Re: ATR-72's and Airbuses

Date:         03 Jan 97 04:36:35 
From: (Terry Schell)
Organization: University of Illinois at Urbana
References:   1 2 3 4 5 6 7
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  or MIME structure writes:

>>...It is worth noting that this support is *not* for commercial aircraft
>>since this engine is designed for planes with <6 seats.

>I always thought that a commercial aircraft manufacturer was one that
>made aeroplanes for profit and a non-commercial manufacturer was one
>that went broke or was subsidised by the government.  Did Cessna stop

Commercial aircraft as opposed to general aircraft. *not* as in a
profitable manufacturer.

>>It is certainly a subsidy ...

>Yes, it is - and all the rest is excuses.

Excuses for *what*?


>With only tiny variations, you sound just like an Airbus executive of
>10-15 years ago.  As Alexander said above, *nobody* is against subsidies,
>as Terry's contribution proves.  It's just the hypocrisy which can become a
>little irritating.

I have not seen anyone bash airbus for the subsidies... just people
trying to point out that they occured and other people claiming they
did not. BTW, Airbus executives were not arguing that they needed
subsidies to make up for impending environmental laws or to offset the
failure to pass meaningful tort reform.  Nor were they asking for a
grant to investigate the viability of a product that is not currently
in production anywhere in the world. Nor were they asking for a
one-time grant worth a few million dollars.  Nor were they competing
with a variety of other companies for the grant.  I don't see how you
can say that the justification of this subsidy sounds much like the
justification of Airbus at all. It is extremely economically
unsophisticated to state that all subsidies are the same.

>In general, I fail to understand the heat generated by this debate.  My
>Econ 101 said that subsidies/tariffs/etc were bad because of the cost to
>the *host* economy (not foreigners) in misallocated resources and higher
>costs to other sectors of the host economy due to increased taxes and
>charges.  To use the current jargon, attempts to tilt the playing field will
>only hurt those who do the tilting.

Your Econ 101 was fairly simplistic (almost by design).  In reality
there are times when subsidies make economic sense (viewed either as
improvment for a country or worldwide improvement) depending on the
type of subsidies, the amount involved, the particular market dynamics
of the products/services involved, the general state of the economy,
the types of government social services, current interest rates, etc.

I have not studies the history of Airbus to fully understand if the
subsidies were given for purely political reasons rather than for
sound economic reasons.  My guess is that both factors played a role.