Finance innovation has outpaced technical and creative innovation. So most companies are dominated by financial engineering.
Any firm with offices located across the world are making cash just moving it around faster than you can make it with a product. And profitably. Taking advantage of exchange rates, interest rates, tax rates, subsidy, tariff differences etc etc is a more sophisticated process these days than anything you see in a factory.
The "Ugh, Capitalism"[0] articles always seem to assume that capitalism started in the last 20 years or so. Which is obviously false. If the company lost its culture of safety that's definitely bad, but of course that culture developed under capitalism in the first place. How does a constant factor (capitalism) explain a change?
The finance industry is a much larger part of the US economy than it has been in the past [1], which does seem like a problem and likely the cause of many of these issues. I'm not sure about the right solution, but it's definitely not to end capitalism.
I started tuning out of this article when it referred to the market Boeing is in as a "free market." I assume the article's author is not a moron, so I don't know how he can lie and distort reality with such a straight face.
I mean at this point the story is older than most of the people who read HN, 1) US government "deregulates" an industry, 2) this amounts to allowing the executives of the largest firms in the industry regulate themselves, 3) said individuals float between the top firms and various lobbying or regulator jobs and craft new policy which entrenches said firms.
Witness the decline for example in the number of US defense contractors, there used to be hundreds a few decades ago, and now there are only really five that matter. Boeing is one of them of course.
We know and have known for hundreds of years what happens when a firm becomes a monopoly, they cut costs even as their prices and profit margins go up, because they have no competition to keep them customer focused.
Jesus Christ, Defector.com and David Roth, Boeing's markets are the polar opposite of a free market.
Could this just be a naming issue? I would argue that a totally free market (as opposed to a regulated competitive market) will systematically lead to monopolies and corruption. Maybe your definition of "free" is different from mine (and potentially the author's).
A truly free market has guardrails to prevent cheating such as monopolies, price fixing etc etc. The current fetishized free market is one of the avenues for monopoly creation. see Standard Oil, IBM, AT&T. In this kind of free market, if there is no outside influence such as government regulation or crowdsourced guillotines, the person with the most Capital will just buy up all the competitors and on the market.
There are regulation-based monopolies are relatively rare. there are examples of natural monopolies such as cable companies using regulation to enhance the power of a natural monopoly. One important regulation-based Monopoly is the one created by patents and copyrights. one fix is to make patents automatically license-able under RAND https://mpeg-g.org/knowledge-base/what-is-a-rand-license-ran.... Inventor is rewarded, everyone gets to use it, pubic licensing terms.
I am using the definition which comes from Adam Smith and is generally accepted in classical economics. A free market is a market which approaches a state of perfect competition, if a monopoly exists within a market, it is by definition not a free market. To my knowledge there is no other generally accepted definition used by economists. I guess Republican politicians may use it differently, or something, but politicians are liars, practically everything politicians say is misinformation to some degree.
Smith agreed with you that some free markets may naturally tend toward monopolization, how they are regulated is definitely one factor but it's a complex subject. Either way I can't imagine any definition of 'free market' which would apply to Boeing's primary markets in 2024, they are not free of regulation, they don't approach perfect competition, they are definitely un-free.
I don't think Adam Smith defined this exactly, can you show me what you're referring to?
I also think your description is very iffy. "A market which approaches a state of perfect competition" depends on what amount of competition you think is perfect. Furthermore, it could be achieved either through regulating or not regulating (depending on what you think "perfect" is), so the term doesn't really say anything about actual policies.
The very intuitive meaning of free market is an unregulated one, IMO. I'm not able to find an ubiquitous or official definition, but most top google results lean in this direction.
I do think that conflating the means (unregulated market) with the end goal (perfect competition market) into the term "free market" is a brilliant marketing move for free market advocates, but it's somewhat dishonest.
My definition of perfect competition is not iffy. It is a well established term in economics. It's not a statement of value or opinion, it's a term that is already defined and its definition isn't up for debate. I appreciate your interest in the discipline of economics and there is a wealth of free knowledge available on the Internet, including the entire text of Wealth of Nations, about economic theory which you may find it interesting to read. https://en.wikipedia.org/wiki/Perfect_competition
As the pure simple form of transactions of value. I build x, you build y, barter is inefficient, so we use money to smooth it out. Adam Smith, yada, yada, yada.
The problem is that Capitalism is not static. It is an evolving system.
Many people that are Capitalism cheer leaders are proponents of a very simplified version, that they want to 'get back to' even thought it generated Robber Barons.
As it evolves, it warps society. It forces people into constraints of decision making, across all layers. Management wants a bonus, so they push for 'cheaper at all costs', short term quarterly goals, and it warps government by buying off politicians, lobbying, and middle managers or line workers, they have kids to feed, bills to pay, they aren't fighting back/rocking the boat.
So this whole situation continues to evolve, until it reaches a breaking point.
Marx was not the only one that called this out. He is just the one everyone hates on. Even thought his work defined the word 'capitalism', and most of the more 'academic' side of his work is just doing what economist do today. What he pointed to was the end-state of the system as it grows, it's inevitable crash.
Many others besides Marx have pointed out the trend.
Nietzsche was expressly not-Marx, and also identified the same trends and end state of Capitalism.
You can find examples going back to Plato.
When wealth generation is the only drive, the society eventually collapses.
In many ways Marx works are continuation of Adam Smith's, who is explicitly calling against "rent extraction" and that landlords are curse on society and economy - which in mostly agrarian economies meant landlords held the means of value of production.
It's very ironic to later see fervent defense of rent seeking under the banner of "Adam Smith Institute" (at least an org named so locally) :/
But when I read Adam Smith, it sounds kind of what would be called socialist from the right.
Marx was doing economic theory. He was paid to write the 'C Manifesto'.
Not that he didn't also believe, but he did do actual economic work, it wasn't just all propaganda calling for a revolution. There was theory behind it.
A lot of it is slow realisation that this was always the "end game" of capitalism. Beware Marxist terms, but then he kinda coined the "capitalism" term too! Big simplifications ahead.
Capitalist is an entity who makes money because they own capital. Any actually productive activity (like investments into products/factories/people/etc) are secondary to extracting rent from owning the capital.
Now, for various reasons, few different things dominated over economy in the past:
1) Rate of return on investment for actual production, investment, etc was bigger than for rent extraction. Some of this was due to wars shaking things up, some of it was due to non-availability of (2)
2) Ability to grow capital purely by speculation was limited by physical & legal issues. This is where financial industry/engineering comes in - you can spend all your efforts on pure speculation, do corporate raiding etc. and be shielded from consequences. Same with earning money just by moving money around exploiting sub-second price differences.
3) (2) was less acceptable in the past - but became very much so in the present, even if there's constant grumbling about Wall Street - hell, the amount of people who claim that "maximizing shareholder value" is an actual law you're obligated to follow should be good point about it.
4) Corporate entities are a lot like paperclip optimizers - individuals in them can be individually moral and the corporate entity can still be an amoral profit chaser, especially in face of external stockholders. However, in the past, they faced different limits (legal & physical), different stockholders (less volatility and short-term juggling), and different social pressures.
All of the above combines with increased disconnect in many countries between different social groups and people starting to think that maybe, maybe, there's something weird. Then they look into how some people have been pointing that this is the "pure capitalism", maybe started calling it "late stage capitalism" to compare with more encumbered earlier forms, etc.
Exactly -> " Corporate entities are a lot like paperclip optimizers "
We are so scared of AI paperclip optimizers, but don't see that humans are machine s that optimize to have as much sex and food as possible.
Our society is optimizing for producing Doritos and Taco Bells and McDonalds and Porn.
Wasn't there a George Carlin bit about men only went to the moon so they could brag and get laid? All our better 'accomplishment' can be reduced to sex. Art, Music, Writing, is sex.
And, Capitalism just smooths the way to the lowest common denominator.
Unless people wake up and put limits on it, like a regulator on an engine so it doesn't blow up.
> Beware Marxist terms, but then he kinda coined the "capitalism" term too!
The term "capitalism" (kapitalismus) does not appear even once in the entire corpus of Marx's writings.
'Kapitalismus' first appeared as a term arrayed against socialism in Werner Sombart's 1902 book Der moderne Kapitalismus. It was only after this book that the term capitalism was incorporated bit-by-bit into Marxist theorizing.
'Capitalism' didn't appear in political science dictionaries/glossaries until after World War I, and didn't appear in the Encyclopedia Britannica until 1926.
The first use in English is from 1854, nine years before Sombart's birth, with use (as "private capitalism") in teaching and disputing about economy in USA since 1863 by Carl Adolph Douai.
"Capitalism" in the modern sense is apparently attributed to Louis Blanc (1850) and Pierre-Joseph Proudhon (1861, explicitly calls out owners of capital being dissociated from actually working it). As a word with way less scientific rigour than some of the stricter mathematical sciences, the exact way of using it also has considerable variation due to differences in languages.
Marx used "capital" and "capitalist", which are older terms. "Capitalism" as a term evolved from the same use that Marx learnt from, with earliest uses of "capitalists" being associated with 1633.
A simple answer may be that capitalism used to be more regulated than before. Not in all areas/industries, but overall - and if not in theory, at least in practice. Maybe the art of lobbyism, legal work, and public relations has gotten more advanced, for example, or company profits have become large enough that they can blatantly break laws and just pay the fine.
I’d extend that to say “regulated” in both the legal and broader social senses - not just comparing government regulation before and after the Reagan/Thatcher era but also things like connection to places: smaller businesses are more likely to be run by someone who feels some responsibility to look after their community and workers, which certainly wasn’t perfect but still better than what happens with huge multinationals whose senior leadership probably isn’t even in the same time zone and certainly aren’t worried about going to church/the country club with people who will ask them why they’re polluting so much or decided to lay off a bunch of people right before Christmas.
I don’t want to oversell that kind of thing as a factor but I really think there’s a cost to scale when a business reaches the point of impersonality where you don’t even know or have much concept of the existence of the people affected by your decisions.
I agree with you, but it's also worth noting that Boeing is one of the "too big to fail" industries tightly coupled to the government. It's too valuable to the DoD to let fail.
There are several industries (microchips have recently become one) where finance has figured out the normal rules around competition don't matter. Boeing can capture the upside and there is virtually zero risk of bankruptcy or being nationalized from mistakes.
The federal register (sum of all US federal regulations) is orders of magnitudes larger than it was 40 years ago.
I don't think a quantity argument is interesting (there is definitely more regulations). Possibly there is a quality argument to made: Due to the regulator capture process (large corporations have seized control of the federal government), the effectiveness of regulations have decreased a lot while the volume has increased. This also serves as a barrier to entry for competition, while also profits for compliance.
This is not what I meant to imply either. More laws can lead to less regulation, if the added laws are full of loopholes that can be abused. Definitely agree with you on the quality/quantity argument: Simplifying laws and regulations should be more on the political agenda IMO.
I think it is pretty clear that regulation or at least effectiveness of such must have peaked in relatively recent past. Going back century or two certainly had capitalistic practises, but also much lesser regulations in many places like food or safety of products.
Now interesting question is when did the effectiveness or regulation peak?
Compared to other economic systems, capitalism hasn't been around for very long. How fast do you want things to happen before evaluating the economic incentives?
My point here is that incentives can work over time and interact with environmental factors. You're making essentially the same argument Larry Summers made against greedflation, "I don't think corporations suddenly became more greedy, so this can't be a phenomenon". Sure, greediness didn't change, but the economic and political environment did, giving the actors cover to collectively raise prices. It's the same as an algal bloom, the initial amount of algae was constant, but at some point the amount of fertilizer in the water increased and it multiplied at greater rates.
Or, empirically, you're making an argument against evaluating any economic system. The fall of the USSR couldn't have been due to communism, because communism was in effect the whole time. The fall of Empire X couldn't have been due to feudalism/mercantilism, because feudalism/mercantilism was there the whole time.
> How does a constant factor (capitalism) explain a change?
Regulations.
Short-term-itis mostly got rolling with people like Icahn in the 1980s and asset stripping. All that got rolling due to changes in regulations around finance.
And then tech and VCs poured accelerant on the flames.
What if we replaced capitalism with a focus on consumer choice, competition, and free markets?
I'm being a bit flippant with that question, because supposedly capitalism is all about consumer choice, competition between companies, and free markets. But I often feel that people who defend "capitalism" vigorously will turn around and say "meh" when shown a market with little consumer choice and little competition. Their blood pressure will go up 20 points while defending capitalism, but they barely blink an eye at a market without competition.
How often do consumers have only 2, or fewer, choices? So much for customer choice, so much for competition. I want to see a political cartoon that shows 2 panels, the first is "the free market ideal" with a bustling market filled carts selling food and goods, the next panel is "the free market reality" showing a bunch of tired people waiting in line for one of two computer terminals, and both computer terminals are operated by the same guy and one of the is broken.
We need to stop talking about capitalism vs Marxism and instead talk about consumer choice and competition between companies. Are we happy with the amount of consumer choice we have? Are companies competing by trying to offer the best goods and services they can, or are they exploiting consumers and making profits by moving money around and rent seeking? We need to talk about IP laws and what makes a free market "free". We need more talk about the underlying principles and less talk about politically charged buzzwords.
I've tried to capture all this before in a question I ask: What does it mean when the things that (supposedly) happen in a healthy capitalist society aren't happening?
Getting rid of government is the solution. They sell it to you as a protection against big business, but in reality it's the tool big business uses to stave off free markets and consumer choice.
Markets don't exist in a vacuum.
They are created and regulated.
They need contract law, and enforcement.
The argument to get rid of government is really an argument for anarchy, to go back to having war-lords.
Do you really want Amazon coming around with enforcers asking for payment. And since there is no Money (since gov is gone) they take your goat and give you a chicken back for change.
Lol, there was commerce without government regulation for the longest time and international commerce is still largely regulated by private arbitration courts (e.g. https://fee.org/articles/the-law-merchant-and-international-...). There was money well before there was centralized government in nearly all moderately developed places. You should really try to know the first thing before you pull such claims out of wherever. If you think government is anything but a ploy to get to your money, you got duped.
"You should really try to know the first thing before you pull such claims out of wherever."
Sigh. Another armchair economist trying to extrapolate history.
You are re-defining all societies in terms of our modern idea of government to push some libertarian view. Yes, you are correct, societies had money before there was a modern elected government with 3 branches. That doesn't mean there weren't rules, there weren't concepts like enforcement of contracts, like debt and how to 'sue' over recovering debt'.
You can't go back in history to when we were tribal, say 'look we didn't need a government', and then extrapolate that to todays world and promote anarchy.
Money before 'central government'? Central to what? My tribe? You are just re-defining what a government is. You are going back to when we were exchanging shiny bits of shell.
I think 'anomy' is implying that we would trust social norms, or that people would behave as expected by force of society's norms. You would behave so others would continue to do business with you.
I think we've seen a lot in recent years how this doesn't work when people are free to break away from social norms.
Other point, I think this is missing that in large global economies, we have both very little recourse on our own without laws. If we trust purely market forces (if you sell me junk I just wont buy from you), then bad-actors can just move on to next mark, or change names. We have started making purchases in anonymously online from other anonymous sellers. There is no longer any social norms to prevent cheating.
really good illustration of trust. which is needed for market pressures you describe, but don't scale well. hence needing laws to track down bad-actors.
https://ncase.me/trust/
You are simply replacing laws and courts from a government to some other body.
That is how society progress on many fronts.
Society grows, and those rules become 'laws', and those courts become 'the courts'.
If you were to magically break up and get rid of government.
It would just re-form as a new government.
Every revolution just forms a new central authority. A new government.
Because who are you going to call when some company says "you know what, I don't agree with this informal court set up by the local tradesman, I'm not paying".
""In its early days the Law Merchant relied entirely on private adjudication and enforcement. Merchants conducted much of early international trade at fairs throughout Europe. At these fairs local authorities performed regular activities, such as preventing violence, but they didn’t normally adjudicate disputes between international traders.
Nor did authorities enforce the terms of private commercial contracts. International merchants formed their own courts for this purpose and applied their own law to these cases. Merchants’ courts came to be called “dusty feet courts” because of the condition of merchants’ shoes as they busily traveled between commercial fairs. In these courts merchants acted as judges, deciding the disputes of fellow traders on the basis of shared customs. Merchant courts enforced their decisions privately by threatening noncompliant traders with a loss of reputation and merchant-community ostracism""
""Since 1958 compliance with many arbitration decisions occurs under potential threat of State enforcement. In that year a handful of countries signed a multinational treaty called the United Nations New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC). Over the last half-century many other countries have also joined the NYC. According to the convention, signatories agree to enforce international arbitral awards brought to their courts.""
Yeah rules are important. I was making the point that rules and enforcement mechanisms do not require the kind of exploitative constructs that are ruling over you right now, and for whom you are little more than lifestock.
Don't get me wrong.
I agree. I'm being ruled by an exploitive construct.
It's just, it always comes about. It's made of people, and whatever mechanism you are contemplating, it too will be subverted.
I haven't come up with any alternative. Just think reducing regulations would mean more pollution, more stealing. We've done less laws, less regulations, and the world was pretty awful. It's a balancing act. You need people to drive on the right side of the road, and obey traffic signs, but you also don't want government telling you how to set the dinner table. How much control do you give up?
• competition, through firms’ freedom to enter and exit markets, maximizes social welfare, that is, the joint welfare of both producers and consumers;
• a market mechanism that determines prices in a decentralized manner through interactions between buyers and sellers—prices, in return, allocate resources, which naturally seek the highest reward, not only for goods and services but for wages as well;
> Think most people do include markets and competition as core to capitalism.
I would argue that this is liberalism, and a smidge older than capitalism. I think you can have multiple kind of capitalism, the old-school, robber-baron that you get in Mexico, Brasil, Russia; the liberal capitalism you get on the west (mixed with more or less socialism), and the weird semi-authoritarian capitalism that you get in China, Vietnam (mixed with more or less socialism too). Probably other exists. Only the liberal one in my mind has free market and competition as a core, its always a secondary effect of participating in the global economy for the others. At least it's my opinion at the moment, i'm not knowledgeable enough, so if you disgree, please do and explain, i want to learn.
If we started digging into details of each possible shade of 'capitalisms', we find a sliding scale of what features are most dominant.
There are some that aren't as focused on 'competition' and 'markets'. I'd say that in all of your examples, they are there, just not as dominant, or somehow 'narrowly managed'. So we'd be arguing over the scale of each feature in each example. Not really right or wrong.
I agree, it is mostly the global market that forces this on some countries with less competition.
I'd argue that part of what enables the current issues is exactly the "hack" of making the gestalt believe that capitalism, free market/enterprise, the ideas of Adam Smith, etc. are all part of capitalism instead of things that at best partially overlap.
This means that people who want to grow richer just by virtue of being rich can easily defend their actions by making any who complain into common enemy for everyone else.
Because penalizing pure financial speculation and other rent-seeking behaviours, or predatory private equity, can be conflated this way with attack on ability of everyone to start their own enterprises, maybe walk away from a job and create their own, etc.
It's pretty amusing the article rather undercuts it's own point by having an ending that makes no sense as the writer didn't bother to fact check who said the closing quote until after publication.
Journalism and the commentariat are in a pretty consistent state of always being so bad there's nowhere left to fall to.
This article is trying way, way too hard with its prose, and not hard enough with its content.
A lot of it is "argument by adjective" with phrases like "small, sad, thwarted" having the responsibility for making the case that the author is trying to make.
You could replace all the adjectives with positive ones and change nothing else, and it would make an equally good case for the opposite position.
> I'd also submit that he and his cohort has no idea—no idea how much anger there is about what he and his cohort have done to make every aspect of life flatter and crueler and riskier and worse, and no idea how lucky he is that all that rage is still being pointed in, and not up.
They used to tell stories about breadlines in Russia where there was no bread, and I think we’re getting to the point where if we had no bread because capitalism said there would be none, we’d still be waiting in line to preserve the illusion.
When the system is a farce that doesn’t reflect its own justification, the problem keeps spreading. The trash doesn’t get picked up because the Trash System is more efficient when it runs lean and mean. But, the trash doesn’t get picked up.
The problem with russia was, that everything was centrally planned, and if that one "central planning location" failed, there was no bread. Even if you have two or three central "locations", one failing means 1/3 less supply and breadlines, since the others can't fill the gap so fast. In capitalism, there were many private companies (bakeries if we continue with the bread analogy), and if one of them fails, noone even notices, since there are so many alternatives.
So capitalism is great!
...until amazon buys all the bakeries (well bookstores), and then fscks up something.... Or if walmart outcompetes small stores and then burns down. Or if you have a duopoly on mobile phone markets. Or if a few investment groups buy all the housing..... oh wait...
To extend the argument, one of the original military motivations for the design of the internet was resilience of the network (relative to radio, IIRC, where relying on a central broadcaster would be prone to failure if the broadcaster was taken down). If one node goes down, even if it's bad news for that node's consumers, the network itself remains resilient.
If we shift that analogy back into the economic discussion, then instead of three places controlling bread production you break up large bakeries (or make running large bakeries untenable) and incentivize a plethora of small bakeries so that when some fail, others can organically fill the gaps. Both G.K. Chesterton and Tolkien were proponents of distributism back in their day, but it's not as well known today.
Yep... if amazon (aws) fails, half the internet is dead... if akamai fails, the other half is dead. There's also some microsoft somewhere, but who cares.
So yeah... the internet was a bunch of small bakeries... now it's pretty much centralized (though in two.. maybe three locations).
But the issue is why does Amazon get access to so much cheap debt that it can buy all those bookstores, competitors, iRobot, with loans for more than those other companies are really worth worth and then saddle them with that debt and shut them down?
Having seen underneath the surface of a certain FMCG (Fast Moving Consumer Goods) giant of USA/multinational market...
The two biggest differences they have with GosPlan is that they have way lower cardinality (less products/categories), and computing/communication power to iterate very fast.
Add to it market data (out of Walmart and others streaming all your purchases with minimal redaction and categorized by store/zip-code) plus in some cases direct inventory view into stores, and simply an army of people and robots/ai that do daily tuning of the supply chain, and you have GosPlan's wet dream of central planning.
Except central/distributed planning is orthogonal to capitalism itself.
Capitalism loves centralization and monopolies, it makes rent extraction easier.
But different forces kept competition going, with cartel busting added to the mix to stop capitalism from circling the wagons too much against competition.
There is a fundamental issue with our civilization and species: we have a scant few actual adults. I mean non-immature, non-self exclusively serving individuals who both care about others and have the capacity to do so beyond their immediate family. Until this issue is recognized en masse, it is going to continue, and as our AI and related automation technologies advance, life is going to significantly degrade for anyone not within the elite economic class.
Rewarding the reckless egoists is immature, it demonstrates a lack of understanding of the larger system, and by not addressing or acknowledging this issue we get our current situation. Knowing and not fixing is immature.
The problem is that the rewarding is systematic and can't really be attributed to a single person (or persons), so calling it immature is really just hitting at strawmen.
You disregard too quickly. Just because immaturity is systematic does not erase the fact that immature behavior is radically short sighted and a personal failure to navigate reality.
The problem is that we have allowed "social skills" to be regarded higher than actual intelligence or technical skills. Social violence is not only tolerated, but encouraged and celebrated. This in my opinion is the most successful terrorist action of our modern era. There was no "cold war" it happened under our noses and we are all living in socially nuclear fallout every day.
By allowing the bullshit to float to the top we have excluded any intelligence from the decision making process.
Basically we're almost to the point where the computers start firing everyone in Idiocracy.
> There is a fundamental issue with our civilization and species: we have a scant few actual adults. I mean non-immature, non-self exclusively serving individuals who both care about others and have the capacity to do so beyond their immediate family.
This is it right here. We as a civilization have been so traumatized by the sociopaths and psychopaths that we've just given up an accepted their rule by terror.
It doesn't have to be this way.
Care about others in the face of their awfulness.
The fact that your compassion makes them mad tells you they know they are wrong. They see you as a threat to their ability to freely squeeze the world around them to death. Any amount of fairness to this group feels like persecution. They will only come to their senses when a more powerful force applies the same unpleasant tactics to them. Suddenly, we are all a united force against THAT evil over there... forget what I was doing yesterday...
MOLOCH -> "It is, in its way, a statement of purpose: not just the assurance that every person, place, and thing is now or will become food for its rightful devourers, but that those doing the eating also think of it as junk food."
Funny, in history, people fed children to Moloch.
Now Moloch has become a symbol of capitalism.
And now, in the analogy, people are junk food. Because life is cheap, people aren't worth enough to spend money on their safety.
As far as I can tell, the whole Boeing situation is a minor and interesting case of a moral panic / groupthink episode. A flight on one of these grossly unsafe Boeing planes still seems to be safer than a daily bus commute to work (and may the heavens help those death-seeking lunatics who travel by car!).
As for why products are getting worse, the west appears to be in a multi-decade energy crisis interlinked deeply with our manufacturing processes being uncompetitive. The actions of management in manufacturing companies are being driven by the regulatory environment around energy and production.
In fairness, what matters is the rate. Although those stats don't include rates so they seem to be not-comparable.
Denmark seems to have a Boeing-737 Max accident every year, except using cars. Boeing is at 2x 737 accidents globally in the last 6 years. I'm not sure what conclusions we were expected to take from this.
obviously I was being slightly facetious - especially as I am unable to find stats on bus death but I'm going to assume that rate of death in bus accidents are much less than those in car accidents because not especially serious - but if that were the case and given that there were two serious crashes of the Boeing Max and there are 1160 I guess the rate there is somewhere around .1 whereas there are 3 million cars in Denmark and 154 fatalities is .009 (again, facetiously assuming that every car was driven)
But since the statement was it was safer than taking the bus to work and given the very minimal stats shown I think it is a reasonable supposition that probably the bus is safer in Denmark although obviously it would require a significant longer and more in depth amount of analysis than one generally expends on a comment on an HN text box.
>I'm not sure what conclusions we were expected to take from this.
given very minimal stats on car accidents and assuming bus accidents much less than car accidents then it would reasonable to think hmm, probably taking the bus is somewhat safer. But not with the absolute certainty that a year long study and gathering of all relevant stats might establish.
Could you maybe distill the serious parts? I'm not exactly sure what you think is joke and argument here. I'm also sceptical of whether that is a comparable approach. If I'm reading you right, you need to account for the fact that cars have lifespans and all the deaths over a lifespan get summed. Assuming a 15 year lifespan for a typical car that bumps the car figure up an order of magnitude and then the rates are basically the same (0.09 vs 0.10).
So the figures you're quoting suggest that a catastrophe in the aerospace industry is business as usual on Denmark roads. Putting aside rather important questions of methodology (eg, 737 MAXs would do a lot more trips than a typical Denmark car).
Not only that, but the 737 Max rate has likely dropped because they got a lot of attention and problems were likely remediated. It is easier to raise the engineering standards over 1,000 planes than 3,000,000 cars. You can see in the Denmark case that back in the dark eras past (like 2002) the situation was much worse but they improved quickly. Boeing will be undergoing the same process right now.
>The actions of management in manufacturing companies are being driven by the regulatory environment around energy and production.
Care to elaborate? Because from where I'm sitting the actions of management are driven around quarterly stock-based incentives and a culture of short-term equity price rise by the boards and big investors
People have been claiming short term incentives for decades. If short term incentives were having long term negative impacts the corporate feedback mechanisms would have picked up on it by now.
What I'm focusing on is that there are people who determine what the incentives of the managers are. Those people don't see an issue with short term incentives. They're identifying - correctly in my view - that there are limited opportunities for competitors to come in with higher quality products. Such a competitor would get crushed by a combination of regulation and costs.
That's a different issue than the "regulatory environment around energy and production".
And
"If short term incentives were having long term negative impacts the corporate feedback mechanisms would have picked up on it by now"
Tells me you either don't live in the real world or are being purposefully disengenious. Most real decision makers plan to remain in their role for at most 5 years before moving up. That definitely encourages short term success. And much more importantly, if the compensation structure of the CxO is such that 99% of monetary compensation comes from vesting on a quarterly basis only if the stocks price or earnings hit specific targets over that short term, how does this translate to long-term success?
> That's a different issue than the "regulatory environment around energy and production".
The incentives are being set to take best advantage of the realities on the ground. Apart from Apple, no-one is taking over markets by fighting the general quality decline. You're arguing that there is a lot of shortermism going on. Fair enough. But shortermism is proving to be a good long term strategy, because the alternatives failed. Not for lack of interest, but because the regulatory state and harsh realities of energy constraints crushed them.
> Most real decision makers plan to remain in their role for at most 5 years before moving up.
I'm glad we've managed negotiate up from quarterly stock prices to 5 years. But note that China is run on 5 year plans - executing complex long term strategies is possible in 5 year steps with a reorientation every so often. 5 year time horizons can be compatible with long term planning.
Note that this is in line with what the investors are comfortable with - they don't think there is an advantage to be gained from keeping CEOs long term. And they're right I expect, getting involved int he money printing exercise that the central banks have been pushing is generally much more important than focusing on technical outcomes and you don't need long-term incumbent CEOs for that.
> ...how does this translate to long-term success?
Unless you're 108, Boeing is older than you are. This has been their routine operating procedure since ... the 1980s? Sometime around that era. They're doing pretty well.
Boeing explicitly started changing their routine operating procedures in second half 1990s. Unlike some claim, it actually started with a Boeing "lifer", but who also bought into Jack Welch management thought.
They have considerably changed in the last 24 years, with memos about dangers of it coming from Boeing since ~2001, and that it wouldn't be something immediate but "creeping" issue.
I don't have anything much to say to that, but I can't resist observing in passing as a comment chain we've escalated from quarterly shortermism to a management transformation process that played out over 24 years at remarkable speed.
If after a quarter-century Boeng have reduced their standards to still-better-than-road-safety, I don't think it is fair to say their management are doing anything that badly wrong.
In pursuing quarter by quarter benefits, in fact some of it happened across only 2 years, they have set up long-term disaster that impacted their ability to design, build, and deliver - first with 7E7 (now known as Dreamliner), then with 737 MAXX series and the inability of Boeing to either take on a new venture like 757 upgrade or a new plane based on 7E7 project but in smaller class (This is, btw, big part of how A350 happened - reusing results of investment in A380).
Some things take long to build (or correct), and very short time to destroy.
And with Boeing it's more that the ongoing disaster known as MAXX took away the blinders from wider population in very... brutal and public way.
That is a relatively consistent story across all the US-related industrial articles I take notice of on HN. The US can't build semiconductors, the US can't build ships, the US isn't building houses, struggles with infrastructure, etc. masks and ventilators through COVID. Now planes.
This isn't being driven by management. Everyone can see what is happening from a mile away including shareholders. This is a rational response to the regulatory environment that US manufacturing operates in. And a specific symptom of that which is the US has failed to secure its access to cheap plentiful energy.
Except at no point did the regulatory environment change for Boeing in ways relevant to production - the rules actually got easier.
Majority of 737 is produced in USA - with many critical subcontractors being former divisions of Boeing that got spun out because, paraphrasing "We will concentrate just on adding value in the final assembly step as well as coordination". It was explicitly done by the upper management, despite everyone pointing out it was bad move. Airbus also does a lot of subcontracting, but is way more integrated and reportedly works on "risk-share" basis with contractors while also providing considerable amounts of resources to ensuring the whole chain is safe and sound.
Those are management decisions.
P.S. a lot of regulatory decisions that block things like building infrastructure including housing are driven by "stockholders" that would be involved, because they sometimes perceive investments as endangering the existing value of their capital.
> People have been claiming short term incentives for decades. If short term incentives were having long term negative impacts the corporate feedback mechanisms would have picked up on it by now.
Maybe the mechanisms are working fine, the markets keep going up, as well as the long term profitability. But I think the incentives themselves are the wrong incentives: as a society, profits are just a (very useful) tool to help us trade and regulate resources. They're not an end goal. The end goal is the wellbeing of humans.
The problem is when we forget that goal, we tend to believe predatory practices are fine, when they aren't. It may well be profitable, even long term, to make predatory (hyperpalatable, heavily processed) foods that make us unhealthy. The reasoning may well be 'Let's make enough money until consumers figure out we're being dishonest'. Getting the hands off the wheel doesn't seem like a sensible choice.
I think the solutions are many. People need to realize those problems exists, not just be in denial -- people are the agents of society, and even if you think pure markets are ideal, you need individuals to make good choices for themselves. In this sense you might say there's an untapped market of consumer and large-scale social protection that balances out our interests and capabilities with corporations. Individuals don't have decades of food research (that's in many cases influenced by industry funding, to make things more complicated) in mind when making choices, and they're influenced by marketing.
I do think ethics plays a large role here. It doesn't seem like a person, working in the food industry, should in good conscience be complicit in any scheme that harms the people eating your food. If the baker near your house started sneaking in addictive substances or subtly (and largely imperceptibly) altering ingredients to save costs, you should well claim that's a failure of ethics in the first place, not of markets. Part of the failing comes from the belief that profit is the be all end all mechanism of society. Being a good person to yourself and others is more important, fundamentally important.
If you work in industry and start seeing those practices being used as a desperate attempt to keep you alive versus the competition, that should give you pause: something in our industry, and our society is broken. You should fight, even from within your company, and spearhead, a change to align your ethical incentives with financial sustainability: by demanding more (or just _better_!) regulation, but also by changing the narrative around marketing, by investing in consumer awareness (and organizations specialized in raising awareness and food research), and also investing in genuine unbiased research. You need to basically fight evil and not let the bad guys have their way. If you're complacent, the default mode is defeat, just like getting your hands off the wheel of a car the default mode is crashing.
And as for why things become worse, it's because of enshittification. Not because of magical "energy limits", not because of "manufacturing competition". Getting the next quarterly bonus by firing everyone works better than having a cut bonus this quarter to fix manufacturing and ensuring a bonus next quarter.
I'm not sure where you get that from, I gave you links so [citation please]
Deaths per billion journeys:
Bus: 4.3
Rail: 20
Car: 40
Plane: 117
Every time I get on a plane I have less chance of making it than on other modes of transport, even cars. Rail and bus are much safer per trip, amount of time spent, and are in the same ballpark as flight when using the per distance travelled metric.
That seems extreme, why aren't those measures reasonable?
Although if we're using journeys; notice that a daily commute will clock in around 500 journeys a year. So while a Boeing 737 MAX plane flight could be called unsafe, unless someone is continuously flying around the risk is still at levels that people find acceptable.
Even for the pilots, who are flying a 737 MAX as their day job, they're still at levels of risk consistent with someone who drives around on a motercycle. I can see why they wouldn't like that and want something to be done, but we're still not at crazy levels here. This is just lower than the standards the airline industry usually works to.
Shall I take the train from London to Edinburgh today to visit the client or the plane.
I am more likely to die from that trip if I take the plane if you look at the likelihood that a single trip would result in my death or not.
The only way you could be against having a holistic view of travel is by either being in the airline industry and it paying to be ignorant or you are American and have no other choice so you have to justify the restrictions that other people put on you and feel okay about it.
And if you’ve ever walked up to a station in London and bought a same day train ticket to Edinburgh, you’d sure wish you’d flown instead when you look at the price tag…
Any firm with offices located across the world are making cash just moving it around faster than you can make it with a product. And profitably. Taking advantage of exchange rates, interest rates, tax rates, subsidy, tariff differences etc etc is a more sophisticated process these days than anything you see in a factory.