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With the debate surrounding the upcoming re-authorization of the Ex-Im Bank of the US, I wanted to hear from someone who might know. What is the best case to be made for its continued operation? I understand the "loans as corporate welfare" case, but I think you could probably classify improved export conditions and the resulting job growth, tax revenue, etc. as a Public Good.

If this is true, do these benefits justify the bank's existence despite the corporate welfare?

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  • $\begingroup$ Do you know the definition of a public good? $\endgroup$ – FooBar Aug 5 '15 at 18:52
  • $\begingroup$ Yes, and I understand that something as ambiguous as "exports" would not traditionally be defined as a public good, but do you understand the question I am asking? Improved export market conditions could be considered non-rivalrous and non-excludable. In the context of the Ex-IM Bank, is there a way to quantify the benefits of the types of "Public Goods" and do those benefits outweigh the downsides. $\endgroup$ – thellama Aug 5 '15 at 20:02
  • $\begingroup$ But "exports" are not the same as "Improved export market conditions". If you can define the latter properly you may have a case. $\endgroup$ – Giskard Aug 5 '15 at 20:41
  • $\begingroup$ The bulk of my question centers around the Ex-IM Bank, but let me rephrase. Does the Ex-IM Bank provide any sort of benefit that might result in what you might call a Public Good i.e. improved export conditions, job growth, tax revenue, etc.. If it does, would that benefit justify it's existence despite the corporate welfare? $\endgroup$ – thellama Aug 5 '15 at 21:23
  • $\begingroup$ @thellama I updated your question based on your comment. I think you still have two separate questions: 1. Does the bank provide public goods? 2. Are these public goods worth the cost? $\endgroup$ – Giskard Aug 6 '15 at 6:05
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Since you keep stressing the public good part of the argument..

From wikipedia:

The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States federal government.[1] Operating as a government corporation, the bank finances and insures foreign purchases of United States goods for customers unable or unwilling to accept credit risk. According to its charter, the Ex-Im Bank does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not take place because commercial lenders are either unable or unwilling to accept the political or commercial risks inherent in the deal.

So the service at hand is lending to higher risk customers.

In economics, a public good is

a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Lending is very much excludable. To the extent that funds of the ex-im bank are limited, it is also rivalrous. Hence no, the services of the ex-im bank are not a public good.

Second order public good

To quote you:

that might result in what you might call a Public Good i.e. improved export conditions, job growth, tax revenue,

This part is irrelevant. Either you provide a public good, or you don't. Providing a private good, that may result in benefits for society doesn't make you a special provider that warrants special benefits.

Any producer of consumption goods creates "improved export conditions, job growth, tax revenue,". That doesn't warrant the government sponsoring them, because they create something "akin to a public good".

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    $\begingroup$ By the way, these definitions are something that should be in the questions, not the answer, to make it more interesting for those who are not specialists on the matter, or US citizens. $\endgroup$ – FooBar Aug 6 '15 at 11:19
  • $\begingroup$ I am really considering this, but I am not convinced. Rather than providing loans, you could say that the Ex-Im Bank purchases risk. While the initial purchase is exclusionary, at lease some of the resulting products, tax revenue from improved exports, global influence, are non exclusionary. You can take the example of a road, it is considered a public good, but contracts awarded to construction firms are exclusionary, it is only the resulting product that is non-exclusionary. Thoughts? $\endgroup$ – thellama Aug 7 '15 at 15:33
  • $\begingroup$ @thellama that's exactly what I address in the second part. As I argue, whether the "resulting products" are non-exclusive or not is irrelevant for determining whether the institution warrants public money on the grounds of providing public goods. $\endgroup$ – FooBar Aug 7 '15 at 18:07

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