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Comment by LeifCarrotson | Hacker News Reader

I hate the "everything must be a profit center" MBA attitude. Boeing is a profitable company because they make machines that fly people from place to place safely and efficiently. Part of that is having training, support, service, replacement parts, sales, manufacturing, IT, R&D, and all the other things required to make things fly.

It's easy to sit in a conference room and say "gee, IT hasn't made any money, instead they've spent a lot of it! Let's downsize, outsource, and make our own divisions pay for IT, we'll see whether we're successful by measuring the IT department's profit next quarter." Inevitably, that department makes more money under that regime, but the company is worse at flying people from place to place.

If you're a hardware company, the software should be free. The support should be effective. You should be hosting training events at nice facilities with free pizza because people who know how to use your hardware will buy more of it. If I have to pay for your software, I'm going to be pressured to buy the Light version instead of Enterprise, and I'm going to pay for only one training class and not learn about your next iteration, and you will sell less hardware.

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Using a throwaway account.

A few years ago I did some consulting work for British Airways. It was interesting in that as far as the planes themselves, and the operational risk of the planes was concerned, the company had their shit together. Decisions made from a safety first point of view. Engineers making the calls. Everything else no object.

But ALL the software around the planes, from the ops to ALL of the b2c was outsourced to hell. Cue a few months later their entire datacenter went down for 3 days, then a massive security breach.

Their idea of agile was to release stuff once every 3 months in a 2 week window.

The thing that I found odd was that they didn't really perceive software engineering as engineering. They had time, money and patience on the aero engineering, but software to them was just another cost center.

This mirrors my experience in automotive regarding the sentiment for hardware vs software.

I think that's often the case in any company that doesn't sell software as a product/service. I know automotive companies are really terrible at it. That said, I'm not sure what level of engineering they do anyway. It seems like at best they design the chassis and maybe the engine. Everything else appears to be contracted out to some other firm. Is that the case?

Not sure about other car companies but my last job was at GM where I worked on their android auto platform. GM had before outsourced their development, but found the quality to be lacking so they have started to move software development in-house.

Agreed, my company's biggest problems all come from a lack of basic software/programming skills which they've decided is not something they need to spend any effort on. In the words of my managers, "we are not a software company" and "learning to code is easy" and "eughhh I don't want to learn any of that computer science stuff". That latter one was when I mentioned something about clean code.

"learning to code is easy"

Oh boy, that's a good one. Like learning to write and learning to paint are easy. You can easily get SOME result...

By the way, I have automotive experience. They do, and have to, pay well.

The one industry where car analogies are appropriate :)

I feel the need to support your point. British airways software has been utter s* in my experience. It's broken multiple times a year for days, making it impossible to buy tickets. Sometimes it's only the website, sometimes the mobile app, more often than not it's both.

My sister has been trying to get a ticket to visit me for Christmas. Couldn't do it because British Airways checkout is broken, tried in multiple browsers. Didn't work yesterday, didn't work today.

Yep - I've complained numerous times about being able to go through the upgrade with points flow on an existing booking, only for something to go wrong after entering my payment details and then just having to wring a call center to process the upgrade.

I wonder what the cost of annoyed customers who now fly Virgin and call center salaries is compared to proper engineering?

This was my experience as a contractor for the Navy, years ago. We’ve had radar systems that can detect planes after a reflection on another plane, but the software is dogshit.

Someone once told me, it’s because generals and admirals can see hardware, and fell like they got value for their money. Software, not so much.

Perhaps it’s something innate in humans. Remember how Beats headphones used to add weights to feel more substantial?

This reminds me of when I gave an tour of the software development company I was working for (we had about 250 employees at the time) and his reaction was "so many people, but you guys don't produce _anything_".

He was right, we didn't ship anything physical.

We just lined up electrons. :)

"We just lined up electeons" :)

Adding weight to headphones does have a practical advantage: it keeps them firmly on your head.

I had a relatively expensive - but very lightweight - set of headphones a while ago and I swapped them for a cheaper but heavier pair because they just wouldn’t stay in place.

That doesn't sound right to me. I don't think gravity is or should be the most important or even merely a significant factor keeping headsets in place. That, and less weight on the head should feel better to the head-holding muscles (not to your biased conscious self evaluating "feel" for the only brief time while you concentrate on it).

I would even say it is the opposite: The heavier the headset the tighter its grip has to be so that it stays in place during head movements. A tighter grip means more pressure around the ears, which for most people means less comfort.

I could see that while you concentrate on the feeling of headsets you may have that same bias as most people probably have that heavier equals better (quality, more solidly built), but I doubt that is true for the rest of your brain and your body.

I tried to find something, anything of substance on this concrete subject but this time my Google-foo failed. Links to research would be appreciated, if somebody else has better luck. A possible confounder is that heavier headsets - if it's not a cheat like in the discussed example - might indeed be better built, but I think we are talking about similar built quality here that only differ in weight, and objective criteria, not self-reported biased by already known to exist weightier-is-better value bias.

I only found this, which is really just a statement: "Relation between weight and comfort?" -- https://www.headphonezone.in/pages/headphone-weight

The weight of objects has interesting effects on our judgement: https://www.discovermagazine.com/mind/holding-heavy-objects-... -- but obviously that does not mean the body sees weight the same, physiologically.

Here's an explanation by a rating company about their headphone comfort scoring: https://www.rtings.com/headphones/tests/design/comfort

It seems the padding matters a lot more than the weight, but lighter headphones need less padding, so for a given price point the lighter headphones are more likely to be comfortable.

> Remember how Beats headphones used to add weights to feel more substantial?

This was not really true, the original tear down that found weights was of a counterfeit pair of Beats headphones.

https://www.gizmodo.com.au/2015/07/are-beats-headphones-real...

That article says that while the first pair was counterfeit, real Beats still include weights to feel more quality...

"As a few folks have pointed out, the version of the headphones we tore down was likely counterfeit. We have posted an in-depth comparison of these and a pair of authentic Beats headphones here. TL;DR: the authentic pair is nearly identical to the counterfeit one."

https://medium.com/@BenEinstein/how-it-s-made-series-beats-b...?

> Remember how Beats headphones used to add weights to feel more substantial?

Beats didn’t do this. Cheap counterfeit headphone manufacturers did.

That's an interesting contrast to what I remember Richard Feynman saying about NASA after the Challenger - that the software was the area that was impeccably run compared to everything else.

Programming was a different game back then, when every kb counted. The bar was much higher. Niche PhDs chasing the cutting edge of technology. Now we have web dev.

What’s wrong with controlling spacecrafts with JavaScript?

Lack of a built-in integer type makes it clear that measurements are inaccurate, so there's a good reason for using JS in that domain :)

You know, you're right. We could even connect it to the net via satellite for real time updates from a headless browser.

"Their idea of agile was to release stuff once every 3 months in a 2 week window."

Can someone explain why this is actually bad?

(EDIT: I'm being serious, so please don't just down vote it without explaining. For airline industry with legacy systems, I don't necessarily think it's bad, but maybe I'm missing something.)

Agile Manifesto[1], principle #3: Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.

There's nothing inherently wrong with this, if 3 months are considered "frequent" in your industry (true for mission/safety critical systems, or systems that should not be upgraded frequently for some reason).

The idea is to deliver small, non-breaking increments to production frequently, rather than infrequent, big bang releases.

1. https://agilemanifesto.org/principles.html

I took it as more of a "only did this one aspect of it" statement more so than a "the one thing they did was bad" statement.

As someone who is familiar with BA IT operations but not connected to B2B/C in any function I can say what a shitshow from experience. Engineering has put up a decent firewall to keep the MBAs from mucking it up. But shit rolls downhill and it’s only a matter of time.

Hopefully the Boeing fiasco is causing other engineering lead companies to refocus their priorities.

To echo what others have contributed, I see this as well in the aerospace industry. Project managers are often willing to accept software as a black box component but wouldn’t dare accept hardware without a high level of quality pedigree. I think some of it is the tangible nature of hardware but also because systems engineers on these large projects almost never come from a software background.

I often wonder if the cavalier attitude towards treating software as an engineered product is because the software industry is relatively young. I imagine a lot of the cowboy attitudes we see in software were also prevalent in, say, pressure vessel design 130 years ago before adoption of strict design standards became common practice. I’ve heard it said that software is very much in the cave drawing days by comparison.

It feels crazy to me to see 'make training profitable'.

A) Not everything has to bring you a profit, jeez.

B) You know how you profit from training? By actually providing solid training to pilots who then fly your planes skillfully and don't crash and don't have any trouble landing. You not only get money from customers paying you for those pilots to fly them, you also save money by not getting sued into oblivion for your negligence.

It feels crazy to me that there's no proper accountability for it.

"Let's make training profitable" + every other decision on the software side = 346 dead people. Those deaths weren't an accident, they were a result of Boeing's desire for perpetual growth at any cost, and to try and beat Airbus at their game. No one except the families of the victims will suffer from that. But go ahead and carry a bag of weed and be prepared to spend your life in the system.

Maybe it's time we rethink how limited liability works; and we get rid of this notion that corporations are beyond reproach (and they are, because the fines cost less than the profits).

Sadly it's not a feature of Boeing, but a feature of unchecked capitalism.

I think all of us here remember the setup for the Wall Street crash in 1929. That was influenced heavily by unchecked capitalism, along with the pressure of WW1 going on in Europe and other world events.

One of the responses was to restrict capitalism (it became fettered vs. unfettered at the point). And it was a good one, one that has seemingly been forgotten or ignored.

Unfettered capitalism, through history, is a net loss for society. But the more we deregulate and seek profit at any cost, the more we re-align with that old view.

In this instance, Boeing seems to be ok with the death of ~350 people.

So I’m a leftist. So I sympathize with what you are saying. But you have to be careful using the term “capitalism”. It’s a highly overloaded term. For example I’ve come to realize that libertarians use the term quite differently from leftists. So if you use the term in mixed company you will find a lot of confusion results. It can be helpful to use other terminology which is less confusing. For example, Marxist economist Richard Wolff describes “capitalism” as the mode of production where a small elite own and control the means of production, inevitably shifting the focus of production to satisfy the needs of that small elite (endless growth being one). But libertarians describe “capitalism” as free economic exchange through markets. Richard Wolff was recently in a debate with a prominent libertarian and the man agreed with Wolff on almost everything. And Wolff is not opposed to markets, he’s opposed to elite control of the means of production.

So it’s best not to use “capitalism” in the leftist sense and expect people to understand you. I also think there is a very serious and legitimate concern over the power of the state. The US state killed the leader of the Black Panthers, for example. We need regulatory control in the hands of the people. You may do well to study leftist critiques of the state. Mikhail Bakunun was active at the same time as Marx and was a critic of Marxism. Bakunin famously said in 1873:

When the people are being beaten with a stick, they are not much happier if it is called "the People's Stick"

Anarchist here, used to identify as a communist. I'd argue that both of your "capitalism" definitions can be pointed to as potential causes of the 737 fiasco, but that the latter ("free economic exchange through markets") seems more in line with what GP was wanting to, err, correct; I read GP as wanting more regulation for airplanes, which is antithetical to free exchange. I feel like the market itself will correct for these problems on a long enough time scale -- if people value the lives of their families enough they'll stop buying tickets for flights on planes made by this clearly inept entity, and if they don't value the lives of their families that much then that's another tradeoff they're free to make. (Yes, some people are too poor to exercise choice between options of varying cost, but that's a problem with poverty rather than choice -- regulating single engine Cessnas out of existence won't mean that radically impoverished people have access to better planes, it will just take away their freedom to bet their lives on flying in the first place.)

> your "capitalism" definitions can be pointed to as potential causes of the 737 fiasco

For capitalism to work as intended, there has to be "perfect information", i.e., no lying and everyone knows what they're paying for. This is obviously a practical impossibility: companies and people lie, and most consumers buy things without fully researching or knowing what it is that they're getting.

One purpose of regulation is to improve the situation. If the FAA certifies a plane as safe, then consumers can rely on that certification and don't need to do their own safety research. They still don't have "perfect information", but it's a lot better than without it.

Good regulation is not "antithetical" to capitalism, it is often necessary for it.

> For capitalism to work as intended, there has to be "perfect information",

If you assume that capitalism is intended to work not in the way sought by the people who drove the move to capitalism but instead according to idealized economic theories much younger than capitalism, sure.

> If you assume that capitalism is intended to work not in the way sought by the people who drove the move to capitalism but instead according to idealized economic theories much younger than capitalism, sure.

I actually agree with you. Much of the foundation of capitalism was based on flawed assumptions ("perfect information" being a major one). Huge amounts of abuse were allowed to be perpetuated as a result, and it's fair to call into question the legitimacy of the entire enterprise.

That said, there are good ideas in capitalism, and we shouldn't throw out the baby with the bathwater.

> Much of the foundation of capitalism was based on flawed assumptions ("perfect information" being a major one)

Perfect information isn't part of the foundation of capitalism.

It's part of rational choice theory, which didn't exist until long ashtray capitalism. (There are arguments for capitalism rooted in rational choice theory, but those are retroactive justifications not the foundation of the system.)

> Huge amounts of abuse were allowed to be perpetuated as a resul

The abuse predates the theory “justifying” it, the theory isn't the cause of the abuse. Capitalism historically wasn't grounded in theory, it was grounded in the opportunism of the mercantile class under late feudalism leverage wealth, power, and the opportunities created by new technology to rearrange society so that the mercantile class (the subset that became the capitalist class) could displace the economic (and also political) power for the feudal nobility.

Intended by whom?

I claimed that regulation is antithetical to free exchange -- if you restrict me from trading something then I am not free to trade it, and if you don't restrict me then the thing is unregulated. I consider this statement a tautology. I don't know what you mean by "good regulation" and "capitalism", but I'll stand by my original phrasing.

> I claimed that regulation is antithetical to free exchange -- if you restrict me from trading something then I am not free to trade it

Not quite. If you buy something without knowing what you're getting, that's not free trade. An airline selling a ticket on an unsafe plane but calling it safe is fraud, and fraud is not free trade.

A "perfect" regulation would only limit fraudulent trade, but allow all other types of trade.

However, because we don't live in a perfect world, regulation will inevitably limit some legitimate trade as well as fraudulent trade. A "good" regulation is one that limits enough fraudulent trade to more than compensate for the legitimate trade that it inhibits.

> Not quite. If you buy something without knowing what you're getting, that's not free trade.

As a matter of language, I disagree. If I want to bet that the man offering me a lottery ticket is accurately conveying the odds, and you don't want to let me make that decision because you just overheard him discussing the fraud he was about to commit against me, physically stopping us from making that exchange by use of force is a restriction of my freedom to make that bad decision. We can agree or disagree about the desirability of that, but linguistically it seems pretty clear to me that this is a restriction of free exchange. Even when I supported such a use of government force I could recognise that.

> If I want to bet that the man offering me a lottery ticket is accurately conveying the odds, and you don't want to let me make that decision because you just overheard him discussing the fraud he was about to commit against me, physically stopping us from making that exchange by use of force is a restriction of my freedom to make that bad decision.

If someone wants to sell your friend a lottery ticket, and you know with certainty that the seller has no intention of paying out a winner, this is not free exchange. It's just a lie and simple fraud. Furthermore, as a friend, you should probably at least try to intervene. The same is true of government (or any authority).

Making a fraudulent trade is not "free exchange", legally, morally, or linguistically.

I would try to intervene with language, but not violence. I would appreciate and expect the same from my friends -- there are people in my life I've discussed very similar hypotheticals with. None of that has to do with whether or not physical interference would constitute a cessation of free exchange; forget legality and morality, just think about the definitions of the words we're using.

In any situation where you are using violence to stop two people from exchanging physical objects, you're interfering with free exchange. If you actually disagree with this, I would like a term which refers to the concept I'm trying to discuss. I'd suggest that you're referring to something more specific like "well informed free trade" or "information symmetric free trade".

Who said anything about violence? No one should try to stop fraud with violence, except in extreme circumstances. The answer to fraud is to simply repay the person who was defrauded... someone who bought a fake lottery ticket should just get their money back, there is no need to resort to violence.

You seem be assume that "free exchange" simply means no one is physically stopping you from making a trade. That isn't what free exchange means. Free exchange means that two consenting parties trade known goods without undue influence. If someone puts a gun to your head to buy something, that isn't free exchange. If someone sells you a fake lottery ticket passing it off as real, that isn't free exchange. If someone sells you something they don't actually own, that isn't free exchange.

You're commenting on a common libertarian rhetorical excess that's ancillary to the point being discussed: If something can be ultimately done by force, it is equivalent to violence.

Meaning, when you get a parking ticket, that's state-sanctioned violence, because ultimately some non-consentual means could be applied to force you to turn over the money. Taxes are violence by the same argument, and, I presume, regulation of a lottery. (Someone might be sent to prison).

How do you intended to enforce regulations without violence? Without violence, your regulations are merely suggestions which I am free to ignore. I'm fine with suggestions.

Again, if you can't agree with my use of words then please provide a term you find suitable for the concept I'm trying to convey. I provided two terms I find suitable for the concept you're trying to convey, but you've provided me none despite an explicit request. To me, when somebody refuses to find common language it seems like they're using language as a barrier rather than a bridge. To disagree on a definition can be understandable, but refusing to provide any alternative looks like rhetoric rather than a legitimate attempt at mutual understanding. What do you call unrestricted exchange of items between individuals regardless of differences in knowledge or legal ownership? I want a term that will clearly convey this concept to you, and others who are using language in a similar manner. [Edit: how would you feel about "unrestricted object swapping" or "unrestricted barter"?]

> If someone puts a gun to your head to buy something, that isn't free exchange.

I don't think I've said anything that would suggest this example is a free exchange, but the other two which don't involve coercion through threats of force I will stand behind (as free exchange, not necessarily as nice things to do to people).

>For capitalism to work as intended, there has to be "perfect information", i.e., no lying and everyone knows what they're paying for. This is obviously a practical impossibility: companies and people lie, and most consumers buy things without fully researching or knowing what it is that they're getting.

And of course advertising, a nefarious tool to lead people to make decisions which otherwise they would have not.

Democracy (and variants) is obviously in conflict with "long enough time scale", as in anything highly motivating the electorate will choose to compel a legislative alternative to free market outcomes. The not so subtle difference between a legislated outcome and a free market one, is the former is the sovereign, and near as I can tell not a single country's founding ideas/documents specify an economic system.

Forgive me for not caring what my genocidal people decree about which laws govern this land our "sovereign" (over whom?) ancestors stole, but yes, there is certainly disagreement between democracy and evolution. And with strange aeons, even democracy may evolve.

Unless you live in Mogadishu you are not an anarchist. In any real sense.

  the pressure of WW1 going on in Europe

In 1929?

> unchecked capitalism

Airplane manufacturing has lots of problems. But it’s a highly regulated industry. “Unchecked capitalism” is a bad description.

Well, yes the airplane industry is highly regulated. But the endless pursuit of growth is a feature of unchecked capitalism. And my understanding is that there has been more “self regulation” attitudes in the airline industry in recent years. So it makes sense that you would begin to see features typical of unregulated capitalism in an industry that is relaxing regulation.

Regulation doesn’t mean it would be safer, just more bureaucratic. There are plenty of examples in the US of regulators failing to properly regulate like in Flint. Adding these regulations often benefits the capitalists more, as it raises the barrier of entry for smaller competitors and makes the market less competitive in the long run.

Because in feudalism and before, or more recently in socialism - where I grew up - nobody ever took shortcuts, for selfish reasons or to please someone or to fulfill some goal (set by some boss or by the "central committee", does not matter) and everybody only thought of the greater good?

Many times when there is discussion about issues like the environment there is such a comment blaming capitalism. I can assure you from my own personal live experience and from having seen huge changes after reunification, in capitalism-free East Germany the environment was orders of magnitude worse off than in capitalist West Germany. Don't blame human behaviors on capitalism/socialism/whatever.

Precisely. People generally do as the system rewards them. If you live in a society of good opportunities and strong law enforcement, people have no incentive to steal, and will probably mostly not do so. If punishment for rape is lax, and/or the culture does not strongly censor it, then sexual crimes will abound. Etc.

And of course, in neoliberal growth capitalism, the pursuit of perpetual growth will mean that some very stupid things are going to be done because they please the system: planned obsolescence, burning unsold clothes to keep the brand valuable, etc. They would mine the earth dry if it would make them a penny in their quarterly reports.

I think what they meant was making training less costly for their customers. It's a lost opportunity, when pilots train instead of sitting behind the wheel/stick flying goods or customers around the world.

I can't stress enough about the first sentence and how important it is.

Metrics have become the goto into having a business nowadays and we min/max everything, squeeze every little bit we can out of things. Its an open market and anyone is able to do however he pleases with his company, but I hate it.

The most recent example that comes to mind is Activision-Blizzard where they exceeded their revenue and profits for 2018 but they went on and downsized the company letting people go and cutting down the overall experience. I hate when this happens really, especially when its crucial to safety like airplanes. I think Boeing should have gotten more than a slap on the wrist for the max's that crashed.

Is this an "MBA attitude?" I get the urge to rant, but I feel like even a good MBA would have seen training as a liability to mitigate in the larger business, not a profit center in its own right.

A competent exec doesn't structure a business so that "everything is a profit center", as that drives specific behaviors, and you have to be careful about the accountability you put in place and how you're measuring those departments. Competent management should understand that.

That said, there's an annoying fetish from human beings to obsess over what's easy to measure, which is not always what's important. Profit being one of those things...

This is unfortunately a very naive point of view. An exec in charge of training is an exec in charge of a cost center. No one likes costs, so no one appreciates his job and his career is hampered.

Turning it into a profit center earns him respect and promotions.

This is why some orgs did an "internal outsourcing" of their IT / training / other "shared services" - they bill the other departments for what they do. It both disincentivizes waste for the client departments and prevents the "IT department is a cost center" mindset, at the downside of a boatload of bureaucracy if every purchase of, let's say, a broken HDMI cable has to go through countless approval loops.

Our department once tried to buy a 200$ fiber optic cable... it took 2 engineers, a manager and a director 9 months of paperwork to request one... and in the end we never got the cable.

I appreciate you pointing this out. Reminds me of a book called Obliquity where I think the author specifically mentions Boeing in a story talking about how companies make more money when they don't specifically focus on making money. If I recall correctly, he mentions how Boeing used to focus on making really good planes and when they did, they made a lot of money. When they shifted to focusing on profit, they started to make less money because they made worse planes. The book is a few years old but feels quite prescient.

That's because we as a culture over-analyze and study businesses as if they are living entities that are the sum of all of it's different internal divisions/parts/stockholder-connected output, instead of fundamentally about delivering value to customers and getting back a greater amount of value in return.

The universities and pop-business books has made everyone so obsessed with the business processes themselves and their management, particularly the stuff that has commonalities across various niches: finance, management culture, 'innovation', etc.

But the all of the various unique fundamental value propositions are what really drives the companies, everything else is just helping deliver and execute that, but the core of the business often goes to the way-side in favour of obsessing over perfecting all of the the small processes in between. An ideal organization should put its primary business front and centre, above the various small processes which it is composed of mostly just for practical reasons of running a business.

It's sometimes difficult to distinguish between the two but I do very much think that it's possible to lose sight of that distinction in the day-to-day running of things, especially once the business gets really larger and running the business itself becomes the biggest time-sink for everyone involved.

I agree. I think we often get too focused on the small details of life and forget the big picture. And by we I mean me as well thank you for your words

Is it this?

https://www.johnkay.com/2004/01/17/obliquity/

Yes! That's it. I only read the first few chapters because my friend loved it and I gave it to him. However I loved those first few chapters

It looks very interesting, thanks!

The essay is from 2004, the whole book (240 pages) from 2010:

https://en.wikipedia.org/wiki/Obliquity_(book)

And TEDxWarwick talk:

https://www.youtube.com/watch?v=_BoAtYL3OWU

Because higher-ups are incentivized to show metrics improve and get their bonus, and so called new data-driven business culture has a bias to measure whats is easy to measure, but not necessarily what’s important.

E.g. we cut 50% of the cost of training this year vs. we improved the training and pilots are more efficient.

Ah, I find that point fascinating, that this attitude trickles down into the incentive structures, and maybe just job evaluation in general. How to measure someone's impact on an org in a way that is not a number: hours inputted, dollars saved or gained, lines of code, leads gained/lost, followers gained/lost...do you know of any examples where you think they've done it in a way that takes the bigger picture into consideration?

I don’t. I believe it’s fundamentally hard to measure second and third order effects too. Maybe the best one can do is just ruthlessly focus on core values, otherwise is very easy to fall into local optima.

It's because these machines and industries have existed and in fact thrived for 50-100 years without any software at all. Software engineers are often seen as glorified IT in aerospace companies.

That's what Capitalism does, to make as much money as possible. And it's up to the government to regulate them, and it failed to do so.

> That's what Capitalism does

Not so fast - scroll through it, to 2019: https://en.wikipedia.org/wiki/Aeroflot_accidents_and_inciden... Be sure to expand sub-articles.

What do you suggest is the cause that underlies poor aircraft design in both capitalism and not-capitalism then? The article you link is not very informative on this question since it is about an airline, not an aircraft manufacturer.

Boing has lost a lot of money on this, which capitalism should avoid no government intervention required.

Instead, this is not really capitalism at work but internal forces inside a giant organization. The risk reward calculation for internal management does not track the company’s overall risks vs reward resulting in company wide losses.

Timescale matters here. If Boeing becomes an example of an organization which suffered greatly, competitors will become more cognizant of the need to make internal incentives match external ones.

And 346 people lost their lives plus whatever its costing their families. But fuck the humans, profits are in the line.

You're going to get downvoted for painting in broad strokes, but the spirit is correct: the societal goal of the free market was to use profit incentives to improve process efficiency in order to more effectively allocate scarce resources, but the failure mode we're experiencing is that the people pursuing profit have come to see the pursuit of profit as the point of capitalistic exercise, rather than as merely a carrot to entice entrepreneurial exercise for the good of society.

It's supposed to be the responsibility of society to keep incentives in check such that this doesn't happen (via regulation or otherwise), but once profit-seekers leverage their profits to seize the reins of power you've got a big problem on your hands.

Nah, this is a business that is thriving on US corporate culture. They're doing the same as everyone else; avoiding spending money so they can keep it for themselves instead of paying it out. The executives and shareholders thusly get nice benefits from the company cutting corners and hoping they don't get caught.

You have to keep in mind for these companies keeping the customer happy is not the intent. It's merely a coincidental side effect of any potential profit seeking they do.

The only people they really care about and are accountable to are the shareholders and investors. And they want infinite profit at the sake of everything else. If you want to solve this problem then you need to remove them from the equation entirely because given enough time they will run a company into the ground and run away with the proceeds.

All publicity traded companies are the same. The only distinction is the means they use to make money at first. Making money is the only goal, and shareholders demand growth quarter over quarter. This is why the fate of successful public companies is to become broader in scope while leveraging anti-competitive practices. The possible end results are either that the company is killed off, or that it effectively becomes the government or otherwise forces its host country into in oligarchy.

"Making money is the only goal, and shareholders demand growth quarter over quarter"

I think shareholders of Boeing would also expect stable growth through sound risk management

Nickel and diming on safety features and training is playing with fire.

Blaming the share holders for something like this is a bit weak.

Share holders of a big, established company want long-term and stable profit. Short-term profit at the cost of increased risk is not something that share holders of a company like Boeing are looking for.

In theory they should want that, but if the company spends money on preparing for the future and its profits decline as a result, then the share price drops. The incentives aren't there.

If short term profit drops but the consensus DCF of future activities rises, the share price is likely to go up. (That’s where preparing for the future creates shareholder value.)

On the other side, it happens all the time that a company has a single blowout quarter and the shares fall.

Amazon would appear to be a strong counter example. Investors are happy to tolerate low short-term profits as long as management has a credible plan to increase long-term profits.

Shareholders are the strawmen used to justify what passes for modern business philosophy.

There’s an almost religious belief in whatever keeps the analysts happy this quarter is the right move. While this is done in the name of the shareholder, it happens to align with the compensation of the managers and directors making that decision.

I see Boeing as a defense/aerospace version of HP, GE, or IBM. In the case of Boeing, management went so far as to move a couple of thousand miles from most of the company. All of these firms chose to put themselves on the path to decline, and did so in a way obvious to anyone who looked closely.

Shareholders by definition are not short term investors. Short term investors own bonds, short term ones to be specific. So it makes no sense that shareholders are scapegoated for everything. Even if someone trades in and out of Boeing stock in a millisecond, the existence of someone to sell to depends on people having an indefinitely long view of the company.

Why do large publicly owned companies optimize for maximizing the next quarters results at the expense of everything else then?

Perfectly rational investors with infinite lifespans might do what you say, but in reality most people are fickle, short sighted and don't actually do much thinking.

How do you even define “optimize for maximizing the next quarters results at the expense of everything else”? Obviously big companies don’t literally do this. I’m pretty sure every big public tech company is currently spending money on products that will not be released before the end of the next quarter.

Big companies make decisions all the time that harm long term prospects (sometimes in ways that are difficult to measure) in favor of obvious short term gains.

As an example, when I worked for IBM, they furloughed the entire Systems technology group (essentially the folks working on things that aren't pure software or contracting) for a week.

This was done purely to reduce the payroll for the STG so that it's income would look better on the quarterly earnings.

Neither the inability to get anything done for 2 weeks (furlough was staggered so only approx half of folks were out each week) nor any of the follow on effects on project or work force was not enough to impede this type of roughshod pursuit of quarterly accounting numbers.

Sure, but now the claim is simply that companies focus on varying time scales, and sometimes those time scales are shorter than what some people would like to see. That’s fairly clearly true, but it’s a very different claim than that big public companies optimize for the next quarter over everything else.

Note that this is unrelated to my (original) comments and I wasn't expressing an opinion on whether companies "optimize for the next quarter".

Sure they do, but people can and do get just as angry when companies ignore short term harm with the promise of long term gains. So the issue isn't short term vs. long term, but rather being right vs. wrong and honest vs. dishonest. It's really hard to always be right.

I mean, if you want "long term thinking", does that mean that WeWork is a better model than Boeing? Because people seem to hold it up as a failure of capitalism just as much.

I'm not saying stock investors take a long view in some absolute sense, I'm just saying they obviously inherently take a longer view than any other stakeholder.

A bond holder doesn't get paid their interest payment, it's a crisis. The government doesn't get the taxes due, it's a crisis. An employee doesn't get their paycheck, it's a crisis. Dividends are an "if we feel like it" thing. Many, many companies simply say "we have never paid any dividends and we may never pay any at all".

Stockholders by definition can only rely on the nebulous entire future of a company for stock value - either it will be sold some day for $X, or the dividends will total $X. That's a longer term perspective than anyone else has.

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