Farm subsidies as the largest program
In the January 2011 episode on farming subsidies, Bob Zadek introduced the subject by asking whether farm subsidies are “an out-of-control program that benefits nobody and costs us about $25 billion at least,” setting aside the higher cost of food. His guest, Chris Edwards, Director of Tax Policy at the Cato Institute, did not treat the figure as an exaggeration: he called the program “the biggest business subsidy or corporate welfare program in the entire federal budget,” with $25 billion a year in direct cost to taxpayers. Edwards said it benefits essentially wealthy farm businesses, describing the transfer as “sort of like reverse Robin Hood”—taking from average taxpayers and giving to the wealthy—and concluded that it “makes absolutely no sense.” Farming Subsidies (2011)
The episode’s framing is thus that corporate welfare is not a marginal line item but the largest business subsidy in the federal budget, and that its beneficiaries are wealthy farm businesses rather than the average taxpayer who funds it.
Rent-seeking, small business and crony capitalism
The August 2020 episode with Robert C. Wright approaches corporate welfare from the direction of small business. Zadek’s framing distinguishes small businesses, which he says want economic freedom, the right to be open as long as they choose, the right to open a business without a lot of costs, and low taxes, from “crony capitalism, where big business gets a seat at the governmental table to form policy and get special favors.” Zadek says none of that ever flows to small businesses, which “don’t get to game the system.” The Decline of American Independence (2020)
Wright agrees and supplies the economic vocabulary. He says small businesses tend to function in highly competitive markets, so they are “basically in the business of pleasing us,” producing what consumers want, when they want it, how they want it, and for a competitive market price—which he calls the essence of Adam Smithian market economies. Big business, by contrast, is “often in the business of what economists call rent-seeking, which basically means getting something for nothing,” and this is “usually gotten through government largesse—what’s called crony capitalism or corporate welfare.” Wright explains the mechanism as imposing costs on competitors or creating market power, moving away from competitive markets “and towards monopoly”; even moving part of the way increases profit. Small businesses, he says, generally cannot—“don’t have the political pull to do that”—except perhaps in some corrupt small town governments, while big businesses are what does that. He invokes the old saying that the country and General Motors were closely aligned, and counters that the U.S. goes the way of its small business class and not large corporate entities able to sway parts of the political system for their own benefit. The Decline of American Independence (2020)
Corporate welfare and political distrust
In the October 2020 episode, Zadek distinguishes political distrust from social distrust, saying he profoundly distrusts government because it has the power to harm him, and asks whether distrust of government can be explained by the accumulation of governmental power and by those who want more power “for selfish reasons so they can use government to enhance themselves with wealth transfers.” Mandatory PPE (2020)
Kevin Vallier agrees in part. He says people trust their local and state governments more than the federal government because the federal government intervenes in a much more harmful way, and that people distrust each other more when the federal government insists on making a decision rather than letting decisions be made more locally. He offers abortion as a big case, saying Roe made salient a massive point of disagreement. Separately, he says large government causes distrust because large governments “can slow down economic growth and prosperity and they can make the rich richer at the expense of the poor through things like corporate welfare and stuff like that,” and that when people see that corruption, they trust government less. He adds that the biggest factor determining political trust is performance, and that if government were smaller it could do the things it does better. Mandatory PPE (2020)
The airline bailout as corporate welfare
Two January 2023 episodes turn to the airline bailout. In the first, Zadek asks Veronique de Rugy whether the country is worse off because of the bailout only because the federal government has $54 billion less, or whether there are other residual detriments. De Rugy answers that the money is bad because the government does not have it and borrowed it, and that with interest rates going up and $31 trillion in debt, all of this is a problem. But in her opinion the biggest problem is the moral hazard it creates: airlines have learned that from now on, forever and ever, the government will step in, and they will be able to make an enormous amount of money during good times precisely because they can tell shareholders and investors to invest in them because they will never have to shoulder the cost during the next emergency. She says this corrupts corporate morals, with companies, shareholders and investors thinking it normal to line their pockets when times are good and be bailed out when times are bad. Shining a Spotlight on the Stealth Airline Bailouts (2023)
De Rugy extends the point to individuals and non-airline companies, who she says have learned that next emergency they will get a check from the government, no questions asked, whether they work or not, and that companies will be able to borrow at very low cost or have the money forgiven. She says this type of behavior is one of the reasons people are upset about capitalism: when people don’t like cronyism, they don’t turn against the government, which is really the one responsible—if the government didn’t give the money, companies could ask and ask and it wouldn’t happen—but instead blame companies for being greedy. Corporate welfare, cronyism, however you want to call it, she says, is the biggest threat. Shining a Spotlight on the Stealth Airline Bailouts (2023)
Zadek, who describes his own world as business credit for half a century, asks why the government could not accomplish the same goals by lending money at market rates as a lender of last resort, predicting a corporation would say it might as well borrow from its bank. De Rugy answers that any government involvement means moral hazard no matter what form it takes, citing government loan guarantee programs where a bank lends but taxpayers pay if the company defaults. She names the Export-Import Bank and the SBA as examples, saying the decision of who gets subsidized loans on better terms falls to government, banks become much less careful about lending, and the government picks winners and losers. She notes that it is always the airline being bailed out, and that at the time of a later bailout roughly 30,000 airline employees faced furlough while movie theater employees were being fired in numbers four or five times larger and no one cared—because the airlines have a relationship with politicians. The government, she says, decides which companies live and die, for political reasons, so a company must have a lobbying branch and please politicians. Shining a Spotlight on the Stealth Airline Bailouts (2023)
The second January 2023 episode repeats the same exchange in nearly identical terms. De Rugy says the money is bad because the government borrowed it, that borrowing is a problem especially as interest rates rise, and that there is $31 trillion in debt; the biggest problem is the moral hazard. Airlines have learned that forever and ever the government will step in, and can make enormous money in good times because they tell shareholders and investors they will never have to shoulder the cost in the next emergency. This corrupts corporate morals, and the behavior is one of the reasons people are upset about capitalism: people don’t turn against the government, which is really the one responsible, but blame companies for being greedy. The True Cost of Airline Bailouts (2023)
In the same episode, Zadek draws the farming parallel: whenever farmers suffer losses due to an existential natural disaster or whatever, the government is right there with a farm bailout because it is an essential industry. He notes a Wall Street Journal article that morning about wheat prices being high because of Ukraine and farmers raking in the money, and asks why government does not take the excess profits when times are good, calling it “a ratchet, which is only one way.” He adds that the airline industry had come off a decade of monumental profits and was loaded with money, and that instead of buying insurance or putting money away, it did not see the need “because of the hope realized by the bailout.” The True Cost of Airline Bailouts (2023)
De Rugy also describes the broader distortion: all these interventions distort the price signal that tells people whether something is risky or safe, whether it is worth investing, consuming, building or hiring. She says the government interferes everywhere, including in the labor market and wages, and that ultimately it distorts the price system and the essential signal that allows a complex economy of exporters, importers, consumers, producers, investors and stock owners to function. The True Cost of Airline Bailouts (2023)
Across episodes: what changed
The topic recurs across four episodes spanning 2011 to 2023, and the treatment shifts in emphasis rather than in conclusion. In 2011, Chris Edwards supplies the concrete budget claim—$25 billion a year, the biggest business subsidy or corporate welfare program in the federal budget—and the farm program is the case. In 2020, Robert C. Wright supplies the theoretical frame of rent-seeking and the small-business contrast, while Kevin Vallier connects corporate welfare to declining political trust. In the two 2023 episodes, Veronique de Rugy moves the case to the airline bailout and to moral hazard, with the $54 billion figure, the $31 trillion debt, and the claim that corporate welfare and cronyism are the biggest threat. The later episodes add the mechanism of behavioral change—companies and individuals learning to expect rescue—that the earlier episodes do not develop.
What the sources do not cover
The excerpts do not state the names of the statutes or bills that authorize farm subsidies or the airline bailout, nor the dates of their enactment. They do not report what any court held, or which constitutional amendment any case turned on, beyond Vallier’s mention of Roe and of the First Amendment right to peacefully assemble in Wright’s remarks. The excerpts do not give the founding date or founding principles of the Cato Institute, and they do not resolve the sentences that break off mid-thought in the transcripts.