Thursday, January 18, 2007

The More the Merrier...

...for the competitor, says George Will:

The average jetliner is struck by lightning twice a year. Boeing's competitor in the commercial aircraft duopoly, Airbus, has recently struck itself twice. The government-created European consortium decided to build the wrong aircraft, then built it badly.

....Created in 1970, Airbus prospered. From 2001 to 2005, its annual orders exceeded Boeing's, and it will deliver more planes than Boeing this year. But now Airbus has problems inherent in its role as Europe's iconic public-private collaboration. Such collaboration, called "industrial policy,'' involves the irrationalities of economic nationalism as each of the nine countries involved in subsidizing the A380 fights for "its'' jobs.

....The A380 has received $3.8 billion in cheap loans and other ongoing government subsidies misleadingly called "launch aid.'' This amounts to seminationalization, giving the governments involved an incentive to regard one another as rivals. Boeing wants the World Trade Organization to compel European governments to stop their subsidies. [Boeing CEO James] McNerney, however, acknowledges that some people think Boeing should allow Airbus to break WTO rules -- and continue to be plagued by political decisions trumping economic rationality. Airbus is illustrating what happens when governments treat commercial enterprises as jobs programs and instruments of national glory.

No comments: