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Economy: Reorganizing government out of the subsidy business

January 13, 2012 | 10:37 am

President Obama on streamlining commerce functions
Channeling Al Gore, President Obama announced his own version of reinventing government Friday morning. He asked Congress to grant him more authority to organize the executive branch as he sees fit, subject to speedy congressional review. The caveat is that "any plan must reduce the number of government agencies or save taxpayer dollars."

That sounds reasonable enough. There's also a separation-of-powers argument to go even further, freeing the president to manipulate the executive branch organization chart any way he or she pleases.

My quibble is with what Obama proposes to do first with this authority, which is to consolidate all the federal agencies, departments and programs devoted to trade and commerce into one entity. There are six major ones with that mission today, according to the administration: the Department of Commerce, the Small Business Administration, the office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corp. and the U.S. Trade and Development Agency.

The point, the administration argues, is to do a better job of helping U.S. businesses. But if that's the goal, why stop at consolidation? Why not declare, in the interests of better separating business and state, that the days of government subsidizing and promoting favored businesses and industries are over? That Washington is simply going to stop doing any sort of industrial policy? That in the future, the only thing the government will do for businesses (aside from regulating them and protecting them against anti-competitive behavior at home and abroad) is help them understand and navigate the government permitting and contracting processes?

That approach would allow the administration to eliminate much of the Commerce Department and the SBA, OPIC, the Ex-Im Bank and the Trade and Development Agency.

Congress would never agree, of course. It's exceptionally hard for lawmakers to look beyond the short-term interests of their constituents to support doing the right thing for the country's long-term interests. And there are lots of employers, big and small, that have come to rely on the help Uncle Sam provides in breaking into foreign markets, financing sales abroad, obtaining low-cost credit and the like.

Withdrawing the helping hand of government would also put many U.S. companies on less favorable footing than their competitors from countries that do not hesitate to set industrial policy. But if we really do believe that markets know better than governments, shouldn't we be willing to compete on those terms?

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-- Jon Healey

Photo credit: J. Scott Applewhite / Associated Press

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