Image generated using Microsoft Image Creator and Adobe Photoshop | | | | | Shareholder value's service ceiling Boeing has sustained a hard descent from an innovative industrial titan to a disgraced and dangerous business more concerned with profit than safety, and it's been hard to turn away from the ongoing catastrophe. In a scathing piece in the American Prospect, Maureen Tkacik traces what went so wrong at the formerly lauded enterprise, using details provided by the late John Barnett , a longtime Boeing employee who blew the whistle on the company's practices. It's abundantly clear from Barnett's complaint that the defects at Boeing aren't the result of simple neglect or cut corners—they're the consequence of a concerted shift in priorities from building a quality product that employees can stand behind to creating value for the company's shareholders. Here's Tkacik on how the company culture changed: Like most neoliberal institutions, Boeing had come under the spell of a seductive new theory of "knowledge" that essentially reduced the whole concept to a combination of intellectual property, trade secrets, and data, discarding "thought" and "understanding" and "complex reasoning" possessed by a skilled and experienced workforce as essentially not worth the increased health care costs. . . . . . .Those who cared too much about the integrity of the planes and not enough about the stock price were [labeled] "phenomenally talented assholes," and [then-CEO Jim McNerney] encouraged his deputies to ostracize them into leaving the company. McNerney's strategy was successful to a point: Tkacik notes that Boeing stock was on a tear for nearly a decade, hitting a high of $440. But the repercussions of years of substandard work done by workers with limited institutional knowledge have been piling up since, from the deadly crashes of two of its 737 Max planes, which together killed 346 people, to the door plug that blew off in midair and much more besides. Now it's clear that "Boeing is in big trouble," as CNN recently put it. But it didn't have to turn out this way. Boeing made the choice to favor immediate shareholder value over long-term success, and now they—and we—are paying for it. + Way back in 2019, Matt Stoller argued that Boeing's decline was simply the failure of modern capitalism writ small. Susan Kang pointed out the same in Truthout last week, taking particular aim at the company's efforts to weaken labor conditions. + From Quartz: "The 1997 Merger That Paved the Way for the Boeing 737 Max Crisis" + From the Washington Post: "Boeing's Troubles Are Spilling Over to Its Airline Customers." | | | | | Profiting from other people's misery The decision to maximize shareholder value puts profits over people by design. And as the evidence against Boeing above illustrates, that includes the people working for a company. Here's a recent piece in the New Republic from Elena Botella concerning her job "selling credit cards with high interest rates to people who were barely making ends meet" at Capital One—and the lengths to which she went to convince herself that she might actually be offering them a useful service. But as she observes with the clarity of hindsight: The real question, of course, isn't whether a credit card with a 27 percent interest rate and a $39 late fee is better than a payday loan. It's whether Capital One's marketing campaigns push people into debt who would have otherwise avoided it; whether it is actually in a person's best interest, desperate though they may be, to borrow money at an exorbitant rate; and whether this enterprise is ethically defensible—in particular, for the decent, hard-working employees who toil every day to make Capital One's mercenary strategy a reality. Because the ugly truth is that subprime credit is all about profiting from other people's misery. It's another disheartening example of how bad short-term decisions that businesses make harm not only their customers but their employees as well. + From the Lever: "The Lie That's Inflating Your Credit Card Bills" + From ProPublica: "Walmart Bought a Finance App and Reduced Fraud Protections. Guess What Happened Next?" | | | | | A hose of easy money Sometimes the ramifications of the unrelenting quest for profits aren't as much damaging as they are just weird. Bloomberg's Patrick Sisson recently investigated why it seems like there are "suddenly so many car washes" everywhere. The answer won't shock you. In the US, the market of car owners is vast. Plus, modern car washes have fairly low overhead and are often automated, requiring few employees. And the shift to a subscription model has allowed car wash owners—including quite a few private equity firms—to really clean up. As investment firm CEO Ian Rickwood puts it to Sisson: What other industry can offer locations with up to 80% subscription-based revenue and an earnings before interest, taxes, depreciation and amortization margin of 50%? . . .And the growth potential is massive. About 15% of the current car wash market is membership-based. . .; when customers go from non-members to members, that results in 13 times more consumption and 10% more revenue. If just 10% of the total market shifted into the membership category, that would boost the total number of washes in the US from 2 billion to 3 billion a year. As Sisson notes, cities are fighting back over nuisances like traffic and noise, and an overcrowded market may soon become an issue. But car wash chains are bullish about demand. Don't be surprised to find one on every corner in the near future. | | | | | | —Tim O’Reilly and Peyton Joyce | | | |
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