I have a slightly different take on the Obama administration's jawboning, which lead Citibank to cancel its purchase of a new corporate jet, than our friend Don Boudreaux at Cafe Hayek. He writes,
Does no one see the sick hypocrisy here? A man who flies in a private jet paid for exclusively with taxpayer funds (Air Force One) scolds other persons for flying in private jets paid for only in part with taxpayer funds.
For a little background, the AP reported Wednesday, January 28, 2009, in an article titled, "Citigroup won't accept new jet," reported that
An official in President Obama's administration contacted Citigroup on Monday to reiterate Obama's position that such jets aren't "the best use of money at this point," and are "an outrageous use of funds" for a company getting taxpayer dollars, said a White House official who spoke on the condition of anonymity.
The jet, a Dassault Falcon 7X costing $50 was ordered in 2005, and was to be one of five corporate jets owned by the company. Citi plans to cut its fleet from five to two jets.
The outrageousness of the purchase is dependent on the return on investment. My guess is that Citi made such a calculation, and the Obama administration did not, relying rather on the appearance of conspicuous impropriety.
If the return on investment was adequate, then the administration made Citibank less profitable, increased the cost of the bailout, and cost jobs of jet construction workers as well as pilots and mechanics at Citi.
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While each opinion is interesting, I totally agree with neither. Couldn't Citibank have made more profit by selling three of the five jets in its fleet instead of purchasing a new one? By selling off 3 of the 5 jets, more jobs for pilots and mechanics would have been needed by the purchasers. Citibank may have made money to pay more employees thus stimulating the economy. My guess is, the Obama administration did not think out their response, but Citibank may not have made the best return on their investment either.
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