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Comment by phkahler | Hacker News Reader

TFA mentions shareholder value. How exactly do unsafe planes help shareholder value?

People are bad at understanding risk. Tell someone that this change will save the company enough money to bump the share price by $2, but there's a one-in-a-million chance per flight that it will cause a crash that will destroy the company instead. Do you go for it? A lot of people will hear "one in a million" as "basically impossible" and say it sounds great. They'll probably rationalize it further by deciding that you're being paranoid about the risks. And then a while later you have a few hundred dead people and a company with a shattered reputation.

From a completely technical perspective, one can understand the cost of this risk with real option valuation techniques. However I’d say this is an inappropriate method when so many lives are at stake.

And to further complicate it, the smaller a risk, the worse we are at estimating it.

Investigations after the Challenger Disaster revealed that engineers at NASA thought the space shuttle had a 1/100 failure rate per mission, while managers thought the shuttle had a 1/10,000 failure rate.

The value is a gamble:

by making unsafe aircraft Boeing was able to avoid losing customers, and in fact make many more sales because airline’s pilots didn’t need to be retrained and their equipment didn’t need to be changed. Combined that made the MAX a more cost effective alternative to the airbus.

That’s your shareholder value, as long as your unsafe aircraft don’t end up crashing.

Also it’s mostly nonsense: executive compensation is often tied up in revenue and market performance, and they’ve mostly cashed out on that before the financial damage caused by their “work”.

We need to stop using "profit motive", "shareholder value", and "rational markets" as if they somehow provide moral air cover for actions that cause easily avoidable deaths and/or massive damage to the commons.

Everything today is about shareholder value. Nobody, but nobody gives a flying frog's fat fucking ass about the end user/customer/employee/etc any more.

Well, don't support public companies then if at all possible. Public companies = greedy shareholders

On the other hand, end users/customers/employee's don't care about schareholders either. Sounds fair to me.

And why should they especially when companies are acting like this more every day, proving the almighty dollar is more important than anything up to and including human lives. Companies give us nothing unless we pay, with money or information, they are not entitled to us caring for them. Companies, however, should most definitely care about customers, as if they go away so does the company.

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