Corporate welfare and middle-class welfare defined

The term corporate welfare was coined by Ralph Nader in 1956. Corporate welfare is subsidies, tax breaks, or other favourable treatment for business and implies that business are much less needy of such treatment than the poor.

The Right talks of the deserving and undeserving poor. The Left countered with payments to business.

Supporters of corporate welfare often justify them as remedying some sort of purported market failure.

Businesses, big and small, see market failure everywhere under balance sheets that are in the red.

The notion behind corporate welfare is profits should be private while losses should be a reason for a taxpayer bailout.

Both direct and indirect subsidies to businesses are classified as corporate welfare. The reason is businesses as supposed to make a profit or go out of business.

If a business is losing money, they should try better or do something different or just go out of business.

Losses are not a reason for a taxpayer bailout. No business project should be premised on government subsidies.

The purpose of the capital market is to direct investment to projects that have a future and take support away from failing projects.

The capital market is picking winners and losers every day because that’s its job. That’s what it’s good at.

The participants in the capital market who are not good at picking winners and avoiding losers will themselves will go soon out of business.

Corporate welfare is increasingly used interchangeably with crony capitalism.

A kissing cousin of corporate welfare is farm welfare. These are the countless subsidies that farmers get in Europe and America, and in the past, in New Zealand.

Middle-class welfare is cash payments by the government to the non-poor. These payments to the middle-class can be for having children such as in Working for Families, for early-childhood education or for childcare. Middle-class welfare also can be tax breaks and subsidies for retirement savings of the nonpoor.

It is pointless to tax the middle-class and then give them their money pretty much straight back as a cash payment for a particular purpose be it child care or for their retirement. Middle-class welfare covers at least in part expenses the middle-class could have covered themselves but for the taxes.


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