Discussion:
Uncle Sam comes to Boeing's Aid
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A Guy Called Tyketto
2009-12-10 09:47:32 UTC
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http://online.wsj.com/article/SB126031187195082573.html?mod=rss_Today%27s_Most_Popular

Now.. I know this is really going to flare up the A. vs. B. war,
and I don't mean for it to.. but the question has to be asked.

Given the article, could this mean that Boeing is being subsidized
by the US Government? If so, this gives those pontificating about the
EADS/Airbus subsidies no room to talk.

Also, this does sound like a smattering of antitrust. But it
definitely warps the entire market for commercial aviation and aerospace.

BL.
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Uwe Klein
2009-12-10 12:45:32 UTC
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Post by A Guy Called Tyketto
http://online.wsj.com/article/SB126031187195082573.html?mod=rss_Today%27s_Most_Popular
Now.. I know this is really going to flare up the A. vs. B. war,
and I don't mean for it to.. but the question has to be asked.
Given the article, could this mean that Boeing is being subsidized
by the US Government? If so, this gives those pontificating about the
EADS/Airbus subsidies no room to talk.
Also, this does sound like a smattering of antitrust. But it
definitely warps the entire market for commercial aviation and aerospace.
BL.
Had to detour via google to see the complete article.

Hmm,
this is not really new information.
At least not for those regions that are not tied up in nationalistic knots ;-)

As an example: In Germany you can get credit safeguarding via "Hermes"
http://en.wikipedia.org/wiki/Hermes_cover

some countries achieve sales via bribes where others
work via political arm twisting ( and the US does a lot of the latter ).

Having the better product seem to be quite often not a major decission factor.

One of the reasons I found the WIPO trade war uncalled for
as it only provides benefits via the retaliatory delays while
being generaly costly.

But if one is on the loosing end everything goes.

uwe

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Miles Bader
2009-12-10 10:40:43 UTC
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Post by A Guy Called Tyketto
http://online.wsj.com/article/SB126031187195082573.html?mod=rss_Today%27s_Most_Popular
Now.. I know this is really going to flare up the A. vs. B. war,
and I don't mean for it to.. but the question has to be asked.
Given the article, could this mean that Boeing is being subsidized
by the US Government? If so, this gives those pontificating about the
EADS/Airbus subsidies no room to talk.
Huh?

Regardless of whether the behavior noted in the WSJ story is good or
bad, it's not the same as the relationship of european governments with
EADS. Moreover, "two wrongs don't make a right" -- criticism of bad
behavior isn't somehow refuted simply because somebody else is _also_
doing something bad!

So, criticize away, critics.

-Miles
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A Guy Called Tyketto
2009-12-11 04:10:58 UTC
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Post by Miles Bader
Post by A Guy Called Tyketto
http://online.wsj.com/article/SB126031187195082573.html?mod=rss_Today%27s_Most_Popular
Now.. I know this is really going to flare up the A. vs. B. war,
and I don't mean for it to.. but the question has to be asked.
Given the article, could this mean that Boeing is being subsidized
by the US Government? If so, this gives those pontificating about the
EADS/Airbus subsidies no room to talk.
Huh?
Regardless of whether the behavior noted in the WSJ story is good or
bad, it's not the same as the relationship of european governments with
EADS. Moreover, "two wrongs don't make a right" -- criticism of bad
behavior isn't somehow refuted simply because somebody else is _also_
doing something bad!
So, criticize away, critics.
Should a relationship like you're describing matter if
subsidies are occurring? You're pretty much saying in this case that
"Your subsidy isn't the same as my subsidy."

A subsidy is a subsidy regardless. So my question is, does this
or does this not give Boeing fanboys room to talk/squabble about
EADS/Airbus getting subsidies. If you believe it does,
pot/kettle/black.

BL.
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Miles Bader
2009-12-11 04:49:09 UTC
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Post by A Guy Called Tyketto
A subsidy is a subsidy regardless.
That's silly -- e.g., if I give you a subsidy of $1 and one taco per
month, and Joe gives you a subsidy of $1,000,000 per week and unlimited
free access all of his company's resources, those are two very different
subsidies. It would certainly be understandable if somebody objected to
the latter, but not the former.
Post by A Guy Called Tyketto
So my question is, does this or does this not give Boeing fanboys room
to talk/squabble about EADS/Airbus getting subsidies.
The mere presence of some connection between Boeing and the
U.S. government certainly doesn't somehow invalidate complaints about
European government involvement with EADS (as you seem to be suggesting
it does). _Details matter_.

If you want to complain about something Boeing does, then complain.

If you want to _compare_ Boeing and EADS subsidies, then by all means,
compare them -- but "comparison" is sort of pointless unless it involves
actual details; merely saying "nya nya he does it too!" accomplishes
nothing.

-Miles
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A Guy Called Tyketto
2009-12-11 06:20:30 UTC
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Post by Miles Bader
Post by A Guy Called Tyketto
A subsidy is a subsidy regardless.
That's silly -- e.g., if I give you a subsidy of $1 and one taco per
month, and Joe gives you a subsidy of $1,000,000 per week and unlimited
free access all of his company's resources, those are two very different
subsidies. It would certainly be understandable if somebody objected to
the latter, but not the former.
But that's the point: Boeing is complaining that EADS/Airbus is
getting subsidies from their governments, while Boeing is getting
subsidies from the US government. In black and white, Boeing's
complaints are pretty much mooted by their own actions with Ex-Im.
Post by Miles Bader
Post by A Guy Called Tyketto
So my question is, does this or does this not give Boeing fanboys room
to talk/squabble about EADS/Airbus getting subsidies.
The mere presence of some connection between Boeing and the
U.S. government certainly doesn't somehow invalidate complaints about
European government involvement with EADS (as you seem to be suggesting
it does). _Details matter_.
Goes back to what I'm saying: A subsidy is a subsidy, no matter
the details or how you look at it. You can't complain about one, albeit
how grandiose it may be, while still getting the same thing, even in
its slightest form. No matter how minute, it still is a subsidy.
Post by Miles Bader
compare them -- but "comparison" is sort of pointless unless it involves
actual details; merely saying "nya nya he does it too!" accomplishes
nothing.
That 'he does it do' would definitely matter, in the various
lawsuits between the two companies, and with the WIPO. In Boeing's
case, it undermines their whole complaint.

BL.
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Miles Bader
2009-12-11 07:06:47 UTC
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Post by A Guy Called Tyketto
But that's the point: Boeing is complaining that EADS/Airbus is
getting subsidies from their governments, while Boeing is getting
subsidies from the US government. In black and white, Boeing's
complaints are pretty much mooted by their own actions with Ex-Im.
No they're not. Details matter.
Post by A Guy Called Tyketto
Goes back to what I'm saying: A subsidy is a subsidy, no matter
the details or how you look at it.
Not true. Details matter.
Post by A Guy Called Tyketto
You can't complain about one, albeit how grandiose it may be, while
still getting the same thing, even in its slightest form.
Yes you can. Details matter.
Post by A Guy Called Tyketto
That 'he does it do' would definitely matter, in the various lawsuits
between the two companies, and with the WIPO. In Boeing's case, it
undermines their whole complaint.
No, it doesn't.

_Details matter_.

The reason that (most) people complain about subsidies from "the other
side" is because they believe it distorts the market, and gives one side
an unfair advantage over the other. For that claim to be true, the
actual details of the subsidy are _clearly_ relevant -- if Boeing were
to receive $1 from the government, for instance, it would be
_irrelevant_, because such a subsidy would be too small to have any
effect; if they received 10 billion dollars, on the other hand, that
would clearly be enough to have an effect.

-Miles
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A Guy Called Tyketto
2009-12-11 09:19:24 UTC
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Post by Miles Bader
Post by A Guy Called Tyketto
But that's the point: Boeing is complaining that EADS/Airbus is
getting subsidies from their governments, while Boeing is getting
subsidies from the US government. In black and white, Boeing's
complaints are pretty much mooted by their own actions with Ex-Im.
No they're not. Details matter.
It's blatant. A subsidy is a subsidy. You can go into detail,
but in summary, a subsidy is a subsidy. One can justify why it's there
all day long, but it's still the same at the end of the day.
Post by Miles Bader
Post by A Guy Called Tyketto
Goes back to what I'm saying: A subsidy is a subsidy, no matter
the details or how you look at it.
Not true. Details matter.
See above.
Post by Miles Bader
Post by A Guy Called Tyketto
You can't complain about one, albeit how grandiose it may be, while
still getting the same thing, even in its slightest form.
Yes you can. Details matter.
See above. A subsidy is a subsidy is a subsidy.
Post by Miles Bader
Post by A Guy Called Tyketto
That 'he does it do' would definitely matter, in the various lawsuits
between the two companies, and with the WIPO. In Boeing's case, it
undermines their whole complaint.
No, it doesn't.
_Details matter_.
The reason that (most) people complain about subsidies from "the other
side" is because they believe it distorts the market, and gives one side
an unfair advantage over the other. For that claim to be true, the
actual details of the subsidy are _clearly_ relevant -- if Boeing were
to receive $1 from the government, for instance, it would be
_irrelevant_, because such a subsidy would be too small to have any
effect; if they received 10 billion dollars, on the other hand, that
would clearly be enough to have an effect.
Please show how Ex-Im does not distort the market in this case.

BL.
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Miles Bader
2009-12-11 09:51:13 UTC
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Post by A Guy Called Tyketto
Post by Miles Bader
No they're not. Details matter.
It's blatant. A subsidy is a subsidy. You can go into detail,
but in summary, a subsidy is a subsidy. One can justify why it's there
all day long, but it's still the same at the end of the day.
People _don't care_ about the word "subsidy", they care about the
effects of the subsidy (in other words: if a subsidy had no effect, few
people would complain about it [well, the people paying would complain,
but that's not who we're talking about here]). And the effects of the
subsidy depend on the details of the subsidy (this seems pretty
obvious).
Post by A Guy Called Tyketto
Please show how Ex-Im does not distort the market in this case.
I never said that it doesn't.

What I said was that you can't play linguistic games to assert that the
_mere presence_ of a subsidy in some form to Boeing somehow
"invalidates" complaints about subsidies to EADS -- that is what you
were doing, and it's clearly just silly.

I've no doubt that the Ex-Im bank stuff does distort the market to some
degree; whether it's to the _same_ degree as whatever EADS is doing, I
have no idea. [I do know that it's hardly news -- that stuff has been
widely known for many many years, and seems to be a perennial part of
Boeing-EADS fanboy bickering.]

If you'd like to start a thread comparing the details of the two
subsidies, and trying to ascertain whether they are comparable or
something, feel free.

But I am not going to because I don't really care about the issue
(I haven't complained about EADS subsidies, mind you). My only purpose
in posting to this thread was to refute the silly claim you made
originally (that complaints about EADS are somehow rendered completely
moot because the mere _presence_ of funniness with Boeing and the ex-im
bank).

-Miles
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JF Mezei
2009-12-11 14:03:10 UTC
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Post by Miles Bader
People _don't care_ about the word "subsidy", they care about the
effects of the subsidy
The problem is that Boeing makes the claim it doesnt get subsidies, and
then accuses Airbus of getting subsidies.

The public/political debate isn't about the details or the level of
subsidies being given, it is a bragging "Boeing doesn't get subsidies,
Airbus does".

There cannot be intelligent debate unless Boeing admits to getting
subsidies and the debate/accusations move to Boeing accusing Airbus of
getting TOO MANY subsidies.

At that point, details can be put down on the table to compare the
subsidies Boeing gets against those Airbus gets.
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JF Mezei
2009-12-11 13:59:03 UTC
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Post by A Guy Called Tyketto
But that's the point: Boeing is complaining that EADS/Airbus is
getting subsidies from their governments, while Boeing is getting
subsidies from the US government. In black and white, Boeing's
complaints are pretty much mooted by their own actions with Ex-Im.
The level of subsidy gained through the Ex-Im mechanism is limited. It
only applies to sales to foreigners and provides credit at good terms.

The level of subsidy where the manufacturer goes to the government and
begs for money to develop a new aircraft is not limited. The C-Series
for instance is getting a huge amount of government subsidies.

Boeing also gets subsidies from local government when it chooses to
build an assembly plant in a state. (for instance, the 2nd final assembl
line for the 787).

Some argue that subsidies such as those for the 380 are unfair because
Airbus doesn't have to repay them if the project fails to become
profitable. I haven't see the contracts, so I can't say if thsi is
really true, but lets assume it is true.

However, in the 380 subsidy above, if it is succesful, the the subdidy
disapears becase it will be paid back in full.

In the case of grants by local governments with tax breaks etc, those
are permanent subsidies that never have to be paid back and continue for
the life of the plant. Is a tax break a subsidy ? Some would argue yes,
some would argue no.

IT is all a matter of semantics.

In the end, aerospace is considered a jewel industry by countries who
have it, and their governments will do what they can to help it. It is
to the USA government's advanatge to have Boeing be succesful because
ever export sale helps reduce the USA's trade deficit and creates jobs
in USA. (Although with Boeing haveing outsourced to so many countries,
the jobs impact is not as great as it used to be).

How the subsidies are given then becomes a matter of semantics.

Airbus is perhaps more transparent with more blatant subsidies. Boein is
more subtle. For instance, government gives NASA some money and NASA
then gives Boeing money to study use of composite fuselages for
commercial aircraft.


Where there is a valid point of contention is if one party gets MUCH
more subsidy than another. It then becomes unfair to the one getting
less subsidy.
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JF Mezei
2009-12-10 15:33:21 UTC
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Post by A Guy Called Tyketto
Given the article, could this mean that Boeing is being subsidized
by the US Government? If so, this gives those pontificating about the
EADS/Airbus subsidies no room to talk.
When United got its first 777 back in 1995, Boeing delivered it in
Vancouver Canada. Why ? Because it could then claim it was an export and
benefit from Im-Ex bank "help".

These shananigans are common, Bombardier and Embraer use them to the
fullest extent possible. In fact, Air Canada purchased Embraers in part
because it could benefit from Brasil's financial help, whereas buying
from Bombardier would be considered a domestic purchase and the Export
Development Canada's help wouldn't be applicable.

I am not sure how europe does it. Since Airbus is a multinational
endeavour, did the member countries create a single entity to help
provide affordable credit to customers of Airbus planes ? Or did France
undertake this on its own ?

I view those as quite different from subdidies to help development
of an aircraft which is Boeing's bone of contention with Airbus. But in
the end, we benefit since the cost of airplanes is lower and helps keeps
airfares in check.

And aerospace is a large enough employer with high paying jobs that any
government will protect/covet it because it really boosts an economy.
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