The Effects Of Corporate Welfare To Society
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Published: Fri, 12 May 2017
“In general, corporate welfare is the funding of companies or individuals while neglecting others. This funding comes inform of business grants or financed loans, which do not require any exchange of either services or goods to the government. Many citizens do not have an idea of the huge sums of taxpayers’ funds that goes to these programs known as corporate welfare. Despite the fact that there have been outcries to cut this form of government spending, the government has done little to correct this situation. The taxpayer continues to suffer from the funding of these businesses through grants, funds given out for research, business insurance, Agricultural programs, technological advancements, maritime activities, trade management programs, the research on energy and forest services (Skidmore 6).
It is very easy to think that corporate welfare is beneficial to the society but, careful insight into the program shows that there are many loopholes, which require quick amendments. Firstly, one of the major problems that require urgent attention is the unfair and corrupt formula that the government employs in selecting the beneficiaries of these funds. Very many incidents illustrate the unfairness employed in the realization of these plans. For instance, the government favors fully established businesses instead of investing in businesses that are starting up. An illustration of this is the situation where the government supports Sematech, one of the largest semiconductor manufacturers, with hundred million dollars annually. Due to this, it became difficult for other small companies dealing with the manufacture of semiconductors to enter into the market competitively. Another issue is, instead of the government supporting companies that offer maximum benefits to the society they choose to fund companies that offer minimal or very little benefits to the society (Skidmore 36).
The tax collected by the government should assist the society in supporting the projects that are beneficial to all citizens without any favor. Corporate welfare, on the other hand, utilizes the taxpayers’ money to benefit a few individuals and companies. Politicians take huge sums of money from the treasury and invest it in the projects dubbed corporate welfare that have very small or no positive impact to the economy. For example, in the mid sixties, the government sought to support a project that would transform the perception of air travel but this was not to be yet the government spent huge sums of money on the project. This huge amount went to waste and, it would have been useful in assisting projects that are more beneficial to the society. Another good example of this wasteful spending in the name of corporate welfare is how the government sunk over two billion dollars in the mid seventies, in an energy project that eventually closed down (Mooney 56).
Another problem that the corporate welfare brings is the irregular or unfair play when it comes to business funding. A huge amount of credit offered to companies and individuals is usually for the influential that often benefit from the support of powerful politicians. For healthy competition to be present, the market environment should offer equal opportunities to all market players both rich and poor. The active presence of corporate welfare that benefits a few causes market players that do not have connections politically to miss equal opportunities. Welfare also prevents companies and individuals with no influence to participate in entrepreneurship and healthy competition. A good example is a company like Sematech, which receives huge amounts of money from the government, to help in its operations has turned the company into an unfair player in the market. Agriculture is also another field that corporate welfare has a contribution in the creation of unfairness due to the financial support it offers to specific agricultural commodities (Whitfield 126).
The corporate welfare encourages a very strong relationship between the business environment and the government. It is imperative to realize that government issues and politics are indivisible. In view of the information above it is clearly understood that any implementation of policies and procedures by the government automatically favor the companies and individuals they support. In a show of appreciation, these companies and individuals utilize the same funds to make contributions that fund political campaigns. For instance, government supports companies whose functions are outdated in order to sustain an administration that assists them to siphon taxpayer’s money. Politicians and the rich use the misused funds for political campaigns and personal gain instead of assisting citizens. The corporate welfare has killed the spirit of entrepreneurship and, any country needs these entrepreneurs for the boosting of economy through innovations (Mooney 148).
Corporate welfare funds cause the prices of goods and services to be very expensive. Goods and services tend to be expensive due to trading barriers promoted by companies and individuals that enjoy political influence. For example, there is an argument that products that are more consumed are subject to more taxation and hence the increased prices. It is important to note that any price increase ultimately affect companies and individuals that earn very little incomes. An increase in price for a basic commodity like sugar puts people who earn a small income in an uncomfortable position. They have no one to air and support their outcries; yet they are bound to pay taxes. For example in the early nineties, the government introduced heavy duty on the cheap parts of the computer that were coming from Japan. The intension here was to save the jobs of the people that worked in those companies. Instead, this trade barrier increased the cost of making a computer by approximately one thousand dollars per computer. This eventually led to the sales of American-manufactured computers to decrease and consequently many Americans lost their jobs (Whitfield 170).
The corporate welfare has also led the government to neglect taking care of its citizen’s social requirements instead; they focus on enriching influential corporations and adhering to their demands. One of these intimidations posed by big corporations is like when the carmaker Daimler Chrysler pressurized the county of Toledo to give them a land that had people and small businesses and, the county council complied. This was very inconsiderate because the needs of the people and their small businesses did not matter. In addition, there are policies, which give corporation such as the Wal-Mart minimal funding hence causing them to mistreat their employees. The employees end up receiving poor pay with uncomfortable working hours. The health insurance cover received is very low hence causing their healthcare to be very expensive (Skidmore 170).
With the illustrations offered above, it clear that the corporate welfare programs are a big disadvantage and here are several solutions to correct them. These solutions include bringing down of those policies that do not work and are of no positive impact to the economy, implement policies to reduce trade barriers in the market in order to encourage healthy competition. Another important suggestion would be to separate politics from the market environment. This would foster honest entrepreneurial behavior and reduce campaigners in the business environment. The government should stop supporting organizations that are unsuccessful but instead focus on successful businesses (Mooney 78).
In conclusion, ordinary citizens should be more educated on the pros and cons of corporate welfare and the rights that they have. Citizens should get together to campaign for changes so that their voices are heard. The government officials should remember that their victory into office is to serve taxpayers. Failure to serve ordinary citizens should lead to the loss of their seats the next time they seek reelection. The government should also remember that ordinary taxpayers are very important and, there should be no favorites. This is especially important when it comes to satisfying everyone’s needs and requirements.”
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