The Export-Import Bank was reauthorized as part of a highway bill as reported by Brian Wingfield at Boomberg. It is unlikely that this cancer will be lethal to the republic but it indicates the difficulty Congress has in supporting freedom.
Two items are of interest about this sad news: The number of board members and the conventional wisdom. Why is the number of board members an issue? It is because three of the five spots on the board are vacant and the Ex-Im Bank cannot approve loans over $10 million without a majority. Veronique De Rugy has computed that 84% of the dollar value of the loans are over $10 million so not approving board members would limit the mischief opportunities for the Bank. Since the Republicans control the Senate there is some chance to limit the damage for awhile.
The conventional wisdom shines through both Bloomberg articles but particularly this paragraph from Wingfield:
Nations love exports — and the jobs and tax revenue that come with them. The U.S. was desperate for more of them during the Great Depression when it created a national bank to finance loans for exports. That was the Export-Import Bank of the U.S., which was so successful at expanding exports that scores of other nations copied the model. But small-government advocates shut down the bank in July, saying it distorted the free market by using tax dollars to pick business winners and losers. Its supporters didn’t given up. Now the bank, seen as a success story for most of its 81 years, has come back to life.
So let’s summarize the conventional wisdom:
Some folks still crave Mercantilism. They are a few centuries out of date.
Instead of reducing tariffs (nations do love tax revenue!) the US found a work-around to subsidize its corporations. Other nations followed suit. What government doesn’t want to expand?
Yes it is a problem for a rational market. For example, we are giving benefits to Boeing so Delta can be at a disadvantage. Good idea?
It has been crony capitalism for 81 years. It appears that nothing can kill it. Perhaps it is time for chemotherapy?