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
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
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.
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.
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