How To Fight The Ex-Im Bank

Tyler Durden's picture

Submitted by James E. Miller of Mises Canada,

In politics, words can be dangerous weapons. The terms we use can either accurately or inaccurately reflect what the government is up to. George Orwell understood this better than anyone, and his essay “Politics and the English Language” is a great denouncement of the abuse of words at the hands of the political class. Though he was writing at the end of World War II, Orwell’s criticism still rings true today. In the age of around-the-clock news and easily digestible sound bites, political speech and writing have largely become “the defense of the indefensible.”

The ongoing debate in the United States over the merits of the Export-Import Bank – a government institution that makes loans to governments and private companies abroad to boost domestic exports – exemplifies this tug-of-war between language. The D.C. lobbying cabal and its puppets in Congress are staunchly defending the institution as a job-creator and economic necessity. A handful of free market organizations are attacking the bank for being a deliberate form of crony capitalism. For years, the intrepid Tim Carney of the Washington Examiner has led the fight to dismantle the Ex-Im Bank, calling out the unfair advantage given to companies like Boeing through government-backed underwriting. His efforts finally appear to be gaining steam. Newly elected House Majority Leader Kevin McCarthy has indicated his support for allowing the charter of the Bank to expire come the end of September. All the lower chamber of Congress has to do is sit on their laurels and the relic of the New Deal era will finally begin to unravel.

Of course, special interests in Washington aren’t going down without a fight. A well-financed lobbying effort is pulling levers behind the scenes to make sure the Bank remains functional. The goal is to convince the American people that the Ex-Im Bank promotes the national interest. Using buzz phrases like “investment at home” and “creating jobs,” the strategy is to obfuscate their true agenda: preserving the trough from which they feed.

So here’s my radical suggestion to help counter to the pro-crony forces: be upfront about the true sinister nature of organizations like the Ex-Im Bank. Let’s call a spade a spade, and finally describe the Ex-Im Bank what it truly is: fascism. Such a word comes off as a boogey man term used to rile up emotions. But in the battle of ideas, sophistry always comes up short. Just as the shortest distance between two points is a straight line, precise words are better than vague words when it comes to making a point.

Fascism was best defined by Italian historian Gaetano Salvemini as an economic system where “profit is private and individual” and “loss is public and social.”  What’s a better merger of government and business than a bank that makes loans to finance the purchase of private-made goods, all of which is backed by taxpayers?

The use of the word “fascism” is guaranteed to turn some people off. The economic system is seen as authoritarian and tyrannical. But calling things as they are penetrates the bubble of specious reasoning. It forces the hand of regime defenders; either they must defend the corrupt system they favor or back off.

Some more astute commentators may claim the tactic is too coarse for the mission. Politics, they say, should be a gentleman’s game where rational discourse is paramount. I completely agree; hence I advocate using fascism to describe exactly what the Ex-Bank is: a government entity used to shore up the balance sheets of for-profit companies.

There is nothing unfair about using proper definitions. What lack fairness are the dishonest arguments being made in favor of the Bank. Robert Samuelson of the Washington Post argues that the Ex-Im Bank “turned a profit in 2013 and paid $1.1 billion to the Treasury.” Not only that, but the Bank “helped support 205,000 jobs” last year, and should thus be allowed to survive given the weak economy.

These kind of arguments are typical of mainstream press reporters. Every government agency is somehow turning a profit. And all government personnel are desperately needed so as to not rock the economy into a recession. Lines of argument such as this take economics to be a straightforward science devoid of nuanced meaning. If something creates a job, then it’s good. If a profit is recorded, that’s also a sign of success. But economic prosperity is never that easy. If the world worked that way, then communism would be an unparalleled success instead of a disaster.

Just the same, the Ex-Im Bank appears to be a sound institution due to fraudulent accounting. According to the Congressional Budget Office, when the Bank is subject to fair-value accounting rules, it actually lost $2 billion over the past decade. In other words, if it were a private institution, the Bank would go the way of Pontiac cars or Circuit City.

If the Ex-Im Bank is a money-loser, then it doesn’t matter how many jobs it creates. The labor and resources that make the Bank functional are being wasted. Proponents of the institution are therefore arguing that taxpayers throw their money away so that Boeing and other big manufacturers get a subsidy. Basically, they are making the case for fascism in the American economy. Is it so much to ask that they be up front about it?

The notion that fascism is somehow foreign to the U.S. is disproven by the very founding of the Ex-Im Bank. As the Franklin Roosevelt administration struggled to get the economy out of the Great Depression, they forthrightly acknowledged they borrowed policy from Mussolini and the fascists. Presidential adviser Rexford Tugwell noted in his private diary that the Italian dictator had done “many of the things which seem to me necessary.” One report from the National Recovery Administration – a bureaucracy created by the National Recovery Act- declared the “Fascist Principles are very similar to those we have been evolving here in America.” Roosevelt himself called Mussolini “admirable” in a letter to an American envoy. In another letter, the president told the addressee “I don’t mind telling you in confidence that I am keeping in fairly close touch with the admirable Italian gentleman.”

If the father of the U.S. welfare state was brave enough to admire fascism in its day, why aren’t the endorsers of a strong, centralized government today? The answer is that “fascism” is now a catch-all word for bigoted conservativism – not a genuine economic system. As Orwell wrote following the last World War, the word “Fascism has now no meaning except in so far as it signifies ‘something not desirable.’” If that’s the working definition today, I see no reason to not use it. The economic merits of the Ex-Im Bank are in serious question. Arguments for its closure would be best helped with some more forceful language.