Over the past year I’ve visited Capitol Hill, alone and in numbers, to advocate for the agency’s reauthorization. But these exercises in people power have barely registered. This is inside baseball politics at its most venal.

Not just Boeing and G.E. but also small business exporters are being impacted. Hopefully the House GOP leadership will get it together sooner vs. later and bring a vote to the floor.

Just as significantly, the resulting reauthorization will hopefully be durable and Ex-Im Bank will not be rendered as ineffectual as some other once-meaningful federal programs now relegated to perpetual short-term stopgap legislating.

On a similar front, the governors of 26 states, plus Guam and Puerto Rico, sent a letter to Congressional leaders this past summer urging re-funding of ExIm. This was quite a diverse group — the Tea Party Republican Paul LePage, of Maine, along with the Democratic grandee Jerry Brown, of California; Republican Nikki Haley, of South Carolina, along with Democrat Kate Brown, of Oregon; Republican Mary Fallin, of Oklahoma, along with Democrat Maggie Hassan, of New Hampshire; all in all representing a genuinely bipartisan bloc. I can’t think of a similarly broad governors’ group agreeing on anything like this before. You can read the full text of their letter via PDF here. A sample:

And similarly, from a reader who has worked at ExIm’s headquarters:

The lack of action to reauthorize Exim is one more sign that Republicans have become the crazy party in succumbing to even crazier Tea Party forces.  Our trade competitors, of course, are delighted.

***

Next, the meta-reasons for increasing skepticism of ExIm. Another reader writes:

Related to your other reader's comments about Boomers is that it seems the sentiment "what's good for American companies is good for America" is much less widely shared than it used to be.

As people hold increasingly negative views of "big business', they're more likely to reflexively see something like ExIm as just another example of corporate welfare, of their hard-earned tax dollars going into the pockets of millionaire CEOs.

For most people, both well and poorly informed alike, views on ExIm and other similar issues (TPP was another good example) reflect snap judgments based on the more basic question of "how do I feel about big business in this country?"

And from another reader, connecting the ExIm debate with the controversy over the Iranian nuclear agreement:

I noted with interest your reader who mentioned the difficulty of non-experts forming opinions regarding complicated matters.  That is certainly true of the Iran deal.

I support the deal, not because I have any specific knowledge of the details, but because I have confidence in the Administration, its allies and the various security and nuclear experts who say it’s a good deal.  I also support the general political view that the international sanctions regime was designed for this very purpose and would not hold together if the deal is rejected.  While in an ideal world it would be great if Iran remained financially hobbled, that’s an unrealistic, and perhaps illegitimate, goal.

Interestingly, many of the Democratic  Senators and Congresspeople announced their support with relatively lengthy explanations of how they reviewed the terms, talked to experts and came to a conclusion.  To the best of my knowledge, no Republican in Congress indicated any sort of careful analysis or consultation with experts, and I would venture to guess that none of them attended the Administration’s sessions with various groups of experts.

Of course, many Republicans opposed the deal for strictly partisan reasons, or because they were reluctant to buck the party line, or for the same reason that Netanyahu opposed it—they were opposed to any deal with Iran which ended sanctions..

So may contemporary issues and policy choices depend on expert information that those of us without expertise inevitably have to decide who we are going to listen to.  It’s disheartening that one of our major political parties doesn’t seem to care what knowledgeable folks think or have to say.

***

Another way to approach a complex issue. The note below is from a West Point graduate and one-time Army officer now working in the IT industry. I know his real name, business address, and related details but don’t think I should publish them. In one of his online profiles he says that he has “well-honed communication and presentation skills,” which is an interesting set-up to the note below (and which I know, from trying, might will not be enough for you to identify him via Google.)

Even though this is a family magazine, I decided to leave the well-honed profanity as is, since bowdlerizing it would look even stranger. And I quote it because a lot of the anti-bank mail takes a similar tone:

Only a dried up, Carter administration, 70's retread Liberal fuckstick like yourself could make a reference to the movie "Idiocracy" and fail to realize that the Liberal tolerance for mediocrity and love of populism is what that movie lampoons.

And your article about the ExIm Bank is one extended ad hominem attack puncuated by supportive statements from company reps whose companies are firmly latched onto the ExIm teat.

Like most Liberals, you subscribe to feelings and nuance over facts and intelligence.  Which is why we will never venture to Mars or live outside our galaxy.  Can you imagine what a clusterfuck the Apollo program would have been if NASA in the 60's had been staffed with Progressive policy wonk assclowns like you, instead to pragmatic scientists and engineers?  (who tend to vote Republican, by the way.  Only you useless asstards with BA degrees vote Democrat)

So please, stick to writing what you know: how to maintain a huge Federal bureaucracy and how tasty you find Barack Obama's ball-sweat.

Leave grown-up topics o the grown-ups.

Oh, one more thing: fuck your mother.

You can always find this sort of thing in comment sections or if you go looking for it. I mention it here because it wasn’t only this one guy, and he is getting his views from somewhere.

The debate goes on.

As this point I'm legally obliged to note that I am one of these unloved Boomers. At least by this reader's logic I'm arguing against the interests of my actuarial class. The reader goes on:

I was born in 1980, putting me at the magic divide between Gen X and Millenials, but old enough to have a good view of the baby boomers.

I would suggest that what is really driving all of this is government policy that was fundamentally geared towards the good of the Baby Boom generation for the last several decades. My thought is that the right wing loves policies that are fundamentally supportive of the older, whiter generations, such as increased Medicaid spending or tax cuts.

Defunding the Ex-Im bank, ignoring climate change, not funding infrastructure, cutting spending on education, all seem to me like policies [whose long-term consequences won’t matter to the] Baby Boomers and therefore [aren’t worth doing if such investments would] take away from spending on things they do want.

I don’t think it was accidental that the United States supported higher education when the Baby Boomers were in school or enacted massive tax cuts when Baby Boomers were in their peak earning years. Nor do I think it is accidental that the estate tax is on the block again, now that the Baby Boomers parents are at the end of their lives. The only difference now is that the bill for past largesse is now due, and people are pissed about it.

I further suggest that similar dynamics have been seen in other countries. Specifically, Argentine under and after Peron (chickens in pots) comes to mind. I also think the current Chinese government has fundamentally the same challenge. It is hard for me to believe that all those girls in high heels with new smartphones are likely to accept that normal rates of growth are acceptable without fighting about it.

***

Now, from another reader, on the modern manifestation of the problem Walter Lippmann wrote about in his Public Opinion nearly a century ago. Namely, how the non-expert general public can be expected to develop views on issues so complex that any one of them would require full-time expert study (and even then might lead to disagreements). The reader says:

Had the same thought reading your second piece as I had after Pres. Obama announced the Iran deal: Americans have a tendency to weigh in on issues that they've read 5 paragraphs about like they know the whole problem and how to fix it. The Iran deal is such a complicated issue, one that I'm sure Obama had staff at the Pentagon and in other agencies going over full time for months before signing on to the final agreement. How can virtually any of us have an opinion on this, given how little we know?

It  makes me think about the book Can Gun Control Work?, the book that James Jacobs (of NYU Law School), spent years researching and writing. It outlines the major issues with gun control, such as the 2nd amendment, the problems with having open mental health records, the problems with the "assault rifle" label, and the vast number of guns already in private hands in the US.

But when it comes down to it, this matters to very few people. Most people would just prefer to say "Guns are bad" or "Gun ownership is my right".

Here’s the relevance to the current discussion. I took a “God save us from this insanity!” tone about the ExIm showdown precisely because this is an issue I think I know something about. Over the decades I have thought, learned, debated, and written about it to feel that I know the pros and cons. You may think my conclusions are wrong, but I’m not pulling them out of thin air.

Interestingly, the people upset about the idiocracy tone all said they didn’t consider themselves experts on the ExIm front. Thus my mistake — even in our new, breezy Notes section! — was in not fully showing my homework, on the thinking behind the idiocracy claim.

***

To round it out, a view from the academy. This is from an economics professor at a well-known liberal arts college, who deals with the theory/reality gulf in economics that I think underlies the ExIm discussion and much else.

I've been teaching at [the liberal arts college] since 1989.  One of the perennial habits I encounter among my students is the tendency to believe the economic theory is "true.” Frequently this belief is based on an ignorance of some important underlying assumptions in the theory.

IF you go back to the original Ricardian comparative advantage model we find the sneaky assumption that "people endeavor to employ their capital as close to home as possible."  In other words, if capital is immobile Ricardian trade theory finds trade is almost always beneficial.  When we relax the assumption of capital mobility maybe not so much.    

I try to explain to my students that economic theory is a map, not a religion. It does not describe reality perfectly, and  it's a good idea to have more than one type of map depending on the situation. When I'm on my boat on the river I want the navigation map, when driving to work, the traffic map.

Unfortunately, many of my fellow PhD economists also fall into the same trap of treating economic theory as a religion. Religious beliefs  can never be fallible or falsified, irrespective of evidence to the contrary.  

That’s all for now. Thanks for weighing in.

If you have had any working exposure to the way big aviation, infrastructure, telecom, agricultural, or other high-stakes business actually gets done around the globe, you realize that the departures-from-market-optimum created by ExIm are tiny compared with those caused by governments in Asia, Europe, Latin America, the Emirates, etc. If you’d like to read about this at length, I invite you to check out my books Looking at the Sun and China Airborne.

Thus in an economic system modeled solely in a classroom, or consisting entirely of the United States, ExIm would be a waste. But in a world where Boeing, GE, Caterpillar, etc are dealing with usually more subsidized competitors from Asia and Europe, doing without ExIm is a form of unilateral disarmament. I say this based on what I have actually seen over the decades.

(And, yes, I also recognize that according to purist theory, even “unilateral disarmament” in trade competition still makes sense, in maximizing consumer welfare. For why I don’t think that’s the end of the discussion, please see “How the World Works” from back in the 1990s. I’m all in favor of expanded trade! But the U.S. did not grow rich by applying pure Ricardian trade theory, nor did England or Germany or Japan or any place else.)

Here’s a parallel: In principle, all military spending is a big waste. Armies destroy things. Their contracting systems are historically rife with corruption. Everybody would be much better off if military spending everywhere went down.

I can agree completely with that in-principle goal — and yet still consider it an idiotic blindness to realities if someone tried to defund the entire Pentagon to reinforce this theoretical point.

***

In last night’s installment, I didn’t fully spell out the pro-ExIm argument the way I had in books or 20-plus years ago in the magazine. Instead I just leapt to the end point, saying that willful blindness to real-world consequences amounted to idiocracy. Readers beg to differ! And also take offense at the term. Here is a sample.

One of the friendlier-toned dissents:

I don't think that opposition to the EX-IM bank ranks on the idiocy scale anywhere near the Republicans denial of global warming or their claims of a link between vaccinations and autism.

There are legitimate concerns about any government subsidy.  Government subsidizes things like sports stadiums and single family housing; when these things are subsidized, there are opportunity costs--other parts of the economy must shrink.  Similarly, the EX-IM bank subsidizes large multinational exporting companies such as Boeng and GE.

You apparently hope that these government subsidies trickle down to U.S. workers and to smaller suppliers to these corporations, and perhaps some of the benefits do trickle down.  But these benefits are the result of exporters offloading the default risk on financing exports from themselves to taxpayers. Additionally, at least to a minor extent, when loanable funds are used to subsidize exports, this competes with and might crowd out funding for non-exporting businesses.

I don't know enough about this particular issue to say more.  But generally you are even-handed in your analysis of issues.  In this case, you should at least acknowledge the potential costs of the EX-IM bank.

Agreed: any subsidy brings risks and costs. In my judgment and observation, the costs and risks would be worse from doing without. Now, from a writer who generally supports public efforts for the public good:

Obviously I don't think I'm a zealot, and I like Fred Hochberg [chairman of ExIm, whom I also know and like], and I think I've been as outspoken about the wackadoodle GOP as anyone...but I think the Republic would survive the loss of the ExIm Bank.

I find the everybody-else-does-export-subsidies argument somewhat persuasive, but on the whole I doubt we really need a government bank to provide 99.8% safe loans to Boeing and Pemex and the emirate of Dubai.

I think those of us who believe government has a very important role to play in fighting climate change and providing universal health insurance and so forth ought to support getting rid of marginal government roles that it can focus on doing those important things well.

I wrote him back giving my pitch on “this is the flawed world we live in, and you have no idea what mercantilism looks like until you’ve checked out the Chinese / French / etc.” He replied:

That’s fair. I bet I would feel differently if I knew anything about foreign affairs...

I guess what I would say is that it doesn't seem completely cut-and-dry, and that defenders of the ExIm don't usually acknowledge that the gross mercantilism you mentioned is gross. I also think the corruption scandals that inevitably seem to pop up at obscure money-sloshing institutions like this really do give government a bad name.

I agree that it’s important to acknowledge the costs and distortions of institutions like ExIm, and insist that they be run well.

Finally, a scolding letter from a reader who I believe is an MBA student at a leading business school. He started with complimentary remarks about my past practice of airing dissenting views. But …

That is why I found the attitude in your latest post on the Ex-Im bank to be so disappointing.

You write that "The people bringing down the Export-Import bank are zealots who care more about their theories than the completely foreseeable damage they are doing to American workers and companies."

I don't have a strong view one way or the other on whether the Ex-Im bank is good policy (my sense is that in a perfect world we wouldn't need it, but in our imperfect world I'm not sure whether it is better or worse than other feasible "second-best" policies). But I do have a strong view that the attitude in the above quote in particular, and your entire post in general, is out of character, factually incorrect, and dangerous.

It is out of character because, as I mentioned earlier, you have a long and admirable history of giving a respectful representation of those that disagree with you (your series on the Iran nuclear deal is one recent example of this).

It is factually incorrect because the opponents of the Ex-Im bank are self-evidently not Ayn Rand fanatics. The opponents include not only the conservative Greg Mankiw and the libertarian leaning but hard to classify Tyler Cowen, but also Senator Obama in 2008. [JF note: this was a throwaway reference in a campaign speech, unrelated to anything Obama has said or done since.] Perhaps in the last few years Obama has started inserting block quotes from the Fountainhead into his speeches, but if so I have somehow missed it.

It is dangerous because it is an example of a habit of thought that closes our minds and prevents us from learning. As soon as we explain our enemy's disagreement as resulting from some defect in their intellect or character, we feel safe to ignore any of the actual good arguments that identify flaws in our own position. The problem is that it is much easier to find some reason that our enemy is a knave or a fool than it is to question our own beliefs. If this habit is left unchecked, we get our contemporary politics: one group on either side of the aisle, each totally convinced that they are the party of honest, right-thinking folk defending the truth and the light against the pack of morons and zealots on the other side.

This is an easy pattern of thought to slip into - it may even be automatic. But for that reason it is all the more important to consciously fight against it. You have historically been at the vanguard of this fight. I hope that this post is merely a temporary stumble.

I wrote back saying that the tone was a decision rather than a stumble, but that it was based on observations I hadn’t bothered fully to spell out this time. Rather than take the argument through any more cycles right now, I’ll thank these readers and others for weighing in, and encourage readers to look more closely into the issues at stake with ExIm.

***

Still:  I think it would be a big, pointless, self-inflicted, and self-indulgent policy error to kill off the ExIm Bank.

The anti-ExIm argument was that big, rich companies like Boeing or GE should not depend on taxpayer help for financing their sales to customers overseas. That might sound true enough, within the confines of the 11th-grade Ayn Rand Debating Club.

In the actual world we inhabit, those firms are competing with others from Europe, China, Japan, Brazil, Russia, South Korea, etc. From places, that is, where government officials dozed through (or laughed at) the Ayn Rand part of the economics courses and are happy to promote their own exporters.

The results? Here’s one, from a Reuters story yesterday:

And this similar report about changes in the industrial landscape, from an American reader with extensive experience doing deals in China, the U.K., other parts of Europe, and Russia. He writes:

I met in London today with developers of a huge infrastructure project who told me that the manufacture of several key large components is being switched from the United States to Europe because of the expected nonavailability of export financing support from the US, because of the import export bank financing debate.

Thanks, GOP.

As the NYT said today in a strikingly sassy editorial, the circa-2015 version of the GOP has convinced itself that the details of actually running the government don’t matter. All that matters are the talking points.

The ExIm consequences are just one example of where that know-nothing posture leads, and not even the most destructive.

The anti-vaccine blather of this week’s GOP debate, which to their discredit the two doctors on stage let pass without rebuttal, may cause life-and-limb harm, rather than just economic loss. The chest-beating about “day one” strikes around the world is more ominous still. And then there are the climate issues…

But if you want a simple, clear example of why flat-Earth, who-cares-about-the-consequences posturing matters, you’ve got it here with the ExIm bank.

Idiocracy: it’s not just a movie any more.

Update I see just now that my friend (and former Texas Monthly colleague) Joe Nocera is weighing in on this point in his NYT column. He writes:

The damage this is doing to our economy is starting to become clear. In recent weeks, Boeing, America’s largest exporter in dollar volume, made two sobering announcements: first, that Asia Broadcast Satellite canceled an $85 million satellite contract expressly because there was no Ex-Im support. (Boeing is hoping to renegotiate.) More recently, Kacific, a Singapore-based satellite company, told Boeing not to bother bidding on a satellite contract, again because of a lack of Ex-Im financing.

As a result, McNerney told me, “layoffs in the hundreds” have taken place in Boeing’s satellite division.

I could be polite about this, but I won’t. The people bringing down the Export-Import bank are morons zealots who care more about their theories than the completely foreseeable damage they are doing to American workers and companies.