Where there are free markets, last year's winners are constantly limited or even run over by competition from nimbler and hungrier new entries that, in a modern industrial economy, often bring disruptive new technologies to market. But, as Adam Smith pointed out, the wealthy are motivated to conspire to restrain trade and limit competition in order to protect their privileges. They don't want to have to compete because that's too much work and too risky. When the Republicans complain about the Democrats and liberals wanting "government to pick winners and losers" what they really mean is that the government should just pick losers that don't want to face fair competition. Anywhere in the US economy where you can find a highly profitable company that is badly run or selling a harmful or obsolete product you'll nearly always find Republican politicians protecting that company from competition or risks via subsidies or legal barriers to competition. Oil companies are the most obvious beneficiaries: Exxon with $30+billion in profits and ZERO US taxes is a great example. Exxon has special tax benefits that wind turbine and electric car companies don't have, it has many exemptions from environmental laws, and it relies on a hugely expensive taxpayer funded military effort to protect its operations in the Middle East and elsewhere. Why are alternative energy sources not displacing the oil companies? Because oil companies get a lot of help from the government. Same for health insurance companies that the Republicans have exempted from ordinary contract law applies to other businesses. Or "defense" companies that get contracts to make things the military does not want. President Obama's budget proposal for 2012 asks the Congress to remove special tax breaks for the oil companies
Obama’s budget request will call for eliminating a series of oil industry tax breaks. The Department of Energy estimates that such a repeal will save $3.6 billion in fiscal year 2012 and a total of $46.2 billion during the next decade.The bought and paid for Congress is going to ignore this without some serious popular pressure. One of the most successful venture capitalists in America, responsible for a number of highly successful startups, says that American Capitalism has become incumbency capitalism.
The Bipartisan deficit commission said that special tax breaks in the tax code mostly favor the rich and powerful (the "incumbents") and that they cost the public $1.2 trillion a year. Those tax breaks are really tax shifts: companies making wind turbines, electric automobiles, solar panels and so on, and people who pay income tax all have to carry the load that Exxon manages to avoid. The Commission said tax rates could be lowered so that most people would pay less, and the budget deficit could be closed if only everyone was forced to pay their fair share. But that would mean that oil companies would have to compete on a level playing field against alternative energy companies and how would they fund things like the $400million they gave their last CEO as a parting gift? Here's a timely example as we wait to see if the Japanese nuclear reactors can be shut down: in state legislatures around this country this spring, utilities are trying to get rate-payers to take the risk on nuclear power plants - the financial risk in addition to the safety risk. One of those states is Missouri. said that Texas law does not apply and so if you show up in the emergency room and the insurance company bails, unless you have a lawyer on tap who can file an emergency legal order you are pretty much out of luck. There's no penalty, ever for the company that wrongly denied benefits. If you want to know why your insurance company can make money while being so incompetent and while stiffing its customers and vendors so often - there's your answer. Picking Losers with Republican Economics. So the next time some tea bag buffoon tells you we need to do something about the deficit and get the government out of the business of running the economy, ask him to support abolishing tax breaks for oil companies or Federal incentives for nuclear power or coal and see what excuse he has for continuing Republican loser economics.
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