Matt Stoller: Boeing's travails show what's wrong with modern capitalism
The plight of Boeing
shows the perils of modern capitalism. The corporation is a wounded giant. Much
of its productive capacity has been mothballed following two crashes in six
months of the 737 Max, the firm’s flagship product: the result of safety
problems Boeing hid
from regulators.
Just a year ago Boeing
appeared unstoppable. In 2018, the company delivered more aircraft than its
rival Airbus, with revenue hitting
$100bn.
It was also a cash machine, shedding 20% of its workforce since 2012
while funneling
$43bn into
stock buybacks in roughly the same period. Boeing’s board rewarded its CEO,
Dennis Muilenburg, lavishly, paying him $23m
in 2018, up 27% from the year before. There was only one
problem. The company was losing its ability to make safe airplanes.
As Scott
Hamilton, an
aerospace analyst and editor of Leeham News and Analysis, puts it:
“Boeing Commercial Airplanes clearly has a systemic problem in designing,
producing and delivering airplanes.” Something is wrong
with today’s version of capitalism. It’s not just that it’s unfair. It’s that
it’s no longer capable of delivering products that work. The root cause is the
generation of high and persistent profits, to the exclusion of production. We
have let financiers take over our corporations. They monopolize industries and
then loot the corporations they run.
The executive team at
Boeing is quite skilled – just at generating cash, rather than as engineers.
Boeing’s competitive advantage centered on politics, not planes. The
corporation is now a political
machine with a side business making aerospace and defense products.
Boeing’s general counsel, former judge Michael Luttig, is the former boss of
the FBI director, Christopher Wray, whose agents are investigating potential
criminal activity at the company. Luttig is so well connected in high-level
legal circles he served as a groomsman for the chief justice,
John Roberts... read more:
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