Export-Import Bank Debate

#27
#27
Abe Hoffman said:
If economic markets were perfect, you would be correct. However; they are not, thus the need for government intervention.
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So then government intervention will make them perfect? I don't understand why we try to fix market imperfection with corruption. Maybe someone can explain that to me?
 
#28
#28
n_huffhines said:
Do they enjoy a general advantage over big business? In most cases, no.

Does the SBA give them a relative advantage? Yes.

Businesses should be judged on their merits, not their size. The market is the judge. The market is by far the best judge that we have.
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If it were only that simple. A bit naive their huff.
 
#29
#29
n_huffhines said:
Fair points, but if it's such a good deal, why aren't banks lining up for the loans? Why do we need a government program? Just ask yourself that.
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From what I'm reading, your normal banks won't back the loans because of the international nature of the deals. So Qantas airlines wants to buy Boeing 777s. Which US bank would guarantee a loan of billions of dollars given that it's a foreign flag carrier? So you also deal with "can't back the loans" from a fiscal standpoint as well.

Poor example as it's your big bad business lol. So how about Colt Defense? They just sealed a deal with Chile to sell 2,000 rifles. And I'd guess that deal went through the Ex-Im Bank. Just using this as an example and I can't say for a fact they did, but that the bank would be useful in that regard.

n_huffhines said:
And again, favored American businesses are given an advantage over non-favored American businesses. This is a huge negative, in my opinion.
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I think the definition of "non-favored" would need to be explained further. If there is a valid reason they are "non-favored" I can see the distinction.

n_huffhines said:
Boeing can keep operating at a pace that defies the natural market, making it harder for new businesses to enter the market and compete. The easy way to secure monopoly power over time is through government. It's much harder to do through being the best business (and we like those kinds of monopolies anyways).
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I think the aircraft industry is kind of a poor example to use in this regard. For the most part, Boeing is the world leader in large passenger aircraft along with Airbus. Sure others have broken into the market from time to time like Lockheed and McDonnell-Douglas, but by and large if you want a passenger aircraft, you look at Boeing and Airbus.

The hard part is getting the capital to start a company that can rival Boeing for the job it does. Sure, you can build a better product, but creating the infrastructure of a company like that in particular? Tens if not hundreds of billions of dollars. Lockheed got out of that business because they couldn't compete against Boeing. Northrop never was in the passenger aircraft realm for the most part. But they diverged into other areas and do pretty well. Big business I know lol

But the more I read about it, it seems like a decent deal to help American businesses sell on the international market.
 
#31
#31
And to wrap it up, I think if we were talking about a non-export company getting government subsidies and loans to put a product on the domestic market only, I'd wholeheartedly agree with your standpoint that it's not a good thing.

But helping a small business break into a foreign market by backing foreign buyers is highly useful in keeping American products and jobs competitive on a global scale.
 
#32
#32
Grand Vol said:
I think the definition of "non-favored" would need to be explained further. If there is a valid reason they are "non-favored" I can see the distinction.

I think the aircraft industry is kind of a poor example to use in this regard. For the most part, Boeing is the world leader in large passenger aircraft along with Airbus. Sure others have broken into the market from time to time like Lockheed and McDonnell-Douglas, but by and large if you want a passenger aircraft, you look at Boeing and Airbus.

The hard part is getting the capital to start a company that can rival Boeing for the job it does. Sure, you can build a better product, but creating the infrastructure of a company like that in particular? Tens if not hundreds of billions of dollars. Lockheed got out of that business because they couldn't compete against Boeing. Northrop never was in the passenger aircraft realm for the most part. But they diverged into other areas and do pretty well. Big business I know lol

But the more I read about it, it seems like a decent deal to help American businesses sell on the international market.
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I know. I'm saying government intervention helps to ensure this is the case. It's my point, exactly.

Why does a company with little competition need to make all these deals with government and take advantage of government programs?
 
#34
#34
Grand Vol said:
And to wrap it up, I think if we were talking about a non-export company getting government subsidies and loans to put a product on the domestic market only, I'd wholeheartedly agree with your standpoint that it's not a good thing.

But helping a small business break into a foreign market by backing foreign buyers is highly useful in keeping American products and jobs competitive on a global scale.
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Your business will find a way, if it's good enough. If it's not good enough, keep it here domestic.
 
#35
#35
Gramps said:
Read GV post .He explained it well
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You and I are talking about the SBA. GV and I are talking about Ex-Im. Just respectfully bow out if you're going to be this lazy about trolling. :clapping:
 
#36
#36
n_huffhines said:
I know. I'm saying government intervention helps to ensure this is the case. It's my point, exactly.

Why does a company with little competition need to make all these deals with government and take advantage of government programs?
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Again, the start up of a rival company is serious money. There have been others, Lockheed, McDonnell-Douglas (part of Boeing now), Tupolev, Ilyushin, etc that have gotten out of the business because it's not profitable.

If these companies were able to compete against Boeing, they would have kept the passenger aircraft lines open and continued designing new aircraft. But they can't beat the quality or price Boeing puts on their products. And if that's not the market prevailing, I don't know what is.

So the big question would be how much of our global sales would be hampered by the lack of a government entity that backs foreign buyers at a default rate of less than 2%? The foreign buyers can and will take their business elsewhere and Americans are put out of a job.
 
#37
#37
n_huffhines said:
You and I are talking about the SBA. GV and I are talking about Ex-Im. Just respectfully bow out if you're going to be this lazy about trolling. :clapping:
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See GV's comment below. He is spot-on. I cannot help that you do not understand this .

Grand Vol (10,175)
12:10 PM Today (#P) ( Report! )
And to wrap it up, I think if we were talking about a non-export company getting government subsidies and loans to put a product on the domestic market only, I'd wholeheartedly agree with your standpoint that it's not a good thing.

But helping a small business break into a foreign market by backing foreign buyers is highly useful in keeping American products and jobs competitive on a global scale.
Click to expand...
 
#38
#38
Grand Vol said:
Again, the start up of a rival company is serious money. There have been others, Lockheed, McDonnell-Douglas (part of Boeing now), Tupolev, Ilyushin, etc that have gotten out of the business because it's not profitable.

If these companies were able to compete against Boeing, they would have kept the passenger aircraft lines open and continued designing new aircraft. But they can't beat the quality or price Boeing puts on their products. And if that's not the market prevailing, I don't know what is.

So the big question would be how much of our global sales would be hampered by the lack of a government entity that backs foreign buyers at a default rate of less than 2%? The foreign buyers can and will take their business elsewhere and Americans are put out of a job.
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I know. How could they ever make airplanes for so cheap?

Washington just awarded the largest state tax subsidy in U.S. history - The Washington Post
 
#39
#39
n_huffhines said:
Your business will find a way, if it's good enough. If it's not good enough, keep it here domestic.
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At this point, I cannot agree with you. Again, this isn't about US companies getting loans to produce domestic items. This is about global sales and the US Government backing loans to foreign entities for American products on the global market.

Keeping it domestic means the status quo is unchanged. Foreign sales means a business is able to expand and hire more workers. And again, if those loans couldn't be guaranteed by the USG, those companies will look elsewhere and buy from other nations. And that means Americans aren't at work and are on the welfare system you hate as much as I do.

Right now, I don't see why this is a bad thing unless a better reason comes up. I support American products on the global market. And if that means the government is backing a foreign buyer, I'm all for it.
 
#40
#40
n_huffhines said:
I know. How could they ever make airplanes for so cheap?

Washington just awarded the largest state tax subsidy in U.S. history - The Washington Post
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You missed the most glaring point of that whole article. First it's State tax. Second:

That money is part of an effort to entice Boeing to build the 777X, an extended-range version of its popular wide-body aircraft, in the Puget Sound region.
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I'm not sure if you are familiar with the 777 or 787 production, but Boeing plans to move it to South Carolina. It has more to do with right to work and the unions than it does with anything else. So a Governor enticing a company to stay in their home State through tax incentives is the way things are done.
 
#41
#41
The point is that by doing so, you hurt American companies that don't benefit from these loans.
 
#42
#42
Grand Vol said:
You missed the most glaring point of that whole article. First it's State tax. Second:

I'm not sure if you are familiar with the 777 or 787 production, but Boeing plans to move it to South Carolina. It has more to do with right to work and the unions than it does with anything else. So a Governor enticing a company to stay in their home State through tax incentives is the way things are done.
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Neither one of those points have anything to do with my point about Boeing maintaining market power through government partnerships.
 
#45
#45
n_huffhines said:
Neither one of those points have anything to do with my point about Boeing maintaining market power through government partnerships.
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Apples and oranges. Boeing maintains market power by being one of only two companies worldwide that produces wide body passenger aircraft. Again, others have tried, others have gotten out of the business because again:

The capital to put an aircraft of that size into production is massive. And adding in R&D and support for that aircraft's lifespan, the sum is huge.

There has to be a market for said product.

It has to be comparable in performance and price to Boeing/Airbus.

The market prevailed because Boeing made a product that was cheaper, more efficient, safer and better than the competition. They historically don't build fighter aircraft, they build passenger aircraft. And do it very well.

And again, how does a Governor attempting to entice a business to stay in his State and provide jobs for his residents have any relevance on the Ex-Im bank?
 
#46
#46
Grand Vol said:
Which ones in particular? And furthermore, are their products in demand on a global scale?
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Just a hypothetical to show the kind of impact this can have on an industry.

Company W, Company X, and Company Y produce the same product. Company Z will enter the market at some point and provide a better product than all of them.

Company W doubles sales through import-export bank program. They lower the price in the US because international sales allow them that flexibility.

Company X loses market power, and lowers production (less jobs).

Company Y can no longer compete and sells to Company W

Company W grows bigger, pushes for more and more costly industry regulation, state subsidies, etc., making it harder for start-ups to enter the marketplace.

Company Z never enters market, never provides the better product, and never employs anyone.
 
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#47
#47
Grand Vol said:
Apples and oranges. Boeing maintains market power by being one of only two companies worldwide that produces wide body passenger aircraft. Again, others have tried, others have gotten out of the business because again:

The capital to put an aircraft of that size into production is massive. And adding in R&D and support for that aircraft's lifespan, the sum is huge.

There has to be a market for said product.

It has to be comparable in performance and price to Boeing/Airbus.

The market prevailed because Boeing made a product that was cheaper, more efficient, safer and better than the competition. They historically don't build fighter aircraft, they build passenger aircraft. And do it very well.

And again, how does a Governor attempting to entice a business to stay in his State and provide jobs for his residents have any relevance on the Ex-Im bank?
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Then why do they need so much help from government? Now we've come full-circle.
 
#48
#48
n_huffhines said:
Just a hypothetical to show the kind of impact this can have on an industry.

Company W, Company X, and Company Y produce the same product. Company Z will enter the market at some point and provide a better product than all of them.

Company W doubles sales through import-export bank program. They lower the price in the US because international sales allow them that flexibility.

Company X loses market power, and lowers production (less jobs).

Company Y can no longer compete and sells to Company W

Company W grows bigger, pushes for more and more costly industry regulation, state subsidies, etc., making it harder for start-ups to enter the marketplace.

Company Z never enters market, never provides the better product, and never employs anyone.
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If we are talking about Company W making a widget that costs $10 to the consumer you would have a valid point.

But we are talking about aircraft that cost tens and hundreds of millions of dollars apiece. And again, which US banks are going to put up the billions in capital to start said company? The cost of a Boeing 747-8 aircraft is $357.5 million according to Wiki. And that's just one aircraft. What other company out there is willing to take a huge financial gamble by creating an aircraft of the same size and performance that has to establish itself in the market and how long before a net profit is realized against the initial investment?

Boeing is a really horrid example of this kind of thing. If you want to talk aircraft, your light commuter planes and executive jets have far more competition in the market.
 
#49
#49
I am talking about all industries. Why do you only want to talk about Boeing?
 
#50
#50
n_huffhines said:
Then why do they need so much help from government? Now we've come full-circle.
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I'm not sure if we're even on the same page...

Boeing isn't getting help from the Government in making the aircraft. State tax subsidies aside, which as a reminder is a State attempting to keep jobs, the Federal Government is the one backing a foreign buyer to purchase said product.

Boeing wants to sell aircraft to Japan Airlines. Japan Airlines wants to buy Boeing products. JAL gets a Federal Government backed loan to buy from Boeing. Ex-Im bank puts up the capital to Boeing, JAL pays off the Ex-Im bank. Simple.

I didn't know dick all about it until today. I knew it existed, but not really how it worked. And in reality, it appears to be one portion of the federal government that might actually work for a change. Your original article makes it seem like Boeing and Lockheed-Martin have been abusing this for decades which is not the case.
 
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