mining Act of 1872

The law meant to encourage the development of natural resources, and has not been updated for modern times. It allows companies (foreign and domestic) to essentially take public land for their own profit. The Canadian company American Barrick Corporation, for example, patented (this a process for gaining title to the land) nearly 2,000 acres of public land in 1994 in Nevada. It was estimated to contain over $10 billion in recoverable gold reserves, yet taxpayers received less than $10,000 in payment.

Now, there may have been and may still be reason to encourage exploration and development of natural resources. But keep in mind that this is land held in trust for all of us who reside in the United States. Would a good manager of our property give it away so cheap. Certainly if it had instead been auctioned the gold would still be recovered, and we would have received a little more for the land (millions of dollars more).

People have tried to get this law rewritten, but the mining lobby has effectively fought those efforts. This is an example of how wealth is used to buy power in order to gain more wealth at the expense of others (we are the owners of the land after all). Incidentally, those public lands that are handed out in this way are often used by hikers, ATV riders and others before they are taken away. So even if we do not consider public lands to be "ours," and revert to the common idea of "first use constitutes first rights," we can see that this is a transfer of wealth from lower-income people to the wealthy.

Drug Research Welfare

The U.S. government routinely funds research into new drugs. We might argue about whether they should be spending our money in this way, but I think the average taxpayer would at least agree that we should get the maximum benefit from that research. In reality, though, the government often hands out to corporations the royalty-free rights to commercialize government financed inventions.

For example, The National Cancer Institute funded research that lead to Taxol, the anti-cancer drug. They then licensed it to Bristol-Meyers Squibb. Originally there was something about "fair pricing" in the agreement, but that was dropped. Bristol-Myers Squibb was allowed to market Taxol at a wholesale price which is about 20 times the manufacturing cost.

Now, I happen to think that (in general) if a company develops a drug at it's own expense it should be able to charge whatever it wants for it. But they didn't develop this! My money and your money was taken as taxes and used to develop it for them so they could make hundreds of millions more in profits. At the very least we should have required lower pricing.

Even more fair would have been charging a true market licensing charge, perhaps by open auction. At least in this way we could recover the cost of developing the drug. This transfer of wealth from taxpayers to large companies is clear corporate welfare example, but it's not limited to drug companies. The government hands out money for research to biotech, computer, and aerospace firms too, as well as many others.

Stadiums

Corporate welfare examples are not limited to federal handout. Many local governments get in on the game of taking your money to give to corporations. For example, professional sports teams will sometimes suggest that they'll leave town - unless the city finances the building of a new stadium for them. Typically cities agree, excusing this as necessary for the local economy. That means your property taxes must rise so the wealthy owners of the teams can get wealthier.

By the way, the new stadiums usually contain luxury boxes and high priced seats to boost profits, but what about the poorer people whose property taxes are paying for all this? I recently read that it is over $60 now to go to a New York Yankees game. Can the average family with three kids really afford to shell out $300 to go to a game in the stadium they were forced to pay for? This is clearly unfair.

Casinos

Casino owners are getting in on the same scam as professional sports teams. For example, Detroit provided $50 million in development funding for three corporate casino companies to set up shop. They also used eminent domain to steal land in prime locations for the casinos. Of course this has caused the Detroit economy to blossom (for those of you who are unfamiliar with Detroit; that was sarcasm).

If there is money to be made with a stadium, casino or a new drug, corporations don't need help. What about sports teams leaving town? Make a federal law that no community can use taxpayer money to give to businesses. Then ports teams won't leave because they won't have a handout waiting elsewhere.

Some corporate welfare examples are outrageous, while others may seem reasonable. But the net result is always that the poor and middle class get their money taken and handed over to those who don't need it. Of course it goes beyond helping the owners of those companies. It makes possible the billions in bonuses paid out to managers in our dysfunctional corporate system. This is a clear redistribution of wealth from the poor and middle class to the wealthy.

Read the whole series:
The Redistribution of Wealth to the Wealthy


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Corporate Welfare Examples

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