Question: Boeing is the major beneficiary of the US Export-Import Bank, which provides subsidies for exports. Proponents of the bill say it is necessary to meet hidden subsidies offered by Airbus, and creates thousands of jobs in the US. Opponents say the cost of the subsidy per additional job is far higher than the value of those jobs.
(A) Assume initially that the cost of the subsidy equals the value of the jobs (e.g., if 30,000 jobs are saved at an average cost of $50,000 per year, the subsidy equals $1.5 billion per year). If that were indeed the case, do you think the subsidy is good public policy?
(B) How would your answer change if the cost of the subsidy were twice the value of jobs saved? Half the value of jobs saved?
(C) Would your answers be any different if McDonnell Douglas were still in business as a competitor?