Today, the Competitive Enterprise Institute (CEI) released a report advocating for responsible investment practices by rejecting corporate welfare strategies and subsidies.
Corporate subsidies, particularly economic development subsidies, are often seen as pro-business measures where federal, state, and local governments provide taxpayer dollars in exchange for promises of economic growth. However, according to the report, the main beneficiaries are companies receiving this special treatment and elected officials who claim credit for job creation. The losers include disfavored competitors, taxpayers, and those concerned about corruption and cronyism in government.
“Quite simply, companies that play the economic development subsidy game are profiting at the expense of the communities in which they do business while contributing to cronyism and government corruption,” CEI Senior Fellow Richard Morrison and Center for Economic Accountability President John Mozena state in their report. “That’s not a sustainable or responsible way to do business, and anyone who cares about ethical business management should treat economic development subsidies accordingly.”
The paper suggests ways to combat corporate welfare:
– Companies should forego subsidies and de-emphasize controversial programs like ESG and DEI.
– Activists should pressure lawmakers to commit to reforms or eliminate economic development subsidy programs.
– Taxpayers must use consumer power, voting power, activism, and political influence to reject corporate welfare subsidies and encourage governments to exit central economic planning.
Read Corporate Social Irresponsibility: After ESG, activist investors should side with taxpayers on CEI.org.
