Saturday Assets and Liabilities

Taking a break from the fevered two-post-a-day schedule I've been on for the past two days, I introduce a new Saturday feature: My cheers and jeers for the week. But since I'm an economist, I feel compelled to call it "Assets and Liabilities" (If I'm feeling ambitious tomorrow, I might roll out a feature on the New York Times -- I might as well get my money's worth as a Sunday subscriber... Otherwise, see y'all Monday.)

Anyway, here you go.

Assets

The Bernie Ebbers jury. Their deliberations were, well, deliberate (40 hours over eight days), and in the end they weren't fooled by his claim that he just hadn't had a clue that his most senior managers were driving WorldCom into the ground. His hubris and rapacity were bad for WorldCom's employees, for its investors, for its customers and now for Ebbers himself.

Which invites two comments. The first is that, as the Wall Street Journal noted in an editorial earlier this week, the legal system is capable of cleaning up wrongdoing even without Sarbanes-Oxley. Ebbers wasn't charged under the new law -- and the old laws appear quite sufficient to send him to jail. The second is that an ordinary jury can in fact sort through a complicated corporate case. Following last year's shenanigans around the trial of former Tyco chief Dennis Kozlowsky, some lawyers had been nattering that we needed to create a special legal track for corporate cases, on the theory that the cases' complexity demands expert adjudicators. Perhaps that's not so, after all.

Liabilities

Airbus, and its European sugardaddies. U.S.-Europe negotions broke down yesterday over ending government subsidies for the European aircraft manufacturer. The U.S. argues that these subsidies are illegal, and cares about ending them because America has a particularly big horse -- Boeing -- in this race, too. Given that the two companies are locked in a cosmic death struggle for the hearts and minds of airlines everywhere, Boeing is understandably concerned that government support for the other side is skewing the market.

The European defense is that all the kids are doing it; Boeing is subsidized, too. Which is (only sort of) true. On account of its defense contracting business Boeing has a symbiotic relationship with the U.S. government. But there are a couple interesting distinctions. The bulk of Boeing's "subsidy" comes in the form of government contracts, so in theory it's a true business relationship (even though the vagaries of the Congressional budgeting process lend themselves to overexpenditures that can look an awful lot like a subsidy). And it's at least more subtle than what the Europeans are doing. Compare that to Airbus, which over the years has received outright grants and low-interest loans to the tune of hundreds of millions of dollars.

It's nothing against Airbus -- as a passenger, I think they actually offer some products that are superior to their Boeing competitors. But isn't it time for the European hatchling to fly out of the nest?