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Boeing should be fined enough that "shareholder value" would be roughly zero after all the assets are sold to pay the fine. That (besides any personal penalty

Boeing should be fined enough that "shareholder value" would be roughly zero after all the assets are sold to pay the fine. That (besides any personal penalty that might be appropriate, of course) might realign the incentives for the next set of managers facing similar choices somewhere else, but it won't happen.

dahdum 7y ago
It might feel good to do that, but you’d be putting tens of thousands out of work, and handing the industry over to Airbus, which last I read, had an ever so slightly worse safety record (though both are quite good). That’s bad for cost and safety long term. By all means I support axing those responsible and criminal charges where/if appropriate, but a company death sentence does not serve the public interest.
- MarkSweep 7y ago
  I think the argument for making it a corporate death sentence is that future companies and shareholders will know it is in their interest to make airplanes that don't kill people. More abstractly, if you value human life at a high enough dollar value and make corporations liable for loss thereof, they will expend effort to preserve human life. It appears that currently the externality of killing people is priced at a level where Boeing does not mind killing people. I don't know if lawsuit liability is the best way to police corporate behavior, but it is big part of the system we currently have in the USA.
  - briandear 7y ago
    They do make airplanes that don’t kill people. More people die per mile in cars than have ever died in airplanes. The train fatality rate in the United States is higher than that of airplanes — the majority of those airplanes being Boeing. More people died in cars yesterday than in all of 2018 for Boeing. And given fatalities per mile, air travel on Boeing airplanes is safer than any other form of transportation. Suggesting that Boeing makes planes that “kill people,” is about as ridiculous as saying that Specialized makes bikes that kill people. The safety record of American aviation is unmatched — and most of those planes are Boeing. Let’s tamp down on the hyperbole.
    - cf498 7y ago
      Because its relative. You cant get car traffic as safe as airplanes. Its not reasonable to hold Boeing to the same standards as automotive traffic. Automotive traffic is simply far more dangerous then flying. You also wouldnt be ok with people dying from bread as long as its fewer then the amount of people dying to e.coli or fish poisoning. The question is always how easy it is to prevent deaths not how many are acceptable for a given branch.
- dna_polymerase 7y ago
  Like those factories and workers would just disappear. Something new would be established, hopefully something better. We can't keep looking away when companies behave like Boeing did, actively killing people, only because we would put people out of work.
  - dahdum 7y ago
    Those factories and workers would disappear from the US to the EU / elsewhere. If you were ordering planes, why would you risk ordering brand new planes from the remnants of a company killed by its own government? Again, I'm not saying they did no wrong. I'm just saying criminal accountability for those responsible is better than corporate death sentences.
- arcticbull 7y ago
  So break off the civilian plane division and kill it off. No reason to hurt all 100,000 employees, just the division that was responsible. It sucks to hear “sheesh I wish there were more competitors” after Boeing just kicked Bombardier in the Crown Jewels for daring to compete with the C-Series, which is only an Airbus product now because Boeing took advantage of the US political system in the first place (a severe miscalculation in retrospect). Monopolies aren’t capitalist. Monopolies keep putting us in uncomfortable situations like this. There’s a reason we have regulations to keep them from happening (or at least break them apart post facto) even if we choose not to use them.
- cf498 7y ago
  If you have companies who are to big to fail they behave that way. We just had that with banks and the financial crisis. Leaving such institutions as is is incredibly dangerous and incentives risky and reckless behavior at the cost of society as a whole. If saving those jobs is the goal, we should work towards that instead of saving the company in hopes that this will also save jobs.
- mdekkers 7y ago
  > Airbus, which last I read, had an ever so slightly worse safety record [citation needed]
  - dahdum 7y ago
    Someone linked it during previous discussions, but it was summary posted on Quora here. I'd consider them equivalent: https://www.quora.com/How-many-plane-crashes-does-Boeing-have-compared-to-Airbus https://www.quora.com/How-many-plane-crashes-does-Boeing-hav...
    - mdekkers 7y ago
      ...which concludes: With the exception of the MD-11, there is no statistically significant safety record difference between jet transports put into service since 1980, Airbus and Boeing included.
gzu 7y ago
Check out their balance sheet. It’s already at zero! They already have been spending so much on buybacks (9B a year, ~eq to net income) that there isn’t any equity left in the company since their liabilities have exploded. On a side note check a lot of large companies today, corporate debt has gone crazy due to buybacks. They’ve converted any stockholder equity remaining into debt, especially after tax cuts and low interest rates. In a bankruptcy, bond holders get paid first.
- panarky 7y ago
  Yet they have 500m shares outstanding with a market value of $200b.
  - gzu 7y ago
    Yep interesting times. Valuation models at these levels depend on EPS growth where buybacks reduce number of shares = more earnings per share. The side effect is a ballooning balance sheet. Can that go on indefinitely? Are upper management (typically near retirement age) at all concerned with the long term effects? Passive investment and Fed also plays part. Joe 401k and systemic index tracking leads to no public awareness of companies financial health. Buy no matter what the largest cap stocks in proportion to size. Fed is completely aware of all this. Interest rates must never rise otherwise everything seizes. December’s reaction was just that.
briandear 7y ago
So destroy the company, put at least 165k people out of a job as punishment? Can we sell off Airbus for their numerous bribery scandals?[1] Should we destroy Tesla because of their autopilot crashes, battery fires and other mishaps? [1] https://www.spiegel.de/international/business/suspicions-of-bribery-throw-shadow-over-airbus-a-1260324.html https://www.spiegel.de/international/business/suspicions-of-...
- salawat 7y ago
  Yes. I see no issues here. If you can't do what you set out to do without being grossly negligent, or resorting to bribery, then perhaps you shouldn't be doing what you are at all. Businesses seem to have forgotten they are not money pumps first and foremost. They are there to do a job, and are currently failing epically at doing so in an ethical manner. I'd put down a corporation like I'd put down a dog should it show a tendency for wanton destruction and bloodshed..
- CaptainZapp 7y ago
  Airbus should absolutely be punished if found guilty for bribery. Same goes for Tesla, if found guilty of neglicence (including lying in their marketing literature). The difference, however, is that you can hardly acuse them of mass murder for corporate greed and profit. And that's exactly what Boeing management did after the Lion Air crash. They knew, or must have known, that they're selling a potential death trap and did exactly shit about it (except promising a fix, delivered eventually, which should compensate for "incompetent pilots"). Look up whataboutism. Because your argument is quite a perfect example.
hkai 7y ago
No, you should not destroy businesses for any transgressions, even for extremely serious ones. Would it be correct to say that your suggestion stems from a general dislike of corporations, rather than from the circumstances of this particular case?
- HelloNurse 7y ago
  Well, the intent is precisely that they cease to exist. They shouldn't be making airplanes because they are a threat to public safety, it's not a mere "dislike".
- frostburg 7y ago
  No; I don't trust corporations, but I don't have a specific a priori distaste for them. I want to point out that I don't want everyone working for Boeing out of a job, I want people that invested in Boeing to lose that investment (so that other boards in the future are incentivized to hold other management teams accountable) and to erase the obviously dangerous safety culture that currently exists in the company. I'm sure that their employees and assets could be useful for their competitors.
- philjohn 7y ago
  There's a philosophical argument to be made wrt corporate personhood. If we lock up and/or execute people for serious transgressions, are corporations let off too easily (fines usually a fraction of their yearly profit, and therefore just a cost of doing business)?

dahdum 7y ago

It might feel good to do that, but you’d be putting tens of thousands out of work, and handing the industry over to Airbus, which last I read, had an ever so slightly worse safety record (though both are quite good). That’s bad for cost and safety long term. By all means I support axing those responsible and criminal charges where/if appropriate, but a company death sentence does not serve the public interest.

MarkSweep 7y ago
I think the argument for making it a corporate death sentence is that future companies and shareholders will know it is in their interest to make airplanes that don't kill people. More abstractly, if you value human life at a high enough dollar value and make corporations liable for loss thereof, they will expend effort to preserve human life. It appears that currently the externality of killing people is priced at a level where Boeing does not mind killing people. I don't know if lawsuit liability is the best way to police corporate behavior, but it is big part of the system we currently have in the USA.
- briandear 7y ago
  They do make airplanes that don’t kill people. More people die per mile in cars than have ever died in airplanes. The train fatality rate in the United States is higher than that of airplanes — the majority of those airplanes being Boeing. More people died in cars yesterday than in all of 2018 for Boeing. And given fatalities per mile, air travel on Boeing airplanes is safer than any other form of transportation. Suggesting that Boeing makes planes that “kill people,” is about as ridiculous as saying that Specialized makes bikes that kill people. The safety record of American aviation is unmatched — and most of those planes are Boeing. Let’s tamp down on the hyperbole.
  - cf498 7y ago
    Because its relative. You cant get car traffic as safe as airplanes. Its not reasonable to hold Boeing to the same standards as automotive traffic. Automotive traffic is simply far more dangerous then flying. You also wouldnt be ok with people dying from bread as long as its fewer then the amount of people dying to e.coli or fish poisoning. The question is always how easy it is to prevent deaths not how many are acceptable for a given branch.
dna_polymerase 7y ago
Like those factories and workers would just disappear. Something new would be established, hopefully something better. We can't keep looking away when companies behave like Boeing did, actively killing people, only because we would put people out of work.
- dahdum 7y ago
  Those factories and workers would disappear from the US to the EU / elsewhere. If you were ordering planes, why would you risk ordering brand new planes from the remnants of a company killed by its own government? Again, I'm not saying they did no wrong. I'm just saying criminal accountability for those responsible is better than corporate death sentences.
arcticbull 7y ago
So break off the civilian plane division and kill it off. No reason to hurt all 100,000 employees, just the division that was responsible. It sucks to hear “sheesh I wish there were more competitors” after Boeing just kicked Bombardier in the Crown Jewels for daring to compete with the C-Series, which is only an Airbus product now because Boeing took advantage of the US political system in the first place (a severe miscalculation in retrospect). Monopolies aren’t capitalist. Monopolies keep putting us in uncomfortable situations like this. There’s a reason we have regulations to keep them from happening (or at least break them apart post facto) even if we choose not to use them.
cf498 7y ago
If you have companies who are to big to fail they behave that way. We just had that with banks and the financial crisis. Leaving such institutions as is is incredibly dangerous and incentives risky and reckless behavior at the cost of society as a whole. If saving those jobs is the goal, we should work towards that instead of saving the company in hopes that this will also save jobs.
mdekkers 7y ago
> Airbus, which last I read, had an ever so slightly worse safety record [citation needed]
- dahdum 7y ago
  Someone linked it during previous discussions, but it was summary posted on Quora here. I'd consider them equivalent: https://www.quora.com/How-many-plane-crashes-does-Boeing-have-compared-to-Airbus https://www.quora.com/How-many-plane-crashes-does-Boeing-hav...
  - mdekkers 7y ago
    ...which concludes: With the exception of the MD-11, there is no statistically significant safety record difference between jet transports put into service since 1980, Airbus and Boeing included.

gzu 7y ago

Check out their balance sheet. It’s already at zero! They already have been spending so much on buybacks (9B a year, ~eq to net income) that there isn’t any equity left in the company since their liabilities have exploded. On a side note check a lot of large companies today, corporate debt has gone crazy due to buybacks. They’ve converted any stockholder equity remaining into debt, especially after tax cuts and low interest rates. In a bankruptcy, bond holders get paid first.

panarky 7y ago
Yet they have 500m shares outstanding with a market value of $200b.
- gzu 7y ago
  Yep interesting times. Valuation models at these levels depend on EPS growth where buybacks reduce number of shares = more earnings per share. The side effect is a ballooning balance sheet. Can that go on indefinitely? Are upper management (typically near retirement age) at all concerned with the long term effects? Passive investment and Fed also plays part. Joe 401k and systemic index tracking leads to no public awareness of companies financial health. Buy no matter what the largest cap stocks in proportion to size. Fed is completely aware of all this. Interest rates must never rise otherwise everything seizes. December’s reaction was just that.

briandear 7y ago

So destroy the company, put at least 165k people out of a job as punishment? Can we sell off Airbus for their numerous bribery scandals?[1] Should we destroy Tesla because of their autopilot crashes, battery fires and other mishaps? [1] https://www.spiegel.de/international/business/suspicions-of-bribery-throw-shadow-over-airbus-a-1260324.html https://www.spiegel.de/international/business/suspicions-of-...

salawat 7y ago
Yes. I see no issues here. If you can't do what you set out to do without being grossly negligent, or resorting to bribery, then perhaps you shouldn't be doing what you are at all. Businesses seem to have forgotten they are not money pumps first and foremost. They are there to do a job, and are currently failing epically at doing so in an ethical manner. I'd put down a corporation like I'd put down a dog should it show a tendency for wanton destruction and bloodshed..
CaptainZapp 7y ago
Airbus should absolutely be punished if found guilty for bribery. Same goes for Tesla, if found guilty of neglicence (including lying in their marketing literature). The difference, however, is that you can hardly acuse them of mass murder for corporate greed and profit. And that's exactly what Boeing management did after the Lion Air crash. They knew, or must have known, that they're selling a potential death trap and did exactly shit about it (except promising a fix, delivered eventually, which should compensate for "incompetent pilots"). Look up whataboutism. Because your argument is quite a perfect example.

hkai 7y ago

No, you should not destroy businesses for any transgressions, even for extremely serious ones. Would it be correct to say that your suggestion stems from a general dislike of corporations, rather than from the circumstances of this particular case?

HelloNurse 7y ago
Well, the intent is precisely that they cease to exist. They shouldn't be making airplanes because they are a threat to public safety, it's not a mere "dislike".
frostburg 7y ago
No; I don't trust corporations, but I don't have a specific a priori distaste for them. I want to point out that I don't want everyone working for Boeing out of a job, I want people that invested in Boeing to lose that investment (so that other boards in the future are incentivized to hold other management teams accountable) and to erase the obviously dangerous safety culture that currently exists in the company. I'm sure that their employees and assets could be useful for their competitors.
philjohn 7y ago
There's a philosophical argument to be made wrt corporate personhood. If we lock up and/or execute people for serious transgressions, are corporations let off too easily (fines usually a fraction of their yearly profit, and therefore just a cost of doing business)?