The View | Be afraid: Bombardier’s woes show government meddling is back in fashion
‘It is chilling to think of the disruption that a combination of activist governments and technology will have on the interests of those at the bottom’
The internet has become the poster boy for the economic disruption that has destroyed the way we do business. Retailers, travel agents, booksellers, medium sized competitors have all been crushed by the digital revolution. But technology is not the biggest disrupter – increasing government intervention beats it by a wide margin.
The ability of governments to make or break business has been around since the days of royal patronage but over the last 70 years, world trade has been largely governed by the mantra of free trade. Since the 1960s, when the Japanese were caught selling goods to the world at low marginal cost, having had their overheads paid for by their huge domestic market, lengthy world trade negotiations have resulted in a fairly open playing field for trade.
The US loves its domestic antitrust legislation. The European Union, operating as usual in its own bubble, is currently taking action against the biggest technology companies for non-competitive activities. Yet while the European Commission fiddles with anti-competitive measures within the EU, governments around the world are burning with disruptive intervention that is changing the industrial landscape.
Many will point to President Donald Trump’s “America first” policy as being protectionist, but it is a delayed reaction to a feeling of being cheated by other governments intervening in the trade process. Socialism with American characteristics is exemplified by the recent imposition by the Commerce Department of a very massive fine on Canadian aircraft manufacturer Bombardier. Boeing initiated the nuisance complaint using the regulatory system to destabilise a competitor – they were not even in the running for the contract to sell aircraft to Delta Air Lines.
There is no doubt that the Canadian and UK governments have massively supported the development of the aircraft to protect jobs and technology, yet Boeing is only in business because of massive support by the US military. The Commerce Department has taken a one-eyed view and played along with the game declaring unfair competition.
From Boeing’s point of view it is a stupid move – the British and Canadian governments are big military buyers. If you are too aggressive with your customers, they may go elsewhere. China will soon be a competitor to Boeing through its government-supported aircraft industry and it will not be long before they are making military exports.
