30 January 2005

Corporate welfare

Is it the role of government to subsidise aircraft manufacture? I think not, but why not let people decide? This article gives the EU's views on subsidies to Boeing and Airbus. It says that planned subsidies for Boeing's 787 [formerly 7E7] from Washington State amount to $3.2 billion, from Kansas $0.5 billion, and Oklahoma $0.35 billion. Of course the EU also gives comparable quantities of 'launch aid' to its Airbus builders. Direct subsidies are not the only way in which government supports big business: import barriers to protect favoured industries are another, as is over-regulation. What they have in common is that they are rarely voted for directly by the people that pay for them. In fact, they often conflict with objectives that real people would choose for themselves. Government and big business can get away with this mutual support arrangement because we have come to accept that policymaking be based on funding programmes or institutions, or on undertaking activities. A Social Policy Bond regime would take as its starting point outcomes. People might choose to elect a government that declares wealthier corporations to be its policy objective, but I suspect that most would vote for better basic health and education outcomes, lower crime and unemployment, and a cleaner environment.

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