October 18, 2006

What European Taxes Buy

Brother AlexC posted a fascinating comparison of EU taxes which asserted that the high marginal tax rates suppressed growth.

Today, Holman Jenkins at the WSJEdPage looks at Airbus, noting that all of those subsidies are killing the company's long term competitive outlook rather than helping it.

Aerospace codgers must be having a Rip Van Winkle moment. There was a time when Europe's supersonic Concorde was ringing up orders and seemed destined to be the future of commercial aviation. Then costs ballooned and the economics dropped out of the project. Only 14 planes were put into service with the national airlines of Britain and France, a face-saving gesture subsidized by taxpayers.

Nothing quite so ignominious will likely be the fate of the giant Airbus 380, although it's interesting to note that 15 just happens to be the number of assembled, flightworthy planes stranded amid the current production shutdown. But one thing is certain: Any hope that Airbus would become more like a real company, and less like a make-work-cum-technological ego trip for European governments, just went out the window.

Russia and Spain are prepared to double down on the bad decisions to attract more influence and all these great government jobs. More cash in will allow Airbus to continue making planes that don't fit the trends or business models of its customers.
The A380 will fly in respectable numbers even if it never makes money. European taxpayers will see to that. The hastily redrawn A350 will sprout wings too, even if it's years late against the 787 and never recovers its costs. Ironically, the Airbus meltdown may one day be seen as the decisive ending of the flagging era of privatization. Its deficiencies notwithstanding, Airbus is admired by some Democrats as a template for future U.S. government enterprises to pursue carbon control and "energy independence."

Imagine if we let Sens. Levin and Lott design American aircraft. Does anybody believe that Europe's politicos are significantly better?

Economics and Markets Posted by John Kranz at October 18, 2006 11:58 AM

I forget, which chapter of Atlas Shrugged is this fiasco laid out in?

Posted by: mdmhvonpa at October 18, 2006 1:12 PM

In the United States, how long has Amtrak been asking for money, promising to do better next year?



Posted by: Perry Eidelbus at November 1, 2006 4:15 PM | What do you think? [2]