From: rwojcik@bcsaic.boeing.com (Rick Wojcik)
Newsgroups: talk.politics.misc
Subject: Re: Concentration of Wealth (Was: Is this a socialist county?)
Date: 21 Aug 92 23:56:00 GMT
Organization: Boeing Computer Services AI Center, Seattle

In article 18274@oracle.us.oracle.com, mfriedma@uucp (Michael Friedman) writes:
>...
>>Other countries 
>>have funding agencies that pour money into industrial R&D on the grounds that 
>>market forces tend to be very shortsighted. 

>Actually, Richard, if anyon doesn't understand tings I think it's you.
>In particular, why do you think that market forces tend to be very
>shortsighted?  

Companies must operate at a profit.  If they are not making enough money, then
they must cut expenses.  In the short term, it is almost always cheap and easy
to cut R&D, something which has been a rather notable trend in recent times in
the US.  When governments subsidize such activities, they are fairly immune to
recessionary cuts.  

>When you answer this question, please take into account the fact that
>companies happily trade 30 year bonds on the world financial markets,
>build office buildings that will not pay for themselves for fifty
>years, plant trees that will not be harvested for thirty years, and
>buy and sell 99 year leases.

I don't know if "happily" is quite the word for it.  :-)  Such activities do
not, however, qualify as R&D, which is the type of investment we were talking 
about.  It is one thing to project the need for buggy whip factories into the
20th century.  It is quite another to risk investing in a new, uncertain 
technology.

>...Airbus may be approaching profitability, but it sure
>isn't profitable yet.  Meanwhile hundreds of millions of dollars have
>been poured own a rat hole.

The "rat hole" you refer to has managed to surpass all other aircraft manu-
facturers except Boeing, which is its only real challenger left.  You are
technically wrong about profitability.  Airbus just announced its first profit
not long ago.  Whether that profitability lasts into the future is another
matter, but the company recently managed to lease A320's to United, thus
replacing 737 sales that would normally have gone to Boeing.  Airbus went for
a risky deal in which they leased rather than sold.  But, hey, is it that big
a risk for a company that can fall back on government funding for its opera-
ting expenses?

>>Japanese companies receive similar funding, but they only have to
>>prove that the R&D meets industry needs.
>Why should industry get welfare?

Why should I answer your questions when you won't answer mine?  Recall that I
asked which company you would rather invest in--one that used your investment
to pay for risky, expensive R&D projects or one that got government funding to
take such risks?  But your attitude is typical of the attitude I oppose.  You
don't regard big fancy military projects as "welfare".  I don't know your 
position on the S&L bailout, but there are plenty of conservatives who didn't
think of that as "industry welfare".  As a taxpayer, you've been paying such
R&D subsidies, filtered through the military, for decades.  Now that the
military excuse for them is declining, you can't see the need for them.

>Ever hear of GATT and NAFTA?  We are convincing them.  On GATT the
>remaining roadblocks are government subsidies of agriculture, not
>commerical R&D.

Those are certainly both worthy efforts.  But you are simply deluding yourself
if you think that the US government has the power to get foreign governments 
let their long-term business investments die.  Since Airbus has achieved a 
healthy piece of market share, Europe can make concessions on operating subsi-
dies.  But foreign governments are not going to give up their R&D investments
(a.k.a. subsidies).  Those types of subsidies are only a problem for Americans.
-- 
Rick Wojcik   csnet:  rwojcik@atc.boeing.com	   
              uucp:   uw-beaver!bcsaic!rwojcik 
Newsgroups: talk.politics.misc,alt.politics.elections,alt.politics.clinton,alt.politics.bush