I somehow notice a lot of this lately, in many different areas. I wonder if there isn't a common cause behind those. Is it just covid or something bigger?
In the past this wasn't as big as an issue because the risk was spread out amongst a multitude of small to medium size corporations. But again, over the last few decades corporations have become mega-conglomerates through buyouts and mergers/etc... Too big to fail. All the eggs in fewer baskets. Again, in an attempt to keep growing, because in our current economic system and the culture promoted in it (partially by MBA's) is the idea that if your company isn't growing it's dying. And even if it's growing, if it's not growing by a large enough amount it is failing...
So you could have a 1,000 person corporations stabley making 100 million in revenue. Providing good benefits and salaries to all. But if its not growing, then it is viewed as failing ... It's truly an absurd mindset and culture.
The COO may have been there 30 years, and may lack an MBA, but increasingly it is this type of CxO that has been reyling upon MBAs and other consultants (operations research) to restructure the organization into an optimized-but-fragile state.
It is the rare old-hand that can standup to younguns talking tech and math, subjects he does not feel comfortable with.
money, responsibility, prestige
> that reward a certain style of business
profitable, growing, innovative
These trite rules get repeated so often they become like The Mandalorian "This is the way".
I think every industry is full of this kind of nonsense. Some closer to home examples : everything needs to be in the cloud; immutability is good; use 3rd party SaaS services for everything; code comments are bad; ...
OTOH didn't Facebook just demonstrate why building everything in-house is dangerous?
You are lowering you cost but by doing so, you are increasing your risk.
Furthermore, by using external saas, some business will have a tendency to get rid of some IT people to "really" save on cost which means you'll lose manpower for when something happens.
Software development has changed in the last decade and now everybody knows that they have to take failure into account when building software. Chaos Monkey opened the eyes of a lot of It people.
There should be some "MBA" level chaos monkey solution.
You have to accept some risk, and it's often hard to compare risks on the business side vs risks on the technical side.
Finance never did produce, it's whole purpose is to extract.
Run a gasoline engine to lean and it will start to heat and stutter...
As for the growth, in a peaceful society you can grow as much as the amount of people you supply, so without war there will probably no other way than saying goodbye to growth.
When things have been built to last, there is a lot of "fat" that can be cut - for a while.
The numbers will always look better - until they don't.
When the music stops, the "lean" "financial engineers" will be long gone, and those still there will have not the slightest clue how to re-start a culture of serious product/service development or robust operations, and the corp falls into a death spiral.
If you are a trader, you DGAF.
If you are an investor, watch for numbers improving without product and operations improving, and new markets being opened.
The "religion" of profit maximization and cost minimization has a price - it's NOT GLOBALLY OPTIMAL OVER TIME for the survival of the organization (profits, anti-fragility, etc.) nor for the larger system of a national or global economy.
Mathematically, flat, non-cycle economic systems are IMPOSSIBLE. You can never achieve it WITHOUT introducing systemic instability because you are eliminating ALL the information REQUIRED to maintain feedback control and you are removing agility of the system. Once the error signal goes to zero, the system is 100% out of control! It's open loop. Then any "environmental" change can tip the entire system over where that could be a competitor, other nation or "act of God" disruption.
And this is what happens when you profit maximize/cost minimize to its ultimate limit. And on the way to that extreme, you are increasingly make the system more brittle and the probabilities of failure increase.
Re having all people being "productive", the reality of things like Price's Law also make reliability worse as an organization (corporation, government, etc.) grows.
Price's Law says that the number of people who actually do most of the work is proportional to the square root of the organization size. In the case of supply chains, most of the people who are "assuring system reliability" actually aren't and generally are incapable of doing so anyway. It's a reality due to network effects (adverse ones but the same dynamic as the good ones - you can't control or differentiate the two).
Note you can take it to the other extreme: not worrying about profits is just as bad if not worse. Socialism/Collectivism doesn't work either for similar reasons actually.
Something has changed in the last 10 years - the last five in particular. I obtained my frequent flyer number from them in 1985 and have flown them hundreds, if not thousands of time so yeah, I have a LOT of experience to draw from.
A great overview of how they have optimized to the extreme to their detriment is by Juan Browne: https://www.youtube.com/watch?v=kO39nIcuPhQ
If HK were still alive I sincerely doubt they would be operating the way they are today :(
Luckily I'm getting ready to move back to the west coast and shouldn't have to fly regularly again - thank god!
He stepped down just a few years before his death, in 2019.
A colorful character and legendary driver of the culture at Southwest.
I’ve only seen this in wealth generation instruments. Outside of those, I haven’t seen much of the “culture“ you’re referring to. In that framing, I think it makes sense and is anything but absurd.
The company is dual purpose at this point: part original mission (airline) part communal investment. Being a great airline that is comfortable with its current market definition isn’t sufficient for its second purpose. The commune’s investment expects growth in the abstract sense. They aren’t interested in Airlines, they’re interested in purchasing a piece of future growth.
Your Vanguard mutual fund’s performance depends on exponential growth - healthy retirement strategies live primarily off of growth, not principal, during the retirement phase. Maintaining value (~+2% on paper growth) doesn’t earn your company a place in society’s communal pool of assets.
Aye, I think that’s the point I’m making. Earning reports are for public companies. The company is part of society’s communal wealth if it’s publishing a quarterly earning report. Check out the companies not posting quarterly earning reports - because they aren’t publicly traded - and not building towards a public offering; I don’t think you’d find this same “culture.”
In your scenarios, the public communally purchased shares of future growth, priced in against the stated goals - and the public’s confidence the company would reach those goals.
What other outcome would you expect? If you think this is the market being irrational, you -personally- can buy at the “failure” price. If you’re right, you’ll do well over a long time horizon.
Nothing wrong with making an effort to lean out an organization, which is simply meant to make it more efficient and more competitive. It's not specifically just cutting staff, it's a lot of things. The trick is to not confuse leaning out with cannibalization. Like Musk says, if you aren't having to add stuff back in, then you aren't deleting enough.
The airline industry is under insane pressure given the environment, and this stuff is bound to happen. Safety may even be unintentionally sacrificed. This space is far from thermodynamically sound right now. If somebody has an easy answer for it, that would be some fat consulting stacks for the BTC fund.
I'll counter your generalization with my own: F250's are hammered with middle-management baggage. MM makes shitty decisions, and still causes tons of wait states. Having consulted for five F500's now, my observation so far is that the 250-500 range are much more incentivized to do what it takes to become more competitive. OTOH, the F20's I've consulted for severely need some waves of boomer (my gen) retirements.
BTW, the general reason M&A activity increases is because the associated market space has contraction pressure on it. What else are you supposed to do? The beginning of the end for markets, governments, empires. That's just the way us humans do things.
There's a decent summary of the book (and the general problem) in the 2012 Time article "Driven off the Road by MBAs"[2] as well.
[1] - https://www.amazon.com/Car-Guys-vs-Bean-Counters-ebook/dp/B0...
[2] - http://content.time.com/time/magazine/article/0,9171,2081930...
* they operate literally one type of aircraft, and therefore only have to train their crew once, keep the specific set of parts, etc.
* they optimize the hell out of making sure their planes are in use carrying paying passengers for the maximum amount of time
* they fly a vast network of point to point using secondary airports, as opposed to coordinating at massive hubs
These are all things that would make recovering from a massive widespread disruption very hard, and Southwest has been doing it better and longer than anybody else.
Southwest had plenty of older 737s as well, but the new MAX planes both fly farther and have more seats, so while the grounding was in effect Southwest was essentially paying to keep the things on the ground while scrambling to reconfigure their flight network, and it affected them the most.
> why you’d prioritize that over the aircraft’s ability to stay in the air.
This is an egregious misunderstanding. There was nothing wrong with the purpose of the the MCAS system nor the concept of it. What went wrong was its failure to follow the dual path design, and do a proper failure analysis of its design. There was a further problem with some pilots not understanding how to deal with stab trim runaway.
These problems have since been corrected, and MCAS is still on the 737MAX.
If the pilots followed runaway trim procedure, which is how the MCAS failure manifested, they would have been fine. In fact, that's what the other unmentioned crew of a 737MAX did that survived MCAS malfunction and landed without incident.
Boeing issued an Emergency Airworthiness Directive about the procedure, which the Egyptian Air pilots didn't follow, either.
They could’ve made a small sized aircraft that had commonality with the 787 rather than the 737.
If plane going from A -> B is late it cannot become flight B -> C. If crew for this plane are stuck in the ground long enough, they have to wait til the next day to fly as they‘re only allowed to be awake and work for so long.
Distributed systems can also be more complex to re-converge after a major disruption.
I'd imagine it's non-trivial to re-plan a network, given equipment and crew limitations.
And as context, we're talking about 24 hours later, now?
In the event of widespread disruption, planes will not make it to their next airport to become a different flight, nor will their crew. Crew can also only be awake and working for a limit of time, so if the disruption causes a crew to go over that limit they are not going out until the next day, etc.
With cloud computing, it‘s a bit different because which host you‘re using in a region doesn‘t really matter, but for airline a specific plane with specific people need to be in a specific time and place.
While Southwest remains my favorite airline.
At the higher end, it certainly isn't necessarily the best any more, but I do think that's mostly because Southwest has kept to its two free checked bags, whereas the major carriers now make significant revenues from checked bag fees.
This type of event is the obvious possible downside that is well known when you structure a company this way. It’s not that events like this aren’t expected, it’s that prepping for them costs more than the loss from not being able to absorb them.
Don't forget all of the future losses by losing the trust of both the customers and the employees.
> it’s that prepping for them costs more than the loss from not being able to absorb them
This assumes that they can absorb these losses.
> Don't forget all of the future losses by losing the trust of both the customers and the employees.
> This assumes that they can absorb these losses.
You can see how this is a problem, right? This essentially means the market is not working as it should - instead of improving quality of service, it makes people absorb the bad experience, ad infinitum. The market is not able to deliver feedback to the companies, who instead rely on some degree of "capacity for suck" in their customers, and the fact that there's a new sucker born every minute - by the time they burn out a cohort of their clients, a new population of naive, hopeful people shows up to replace them.
> You can see how this is a problem, right?
Actually the market works just fine: it transfers price pressures efficiently across all participants - including human beings. It's society that doesn't work anymore, because it has now lost any meaning of 'value' beyond monetary terms for most of the population. Most consumers now cannot choose not to minimize expenditure: either because they cannot afford it, or because they simply don't know how to look at experiences through a lens different from "what is the price".
Leaving aside flying private--which is a whole different magnitude of cost--consumers can absolutely choose to pay more to insulate themselves from much of the unpleasantness of flying. Doesn't help much when flights are canceled or delayed of course but you have Pre-Check, airline lounges, business class seating, etc. which do generally improve the experience.
But, yes, society in the aggregate does not value the better experience at what it would cost to deliver--certainly not to the point of effectively excluding a significant segment of the population from routine flying but, in the process, making it a more pleasant experience for others.
It's the market working exactly as intended.
If people want cheap flights, they will keep flying southwest and deal with the occasional problems that come with dancing on a razors edge.
So, from a purely rational perspective, if the company makes $100m profit over 10 years then gets "sick", well, job done - you just start another one and carry on. Money doesn't care for future consequences; if anything, inflation puts pressure on disposing of profits quickly while postponing losses (and risk), even if doing so will eventually kill the company.
Extreme "financialization" of our ways of production has given us great rates of efficiency and innovation, at the expense of long-term stability.
This is a purely financial take, not necessarily a purely rational one. I say that because it's pretty easy to dismiss all the human aspect of a company dying, all the suffering it creates as something to not be taken "rationally" but what it actually means is to push the human-factor into the statistics field and be done with it.
I don't agree with this worldview.
Companies shouldn’t exist for the sake of longevity.
The human element doesn’t matter at all? Their workers are fed up.
This tunnel visioning on financial metrics is so superficial and narrow that it makes me angry. A company is a community of interacting, real people, not a video game.
Failure to maintain altitude above ground level and failure to maintain solvency are in many ways equivalent.
Both domains involve taking risks, but with severe consequences when either risks are miscalculated or ground truths change. Financial bets can be hedged in ways flight profiles often cannot be, and Southwest are credited for doing this (with fuel purchase futures notably), but there's a sense in which businesses are arbitraging latent risks for present profits in ways which can prove catastrophic. (Venture start-ups are particularly prone to this IMO.)
Southwest's single-airframe fleet affords efficiencies, but also risks should faults arise with that airframe or subsystems of it (as with the 737 MAX scenario).
It's usually not a problem for a business to incur a short term operating loss.
It's not quite as simple as cash-on-hand, turnover, or profitability. Start-ups without revenues or net profits may be solvent if investment capital is available, premised on future profitability or a viable exit strategy. But it's fairly strongly related.
Airworthiness is more an overall assessment of risk.
A substantially compromised aircraft, with expert piloting and favourable weather, can still land successfully.
A fully-airworthy aircraft experiencing CFIT won't. Nor will one flown into unanticipated adverse conditions such as violent weather, volcanic ash, or wind shear.
And of course, a sufficiently crippled craft cannot be landed successfully no matter what.
(An additional case is of a landing with partial survival of passengers and crew. We'll omit that.)
Airworthiness increases he probability of a successful flight. It's neither strictly necessary, nor sufficient. It is part of the overall risk assessment, effectively a creditworthiness rating.
An airworthiness certificate is a specific certification of such airworthiness.
If "the price we pay" is a day or two of one airline (not any of the others) grounding most of its fleet, most likely due to a controversial internal HR policy, it's an exceptionally low price.
This is the thing with markets: whatever optimization you make, you won't reap the fruits of it for long. Someone - either competitors or adjacent third parties - will show up to suck out your margin, leaving you mostly as you were, but locking that optimization in as a permanent fixture in the industry. This means that when companies over-optimize, shoot past the optimum "value to profits" ratio and aim for higher margins still, they make the industry permanently (well, until next collapse) worse for everyone.
As opposed to...? tons of cargo and millions of people are being moved around everywhere, welcome to the modern world. The US commercial flight industry sucks in the grand scheme of things mostly due to a lack of competition. Flying in the US is expensive compared to Europe/Asia.
Just imagine that most businesses are equivalent to running your whole stack on a single, self hosted at home, RPI. Including the git repository, and no backups.
> The pilot emailed following the first Southwest post today (and provided his SWA ID to prove his identity). He asked that I paraphrase the email.
> Essentially, the union cannot organize or even acknowledge the sickout, because doing so would make it an illegal job action. Years ago, Southwest and its pilots had a rough negotiation, and the union would not even let the pilots internally discuss the possibility of working-to-rule (which would have slowed Southwest to a crawl).
> But at the moment the pilots don’t even have to talk to each other about what they’re doing. The anger internally - not just among pilots but other Southwest workers - is enormous. The tough prior negotiations notwithstanding, Southwest has a history of decent labor relations, and workers believe the company should stand up for them against the mandate. Telling pilots in particular to comply or face termination has backfired.
[1] https://alexberenson.substack.com/p/urgent-a-southwest-airli...
It can not be that high skilled professionals oppose having their body autonomy revoked... it can not be that "my body my choice" should extend to more medical choices than 1...
no no. this can not be allowed
Before the vaccine was widely available you may have had a case but once you become vaccinated your risk level drops to well below other risks we already accept as part of having a free society.
I cannot have murder, child porn, or heroin use be a part of my religious ceremonies. I cannot have libel be a part of my free speech and expression. I cannot be Typhoid Mary and spread disease around. I cannot open a restaurant that skips hand washing. I cannot go to public school unvaccinated for measles and a number of other diseases in most states. I cannot drive drunk, despite research showing doing so actually improves my chances of surviving an accident (https://www.scientificamerican.com/podcast/episode/odds-favo...).
Immunocompromised people exist. Tens of millions of children aren't yet eligible for the vaccines. I'm inclined to consider their individual freedoms not to be needlessly infected by a pandemic disease as important, too.
Care to address that or do you just want to keep building strawmen?
Again, this is fairly key. A large portion of the country is not yet eligible for the vaccines at this time.
> That is a very weak rebuttal
That is a very weak rebuttal.
1. Vaccinated people still spread covid, Vaccination primary effect makes a person asymptomatic, this has been proven.
2. "Large portion" is false, it is children under 12, who have a lower chance of serious illness than a vaccinated person. That said if you as a parent feel that risk to do high then you as a parent can take measures to ensure you children only come in contact with vaccinated person, this however does not mean you can impose that desire via government. To be clear I am fine with parents advocating business require vaccinations of their own business policy, I am not fine with government telling a Bar that is for adults they also must require vaccinations. Government mandates bad, private business choices good.
Vaccinated people still spread COVID, but they're less likely to. https://www.nbcnews.com/health/health-news/vaccinated-people...
"When infected with the delta variant, a given contact was 65 percent less likely to test positive if the person from whom the exposure occurred was fully vaccinated with two doses of the Pfizer vaccine. With AstraZeneca, a given contact was 36 percent less likely to test positive if the person from whom the exposure occurred was fully vaccinated."
> "Large portion" is false, it is children under 12
That's about 50 million Americans, a number I consider fairly large. https://www.statista.com/statistics/457786/number-of-childre...
Firstly, NBC? They're not exactly going to give you a balanced view, are they. Anyway. The article is about an academic study. Those are near worthless: even theoretical studies with 100% external validity frequently come out too late to be informative. The real world data is what matters here. Perhaps someone who was literally just jabbed spreads it less, but if the protection lasts three months it's irrelevant and misleading to make a temporally unbounded claim "vaccinated people are less likely to spread COVID".
The fact that fetal cells are used in testing has been public for a long time.
This article dates back to last December, for example: https://www.nebraskamed.com/COVID/you-asked-we-answered-do-t... (and here's me citing it two months ago, in case you want to claim a ninja-edit "last week": https://www.reddit.com/r/bestoflegaladvice/comments/p6f6yl/l...)
The “it’s the vaccine mandates!” argument has to figure out a way to explain why all the other airlines weren’t similarly affected when they instituted theirs.
Alex Berenson is… not a reputable source. https://www.theatlantic.com/ideas/archive/2021/04/pandemics-...
https://thefederalist.com/2020/09/07/atlantic-editor-concede...
https://thefederalist.com/2020/07/16/im-at-a-loss-for-words-...
https://dailycaller.com/2019/05/02/washington-post-atlantic-...
https://web.archive.org/web/20190911050141/https://www.daily...
https://archive.ph/MWN6K/again?url=https://www.theatlantic.c...
And many other examples.
OTOH, Derek Thompson predicted in 2017 that Bitcoin is overpriced at $16K, so maybe he knows something we don't?
Considering all of the other household items that are also commonly tested using fetal cell lines (including acetaminophen, aspirin, ibuprofen, albuterol, pseudoephidrine), the analogy doesn't apply.
https://arstechnica.com/science/2021/09/hospital-staff-must-...
As an example, here's a 2018 study on Tylenol using the HEK 293 line: https://pubmed.ncbi.nlm.nih.gov/29273526/
I don't appreciate this YouTube channel doing what they are doing, it is pouring fuel on a giant nothingburger.
That's their MO.
> Wikipedia can be a great tool for learning and researching information. However, as with all reference works, Wikipedia is not considered to be a reliable source as not everything in Wikipedia is accurate, comprehensive, or unbiased.
So, there's also that to consider.
https://en.wikipedia.org/wiki/Wikipedia:Researching_with_Wik...
Here's a Nature Communications paper on HEK293 containing a brief history with an impact factor ~13. https://www.nature.com/articles/ncomms5767
Above 10 is considered of significant worth.
If that's not good enough for you, stick to whatever it is you're good at, and stop citing trash.
Previously, if there was a shortage of say plane brake discs, the wholesaler would jack the price up 10x for the last 3 sets. That would lead to one of the 4 customers who wanted to buy them to say "nah, it's too expensive, we don't need it that badly".
The person who wouldn't get a set was probably the guy restocking the spare parts shelf, while the people who really really needed those parts right now so a plane can takeoff got them.
In todays world, it's illegal to jack the price, one customer buys all the cheap stock (one to use, 2 as spares cos they heard about a shortage), and now 2 planes can't take off.
The same happens for thousands of other products all across the world. The end result is the people who really need goods can't get them, while others sit on piles of stock 'lucky we bought some just before they ran out!'. Endgame: The economy grinds to a halt over tiny shortages everywhere.
The proper solution is to allow and encourage price gouging again, and have a PR campaign to explain to the public how changing this law really is in their interests, even if it appears on the surface that paying $100 for a flashlight in an emergency can't be good for anyone.
Price gouging laws are exclusively a local and state matter, and only apply at the retail level. Although there have been proposals for price-gouging laws at the federal level, none have been enacted. State laws don't generally apply to B2B interactions.
Any goods wholesaler I know of goes straight from "in stock, the price is X" to "out of stock, even if you offer a million $ you can't have any". Nobody auto-increases prices as stock runs low.
Perhaps it isn't illegal to do so, but nobody does it, probably because businesses believe it's illegal to do so.
Also as a practical matter the software they're running simply doesn't have the feature to dynamically change prices based on inventory and lead time. So someone would have to manually update all the parts prices, then lower them again later. Not worth the hassle.
The answer might be affirmative, but that doesn't mean that doing so is a good business move. If you were in charge of sourcing at a company, and a supplier pulled that shit on you, you'd be finding a replacement supplier rightquick. If a supply will gouge you for this reason, you can be sure they will be looking for other reasons in the future.
TL;DR: price gouging, even if legal, is bad optics.
Ad-hoc heuristic decision making + political in-fighting can get you off the ground, but it can't keep you reliably airborne.
Nowadays, no one runs with any sort of buffer if that isn't explicitly demanded by government or other regulations... and when the shit hits the proverbial fan, it hits hard as a result.
Vaccine mandates. All the staff have walked off the job rather than be jabbed.