July 19, 2011 2:52PM

Federal Government Subsidizes and Penalizes Boeing Co.

When an entity is as mammoth and undisciplined as the $3.8 trillion U.S. federal government, it’s inevitable that its programs will be working at cross purposes. Just ask the civil aircraft manufacturer Boeing Company.

Politicians love Boeing because it not only makes valuable products but it also exports billions of dollars worth around the globe. To give a boost to those exports and supposedly create more jobs in the United States, the federal government’s Export‐​Import Bank offers preferential loans to foreign governments and airlines to help them buy more Boeing aircraft.

As my Cato colleague Sallie James documents in a new study, “Time to X Out the Ex‐​Im Bank,”

the number‐​one user of the Ex‐​Im Bank is the Boeing Company. Of the 35 aircraft sales supported by Ex‐​Im in FY2010, 28 were Boeing products, and the Congressional Research Service estimates that more than 60 percent of the value of Ex‐​Im Bank loan guarantees supported Boeing aircraft sales in that year.

No wonder critics refer to the Ex‐​Im as “Boeing’s Bank.”

Yet the same federal government is making it more difficult for Boeing to manufacture its airliners cost‐​effectively in the United States. Under the sway of organized labor, the National Labor Relations Board is seeking to prevent Boeing from expanding its production in South Carolina, a right‐​to‐​work state where the company’s employees are non‐​unionized.

In a column at Bloomberg​.com today, Harvard economist Edward L. Glaeser rightly worries that the NLRB action is undermining one of the most important advantages enjoyed by American‐​based companies—the freedom of labor, capital, and goods to move freely within the United States. As Glaeser notes:

The profound role that mobility has played in our country, enabling repeated reinvention, causes me to be deeply worried about the possibility that a National Labor Relations Board complaint will prevent Boeing Co. from moving plane production from [unionized] Washington state to South Carolina.

In the spirit of compromise, Congress should eliminate the Ex‐​Im Bank, while telling the NLRB to back off and let U.S. companies deploy their productive resources in whatever locations within the United States that make the most competitive sense.