Corporate Welfare and Life Insurance

Everyone likes to buy stuff.

I don’t care if you’re Republican or Democrat, Liberal or Conservative, Yankees or Mets fan.

You and I both have stuff that we are willing to trade our hard-earned money for.

When a company does a good job of providing us with that stuff, we’re happy to help that company succeed.

But does that mean that the government should “help the economy” by choosing which companies should succeed and which should struggle?

No Playing Favorites

Ira Stoll, writing at Reason.com, makes some good points about New York’s respective policies towards Amazon (good) and Walmart (bad):

Rather than trusting individual consumers to decide where to shop, they try to decide for us by playing favorites, subsidizing Amazon while hassling Walmart. Rather than establishing low tax rates across the board, they carve out special programs, such as the Excelsior Jobs Program, that claim to target favored industries: “strategic businesses such as high tech, bio-tech, clean-tech and manufacturing.”

In the general economy, it is unfair and counterproductive for the government to play favorites with companies and industries.

What incentive does a business have to become more competitive if the government will bail it out or pave its way?

How does a government subsidy or discriminatory tax treatment encourage innovation?

Term Life Price Wars

In the life insurance business, corporate welfare would be a disaster.

The “term life price wars” heralded by all the ads would not be needed to keep term insurance cheap.

Companies would have less of an incentive to apply underwriting guidelines aggressively to get more business.

This would serioulsy impair the chances of people with a serious medical condition of getting coverage.

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