Economically the man is an idiot.
https://www.cigionline.org/articles/boeing-bombardier-dispute-trumpism-its-worst
https://www.cigionline.org/articles/boeing-bombardier-dispute-trumpism-its-worst
Donald Trump’s Nationalist Economic Policy at Work
- Thread starter Ponca Dan
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So, in summary, Boeing filed a stupid complaint and no final decision has been made yet.
Do I have that much correct?
Do I have that much correct?
Bombardier has been subsidized by govt for years and everyone had been complaining for years. It’s an unfair cheating system that enables them to bid low and let their governments cover their losses. Good to see something being done but I’m sure nothing will be done. It’s just exposed more.
It upsets you that the Canadian government (read taxpayers) have been subsidizing Bombardier for years. Why? It has resulted in American owned airline companies being able to buy the planes at a reduced price, which has simultaneously kept plane tickets much lower than they would be otherwise. We should stand up and applaud Canadian taxpayers for being so stupid as to extend to the American public this wonderful bonanza.
Besides, did you read the article? Boeing isn’t even competing for those contracts. It’s economically ignorant what the Trump administration is attempting to do. I hope they lose this one.
Nailed it. Maybe a little public exposure in what the Trump administration, in concert with good old crony capitalist Boeing, will put a stop to it.
you are just reading about the tip of the iceberg. I said it's been going on for years on every plane they build. This one plane is not the only issue. If it weren't for the subsidies bomber would be out of business. Of course, you can say that about many american companies also. But it does give them an advantage on bidding contracts over the world. If you're going to compete worldwide, which they do, it needs to be on a more level playing field. That's all. Maybe this will change some of that, but most likely not.
You’re completely missing the point. Canadian taxpayers are subsidizing - paying a portion - of our airplane tickets. It’s like the tickets cost $100 and Canada is ponying up $20 of it. Thank you, Canada! Keep subsidizing! And Trump wants to put a stop to this wonderfully stupid Canadian policy. Come on, Donald, keep the money rolling into the US from Canada! Force Delta to pay more for their planes and that will force millions - MILLIONS! - of Americans to pay higher prices for airfare. How does that make America great?
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you worry about a $20 ticket and don't mention the $10 billion contract. It's been billions over many years and 10 isn't even enough. You are not only missing the point, but you're not even at the game yet. I don't know how to convey the importance of fair competition and the value it would bring to the US. But like I said, it's not going to change much if any. That trickle of money from Canada doesn't even get on the radar.
I didn't see anything which said US Airlines are charging less for tickets on those planes. It's been my observation that tickets are fairly uniform airline to airline regardless of what aircraft they use on the flight. If anything, the airline is keeping the savings on their debt service and not passing that savings on in the form of cheaper tickets.
OK, let's take a look. Bastiat wrote a wonderful essay many years ago entitled "That Which Is Seen, and That Which Is Unseen." You should read it. In that essay he points out there are always unseen consequences in any action. Even if the policy has exactly the results as advertised (they never do in reality), there are always detrimental consequences that remain hidden from the naked eye. What politicians (in this case Trump's economic team) want you to focus on are those things you see. Disregard the unseen consequences.
So let's try and see some potential unintended consequences in Trump's action. Delta has contracted to buy planes for $6 billion. Trump wants to slap tariffs and other fines on the contract that equal approximately 300 per cent. Let's suppose the planes are now going to cost Delta $15 billion instead of 6. If you were Delta, what would you do? If you honor the contract you will price yourself out of the market. Your options will be to raise the ticket prices enough to cover the $15 billion, and hope no one notices. If your ticket goes from $100 to $150 will you notice? I would. Delta will lose customers to competitors like JetBlue. So the other option is to say screw it, we will lose money if we continue those flights, so we'll just drop the flights. Suddenly the pilots, crew, baggage handlers, maintenance personnel are facing layoffs. That increases the pool of pilots, etc. in the marketplace, which will drive down the salaries of those pilots, etc. still working. Lower salaries mean they don't get to buy products they had hoped to buy. Let's say Pilot Bob was planning on buying new carpet for his house. Now he's worried, will he be able to keep his job, will he have to take a cut in pay? He'd better hold off on buying the carpet. Now the carpet layer has seen his potential customer bolt, he's out the money he had hoped to earn. Classic "trickle down effect!" The consequences become unending.
But another unintended consequence is this: as the article points out many of the components in the Canadian plane are manufactured in the US. Canadian company loses the contract, so do the American manufacturers of those components. The Canadian company drops into insolvency, possibly so do those American manufacturers. Their jobs are lost.
A third unintended consequence: the Canadian company goes out of business, it sells its equipment and technology to a Chinese company. My God, Trump would have a spastic fit! Now Boeing is going to have to compete with a Chinese company! Poor Boeing!
A fourth unintended consequence: only one manufacturer of those planes remains, a company out of Brazil, a company that does not use as many American made components, and a company that will surely raise it prices even more because Trump has seen to it the Brazilian company now has a monopoly. The more expensive plane put companies like JetBlue into jeopardy. They may lay off even more pilots, flight crews, etc., which only increases the effects of the first unintended consequence.
The point is, before Trump's action the American public had plane tickets and an extra $15 billion to spend on other items. After Trump's actions we only have the plane tickets. "But Dan, but Dan," you say, "the Boeing employees will have that $15 billion to spend. It's a net wash." Even if that were true, why does the government get to have a say in who I get to spend my money with? It is not only economically wicked, it is morally evil.
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