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Re: demise of Aerospace Industry?



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[Topics under debate]: GOOD GOVERNANCE
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vamsi@siliconcorp.com wrote:

> Charu datt wrote:
>
> > A question here is- given that [public/my] tax money was used to
fund
> > boeing's
> > startup, why should I have to buy their stock, thus paying twice, to

> > partake of
> > their profits?
>
>     Let us dissect the oxymoron, shall we?  This is not your
traditional Rs 2
> per kg giveaway.  Of course, socialism has gotten us used to certain
kind of
> warped thinking.  Nonetheless, I have hope.  You see, the startup
capital
> (which came as taxed money) wasn't exactly "given away".  The
Government
> basically demanded that Boeing should produce product X for Y amount
of
> money.  Hence, the Government got something back for "investing" that
tax
> money.  However, the company was allowed to raise more capital to fund
its
> civilian operations in the stock market, etc.  What exactly was given
away
> here?

Actually the way it works is that the government lets boeing [or
whatever military
contractor] charge way more than the production cost [much more than a
fair
profit] and that excess ends up financing the development of civilian
aircraft
from which  boeing profits once again. This benefits boeing- it's
employees and
stock holders, and the bureaucrats involved- they end up in cushy jobs
at boeing
after they retire. It can be argued that this benefits the public at
large by
making available civilian air transport that would not have become
available
otherwise because of the size and risk involved in  investing that  much
capital,
but let's be clear that this amounts to central planning for the use of
public
resources [tax  money]. This is NOT a free market operation, it is
massive market
interference.

>
>
> >..... Or, in another example, if you were to let in global capital
> > in the
> > form of say, boeing to compete with and dislodge AAI/HAL, the power
> > formerly held
> > by bureaucrats is transferred to company management which is not
> > publicly
> > accountable for most of its actions.
> >
>
>     Not publicly accountable?  How absurd!  When the private power
structures
> have to compete, their power is checked and hence, accountable.  The
global
> capital could be let into India to create many Aerospace startups and
the fact
> that they have to compete means that their actions are accountable
unlike your
> MLA/MP owned Hindustan Aeronautics Limited (HAL)!!

You're assuming there will be many players to compete. Given the current
state of
consolidation in world aircaraft manufacturing markets, I don't see why
you would
expect this.
The  purpose of private corporations, and the matter that they are held
are
accountable for by their shareholders, is only to make a profit. A
government [in
theory!] is accountable to its citizens to execute actions for their
welfare. In
practice, neither governements nor the managements of large corporations
are as
accountable to their respective consituents as the theory would dictate.



-Charu



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