Thursday, October 29, 2009

Corporate Welfare In America

Americans have often complained about subsidies given by European governments to European airplane producer Airbus. But while it is true that Airbus has received government subsidies (more in the past than in the present though), the European reply that Boeing receives government subsidies is also true.

The state of South Carolina will give a $170 million grant (which is to say, a pure give-away) to Boeing for investing in South Carolina and they will also receive future tax breaks.

The state of Washington, where Boeing has its main operations has also given similar subsidies to Boeing, which is why the main reason for the move as Mike Shedlock argues may be the uncooperative unions in Washington, but the story nevertheless again reminds us that it is not just Wall Street bankers or Detroit car makers that have received corporate welfare from governments.

In a related story, China has now decided to investigate the U.S. government's subsidies to its car producers. This move is mostly symbolic (and probably meant to be part of China's retaliation for the tire tariffs imposed by the Obama administration) as few cars are exported from America to China.

U.S. corporate welfare (whether it comes from the federal government or state governments) doesn't justify corporate welfare in other countries, but it certainly means that America can't claim to have the moral high ground on this issue.