Since the Export-Import Bank’s charter expired, the agency’s two largest beneficiaries, Boeing and GE, have been acting like bullies. They have threatened to leave the country, cut jobs, withhold contributions, and make investment decisions based on politics.
One would hope that Congress would at some point say “enough already” because no matter how angry these executives are to have lost the political battle over Ex-Im, this is no way to behave. Their companies do not have a right to government handouts, especially when they come at the expense of everyone else.
The sad part is that the media world is reporting on these threats and claims from Boeing and GE without an ounce of skepticism.
Take GE’s claim that it will have to move 400 to 500 jobs to France, Hungary, and China because and only because the Ex-Im hasn’t been reauthorized. The Wall Street Journal reports that several states will be losing jobs as a result of the Ex-Im bank’s closure and GE’s moving jobs abroad:
For months, GE has said that the failure to reauthorize the export financing agency, which congressional Republicans have singled out as an example of corporate welfare, would force the company to move jobs overseas or risk losing contracts for turbines, power projects and other industrial equipment.
GE on Tuesday said it had signed an agreement for a line of credit for certain power projects from France’s export credit agency, Compagnie Française d’Assurance pour le Commerce Extérieur, or Coface, which would result in 400 jobs moving to Europe, primarily from facilities in New York, Texas, South Carolina and Maine. It said another 100 jobs would be moved next year from a facility outside Houston to Hungary and China to access export credit for customers of gas turbines used in aviation.
The Journal isn’t alone in reporting the loss of U.S. jobs due to the end of Ex-Im. Bloomberg, Fortune, The Week, Reuters, Federal News Radio, The Hill, and the New York Times have joined them, just to name a few.
As it turns out, though, these supposedly lost jobs never existed in the first place: Here’s the Washington Post:
General Electric on Tuesday announced that it plans to send 500 jobs overseas, a move the industrial giant said is necessary because Congress allowed the charter for the Export-Import Bank to expire earlier this year.
But then the author says:
Those 400 jobs do not currently exist, but that is the number of jobs GE would create in France if it wins pending deals that Coface has agreed to help finance.
So jobs aren’t being destroyed in the U.S.
Also worth noting is that G.E. doesn’t always make such noise about “moving jobs abroad.” After all, it already has a large workforce overseas. Should Americans be upset about those jobs, too? Should the media start reporting on them? There are of course good reasons for a company to do business abroad, such as improving the bottom line of companies headquartered in the U.S. by taking advantage of profitable economic opportunities outside of the U.S. If G.E. feels that for whatever reason that it is the right thing for its bottom line to move to France, it should go ahead.
And for those of you who are tempted to say, “But if we revived Ex-Im, that would give an incentive to G.E. to create these jobs in the U.S.,” I would remind you that, as my colleague Don Boudreaux has shown repeatedly, “using protectionist policies to ’save’ a job comes at enormous cost, as opportunities shrink and input costs swell for industries downstream.” It is not worth it!
Even if the use of credit supports is good for GE, it doesn’t mean that it is good for the country as a whole. There are many unseen victims of Ex-Im like schemes. Export subsidies tend to boost the jobs and profits of the industries being subsidized but hurt non-subsidized industries by shifting jobs, economic growth, capital and other good stuff from the non-subsidized to the subsidized. If the French government wants to hurt its economy overall to subsidize GE, be my guest. The U.S. government should abstain.
I wish people would also take with a grain of salt the idea that the end of Ex-Im is leaving GE with no choice but to seek credits from foreign governments and create jobs abroad. GE is a very wealthy and successful company (worth $260 billion) that can survive the end of a crony federal agency like Ex-Im. Five years ago, GE head Jeffrey Immelt agreed. As Freedom Partners reminds us, Immelt said that General Electric is big enough that it could never use a lack of government support as an excuse for not doing business somewhere. Shouldn’t reporters question whether Immelt’s change of heart today is anything other than political bullying?
Do we really believe that it wouldn’t have access to capital to fund its deal without Ex-Im? Over 98 percent of exports happen every year in the United States without it. In fact, most of GE’s exports don’t even get Ex-Im backing. And the fact that a company would prefer getting a cheap loan through Ex-Im doesn’t mean that capital isn’t available elsewhere. Pro-Ex-Im supporters like to conflate the two things as if one led to the other.
I will end by mentioning this piece by Jackie Calmes at the New York Times. She reports poorly on the news of G.E. but she also includes this funny tidbit:
The bank’s opponents are “in some cases economically illiterate,” said John Engler, the president of the Business Roundtable and a former Republican governor of Michigan. “I think it’s the antigovernment nature of so many members” elected since the Tea Party’s rise in 2010, he added.
As you probably guessed, the author never mentions that a vast majority of economists who have weighed on this issue are opposed to the Bank. Not a word either on the fact that many of these economists are neither anti-government nor illiterate. How about citing liberal economist Deal Baker in her piece? Or former Bush NEC Director Keith Hennessey on why he thinks Ex-Im should go? Or Greg Mankiw on why we should kill the bank?