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The financialization of Boeing was a "success". Boeing's stock rose. Executives made their money and cashed out. Somebody else was left holding the bag. Thi

The financialization of Boeing was a "success". Boeing's stock rose. Executives made their money and cashed out. Somebody else was left holding the bag. This is the behavior the current market rules incentivize.

tpmx 7y ago
> This is the behavior the current market rules incentivize. What changed in the "market rules" between then and now? How do you make a causation from that diff plausible? Another alternative: A once great company fell apart due the usual factors: greed, incompetency, entropy, failed succession plans, great people being unusual, ethically minded technical founders being replaced by MBAs - who then turn out creating larger profits in the shorter term, etc. It's highly unusual for great companies to remain great companies over a long period of time. Edit: I mean, I agree that it seems like the behavior of large companies has changed quite a lot; from say 1980 to 2010. But how much of that is cultural, and how much is legislation? What has driven this change? (Are we talking about the same thing, using different terminology?)
- rectang 7y ago
  Between then and now there has been a lot of legislative and legal change empowering corporations and disempowering individuals. (Most notably Citizens United, but that 2010 decision postdates the Boeing takeover.) I think the main factor here, though, is that executive behavior evolved to exploit existing weaknesses in the regulatory environment in order to maximize their personal benefit at the expense of company health. You can call that a "culture change" if you like. Some (including me) argue we should respond to such changes by patching the vulnerabilities in the market environment. Others disagree and advocate letting the market sort itself out; I maintain that this means continuing to incentivize bad behavior.
  - tpmx 7y ago
    > I think the main factor here, though, is that executive behavior evolved to exploit existing weaknesses in the regulatory environment in order to maximize their personal benefit at the expense of company health. You can call that a "culture change" if you like. What that else would you call it, though? It seems to me that the root cause is that the legislators haven't kept up with the increasingly sophisticated behavior of the companies. > Some (including me) argue we should respond to such changes by patching the vulnerabilities in the market environment. Others disagree and advocate letting the market sort itself out; I maintain that this means continuing to incentivize bad behavior. FWIW I think I'm on the same side as you here. What I worry about is that all of this patching creates more complexity, which can then in turn be exploited by the (often smarter) people working for these companies. (Seems similar to the infosec problem in software.)
- marcosdumay 7y ago
  The stock exchanges also changed quite a lot from 1980 to 2010. That's what brought new rules to the companies. A great question is why did the stock exchanges changed? I can't find any single answer, but I think operations optimization and the consequent low transaction costs played a large part.
  - tpmx 7y ago
    Sure, yeah, the democratization of stock exchange "betting" via the internet may have been a factor.

tpmx 7y ago

> This is the behavior the current market rules incentivize. What changed in the "market rules" between then and now? How do you make a causation from that diff plausible? Another alternative: A once great company fell apart due the usual factors: greed, incompetency, entropy, failed succession plans, great people being unusual, ethically minded technical founders being replaced by MBAs - who then turn out creating larger profits in the shorter term, etc. It's highly unusual for great companies to remain great companies over a long period of time. Edit: I mean, I agree that it seems like the behavior of large companies has changed quite a lot; from say 1980 to 2010. But how much of that is cultural, and how much is legislation? What has driven this change? (Are we talking about the same thing, using different terminology?)

rectang 7y ago
Between then and now there has been a lot of legislative and legal change empowering corporations and disempowering individuals. (Most notably Citizens United, but that 2010 decision postdates the Boeing takeover.) I think the main factor here, though, is that executive behavior evolved to exploit existing weaknesses in the regulatory environment in order to maximize their personal benefit at the expense of company health. You can call that a "culture change" if you like. Some (including me) argue we should respond to such changes by patching the vulnerabilities in the market environment. Others disagree and advocate letting the market sort itself out; I maintain that this means continuing to incentivize bad behavior.
- tpmx 7y ago
  > I think the main factor here, though, is that executive behavior evolved to exploit existing weaknesses in the regulatory environment in order to maximize their personal benefit at the expense of company health. You can call that a "culture change" if you like. What that else would you call it, though? It seems to me that the root cause is that the legislators haven't kept up with the increasingly sophisticated behavior of the companies. > Some (including me) argue we should respond to such changes by patching the vulnerabilities in the market environment. Others disagree and advocate letting the market sort itself out; I maintain that this means continuing to incentivize bad behavior. FWIW I think I'm on the same side as you here. What I worry about is that all of this patching creates more complexity, which can then in turn be exploited by the (often smarter) people working for these companies. (Seems similar to the infosec problem in software.)
marcosdumay 7y ago
The stock exchanges also changed quite a lot from 1980 to 2010. That's what brought new rules to the companies. A great question is why did the stock exchanges changed? I can't find any single answer, but I think operations optimization and the consequent low transaction costs played a large part.
- tpmx 7y ago
  Sure, yeah, the democratization of stock exchange "betting" via the internet may have been a factor.