Crony Capitalism at Work
- U.S. tax dollars (instead of private bank loans) are being used to fund a granite products company in Brazil that pays poverty wages to put Americans out of work.
Granite manufacturers are one of many U.S. industries struggling to compete with foreign competition -- which makes it odd that the federal government is subsidizing a Brazilian granite project.
The Overseas Private Investment Corporation (OPIC) is a federal agency that subsidizes U.S. businesses that set up operations in foreign countries. In 2012, OPIC approved a $6 million taxpayer-backed loan to support a U.S. company expanding its Brazilian operation that extracts granite and cuts it into slabs for countertops to ship to the U.S. and other countries.
The OPIC subsidy obviously helps the recipient — Wisenbaker Building Supply — but it hurts American companies that excavate granite or shape granite blocks into countertops in the U.S. reports the Washington Examiner.
U.S. rock quarries have pared back operations over recent decades. In Barre, Vt., jobs in the industry amount to one-third of the1960s peak, Barre Granite Association's Executive Director Ed Larson told a local newspaper last summer. “Mainly because of foreign competition," the paper said.
“Imports chip away at Vermont Granite Industry,” a Boston Globe headline declared in 2008. “The competition remains fierce overseas,” the article reported, “where quarry workers earn as little as a few dollars a week. The cost of extracting and cutting the granite is so low that even after the cost of shipping it to the United States it is cheaper than Vermont's.”
“All the pressure is foreign,” Joe Timilty of Massachusetts-based USA-Granite told me over the phone.
American companies will always complain about foreign competition, but this isn’t a matter of free trade. This is the federal government subsidizing foreign competition.
Wisenbaker is a U.S. construction company with many operations around the globe, including the granite quarry in a rural region of Brazil. The $6 million taxpayer loan was to help Wisenbaker “make investments related to granite quarries in Brazil for export of granite slabs to China and the U.S. for homebuilding industry,” as one OPIC public summary puts it.
Many American companies import granite blocks and form them into countertops, and so expanding Wisenbakers’ granite-cutting operation in Brazil hurts U.S. counter-top makers.
Also, hundreds of granite quarries still operate in the U.S. This Brazilian operation is their competition, and the U.S. government is subsidizing it.