Unfair But Not Illegal

Posted: February 1, 2011 in Songs of Space and Nuclear War
Tags: , , , ,

KC-X Competition

The WTO has ruled Boeing has gotten unfair (versus illegal) tax breaks from three states and technology transfers from NASA and the Department of Defense.

Why does it matter?  Because the Air Force’s next tanker buy is in play.  Some value it at a $35 billion effort; other estimates for the total value of the buy have gone as high as $100 billion.

How much was Boeing’s leg-up worth?  It depends on who you ask.  If you ask the WTO, it’s about $5B.  If you ask the Europeans, it’s about $24B.

On the other hand, Boeing asserts low interest loans to Airbus have been worth up to $200B.   

An earlier WTO ruling concluded Airbus had received about $15B in below-market loans and “several” billion dollars worth of grants.

So what we really have appears to be a worldwide glut of airplane manufacturing capability and a confirmation of the law of economics: if you tax something you get less of it and if you subsidize it, you get more.

 

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  1. […] Unfair But Not Illegal – Songs of Space and Nuclear Warfare […]

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