Corporate Welfare

-More money from around the world is coming through Louisiana than almost anywhere else in the country, and you're like, "Okay, where is that money going? It's not going to my schools. It's not going to my roads. So what's happening?" -IKEA said, "Oh, we're interested in coming to the Memphis area." They also said, "Well, how much money are you gonna give us before we decide whether we're gonna come or not?" -We're paying for them to build luxury condos for the wealthy.

This was not done democratically and it was not done for the kids and the working people. It was done by a small group of people so that they could economically benefit $6 billion. -Monies that could be flowing directly into classrooms and communities are somehow given as breaks to those who really don't need a break. -They saw a small farm raising food locally.

That gets people questioning a lot about what happens in industrial agriculture. But when you uncover what happened here, it's all about eliminating competition. -Our money is going to these billionaires in order to give them a competitive advantage. It is really the antithesis of what capitalism should be.

This is basically socialism for the rich. -Funding for this program has been provided by... Sarah Scaife Foundation, Melvin S. Cohen Foundation, Family Muhlenkamp Charitable Fund of the Pittsburgh Foundation.

-Every year, billions of tax dollars are handed out to businesses that don't need it. That's your money. My name is Johan Norberg, and I've studied and written about the relationship between businesses and government around the world, most recently here in America. Your tax dollars are given to some of the largest companies in the world and often given with little accountability.

That's why some call it corporate welfare. America's corporate welfare system, with its tax exemptions, subsidies, and bailouts, is complex. But we'll tackle it head on and we'll meet some people whose lives and livelihoods have been directly affected by these bloated programs, the individuals who pay the price. And you'll ask yourself, where's the outrage?

-Louisiana is a very rich state with poor people. -In the county of East Baton Rouge, Louisiana, more than 19% of all residents live in poverty. At the same time, many of the world's largest oil and petrochemical companies are here. In fact, the GDP of this one county is larger than 94 countries in the world.

-In the last 12 years, we've been a number one or number two state for foreign direct investment, which means more money from around the world is coming through Louisiana than almost anywhere else in the country. And you're like, "Okay, where is that money going? It's not going to me. It's not going to my schools.

It's not going to my roads. So what's happening?" -A main reason that money isn't reinvested in these local communities is the massive tax exemptions given to select companies operating here. Beginning in the 1930s, the Industrial Tax Exemption Program, or ITEP, allowed select large companies to escape property taxes. -The intent of the law really was to encourage manufacturers either to locate here or expand their plants and create new jobs.

And the idea was that you would get the exemption for 10 years. At the end of the 10 years, then that property would go on the tax rolls. -But as so often happens with government programs, after more than 80 years, ITEP exemptions were almost always approved for extension. Predictably, large petrochemical companies came to count on these massive property tax exemptions.

-I like to call to order the regular meeting for Thursday, November 15th. -Unlike other states, Louisiana excluded local communities from having a say in the process. Everything was decided by the State Board of Commerce and Industry. -It was just rubber stamped by the State Board of Commerce and Industry, and there was no accountability, verification of any job creation.

-All in favor, indicate with an aye. -Aye. -Aye. -Our local school system is experiencing a deficit.

Our school teachers have not received any sort of raises for 10 years. -Then a network of churches and community organizers began a campaign to bring public awareness to the inner workings of ITEP. -It was allowed to go on for 83 years because it wasn't in the light of day. When the public knew about it, that's where the outrage came.

-Monies that could be flowing directly into classrooms and directly into communities and community centers are somehow given as breaks to those who really don't need a break. -Governor John Bell Edwards issued an executive order changing how ITEP worked. Now all exemptions are capped at 80% of the property's value and they have to be approved locally before going to the State Board. -We're actually going to allow the school board, the police departments, the city councils, they are now allowed to vote on the measures.

-And so as president of East Baton Rouge Federation of Teachers, I received a seat at the table. I implore you tonight to not make a decision on what's best for jobs for Baton Rouge, but what's best for the students of the East Baton Rouge Parish school system. Thank you. -Thank you.

-Our boys and girls that we're educating today will be a part of the working community one day. And they should want to make sure that these students are ready to take on the jobs that they will need them to do. -We love Exxon. I use their gas.

And my wife used to work there. But it's time they put their big boy pants on and run their company based on the profits that they make. We've got to fix it. This is broke.

-Where do we draw the line? It's important to have these businesses, but are we sacrificing the children for that? It's not the fault of Exxon. They're doing their duty to their stakeholders.

What is not okay is that our politicians and our government officials are allowing things like this to happen. -In a dramatic first vote, East Baton Rouge narrowly voted against a multimillion dollar tax exemption for ExxonMobil. -Please vote. -The motion fails.

-After hours of debate, the East Baton Rouge School Board voted down a controversial tax break for Exxon last night. It's the first time they've killed the exemption since they've had the authority to vote on the issue. -But other counties in Louisiana were fearful that large companies might pack up and leave. So they approved several new exemptions.

-And hopefully over time, we find some common ground and common space. -Meanwhile, the petrochemical industry keeps pushing to reverse the executive order. The topic remains a key issue in elections. -No one said ITEP before three years ago.

And now people are talking about it. They're developing opinions about it because it's kind of just like bubbling up, I think. It's just getting started. And I think the real reform will start to come down the line.

-We are not anti-business. We are not anti-manufacturing. But we think everybody should pay their fair share of property taxes to support the good of a community. -In East Baton Rouge Parish, transparency was the key first step, which ultimately forced change.

Property tax exemptions like those given to big businesses in Louisiana are also used by many smaller cities to lure select businesses to the area with a promise of increasing local jobs. Cities like Memphis, Tennessee. -Memphis has a population of about 650,000. It used to be the cotton capital of the country.

Now it is probably most known for FedEx and Elvis Presley. -IKEA is a global retailer with over 300 stores in 38 countries. It's the largest furniture retail store in the world. In 2015, IKEA proposed opening a new store in Memphis.

IKEA was founded in my home country of Sweden. Here in America, IKEA is best known for meatballs and nearly impossible to pronounce product names. -So what happened was IKEA said, "Oh, we're interested in coming to the Memphis area. We think it would be a great fit for us." But obviously with that, they also said, "Well, how much money are you going to give us before we decide whether we're gonna come or not?" -The city of Memphis has a program called the Economic Development Growth Engine, or EDGE, to entice new businesses to move to the city.

One way it does this is by offering large property tax abatements. -It did not come without controversy early on. There were people who thought that we were going down a very slippery slope here by offering tax incentives to retailers, which is generally not done. -Memphis gave IKEA a $9.5 million tax break over 11 years, and IKEA agreed to create 175 new jobs with an average salary of $41,000 a year.

-Lines are growing tonight for IKEA's grand opening tomorrow. -We believe that we'll see people come from Birmingham and Jackson, Mississippi, you know, from hundreds of miles away, not just for the opening, but on a continuous basis. -There was some pushback from other businesses as well. "What about us?

I mean, we've been here and we employ here and we pay taxes here. You know, where is our financial incentives here?" -Ron Becker is general manager and part owner of the Great American Home Store, another furniture store located in Memphis since 2004. -Well, what bothered me was not that IKEA was coming to town, but the fact that they were going to get a tax abatement equal to almost $9 million. And just a few short years ago, when I went to the city officials, they told me that there was no such program for retail.

-You're really pitting these gigantic corporations who know the government and have tons of lobbyists against mom-and-pop shops in our community that we're trying to save. You're basically asking people to pay more tax dollars in order for their competitor to succeed over them. -We have about 135 to 140 full-time employees. We pay our people very well.

Our income levels meet or exceed anything that IKEA was offering to their people. Gentlemen, y'all ready for that early morning meeting? -And if you talk to business owners, they will tell you "Look, tax incentives are not the main reason we go somewhere. We go somewhere that has a good workforce, that has good laws." We have low taxes, and that's what we need to be focused on.

-Two years after IKEA Memphis opened to much fanfare and millions in tax breaks, new documents show the Swedish furniture retailer doesn't have as many jobs on the site as they promised. -The politicians, they want to just get out and say that we have jobs coming in, we have a new company that chose Memphis over somebody else, and they like the sound of that as opposed to worrying about something that will happen years down the road. -The company committed to create 175 net new jobs. IKEA started 2018 with 175 employees, but ended with 147.

IKEA also committed to pay $41,011 annually, and it hasn't met that figure, paying on average $36,021 in 2017 and $36,944 in 2018. -I believe in a level playing field. IKEA is a Fortune 500 company. They don't need tax breaks from the government to expand.

Smaller businesses create more jobs. There's only one IKEA in Memphis, but there's 15 to 20 independent furniture stores in Memphis. Where's our tax break? -I'm standing in front of what used to be King's Furniture, Louis Caddell's store.

Less than two years after IKEA opened, King's Furniture went out of business, and Louis now works in another state. -I've always thought of myself as an entrepreneur. And to have to go and empty your building out and take your sign down is like losing a child. -These are our tax dollars.

We work really hard for them. And they should go to things that we need. They should go to essential government services -- roads, schools, police, fire. I mean, that's what this money should go to.

I think it's essentially just not the role of government to give money to big corporations at the expense of small business owners. -Many such programs begin with good intentions, but they result in unintended consequences. And there's another risk -- blatant abuse. When millions, if not billions, of taxpayer dollars are on the table, there's often enticement for manipulating the system, which usually benefits the wealthy and connected.

Chicago is the third-largest city in the US, and back in 1984, it decided to rejuvenate districts that were labeled as blighted. To do this, the city instituted a plan called Tax Increment Financing, or TIF. The goal was to spur development in the poorer areas of the city. -And any increase in property values doesn't go to local governments, doesn't go to schools, it's diverted to economic development.

And right now it's basically at the sole discretion of the mayor on how those funds are used. -The basic idea behind TIF was to provide tax funds to encourage developers to build in distressed neighborhoods. TIF programs like this exist in 49 states, but each state differs in exactly how they're administered. These variances make it hard to present TIF as a national problem, but it is.

In Chicago, for example, a neighborhood is first designated as blighted. Then that neighborhood's local property tax income is frozen for 23 years and any future increase in local taxes is taken from the blighted neighborhood and put into the mayor's TIF fund. More than 500 projects in Chicago have received TIF funds. -Roughly 50% of the TIF funds are not flowing to these areas that are, you know, "blighted." They're instead going to affluent areas where you have a lot of businesses, where businesses would be investing and locating anyway.

-Since 2006, Chicago Public Schools have been deprived of $2.5 billion in tax revenues diverted to TIF. Lincoln Yards is one such TIF project. -It's the largest development the city of Chicago has considered in decades. The North Side's $6 billion, 52-acre Lincoln Yards project is one step closer to reality.

The mixed-use development is expected to bring in an additional 30,000 residents to an already dense Lincoln Park and Bucktown neighborhoods. - Well, I told you, mama Ain't gonna tell you no more -The Hideout is an historic local music club that lies within the $6 billion Lincoln Yards project. Tim and Katie Tuten have owned the club since the 1990s, and it's been a neighborhood hangout for nearly 100 years. -That bar in the front has been there since the 1880s, and it was always called the Hideout since the license name, 1934.

-It was a community house. -The city designated the neighborhood as blighted. Local residents scoffed at the idea. -This is actually prime property.

We're talking riverfront property. I mean, Lincoln Yards is really sandwiched in between two of the most affluent neighborhoods in Chicago.

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-So this is a thriving business. It's been here for as long as we've been here, 25 years before that, and it exemplifies the type of light manufacturing that's been going on in this neighborhood forever. -When you come during the day, you can't find a place to park because there's so many employees. So in this building, it was a beautiful, beautiful brick building.

They probably had 10 to 14 employees. -The building got sold before we knew it. That weekend, they tore it down. By Sunday, everything was cleared out and hauled away.

So it really sent a message that the developers were moving fast. -The Lincoln Yards project threatens many of the existing local businesses, but developers told Tim and Katie that they want to preserve the Hideout. They said that the Hideout was an enticement for the type of clientele they want to attract. And Tim and Katie would get more customers as well.

-The developers, they have this theme that they constantly say "You're going to make a lot of money." And when they tell us "You're going to make money," it's the opposite of the kind of real values that we really hold and cherish -- to have a community of people that do things because they love it and they believe in it. That's where you have really depth of a life. -We're not against development. We are against the use of public tax dollars that are subsidizing a private luxury developer.

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-So the city is being influenced not by what is good for the neighborhoods, for all of these people that can't find affordable housing that live throughout the south and west side of Chicago. It is being driven by wealthy developers who literally got together with our mayor and said, "Sell us that property. We will build luxury condos. There'll be billions of dollars worth.

You kick in a $1 billion TIF, and we will have this amazing development." -And just to put it in perspective, the amount we're talking about here, nearly a third of all property tax revenues collected by the city of Chicago are now diverted into TIF districts. We just set a record $841 million in TIF districts in the city of Chicago in the most recent year. -The property was sold to a developer and then the developer said, "Now that we bought it, we need a TIF." And the TIF is usually the incentive to get a developer to purchase the property. They knew that money that could go to school children on the south and west side, the economic development that could save our city.

And they decided, "No, we don't care about those people. We want it right here in this majority white, wealthy area. We're going to push through a TIF." -The full city council approved the Lincoln Yards project about 15 minutes ago. Activists are vowing to amp up their opposition.

Protesters blocked off part of City Hall, and they also packed the hallways on two floors inside. But despite the outrage, a swift decision by the Finance Committee this morning set up the full council vote, which went through as expected. -The most frustrating thing about the TIF program is that it enables the pay-to-play politics that are so widespread in Chicago. We're taking away money from core government services.

We're taking away money from schools and repairing roads and things that everybody in the community can use. And we're essentially using that money to offset costs for wealthy, well-connected business interests who really don't need the help. The use of these funds have typically been a slush fund for the mayor of Chicago, both Emanuel and Daley prior to him, to sort of reward people who are politically connected and possibly support their campaigns. -This was not done democratically, and it was not done for the majority of the kids and the working people in the south and west side.

It was done by a small group of people so that they could economically benefit $6 billion. -These are major decisions being decided by a very small group of people that are motivated by their own personal monetary gain. This is not for the best of our city. It's for the best of a few.

And that just is egregious.

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-The TIF program in Chicago is classic corporate welfare in action. So far, our stories have shown corporate welfare operating on the local level -- East Baton Rouge Parish, Memphis, Chicago. But guess what happens when the federal government gets involved? America's first Agricultural Act was passed by Congress in 1933 in the depths of the Great Depression.

It's been renewed without fail ever since. -We will always stand with the American farmers. Now to the Farm Bill. It was a bipartisan success.

-In 2018, the 18th iteration of the Farm Bill allocated more than $428 billion in various programs over the next four years. Most of that, 76%, now goes to SNAP or food stamps and the remainder goes to agriculture -- over $102 billion. Agricultural production has been shifting to larger farms for decades. In 1991, America's small farms accounted for 46% of the nation's production.

But by 2015, that share had fallen to under 25%. -The amount of subsidies that the big guys, they're getting, is so much more than the little guys. When you look at who is getting the money, you find that something like 70% goes to the 10% largest farm. Those subsidies are really complicated.

So it's not surprising that it's the big guy who have the resources not just to lobby in Congress, but to actually have entire shops to try to get and maximize the amount of subsidies that they're getting. -Sugar is one of the most heavily regulated agricultural programs, with import quotas and pricing determined by the USDA. The Florida-based Fanjul brothers, who control the world's largest sugar refining operation, were once dubbed the first family of corporate welfare by Time Magazine. They receive about $65 million in price supports annually, and the Farm Bill sets consumer prices at about twice what the rest of the world pays for sugar.

What, then, could be the purpose of sugar subsidies if high-priced sugar is the guaranteed end result? In 2016, the Fanjul brothers hosted fundraisers for both Hillary Clinton and Donald Trump, presumably to stay in favor with the White House regardless of who won the election. Some argue that the farm industry faces unique challenges such as unpredictable and devastating weather events. -Farming is a risky business, but it's not any riskier than anything else.

If you're in retail, you're exposed to if there's a big snowstorm before Christmas. So this notion that farming is any different than many other industries just makes no sense. -The US government still treats agricultural subsidies as if they're helping the small farm owner, but that's not the case at all. Most small farms today exist outside of the subsidy system.

Greg Gunthorp is a third-generation farmer. He and his family employ 45 workers on their Indiana farm. -We raise pigs, chickens, ducks, and turkeys on the farm. We raise about 2,500 pigs a year.

-For 20 years, Greg has witnessed how government subsidies influence farm practices. Meat, fruits, and vegetables are not directly subsidized by the US government. The most subsidized crops in the US are corn, soybeans, wheat, cotton, and rice. The shift has been to large-acreage farms of these monocrops.

-Farmers choose to raise corn and soybeans because those are the crops that there's government- guaranteed revenue, insurance. And who benefits from corn prices being low? You know, large companies that have lots of confinement animals that eat corn and soybeans. It's not the diversified, independent family farm.

-Other farmers in their community have turned to subsidized corn and soybeans. But Greg and his wife remain committed to a diversified farm, including the production of protein. They began to sell directly to restaurants and retail stores. -Good to see you.

The USDA tells people to eat their fruits and vegetables, yet the subsidies all go to items high in fat and high in carbohydrates. We choose not to subsidize fruits and vegetables or clean proteins. -Corn is the most subsidized crop of all. Nearly 30% of US corn is converted to ethanol, almost 48% to various forms of animal feed, and 13% is exported.

The corn we actually eat is less than 10%, and more than half of that is used to make high-fructose corn syrup and sweeteners. -If we were going to pay farmers, we should probably choose to pay farmers something that put Americans on a better diet rather than a bad diet. -One of the original purposes of the Farm Bill was to ensure a dependable food supply. Today's farm programs fail to address that need, and many of our cities and rural areas have become food deserts -- places where fresh food just isn't available.

-The city suffers from only having convenience stores and gas stations that provide some kind of food products, but it's not enough to give people a nutritional and healthy meal. -Pastor Marty Henderson founded Peace Gardens and Farms. The plan is to grow healthy food and make it available for the neighborhood. Several volunteers received master gardener certifications from the local university.

-All of these down here, how about them? -We plan to provide food for 600 families every week. And so we have our work cut out for us. But we're looking forward to stemming this tide of food insecurity in Gary, Indiana.

-And that's amazing. From that little seed, this is what comes of it, ain't it? -How does it taste? -That's pretty good.

-My grandmother sold 35 bunches of collard greens for 15 cents a bunch. That was how she made some money. I didn't know that the seeds for farming were being planted in me when I was a child. -Pastor Henderson's farm receives no agricultural subsidies for the food that they grow.

They are taking it upon themselves to work towards a solution for the food shortages in their community. As small farms diminish, the remaining large farms mainly serve highly consolidated corporations, many of which are not even American companies. Brazilian meat processor JBS has acquired Swift, Pilgrim's Pride Poultry, Cargill Pork, and others, becoming the world's largest meat processor. In 2016, the largest pork producer in the US, Chinese-owned Smithfield Foods, increased consumer prices in stores, but decreased the amount they paid farmers for live hogs.

Yet they still benefited from the government subsidy system, heavily lobbying to keep feed prices low. It's estimated that in 2019 alone, agribusiness spent over $135 million on lobbying. But simply staying free from the farm subsidy system does not protect the farmer from big agriculture's influence and pressure. -The Hawkins Farm in northeastern Indiana has been a working family farm since 1957.

Today, Jeff Hawkins and his son Zach continue the tradition. -So this is a 99-acre farm in Wabash County, Indiana. And my dad and I farm together. -Jeff and Zach raise hogs, cattle, vegetables, and poultry.

They sell primarily to families and restaurants in the area. And in the summer, Friday is brick-oven pizza night. -We embody what people romantically think about when they think about a farm. You know, big corporations put red barns and, you know, cattle out in green pastures on their labels.

And we are that. -In 2018, more than 9 billion chickens were raised for their meat. About 30 companies control 95% of the $31 billion industry, and they processed more than 150 million chickens each week. The Hawkins Farm processes around 200 birds per week.

The state of Indiana grants an exemption that allows small farmers to process their own chickens on the farm rather than sending them off to a large poultry processor. -There are all sorts of regulations that need to be followed. We do a citric acid dip at the end, which helps with microbial issues, and they're put into a poultry chiller, which is a very powerful refrigerator so that pathogens are not allowed to grow and it's a very safe, clean system. And to our knowledge, there has not been one recorded case of foodborne illness from birds that have been butchered under this exemption.

And this exemption has been in place for around 50 years. -Their chicken is off the chart, and we've featured them since day one of the restaurant, basically. -Peter Eshelman owns a four-star restaurant in nearby Fort Wayne, Indiana. He also runs his own farm to support the restaurant and buys food from local farmers.

In 2015, the Indiana state legislature invited Jeff and Pete to make a presentation on farmers markets and local restaurants. -And then I'm bragging about Hawkins and I'm bragging about his chicken that is as good as the finest chicken you buy from France, and he got up and talked about the great partnership. -Our next presenter is Jeff Hawkins from Hawkins Family Farm. -I come today as a fifth- generation Wabash County farmer.

My son, who is my partner, is the sixth generation... -But they were in for a surprise. -We finished our presentation, and the chair of the committee said, "Well, that's illegal." So she went to the Indiana State Department of Health and she requested that they issue a cease and desist letter. -Both the Hawkins Farm and Pete Eshelman's restaurant received the letter.

They immediately had to stop selling and serving chickens from the farm. -When we first received the letter, I mean, I think it was overwhelming and I felt very helpless. -The state attorney general soon declared it was, in fact, legal for the Hawkins to process chickens on their own farms. It seemed that the issue was resolved.

But despite the ruling, certain senators drafted a new law in order to make it illegal. -So that's how a hashtag was born, #keepchickenonthemenu. "You've enjoyed this meal. Will you please contact your representative?" People were telling us they would call, and they actually would lead with "Is this about the chicken thing?" when they picked up the phone.

-Not even "Hello?" -Once again, Jeff, Zach, and Pete head to Indianapolis to testify. -They basically came up with a story that small farms processing chicken on the farms is a health risk. -Two weeks before we testified, there were two recalls back to back of something like 4 million pounds of chicken that had been inspected. -By the end of that year, over 8 million pounds of chicken had been recalled from major producers.

In 2018 alone, there were 34 poultry recalls from the large producers. Remember, in over 50 years, there wasn't a single reported health issue with any small farms that were processing poultry under the exemptions. -But it didn't seem to move the needle much. And that suggested that safety wasn't fully the argument.

Why was tiny little really unusual Hawkins Farm a threat? -The opposing side was not only represented by state regulators, but also by large agricultural lobbying interests, including the Indiana Farm Bureau, the Indiana State Poultry Association, the Indiana Pork Producers Association, and the Indiana Beef and Cattle Association. -At this point, we're dead in the water. But when you uncover really what happened here, and it took a while to figure this out, it's all about eliminating competition.

So if at that time, the large poultry producers, they're very well organized, they saw a small farm that was operating legally to process chickens on the farm, that's competition to them. And so how was one farm going to hurt these big producers of hundreds of thousands of birds, you know, a year or more? It's because they don't want 1 farm, 2 farms, 100 farms, 500 farms, 1,000 farms. So the other thing is the value system associated with raising food locally -- humane, drug-free, stress-free.

If you know where your food comes from, that gets people questioning a lot about what happens in industrial agriculture. -It might be a "use regulation to stifle competition" thing. Nobody's declared that, you know, so draw what conclusions you will. -The social media campaign continued to create enormous public pressure, so local politicians took a closer look without the influence of the agricultural lobbyists.

Small farm owners were invited to meet with state agencies to redraft the bill. -They brought us together with the Board of Animal Health and the Department of Health and kind of said, "You know, what can we do to make this better? Is there a creative solution here?" -Remarkably, a revised bill was drafted to everyone's satisfaction. -And then that bill did pass.

So we are -- yeah, we're under a new kind of regulation, but one that feels appropriate to what we're trying to do here. -It went from the worst form of government to try to put somebody out of business to actually an example of how government works when you have the right people in place on all sides and you're willing to listen and kind of find common ground. -We were braced for things to unfold the way they usually unfold, you know, for the small farm to lose the battle. But because people joined in the process, people called their representatives, they shared our story online, and I think that was to the surprise of everyone involved.

-Despite the efforts of large agricultural interests, the state government and local farm owners found a solution. In fact, the regulations were improved to better suit small farms while maintaining high safety standards. Now, restaurants like Pete Eshelman's can continue to serve locally sourced poultry, and neighbors have a choice in the food that they eat. If you think that serious agricultural reform isn't possible, let me share the example of New Zealand.

Up until the early 1980s, New Zealand farmers were generously subsidized until the point that a third or more of farm income came from the central government. But in the mid 1980s, radical reforms virtually eliminated subsidies and opened up the world market. Many farmers struggled at first, but the end result is that New Zealand farmers increased their output, and New Zealand is now one of the most efficient agricultural producers in the world. -I think there's hope, especially on farm subsidies.

I think there is a bipartisan understanding that this is wrong and there are people on both sides of the aisle who are talking about getting rid of farm subsidies. -Sometimes subsidies like those in the Farm Bill grow and grow over the decades until they become almost impossible to remove. But new corporate welfare programs can also spring up impulsively. This happened in 2008 in response to a housing crisis.

The government acted very quickly to manage an economic meltdown. But did it act wisely, and should it have acted at all? -Today, fear on the floor of the New York Stock Exchange as investors worried the country is in the midst of an economic crisis unlike anything seen in decades. -Markets around the world are coming off the worst week since the crash of 1929.

-In 2020, an unprecedented pandemic caused a global economic crisis. Before that, the world also experienced a crisis in the crash of 2008. Major investment firms failed, housing foreclosures skyrocketed, and millions lost their jobs. The government played a unique role in both the cause and reaction to that crash.

Have any lessons been learned? In 2008, John Allison was CEO of BB&T, one of the 25 largest banks in the country. -Nobody in my family had ever graduated from college, and a professor got me very interested in finance. And that's how I ended up going in the banking business.

I became CEO in 1989. We were $4.5 billion in assets. We had grown to $152 billion in assets during my tenure as CEO. -Today, Allison is retired as CEO.

He's an author and educator and often lectures on the lessons to be learned from the 2008 crisis. -I wish, in a way, I had a more fun subject to talk about than the financial crisis, but it's actually a very important subject. Whether you know it or not, because of your age, I am sure it had an impact on your family and your family's friends. It was a dramatic event, a very dramatic event.

And if we draw the wrong conclusions, we're going to make the same mistakes again. And the thing that hurt people the most was in the housing market. -Part of the origins of the crisis can be traced back to Freddie Mac and Fannie Mae, a pair of federally created lending institutions. -In the early 1990s, President Clinton demanded that they start having half their loans in what was called affordable housing, now called subprime lending.

And a lot of economists said, "Wow, that's risky." -With the backing of government lenders and financial institutions, banks dramatically increased their number of subprime loans given to people with low credit ratings. Soon, it became much too easy for people to borrow more than they could afford. Making what the government called affordable housing loans, which actually were unaffordable to the borrowers, became a big business. -Risky mortgages -- Those loans are expected to cost 2 million people their homes before it's all done.

-I shouldn't have even been offered this mortgage. Is a subprime mortgage. There's a lifetime invested here. It's a nightmare.

-Predictably, as more money came into the housing market due to the subprime loans, housing prices went up. -So the prices got so high they had to break. And when they broke is when the big correction happened. -This morning at the opening bell, the Dow took a steep dive in what seemed for a time like near-panic selling.

-In 2008, we really needed an economic correction because we'd overinvested in housing. What we didn't need was a crisis. And the crisis was almost totally created by government's arbitrary handling of problem situations. Unfortunately, a number of large banks made mistakes, and if I'd had been in charge, I'd have let them fail, but the government didn't want these big banks to go broke because of the cronyism that exists in our economy.

-Not since the Great Depression has the federal government stepped in to help a failing financial institution in this country the way they did over this past weekend. -For example, the first company that got in trouble was Bear Stearns. They were nice people who'd made some bad mistakes, but they certainly were not critical to the marketplace. The marketplace was stunned when the Federal Reserve essentially bailed out Bear Stearns.

And then later on, Lehman Brothers, which was much more important than Bear Stearns, got in financial trouble, and they allowed it to fail. -Sunday night, a sign of the extraordinary times on Wall Street as thousands of Lehman Brothers bankers packed their boxes. -The market believed that Paulson, who was Secretary of Treasury, had a lot of animosity against Lehman Brothers. These government bureaucrats can just make it up however they want to make it up.

But how do you deal if there's no rule of law? And that's what took a correction and turned it into a crisis. -Government interventions became chaotic. -Wachovia was essentially taken over by the Federal Reserve and sold to Citigroup.

But everybody in the market knew that Citigroup was in more financial trouble than Wachovia. We said "This is crazy. You're selling a bad bank to a worse bank? How's that supposed to work out?" And a few days later, they ended up selling Wachovia to Wells Fargo.

They just reneged on a legal contract they had signed with Citigroup. They just said, "Sorry, we're out of it." -The American taxpayer has been asked to take on a big burden all at once, $700 billion to shore up a financial system on the verge of collapse. -A lot of people have heard about what's called the bank bailout. It's technically called the TARP program.

The reason healthy banks were forced to take TARP is Bernanke, who was head of the Federal Reserve, was afraid that if he just bailed out the bad banks, that would mark those banks. So he very much wanted the healthy banks to participate so it looked like a bailout of the industry instead of a bailout of banks. And the good banks like BB&T would be painted with the same brush as the bad institutions. -All banks were forced to take a bailout loan from the government, whether they needed it or not.

This policy hid which banks had made poor financial decisions. -In BB&T's case, we didn't need the money. We had to pay a very high interest rate, and the net cost was between $50 and $100 million for money we did not need and did not want. The myth that deregulation and greed on Wall Street cause a financial crisis and the government stepped in and saved the economy is not true.

Unfortunately, government policies which had good intentions, you know, like affordable housing, created very bad outcomes. When government starts interfering with market processes, it often produces very bad results, even when their intentions sound good. -So we've seen how the federal government's good intentions can have terrible results, but what happens when government officials decide to fully step out of the way and deregulate an industry? That's exactly what happened in 1980.

-I've had this truck since 2014, and I've put about 600,000 miles on it. And then I bought my first rig in September. I'll never forget the day -- September 3, 1983 was the day that I realized my dream and bought my first truck. -Hi.

-Hi. Carl Smith. -Johan Norberg. Nice to meet you.

-Good to meet you, too. I started in business back in 1983, and they had just deregulated the trucking industry to where now small-time operators like me can be in a small trucking business for themselves. -Before 1980, it would have been virtually impossible for Carl to start his own trucking business. That's because of the Motor Carrier Act of 1935, which put the government in complete control of the trucking industry.

-The industry was regulated both in terms of where you could go and how much you could charge. Our rates were set through rate bureaus. You operated on the roads that were approved. -There were bureaucratic limitations and inefficiencies, such as forcing truckers to make long, empty back calls.

But overall, the established trucking companies and unions were happy with the arrangement. They knew that there would be guaranteed profits and jobs and it would be almost impossible for a new startup to compete. -So it was a good deal for the companies, and it was something that we were loathe to change. -The Motor Carrier Act of 1980 fully deregulated trucking.

-The truck deregulation legislation will get the heavy hand of the federal government out of the area of the private sector. It'll mean new opportunities and new jobs. -And it was devastating to the existing industry. But I think it's something that had to happen.

-After it was deregulated, it allowed for a smaller, less established individual like me to get into the industry and earn a good living. Morning, Matt. Morning, Misty. What are you doing today, Matt?

-Hey,

we have a load picking up today at 3

00 p.m.,

delivering Tuesday at 8

00 a.m. into Timmonsville, South Carolina. -That's the Honda ATV plant, right? -Yes, sir.

-This is a compressed trailer, or a liquid tanker? As the years went on, I bought another truck here, another truck there till at one point I was up to 11 trucks operating a small fleet out of Ohio. -Deregulation led to a substantial shift in the industry. Many more small outfits like Carl's gained a competitive foothold.

Over 40 of the larger regulated trucking companies went out of business, but some adapted and still operate today. -Someone might ask, you know, why when you lose, you know, 40 or 50 companies that went out of business after deregulation, why is that a good thing? That's a good thing because the consumers are getting a better service and product as a result of that. And when a company goes down, that freight is still moving.

So some other company is going to pick that up. Are those companies gonna need employees to help handle that freight? Well, of course they are. So many of those people who indeed lost their jobs as a result of a company failure, they're working for another organization.

-But the good thing is, is that industry is still highly regulated as pertains to safety. What's not regulated is who can and cannot be in this industry. And I think that's a better deal for everybody. We sent all four of our children to college, and we've actually lived a pretty decent life.

I'm one of those people that I knew what I wanted to be when I was 12 years old -- I wanted to be a truck driver. Others told me that I had a lot more potential to do other things, but I said that's really what I want to do. I'm one of the lucky ones. I got to do what I wanted to do.

-Initially, deregulation in the trucking industry was tumultuous, but in the end, the American consumer benefited from lower shipping costs and more efficient service, and new truckers like Carl could enter the industry and make their mark. Thank you so much for sharing your story and spending time with me. -Thank you, Johan. This has been great.

Take care. -Here in America, government regulation becomes corporate welfare when big companies successfully lobby Washington, D.C., with a goal of shutting out their competition or to get special protections. And the politicians are no better. Regardless of political party, their campaigns are usually funded by these special interests, and this is how they return the favor.

So the question is, who is lobbying for the taxpayer? The answer is no one. Excessive government-business collusion is not good for America. Some feel the problem lies with big business.

Others that it lies with big government. But either way you look at it, the problem can be beat. In the end, it's the government that creates and enforces the law. So focusing on policy change and the law is critical.

Jeff and Zach Hawkins fought the state government with a social media campaign. East Baton Rouge fought for a seat at the subsidy decision-making table and won. In both cases, public exposure was key in changing how their state governments operated. And it also takes brave politicians like those in New Zealand who completely reformed their agricultural system to become a world leader without subsidies or those in the US who deregulated the trucking industry.

What I've observed on the ground in country after country and certainly here in America is that it's better to let the economy evolve in its own natural way, bumps and all, rather than to rely on government intervention. As we've seen, when big brother decides to help big business, the cure is often more harmful than the disease. I'm Johan Norberg. Thanks for watching.

-"Corporate

Welfare

Where's the Outrage?" is now available on DVD. For more information or to order a DVD of this program, call 1-800-876-8930 or visit www.freetochoose.net. -Funding for this program has been provided by... Sarah Scaife Foundation, Melvin S.

Cohen Foundation, Family Muhlenkamp Charitable Fund of the Pittsburgh Foundation.