> This is companies prioritizing short-term over the long term.
Well, it is, but realistically that is almost what the dynamics of the situation _forces_ them to do, particularly over the sorts of timeframes that aircraft manufacturers run on. Taking the 737 MAX project as a whole, to the outside observer it would seem obvious that Boeing should have designed a new-generation plane to effectively compete with the A32X family; this would, _in the long run_, clearly have paid off.
But if you're the CEO of Boeing, considering a project with a 20 year payoff period, well, in 20 years you're probably not CEO of Boeing anymore, if you're even still around at all. Selling very long-term investments to the public markets is also not necessarily easy. So "squeeze another few years out of the 60 year old design, at any cost" starts to look like an attractive option.
On:
> But if they had a reputation of quality I would be happy to pay the premium.
I don't think that _really_ applies here. There are about twice as many A32Xneo orders as 737 Max orders, and it it fairly clearly the market's preferred plane, but if you want an A32Xneo today, you're going to be waiting _years_. As long as the 737 Max can get off the runway at all, it has a large captive market.
(Part of the problem here is that there are only really two companies who make planes in this size class, and again that fact is a failure of regulation; both Boeing and Airbus are products of mergers which should arguably not have been permitted.)