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What The Media Tell Americans About Free Enterprise

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April 1996



With job insecurity garnering headlines in the U.S. and many demanding that the government "do something" about it, few reporters have looked overseas to see what happens when governments try. Time's Jay Branegan did. According to Branegan, in the April 15 issue, "The rich benefits that have made Europe a sweet place to work have clogged its economic arteries. Call it Eurosclerosis -- the combination of a staggering tax burden and a blanket of regulations that smother new businesses and entrepreneurship."

Branegan's evidence: "Europe's unemployment rate of 11 percent is twice as high as the U.S.'s, and its job creation chart is a flat line. Over the past three years, the U.S. has created 8.4 million new jobs, Europe none. Significantly, many of those new American jobs pay higher than average wages, and as many as 60 percent are managerial or professional." Branegan also pointed out that high minimum-wage laws in such countries as France mean "many [Frenchmen] aren't working at all. Joblessness among young people, hit hardest by minimum-wage laws, is roughly twice France's overall unemployment rate of nearly 12 percent." Something for reporters to keep in mind as American politicians debate raising the U.S. minimum wage.

On the March 26 CBS Evening News, correspondent Ray Brady reported on one form of government spending that has largely escaped the budget ax -- corporate welfare. Specifically, Brady looked at federal subsidies for ethanol. According to Brady, "Critics, even those within the U.S. government, say the virtues of ethanol are way overstated. At a time when the government is cutting on social programs, they question why it's still handing out subsidies to the ethanol industry, subsidies that amount to nearly $800 million a year."

Brady recounted how "ethanol was born of desperation during the Arab oil embargo of the 1970s, when gasoline prices soared and lines pressed for miles. But now gasoline is plentiful, much cheaper to produce than ethanol. And today, ethanol accounts for just over one percent of all U.S. energy consumption." And while "ethanol does reduce some pollutants, the Congressional Budget Office says it contributes to others, such as ozone pollution."

Why, then, does the subsidy continue? "Many point to the lobbying of corn growers and generous political donations to both parties by Archer Daniels Midland, the world's largest producer of ethanol, and a major beneficiary of the government's subsidies." According to Brady, the ethanol industry has "racked up $6 billion in subsidies, courtesy of the American taxpayer."

Kudos to Branegan and Brady for practicing journalism at its best, with Branegan looking at the results of programs politicians are proposing and with Brady questioning programs neither political party wants questioned.


Rich Noyes


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