Last week was an historic week here in South Carolina, with the roll out of the first Boeing 787 Dreamliner completed in our state. While this is a triumph of the free market on the one hand, as South Carolina stood up to the NLRB’s bullying of Boeing with regard to union contracts, it isn’t free market capitalism in the truest form.
Boeing, while standing up for free-markets while standing down the NLRB, is now standing against the free market by pushing for a reauthorization and expansion of the Export-Import Bank of the United States.
It isn’t good enough for conservatives to support free-markets when it fits an agenda, only to discard them when it’s convenient.
Unfortunately, that’s exactly the attitude we read last week in an editorial by former SC Department of Commerce Secretary Joe Taylor. In his op-ed piece in the Charleston Post and Courier, Secretary Taylor mad a passionate case for the reauthorization of the Ex-Im Bank, thus jettisoning his otherwise strong commitment to free-market principles.
In the name of “job creation” and capitalism, good folks like Mr. Taylor are supporting policies that inhibit job creation and undermine capital markets. That’s because the Export-Import Bank is, effectively, a taxpayer-funded subsidy for foreign companies to buy American products and for American companies to buy foreign products.
Now, on the surface this sounds fine and fair, but, as is usually the case, the devil is in the details.
Secretary Taylor rightly claims that “eighty percent of the Boeing 787s produced in North Charleston will be sold to overseas customers who routinely use the services of the Export-Import (Ex-Im) Bank.” He does not mention, however, why this is the case. Why are so many overseas airlines buying Boeing products, while most domestic carriers are buying foreign made Airbus and Embraer jets? Because the Ex-Im Bank works both ways; it incentivizes foreign airlines to buy American made Boeing jets by giving them low-rate taxpayer subsidized loans, and it incentivizes domestic carriers to buy Airbus and Embraer through low-rate taxpayer subsidized loans. Thus, the primary reason the overwhelming majority of Boeing 787s will be operated by foreign airlines is government interventionism in the free-market system.
If the United States Congress does the right thing and ends this taxpayer-funded loan guarantee / subsidy program, the free-market will correct itself and Americans can fly on American-made planes. In other words, if Ex-Im is nixed, it won’t kill Boeing’s demand as folks like Secretary Taylor claim. Instead, it will reallocate that demand based on free-market forces, and we will see more Boeing 787s flying the domestic skys.
The notion that Boeing won’t succeed in Charleston without the Ex-Im Bank is laughable; they will succeed, and Americans will have a chance to fly on planes built in our state without having to book a flight on Air France.
The Secretary also claims that the Ex-Im Bank “doesn’t cost American taxpayers and over the past five years has actually made over $3.4 billion for the government.” To that notion, I’d add the following: it is true that the Ex-Im Bank is currently self-financing, but so were Federal home loan guarantees to Fannie and Freddie until the music stopped in 2008. Then, in a matter of months, taxpayers forked over $ billions to bail out these failed financial institutions.
Such is the trouble with loan guarantee programs: they do financially well when the economy is on the up, but devastate the guarantors during a downturn. Government guarantees, which are ultimately taxpayer funded, make money…until they are needed.
Let’s stand up for free-markets like we did for Boeing against the NLRB and their union allies. Let’s stay true to our commitment to freedom and free-markets in South Carolina by living up to Secretary Taylor’s correct claim that “In South Carolina, we take care of our own.” Let’s take care of our own by standing up for every business in every corner of this state.
Boeing isn’t our only “own,” our own includes thousands of corporations and small businesses across the Palmetto State that don’t receive taxpayer funded subsidies, and are paying for the companies that do.
Freedom and free markets work, let’s give them a chance to show us how well.