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Boeing vs. Airbus – clash of the dwarfs?

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The legal battle between Boeing and Airbus has always been considered a contest of titans: The world's two leading airplane makers, each accusing the other of being illegally pumped up by billions of dollars in government-subsidy steroids.

The case before the World Trade Organization (WTO) – which handed down a confidential decision on Friday that reportedly favored Boeing – is often characterized as the biggest dispute, in dollar terms, to ever be litigated before the WTO.

But these titans suddenly look like dwarfs in the context of the "great recession." In the past year, governments have injected far larger sums into their economies, artificially bulking up banks, automakers, and other companies. Analysts worry that a more encouraging attitude toward government assistance might be settling over the globe. What would be the relevance of Boeing-Airbus then?

Were the world to drift toward much higher levels of government subsidies, the global economy would surely suffer. Subsidies distort the trade that grows economies. And they suppress the market-winnowing that sorts useful services and products from duds.

No one denies that government supports are part of the economic landscape. But that's why countries negotiate trade agreements and join the WTO – to tame that wilderness and establish rules that put countries at an equal advantage.


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