Thursday, January 27, 2005

Subsidizing the 35,000 Foot Club

Make sure you check out Dr. Dan's answers to the questions posed yesterday in the comments section below that post.

Old Europe scores a big success! It has poured $14 billion dollars into research for Airbus to come up with a mega-plane; the largest commercial airplane in the world. It was a cooperatively fat subsidy to Airbus coming from France, the UK, Spain, and Germany. Here's what Shroeder had to say:

"Good old Europe has made this possible," German Chancellor Gerhard Schroeder told a packed hall in Airbus's headquarters in Toulouse, southwest France.

That was a barely-veiled barb recalling the US dismissal of France, Germany and other EU states in 2003 as "Old Europe" because of their opposition to the war on Iraq.

The head of Airbus continued in the same vain:

Airbus chief Noel Forgeard made similar hints in his presentation of the A380 during a colourful spectacle featuring computer graphics, atmospheric theme music, dancers and fountains.

"The European states -- so easily accused of weakness -- backed this fantastic challenge 35 years ago and have believed in the A380," he said.

I don't know anybody who is accusing the UK of weakness, but when this 35 year effort began, we were knee-deep in rice paddies trying to help the people that were being screwed by the adverse turn in post-French-colonial life. We followed that up by winning the Cold War, while these guys were busy subsidizing development of a plane that will be used by airlines for the following:

Richard Branson, the head of Britain's Virgin Atlantic, said his airline would pamper passengers on the six A380s it has ordered by including gyms, beauty parlours, bars -- and even casinos and double beds.

The last two features meant "you'll have at least two ways to get lucky on our flights," Branson joked.

Here is the simple economics of this great success of Old Europe - by subsidizing the development effort of the plane, they have effectively partially subsidized arifare for those who will travel on these planes. In so far as they will be used outside of these four nations, the taxpayers of those nations just forked over $14 billion to citizens of other locales, maybe even ... gasp ... Americans! Doesn't really compensate us for bailing these losers out of two world wars and the threat of Communist totalitarianism, but we'll take it.

And how do such subsidies jive with the politics of Old Europe? Well, for starters, subsidizing the 35,000 foot club isn't exactly a boon to the poor - not sure that they'll be booking the double beds. How could they be so insenstive - couldn't they foresee how this would look 35 years down the line when a tsunami was bound to hit Indonesia? You foresee a tragedy like that, and you still pour $14 billion into ensuring the sexual rights of ageing rich Europeans? Sounds like something the UN would cook up. Even if you didn't foresee such a tragedy, is this the type of behavior you should resort to in the aftermath:

TSUNAMI-struck Thailand has been told by the European Commission that it must buy six A380 Airbus aircraft if it wants to escape the tariffs against its fishing industry.
While millions of Europeans are sending aid to Thailand to help its recovery, trade authorities in Brussels are demanding that Thai Airlines, its national carrier, pays £1.3 billion to buy its double-decker aircraft.

The demand will come as a deep embarrassment to Peter Mandelson, the trade commissioner, whose officials started the negotiation before the disaster struck Thailand - killing tens of thousands of people and damaging its economy.

While aid workers from across Europe are helping to rebuild Thai livelihoods, trade officials in Brussels are concluding a jets-for-prawns deal, which they had hoped to announce next month.

As the world’s largest producer of prawns, Thailand has become so efficient that its wares are half the price of those caught by Norway, the main producer of prawns for the EU.

But guess which airline will be the largest purchaser:

The biggest buyer of the new plane is the Emirates airline, which has ordered 43. "The A380 will be the future of air travel," said its chairman Sheikh Ahmed bin Saeed Al-Maktoum.

Weren't the Boeings sufficient to take out the World Trade Center? Now the Sheikh will be coming at us with these planes - thanks a lot, Old Europe.


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