Crises at Boeing and Intel Are a National Emergency

https://www.wsj.com/business/crises-at-boeing-and-intel-are-a-national-emergency-093b6ee5

by bookofjoe • 2 years ago

41 51 2 years ago

bookofjoe• 2 years ago

newprint• 2 years ago

With Boeing - A fish rots from the head down. Entire upper management needs to go, now and can't work for Boeing or it's subsidiaries or contractors. Nowhere near Boeing.

AtlasBarfed• 2 years ago

This is a Wall Street Journal article.

You know damn well that the financial wizard management is the primary implicit endorsement of Wall Street and the WSJ megaphone trumpets, and has for... ever? Minimal engineering knowledge, minimal core product knowledge, establishment of anticompetitive cartel/monopoly conditions, reduction of open competition via mergers and acquisitions. Short term thinking and planning. Regulatory capture.

Oh, but now there's two "emergencies". WAIT WAIT WAIT, are we calling for a BAILOUT? THE GOVERNMENT MUST STEP IN!!!!! I love it. Talking out of their mouth and assholes at the same time. FREE MONEY FOR THE MEGACORPORATIONS!?!?!?

Intel and Boeing are symptoms of a catastrophic disease America has: cartels and monopolies and associated corruption, economic damage, inflation, high prices, regulatory capture/bureaucracy, and more.

Globalization and the associated fragile supply chains is a symptom of these megacorporations. Our economy is not resilient to disruption in an increasingly unstable world, with long term trends like demographic disruption, war, global warming will only make it worse.

Healthy competitive markets also mean resilience in supply chain. They go hand in hand. THAT is the real national emergency.

WE NEED TO BREAK UP THE CARTELS. EVERYWHERE.

m_fayer2• 2 years ago

I vaguely hear a lefty in a leather jacket whispering sly warnings about neoliberalism. I may have even heard a hint of “I told you so” but maybe that’s just my imagination.

bediger40002• 2 years ago

This is just more pro-monopoly, too big to fail propaganda. If monopoly enforcement had prevented 50 years of defense company mergers, or if the courts had broken up Microsoft, this wouldn't be an issue.

Let them fail. A hundred competitive companies will rise from the ashes.

ggm2• 2 years ago

Let them fail. A hundred competitive companies will rise from the ashes

Look, I want to agree, but you're casting an awful lot of social disruption into play for probably a decade in a belief we get to a better place when agents of chaos like Musk and Bezos would like to feast on the carcase and grow ownership monopolies in them.

I don't personally think the most likely outcome of "let them fail" is a kinder better world.

gibbitz• 2 years ago

True. The best outcome would be a bailout with a breakup for both of them.

bediger40002• 2 years ago

That didn't happen when the Bell System was broken up. I kind of doubt it would happen from busting up Microsoft, Google or anything else.

salawat• 2 years ago

I don't personally think the most likely outcome of "let them fail" is a kinder better world.

What a coincidence. Seemingly same outcome leaving it alone. But if you want to change the outcome of a system, you have to change something about it. I vote for change.

weebull2• 2 years ago

The current situation is unstable and requires interventions to stop it collapsing. That doesn't then make it stable. It just prolongs the instability.

It will collapse. You only get to influence when it will collapse.

elintknower• 2 years ago

This is what happens when you stop hiring the best people regardless of what color they are. As a minority this is incredibly embarrassing.

add-sub-mul-div• 2 years ago

Someone whose passion for evaluating people without respect to their identity is sincere and not performative might have gotten through two sentences without declaring their identity.

sails01• 2 years ago

You said that because all the responsible of those two debacles are white men, don't you?

nine_zeros3• 2 years ago

The title could be changed to "Corporate greed over decades led to a National Emergency" - and it would be more accurate.

But NO MORE BAILOUTS. Next time the US government needs to save something, they should take over the assets as an eminent domain, wipe out equity holders, and put a 10 year ban on all executives/board of directors who authorized share buybacks.

class3shock• 2 years ago

I don't know if that could work but I think it points out the fundamental issue; Companies that change to prioritizing shareholder value over focusing on their purpose (planes, chips, etc.) are destined to end up in this situation.

I just wish things could be different. Boeing was in a place of being one part of a duopoly with Airbus, in a era of increasing commercial air travel. At the same time as slowly renewing focus on military aero that has been recovering after large cuts at the end of the cold war. In an era where space went from a tiny field to having a bunch of commercial applications and interest. All places they could have been leaders! But it's just eroded.

I know much of this is just the past repeating itself but I just wish it were different. It's hard not to think being an engineer back in the day working on the 747 was a better gig then it'll be working on whatever Boeing does next.

gruez3• 2 years ago

But NO MORE BAILOUTS. Next time the US government needs to save something, they should take over the assets as an eminent domain, wipe out equity holders, and put a 10 year ban on all executives/board of directors who authorized share buybacks.

1. Isn't that what usually happens with government bailouts? AFAIK the us government got stakes in automakers they bailed out in the GFC.

2. I'm not sure whether punishing the board/executives sets up the right incentive here. They're the ones that will be approving/approaching the government for the bailout. Punishing them for accepting it is a good way to run the company into the ground (no punishment) rather than accepting the bailout (punishment).

nine_zeros3• 2 years ago

1. Isn't that what usually happens with government bailouts? AFAIK the us government got stakes in automakers they bailed out in the GFC.

In part, yes. But that was a real generational crisis. Today, there is no real financial crisis. Boeing and Intel are failing because of their own choices over the last few decades. In non-financial-crises, execs ask for subsidies and general funding. US Govt should say fuck off to that.

2. I'm not sure whether punishing the board/executives sets up the right incentive here. They're the ones that will be approving/approaching the government for the bailout. Punishing them for accepting it is a good way to run the company into the ground (no punishment) rather than accepting the bailout (punishment).

We don't need the right incentive. We want them to not make any more money. We don't need them to approve the bailout because the government can seize it via eminent domain.

caseyy2• 2 years ago

We should let failing businesses fail. Everyone would have learned their lessons a long time ago and we would have less corporate greed/corpo-political corruption.

And people should be angry at them for failing and causing economic disruption (assuming it would even be as bad as prophets of doom say). Their suffering should be publicly attached to its harbingers — greedy and incompetent executives.

People responsible and accountable for the current situation would face natural consequences of their actions.

But of course, I don’t think it will happen. We bought into the delusion that executives and big business can do no wrong, and that they somehow shouldn’t face the results of their actions. Their employees, stakeholders, and the broader economy just keep being “affected by difficult times”.

But neither these companies would be “difficult times” nor subprime mortgage lenders and CRA’s were “difficult times”. They are and were just groups of greedy executive sociopaths getting a free ride off society, knowing full well the negative externalities of their actions.

We keep letting weeds grow in our proverbial garden unchecked and then say “if we take out the weeds then there will be no more garden”. Well guess how that happened, and guess what’s the only way to get a sustainable garden back. Except with weeds, dealing with them requires action, effort. With large corrupt businesses, we don’t need to do anything — just allow natural consequences.

alephnerd5• 2 years ago

We should let failing businesses fail. Everyone would have learned their lessons a long time ago and we would have less corporate greed/corpo-political corruption

In most cases I agree, but for extremely CapEx heavy industries, this is a death sentence.

For example, the entire semiconductor industry in Taiwan, South Korea, and Japan would not exist without industrial strategy and capital provided by local and central government.

In fact, unlike in the US and Europe, anti-trust never had significant mindshare in Asian economies, and much of the economy in these countries are largely split among a couple dozen conglomerates or holding companies.

This is the model that China is using, as it was Taiwan, Japan, and South Korea that played the largest role in making China a multi-trillion economy by investing in China decades before the US and the rest of the West began investing in the early 2000s.

A purely profit driven incentive structure is diametrically opposed to commodification (which is the ultimate form of production at scale) because the margins pressures would be too severe.

This is exactly what caused the entire semiconductor fabrication industry to collapse in the US in the 2000s-2010s, while Asian countries continued to spend tens of billions subsidizing a handful of conglomerates that represented these industries.

seo-speedwagon• 2 years ago

These companies exist as capitalist organizations, they don’t build planes and chips out of patriotic noblesse, they do it to turn a profit. In such a system, failed companies go out of business. It really is that simple, anything else leads to bailouts that socialize losses for companies that privatize profits.

If they’re so important, then they should be nationalized.

ruined• 2 years ago

this failure mode of self-destructive financialization seems incredibly common among american firms. what's at the root of this contradiction? what kind of change could incentivize different behavior?

mrtksn3• 2 years ago

this failure mode of self-destructive financialization seems incredibly common among american firms

Isn't that by design? Ideally, business people will capture the market (usually though innovation and disruption) and then optimize the profits by removing costs as much as they can. In a "perfect world", Boeing wouldn't have any engineers, workers and facilities and they will just sell planes without delivering any.

They will be like licensers, middlemen or even better they build just one very powerful plane and whoever owns it has huge advantage over the rest so Boeing will sell "making sure your enemy doesn't have it" rights and extract the profits using a raspberry pi plugged on the wall at a Starbucks, running a code written by the lowest bidder on Fiverr and keeps selling planes and transferring the money into the shareholders bank accounts at the lowest transfer costs possible through the most tax-optimized scheme.

That's the ideal world Peter Thiel describes and he is right. Of course he shows concern for other stuff but that's because of ideological/personal/religious reasons.

arresin• 2 years ago

Wait why is that ideal?

throw0101b• 2 years ago

this failure mode of self-destructive financialization seems incredibly common among american firms. what's at the root of this contradiction?

Jack Welch ironically got it right (eventually):

On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy...your main constituencies are your employees, your customers and your products.

* https://en.wikipedia.org/wiki/Jack_Welch#Politics

Of course many of the top post-MD-merger executives were from MD and were Welch acolytes.

CuriousCosmic• 2 years ago

what's at the root of this contradiction?

capitalism.

what kind of change could incentivize different behavior?

worker ownership.

Sorry if that seems terse but really this is the root of the problem. Shareholder value is the end goal and shareholders are generally seeking immediate short term profits (as there's little cost to liquidating a share position and moving to a more profitable company/asset instead). If you want to eliminate this problem, you need the shareholders to be the workers. They need to control the company in a meaningful way because while shareholders generally only care about profits, your workers are going to care about continued employment and the stable maximization of wages and benefits (which as a long term target is only pursuable via real long term growth).

tim333• 2 years ago

There's something called the principal–agent problem. With companies run by the founders they are usually major shareholders and run the place in the interests of its onwners.

You get problems though when they leave and a professional manager is hired (the agent) to represent the shareholders (the principle). They'd like them to run the company sensible but there are incentives for the manger to say slash r&d and safety to raise apparent profits in the short term and make their options go up and then move on if it falls apart.

It's an old problem - see https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...

smeg_it3• 2 years ago

I hadn't heard of this. Thank You.

I had this concept myself as I've always thought c-suit executives are mostly interested in there own interest and that it's exacerbated by them not staying long term. I don't know the stats, but CEO's used to be there for 10-30 years but now many are there for a very short time like 5 or less. Again, those numbers are pulled out of "you know where" but I have read that its much less than it used to be. Feel free to correct me if I'm wrong. Of course, most of us know that politicians don't really represent the populous anymore. There was a Princeton study on that that gets quoted allot and I've found a copy of it, but it's no longer easy to find. I would be interested in why it's so hard to find. Also, I would be interested if there are more studies like that.

smeg_it3• 2 years ago

I saw a good documentary on this but I don't remember the name. Someone that does can post it but it started in the 70s when it got bought out by a profit focused company that already had a negative reputation for quality control. Then began the outsourcing and profit only focused management. The engineering pride was replaced by greed (profit motive). This does seem to be the natural course of events though as the founders leave and the company grows beyond it's original "mission". Too me this sounds like the tech oriented "enshitification"; let me know if I'm wrong (after learning that new "term", I see it everywhere). I believe most of this was already said, but it's a good documentary.

Crises at Boeing and Intel Are a National Emergency

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