It's all about risk right? Is the idea that these companies couldn't get these loans from private banks?
If I'm understanding then, the government provides lower interest rates so companies are willing to sell their products overseas, otherwise they wouldn't bother.
I understand these companies employee people, but I feel uneasy because when politicians talk about creating jobs, now I imagine programs like this being used. Just seems contradictory to what capitalism is suppose to be. Capitalism takes on different forms along the spectrum, I just don't feel great that a strategy to keep people employed is to help companies employee more people by expansion. There are other ways to increase jobs that benefit individuals more directly, like infrastructure.
Kinda. The best way to think about what Exim does is to think about a cosigner on a loan. Exim is mostly making loans possible for borrowers in local markets that would pay out the ass for USD. Export credit agencies are hugely popular in Latin America. Boeing doesn't really need the US gubmint to help it out with the capital markets; it has a full standalone capital structure at extremely low interest rates driven by its great investment grade credit profile. However, imagine you were selling to like some company in Brazil or a Korean development bank or something. They would be borrowing at crap rates; Exim takes substantially all (or even all) the risk off the table by guaranteeing the loan.
There's no question it drives the exporter's sales, and the exporter could be forced to take the credit risk themselves or forego the sale if CORPORATE WELFARE wasn't at play.
But practically we are stuck. I've read some interesting game theory papers on this. If you think about it, if we're going head to head with Le France and they're supporting Airbus, if they offer $1 of support more than Exim does, Boeing can't make the bid and will bow out. Airbus could get $1 of support and win! So it's like rational actors have to ante up or else the playing field will be so unlevel that blah blah.
I'm all for helping the little guy. But there's NOOOO REASON in MURKA we can't support our people (not with free college, piss off poors) AND support a program that returns capital to the treasury every year and helps our corporations. I have no idea why everything is so US or THEM in this country. We can do both. We just need to cut the military.
And we also need to cut Marco Rubio.