8:01 PM
Norbrook
One of the usual complaints you hear from the conservatives is about "government subsidies." Usually, when they make those complaints, they're talking about government giving subsidies to some industry or initiative that they don't approve of, or that may not be in favor with established businesses. If you listen to them, you'd come away with the idea that only the free market should matter, that in the past government didn't subsidize industries, they were built by bold entrepreneurs who risked their own money to do so. Sometimes it's phrased as "The government shouldn't be picking winners and losers." It's a compelling tale, alright. It's also complete bullshit, as any study of history or a look at the present day would tell you. There are very few major economic sectors, along with the major players in it, that do not owe their start to government incentives and subsidies, and there are a considerable number which continue to receive them.
What do I mean by that? Consider railroads. We've seen any number of stories in print and on film about the building of railroads in this country, including the transcontinental railroads. Great fortunes were made (and lost) during the building of them, and, from a conservative point, you'd think it was a story of people risking their money to build them in the hopes of making those fortunes. There's an element of truth in that, but there were also some serious government incentives provided. Principally, the Pacific Railroad Act of 1862, and of 1864. What was the incentive?
At that time, the Union Pacific and Central Pacific railroads were granted 400-foot right-of-ways plus ten square miles of land for every mile of track built.
The 1864 Act gave them twenty square miles plus mineral rights to the land. In other words, to get the railroad built, the federal government gave the railroad companies a lot of land. In effect, the railroad company also became a real estate company. There was also a bonus and backdoor incentive to grow another industry in there. The requirement was that they had to use American steel for the rails, so domestic steel companies were also benefiting from the expanded (and captive) market.
That isn't the only case. Settlement of the West? The Homestead Act, which transferred a lot of federal land into the hands of private citizens. Mining? The General Mining Act of 1872, which not only codified the procedure for establishing mining claims on federal land, it set a price which is still in effect, hence, any mining company gets a considerable subsidy to find and extract minerals from federal land. Airlines? The early ones got their start as mail carriers who added passengers.
That's just a short list, not by any means complete. Many of these established industries still do get subsidies from the government. Oil and gas companies? Listen to the fight about protecting their tax breaks, and fight to keep from paying royalties on oil and gas produced from federal leases. Mining companies lobby frantically to keep Congress from modifying the 1872 Act. Ranchers fight to keep federal land open for grazing. The agricultural sector screams every time their subsidies get brought up. Over and over again, established industries, the "proponents of the free market," fight tooth and nail to keep their federal subsidies, and Republicans are more than willing to help them do it.
That attitude promptly changes when it comes to deciding to give incentives to new industries. Then the conservatives catch the free market fever, and get the figurative vapors over the thought of the government aid. Solar and wind power? Oh, no! Why, if it was a good idea, the free market should decide, not the government! Why, that's the way other businesses worked! Except for the federal money which built electrical distribution networks, dams, hydroelectric plants, and made sure that most people have electricity. High speed rail? Oh my goodness! Why can't it be done with private money? After all, the airlines, roads, and early railroads didn't need government to do it! Except for the mail contracts, the land grants, airport construction, air traffic control, and the road tax money that were given out all over.
The point is that the conservatives' talking point that industries in the past didn't need or get government subsidies is a fiction. Right from the beginning the government has used preferences, tax breaks, and outright subsidies to encourage new industries. Government "boondoggles," or "wasteful spending" on projects that "weren't needed" ended up being critical to the nation's development, or are major parts of the economy today.
There is nothing new about the government giving preferences and support to new industries. What the conservatives haven't answered is this question: If they're so much against the government picking winners and losers, then why are they so in favor of continuing to have the government support supposed "winners"?
