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Encyclopedia > Corporate welfare

Corporate welfare is a pejorative term, first coined by Ralph Nader in 1956, describing a government's bestowal of grants and/or tax breaks on corporations or other "special favorable treatment" from the government. Usually these actions are seen to be at the expense of the citizens, although they might be seen as at the expense of other corporations as well. Both terms are meant to remind one of welfare payments to the poor, and perhaps imply that corporations are much less deserving than the poor. Some object to the term "corporate welfare" on the grounds that the term plays on negative stereotypes about welfare payments to poor people, and may suggest that the poor are as undeserving of government "handouts" as corporations are. Corporate welfare is a symptom of regulatory capture. Look up pejorative on Wiktionary, the free dictionary. ... The word term refers to either a word unit or a time unit with specified boundaries or limits. ... Ralph Nader Ralph Nader (born February 27, 1934) is an American activist lawyer who opposes the power of large corporations and has worked for decades on environmental, consumer rights, and pro-democracy issues. ... A tax is a compulsory charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (e. ... A corporation is a legal entity (distinct from a natural person) that often has similar rights in law to those of a natural person. ... Social welfare can be taken to mean the welfare or well-being of a society. ... Regulatory capture is an economic phenomenon in which a government regulatory agency becomes dominated by the interests of the industry that it oversees. ...


Corporate welfare is applied in a number of different situations. A classic example is the granting of the use of broadcasting rights to TV stations at nominal fees, when other companies are willing to pay substantially more to use these frequencies. Increasingly common with the rise of globalization is offering incentives to locate in an area. For instance a company intending to build a manufacturing plant, or even a sports stadium, will frequently declare interest in two areas, and then let their respective governments attempt to "outbid" each other with promises of tax breaks, free land, and infrastructure developments. Critics charge that this skews the free market, giving a competitive advantage to large corporations, and shifts tax burdens away from these large companies to smaller ones and to individuals. Braun HF 1, Germany, 1958. ... Globalization (or globalisation) refers to the worldwide phenomenon of technological, economic, political and cultural exchanges, brought about by modern communication, transportation and legal infrastructure as well as the political choice to conciously open cross-border links in international trade and finance. ...


Another common example often derided as "corporate welfare" is when a large company is nearing collapse, and is given substantial breaks or financial support by the government to keep it in business. While free market theory views the bankruptcy of companies as essential to the process, the specter of lost jobs and unhappy voters often means the government will step in to help a faltering behemoth, to an extent that would not happen with a small business. For example, the airline industry has survived ongoing losses through government aid. A free market is an idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of coercion are inclusive of theft). Colloquially and loosely, a free market economy is an economy... Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, administration - see text) in the UK. Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. ... Behemoth and Leviathan, an engraving by William Blake For the article on the Polish death metal band, see Behemoth (band). ... An airline is an organization providing aviation services to passengers and/or cargo. ...


Critics of corporate welfare charge that many cases are nothing more than "pork barreling" and even examples of corruption. Examples might include defense contracts given to inefficient businesses in a politician's district, or giving assistance to a major campaign donor. Pork barrel, in a literal sense, is a barrel in which pork is kept, but figuratively is a supply of money; often the source of ones livelihood. ... In military science, defense (or defence) is the art of preventing an enemy from conquering territory. ... A contract is any promise or set of promises made by one party to another for the breach of which the law provides a remedy. ... To meet Wikipedias quality standards and appeal to a wider international audience, this article may require cleanup. ...


Some forms of corporate welfare are less widely criticised because of their positive externalities. For instance, most countries heavily support their domestic film companies, arguing that the preservation of national culture would not be ensured by an unfettered market. A number of countries have used corporate welfare as a form of investment, to get industries started that would go on to pay great dividends for both the government and society in the long run. An externality occurs in economics when a decision (for example, to pollute the atmosphere) causes costs or benefits to individuals or groups other than the person making the decision. ... Film refers to the celluloid media on which movies are printed. ... The word culture, from the Latin colo, -ere, with its root meaning to cultivate, generally refers to patterns of human activity and the symbolic structures that give such activity significance. ...


Corporate welfare knows no party ideology. Just as Republicans/conservatives are likely to call for energy depletion allowances to encourage job growth in the oil industry, Democrats/liberals are likely to call for grants to corporations to encourage use of or develop alternative fuels, such as biofuel. Libertarians may be most consistently opposed. Burton W. Folsom, Jr. identifies businesspersons who seek corporate welfare as "political entrepreneurs" in his book, The Myth of the Robber Barons as distinguished from what he calls "market entrepreneurs." This article is about the general topic of biofuel. ... This article deals with the libertarianism as defined in America and several other nations. ... o_o ... Wikipedia does not yet have an article with this exact name. ...


References:

  • Nader, Ralph. Cutting corporate welfare (Seven Stories Press, NY, 2001).
  • Jansson, Bruce S. The $16 trillion mistake: How the U.S. bungled its national priorities from the New Deal to the present (Columbia University Press, 2001)
  • Mandell, Nikki. The corporation as family : the gendering of corporate welfare, 1890-1930 (University of North Carolina Press, 2002).
  • Glasberg, Davita Silfen. Corporate welfare policy and the welfare state: Bank deregulation and the savings and loan bailout (Aldine de Gruyter, NY, 1997).
  • Lewish, David. Louder voices: The corporate welfare bums (Lewis & Samuel, 1972).
  • Whitfield, Dexter. Public services or corporate welfare: Rethinking the nation state in the global economy (Pluto Press, Sterling, Va., 2001.)
  • Folsom Jr, Burton W. The Myth of the Robber Barons (Young America)

External links


  Results from FactBites:
 
Corporate welfare - Wikipedia, the free encyclopedia (681 words)
Corporate welfare is a pejorative term, first coined by Ralph Nader in 1956, describing a government's bestowal of grants and/or tax breaks on corporations or other "special favorable treatment" from the government.
Some object to the term "corporate welfare" on the grounds that the term plays on negative stereotypes about welfare payments to poor people, and may suggest that the poor are as undeserving of government "handouts" as corporations are.
Corporate welfare is a symptom of regulatory capture.
Cutting Corporate Welfare by Ralph Nader (3625 words)
Corporate welfare-the enormous and myriad subsidies, bailouts, giveaways, tax loopholes, debt revocations, loan guarantees, discounted insurance and other benefits conferred by government on business-is a function of political corruption.
Perhaps still the largest corporate welfare expenditure of all time-ultimately set to cost taxpayers $500 billion in principal and interest-the SandL bailout is in large part a story of political corruption, the handiwork of the industry's legion of lobbyists and political payoffs to campaign contributors.
What is the conceivable rationale for a corporate welfare profligacy that spends hundreds of millions on luxury-box-equipped, amenity-filled stadiums designed for the comfort of the wealthy spectators while fiscal constraints force the shut down of participatory high school sports activities.
  More results at FactBites »

 
 

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