The downside of a society that is more narrative driven versus data driven is the resulting bandwagon effect. Someone has a problem with a policy or a program and without one iota of quantitative analysis or data they go on a rant riddled with the usual ideological verbosity and if articulated forcefully enough is able to get more narrow-minded ideologues to follow along. Both Democrats and Republicans are guilty of this as they continuously forego leadership opting instead to appease the ratchet wings of their respective parties. It’s no wonder Congress gets low ratings.
The narrative opera is hitting high pitch as the U.S. Export-Import Bank faces its final curtain call on 30 September, the last day of Fiscal Year 2014. Congress must vote to reauthorize the bank by that date or, according to the Bank’s supporters, the United States will lose an important role player in America’s attempts to keep the economy chugging along.
Just what is the Export-Import Bank? According to 12 U.S.C. 635(a)(1), among the objects and the powers of the Bank is the financing and facilitating of the export of goods and services, imports, and the exchange of commodities between the United States, its territories, or insular territories, and foreign nations or their agencies or nationals. The Bank can provide these services by authorizing loans, guarantees, insurance, and credits with the goal of increasing employment in the United States. According to the Bank, they are not competing with the private sector. They assume credit and country risks when the private sector is unwilling or unable to do so. They also try to level the playing field particularly where other countries are subsidizing their exports to the United States.
Supporters like U.S. Senator Tammy Baldwin, Democrat of Wisconsin, have been repeating the policy goals provided in the law; that the Bank helps create global competitiveness and allows businesses here in the U.S. to create jobs.
Some Republicans, on the other hand, would give the impression that re-authorization of the Bank would amount to return to 18th century mercantilism. They are not impressed with the Banks eighty-year record of supporting $600 billion in U.S. exports. Instead, they have made claims of “crony capitalism” in their opposition to continuing the Bank. Recently, House financial services committee chairman Jeb Hensarling took a trade group and Boeing to the woodshed for their attempts to marshal Congressional support for re-authorization. According to The Huffington Post, Mr. Hensarling, in a letter to Boeing chairman James McNerney and Jay Timmons, president of the National Association of Manufacturers, said the following:
“I respect your constitutional right to petition your government for the redress of grievances,” Hensarling wrote to Timmons and McNerney. “I just wish you had used the occasion to petition for opportunity instead of special privilege.”
There is a historical irony here, of course. Republicans, who are always first out of the gate to talk about the Founding Fathers and adhering to the nation’s economic traditions forget that the United States was spawned from petitions for special privilege. Christopher Columbus’ voyages to the New World were financed by the Spanish crown.
The British monarchy granted individuals charters permitting them to settle in North America and carve out the thirteen colonies from whence the United States came about.
The granting of monopolies was a special privilege to communications companies and utilities that allowed the construction of railroad and communications infrastructure by private entities that needed the protection from investment destroying competition and inefficiencies that only such franchises could provide.
In this case the “special privilege” at issue isn’t keeping any firms out. The Bank invites small and large companies to seek out its services. Rather, the Bank is helping companies knock down barriers to capital access and international markets.
Congress has a duty to regulate commerce, but regulation doesn’t mean stifling the flow of capital necessary for commerce to achieve liftoff. Regulation can easily mean taking the foot off the brakes and pushing the throttle forward and by re-authorizing the Export-Import Bank, the economy takes another step toward achieving full employment.