I sent this letter to the Times about McKay's column; I'm not sure if it was published or not.
Floyd McKay’s Feb. 2 column could not have been more perfectly timed. On the same day, Germany announced that unemployment reached 5 million for the first time since the 1930s. Its unemployment rate is hovering near a post-war high of more than 12%, a level that would incite riots in this country. France’s labor market is so weak that in 1998, it reduced the legally mandated work week to 35 hours in an attempt to force companies to hire. The move was a disaster and is in danger of repeal. Economically speaking, Old Europe is looking more geriatric than ever.
Airbus’s current success has come at tremendous cost. In the 1960s, France and Britain spent more then $20 billion (adjusted for inflation) on Concorde. They sold just 14 of the supersonic jets and stuck taxpayers with the bill. This arrangement planted the seeds for Airbus’ birth, but in its first six years of existence, the four-nation consortium delivered only 60 planes. Without massive subsidies, Airbus would have died quietly in the early 1970s. But it tried and tried again, with government financing of course, and on its third attempt finally produced the successful A320 in the mid-1980s.
Airbus has been a “success” because it has not been held accountable for its mistakes. Whenever an Airbus plane failed to sell, its government sponsors simply patted it on the head and signed the check for the next model. Boeing, by contrast, put its very existence on the line with every new jetliner. As for the A380 super-jumbo, if I had risk-free access to other people’s money, I could build a really big airplane, too. If, like Mr. McKay, you think this sounds great, the Seattle Times has my mailing address. No CODs, however.
Keynes is dead and we are living in his long run.