A Closer Look at Aircraft Industrial Policy
May 3, 2023
The last time you took a commercial airline flight, odds are that you were on a plane that was manufactured by one of two companies: American-based Boeing, or French-based Airbus. Together, these two companies have almost the entire market for commercial airplanes.
A piece published recently at the website American Compass makes the argument that Airbus is a success story for industrial policy: European government decided they needed to compete with foreign manufacturers of airplanes, they made the public-money backed investments, and propelled Airbus past Boeing and others to be the world leader.
As American Compass said when publishing the piece: “According to free-market dogma, state-backed Airbus shouldn't have been able to compete with Boeing. Instead, Airbus surpassed Boeing as leading aircraft manufacturer, gaining a reputation for cutting-edge innovation. U.S. policymakers should take note.”
The American Compass piece really took off. But is really describing reality for Airbus and Boeing? Economist and Mercatus Center research fellow Veronique de Rugy says those claims need some serious grounding.
In a response to the American Compass piece published at National Review, de Rugy flies into the industrial policy headwinds and argues that while crony capitalism certainly works for the companies it benefits, but that doesn’t mean it’s good for the country.
Buckle your safety belts and secure your deployed oxygen masks, because today, Eric Kohn talks with Veronqiue de Rugy about the turbulent claim that European industrial policy to boost Airbus “worked,” the reality of massive American public subsidies to Boeing, and whether advocates industrial policy can actually bring their goals into a safe landing.