August 26, 2014
A New York Times article on the role that the debate over the Export-Import Bank is playing in the North Carolina senate race told readers that the bank:
“says it makes a profit and supported more than 200,000 jobs with $37.4 billion in transactions last year.”
It would have been worth including the views of someone other than the bank who could have put these claims in context. If companies did not have access to the Bank’s loans at below market interest rates, most of these sales would still take place. The companies would just have lower profit margins. As a result, the number of jobs that would be lost is a fraction of the number cited here.
Furthermore, in standard models it would be expected that with fewer exports subsidized by the bank, the dollar would fall in value, which would make other exports more profitable. The net effect on jobs and GDP would be close to zero and quite possibly positive. It would be possible to construct the exact same story about any industry that is subsidized by the government with loans offered at below market interest rates.
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