Government as a Social Tool or Business Partner - Essay Example

However, as resources are scarce and limited, granting financial aid to business organizations reduces the fund which should be utilized for social and welfare programs. It should be noted that when the governments prioritizes corporate subsidies and allocate less fund for welfare payments, it just emphasizes that corporations are much needy than the public. This is even more strongly felt now that the country is operating on a tight budget. Theory then states that the private sector should be solely responsible for the provision of social programs.

This paper opts to offer an insight to this issue by looking at the economic argument for and against corporate welfare. It is irrefutable that corporate welfare is one of the most debated social and economic issues. The term “corporate welfare” is coined by Ralph Nader in 1956 in order to describe the “benefits conferred on corporations as compared to any corporate payment, or goods or services provided, to the government.” With this definition, Nader looks beyond the benefits conferred and costs incurred by a particular program by looking at the government’s costs and benefits.

For example, if a program involves the government giving more to private companies than it gets back, then it is considered as corporate welfare. When used loosely, corporate welfare includes a government’s bestowal of money grants, tax breaks, or other special favorable treatment on corporations. The provision of corporate subsidies in the American setting can be traced back to the origins of the corporation. Corporate welfare can take the form of direct grants to business, programs that provide research and other services for industries, and programs that provide subsidized loans or insurance to business.

A good example is the Ohio Loan Law in 1837 which “required the State to give tax revenues to private canal, turnpike, and railroad corporations while permitting them also to charge tolls” (Nader 1999). Others