Economist Greg Mankiw, a former chairman of the Council of Economic Advisers under President George W. Bush, recently came out against the Export-Import Bank. See his short blog post below.
I just got back from Utah, where I was one of the speakers at a conference that has been dubbed “Club Mitt.” One of the other speakers–this one a politician rather than a nerdy academic like me–spoke about the need to reauthorize the Export-Import Bank. (I won’t mention the person’s name, since the event is off the record.) What struck me is how weak the arguments were.
Three arguments for the Ex-Im Bank were given:
1. It creates jobs. Of course it does! If the government were to put the names of all businesses into a hat, pull out a few randomly, and give those a per unit subsidy, those businesses would expand and hire more workers. That would not make it a good policy, however, because the wrong jobs would be created.
2. It returns money to the Treasury. Really? If the bank were truly a profitable venture, we could privatize it. I bet if the government tried to sell off the Ex-Im Bank, it wouldn’t get much, if anything at all. If the Bank’s activity were actually profitable, we wouldn’t need a government-run bank to do it.
3. Other countries give similar subsidies to their firms. So what? If other nations engage in corporate welfare, that is no reason for the United States to follow suit in the name of a level playing field. We don’t need to import other nations’ bad policies.
Maybe there are better arguments for the Export-Import Bank. But if this is the best advocates of the Bank can do, it shouldn’t be reauthorized.
Read it on Greg Mankiw’s Blog here: http://gregmankiw.blogspot.com/2015/06/the-export-import-bank.html