It baffles me how this happens time and time again in companies as they grow (albeit rarely with this level of human life consequence), and nobody ever seems to learn from it.
Every hour that a Boeing employee spends trying to design or build a good airplane is one less hour that he can spend angling for power within the organization. So the people who care the most about the original purpose of the organization will be systematically outcompeted by the people who care the most about obtaining power within the organization. A widespread and profound problem.
When companies are small, the machinations of political types and their inadequate contributions to the core product are too obvious, and they get weeded out.
But when the company grows large and successful (due to the efforts of the people who cared about the original mission), it has a brand and long-term customers. At that point, the political types can burrow in without any immediately obvious effects, since there are enough other people doing the real work and the company has enough momentum to keep moving for some time.
This is broadly why I'm in favour of aggressive antitrust and pro-competition regulation. Companies should be kept medium-sized and competitive. Economies of scale should be sought through cooperation, not conglomeration.
The companies are smart enough to learn from it. The problem is that in a late-stage capitalist market, companies have already grown so large that the easiest way to continue to grow profits is to cut costs as much as possible.
It’s pretty obvious that in many cases, this incentive is entirely opposed to human health and flourishing. Sure, you can cut costs in consumer electronics like TVs without harming anyone. (Assuming regulations that enforce a baseline quality in electrical components.) You can’t do that in aviation or health care.
Another aspect is that lower costs don’t make it back to consumers in many industries with little competition. A more “financially efficient” Boeing means more money for shareholders, not cheaper airplanes.
A counterpoint is that disasters should provide an economic incentive to the company to fix problems that cause disasters. As you point out, this simply isn’t happening. There was apparently not enough market incentive after the B737max crashes to fix their quality control problems. That means it’s cheaper for Boeing to crash its planes than to have really strong quality control. Obviously, the capitalist incentives in this system are no longer working for society.
These late stage, massive companies are not about making good products. They are legally about returning value to shareholders. The people in charge are therefore all about optimizing the company finances.
The only way to counteract this frequently terrible incentive is by us people (the government) creating the incentives that work for society. That could mean huge, costly fines in these situations such that the only way to get money for shareholders is to make quality products, since what should be a market incentive has gotten so messed up.
> The only way to counteract this frequently terrible incentive is by us people (the government) creating the incentives that work for society. That could mean huge, costly fines in these situations such that the only way to get money for shareholders is to make quality products, since what should be a market incentive has gotten so messed up.
The US government could also get more aggressive about blocking mergers and breaking large companies up for being large. If you blew up Meta as an example, you'd force all of its ventures to compete with each other on the open market again. If you blew it up in to regional or state-level companies and prevented them from merging with each other they would all have to figure out how to work as they each invaded each others' markets. That "inefficiency" of the market would naturally create jobs and upward wage pressure as companies attempted to hire each others' staff away from each other.
They absolutely learn! These jackasses got paid in stock, inflated their income 10x, cashed out, and then when shit hits the fan, the corporation is on the hook. These leaders never go on trial for this shit because destroying culture isn't a crime.
And then when there is an investigation, it's just a general cultural issue and no one person is at fault, so the company pays out a lawsuit, the current guy gets fired with a huge bonus to cover the fact that he couldn't inflate the stock and the pattern repeats.
So, basically, there's high upside and no downside so why not?
They learn. It's a feature, not a bug. Some executive is chilling next to his third infinity pool, chuckling. It's someone else's problem now, suckers.
Exactly. They did learn from it -- and it is by far the best way to optimize around short term gains.
Just like people who join a company, grow the company to unsustainable bounds, then leave for the next company while the previous company struggles to maintain or fulfill previous obligations.
015UUZn8aEvW|1 year ago
Every hour that a Boeing employee spends trying to design or build a good airplane is one less hour that he can spend angling for power within the organization. So the people who care the most about the original purpose of the organization will be systematically outcompeted by the people who care the most about obtaining power within the organization. A widespread and profound problem.
When companies are small, the machinations of political types and their inadequate contributions to the core product are too obvious, and they get weeded out.
But when the company grows large and successful (due to the efforts of the people who cared about the original mission), it has a brand and long-term customers. At that point, the political types can burrow in without any immediately obvious effects, since there are enough other people doing the real work and the company has enough momentum to keep moving for some time.
crabmusket|1 year ago
Terr_|1 year ago
noahtallen|1 year ago
It’s pretty obvious that in many cases, this incentive is entirely opposed to human health and flourishing. Sure, you can cut costs in consumer electronics like TVs without harming anyone. (Assuming regulations that enforce a baseline quality in electrical components.) You can’t do that in aviation or health care.
Another aspect is that lower costs don’t make it back to consumers in many industries with little competition. A more “financially efficient” Boeing means more money for shareholders, not cheaper airplanes.
A counterpoint is that disasters should provide an economic incentive to the company to fix problems that cause disasters. As you point out, this simply isn’t happening. There was apparently not enough market incentive after the B737max crashes to fix their quality control problems. That means it’s cheaper for Boeing to crash its planes than to have really strong quality control. Obviously, the capitalist incentives in this system are no longer working for society.
These late stage, massive companies are not about making good products. They are legally about returning value to shareholders. The people in charge are therefore all about optimizing the company finances.
The only way to counteract this frequently terrible incentive is by us people (the government) creating the incentives that work for society. That could mean huge, costly fines in these situations such that the only way to get money for shareholders is to make quality products, since what should be a market incentive has gotten so messed up.
throwway120385|1 year ago
The US government could also get more aggressive about blocking mergers and breaking large companies up for being large. If you blew up Meta as an example, you'd force all of its ventures to compete with each other on the open market again. If you blew it up in to regional or state-level companies and prevented them from merging with each other they would all have to figure out how to work as they each invaded each others' markets. That "inefficiency" of the market would naturally create jobs and upward wage pressure as companies attempted to hire each others' staff away from each other.
jethro_tell|1 year ago
And then when there is an investigation, it's just a general cultural issue and no one person is at fault, so the company pays out a lawsuit, the current guy gets fired with a huge bonus to cover the fact that he couldn't inflate the stock and the pattern repeats.
So, basically, there's high upside and no downside so why not?
renegade-otter|1 year ago
pylua|1 year ago
Just like people who join a company, grow the company to unsustainable bounds, then leave for the next company while the previous company struggles to maintain or fulfill previous obligations.
carom|1 year ago
Clent|1 year ago