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> If the deal is accepted, it could complicate Boeing’s ability to sell products to the U.S. government as a felon, though the company could seek waivers. About

by abeppu 2y ago

> If the deal is accepted, it could complicate Boeing’s ability to sell products to the U.S. government as a felon, though the company could seek waivers. About 32% of Boeing’s nearly $78 billion in revenue last year came from its defense, space and security unit. My understanding is that getting security clearance involves a bunch of checks and statements about your character, and having a federal felony conviction on one's record would be a hard blocker. Absolutely, I think that the real punishment, beyond the $245M fine, ought to be losing its many many billions of DoD contracts. After all, once a firm has demonstrated this kind of behavior, how on earth should we trust it with not only taxpayer dollars but the lives of servicemen/women and critical military resources?

hdhshdhshdjd 2y ago
DoD will continue to do business with Boeing because there aren’t enough options because we consolidated everything into a handful of mega corps and gutted competition in defense like we have across the entire economy. This “punishment” is a joke, these people are mass killers they should be in jail.
abeppu 2y ago
Also in the "corporations as people" x "criminal justice system" vein, I would be in favor of moving towards a standard where, if a person convicted of the same crime would receive a prison sentence, a company should be forced to cease operations for an equivalent period, and put all its assets into frozen fund which can only be used to pay out debts/obligations, and which earns no interest.
- sureIy 2y ago
  As bad as this is, nobody wants an Airbus monopoly, so let’s hope that individuals are arrested and Boeing continues to exists instead.
  - abeppu 2y ago
    I think the DoD should make clear that the funds previously marked for Boeing would be open for new firms even if staffed by former Boeing employees -- provided diligence checks find no involvement by those parties in the current fraud case. Boeing, if it had no prospects of continued DoD contracts, would naturally want to offload teams and facilities dedicated to that work. If this situation was handled right, it could spark the creation of multiple new American firms with the means and know-how to deliver the various products and services that Boeing formerly provided, while simultaneously delivering a very clear message to shareholders and C-suite officers that this sort of conduct will not make them rich.
    - t_mann 2y ago
      > the funds previously marked for Boeing would be open for new firms even if staffed by former Boeing employees > delivering a very clear message to shareholders and C-suite officers that this sort of conduct will not make them rich And the best way to make that point is to create new investment opportunities that will make some former employees of the same company and many of the same investors rich?
      - abeppu 2y ago
        1. Boeing investors should take a substantial haircut. If those investors subsequently in on new firms, good for them (though initially these new firms may be private). I see no reason they should expect to "get rich" from the investment. The top institutional shareholder is Vanguard whose involvement will have been minimal and whose future behavior is unlikely to change. But Boeing execs whose compensation is largely in stock packages should take a really large hit, and any shareholders who are more apt to be more activist will be more likely to express concern about this kind of conduct sooner. 2. I have to expect that plenty of employees who did not become dead whistle-blowers were not involved in fraud, or poor engineering practices. Certainly a great many long-time Boeing employees expressed concerns about the deterioration of engineering-first culture.
        t_mann 2y ago
        The investors who got rich through Boeing have cashed in a long time ago. What you're suggesting would be much more interesting to them than Boeing is today. You're basically saying 'this handful of companies is virtually guaranteed to share contracts worth billions per year among them'.
  - sitkack 2y ago
    Then nationalize Boeing's commercial airplane unit and put the people who actually want to build quality airplanes back into leadership.
- WorkerBee28474 2y ago
  That sounds like a great way to make 145,000 Americans unemployed.
- maeil 2y ago
  Garnish valuation increase and dividends for X years, just like wage garnishing. At the end of every quarter, if the market cap of the company has increased by $X b/million, $X b/million has to be paid as a fine to the government. This means that effectively the share price cannot increase during the period, only go down. Of course, this needs to be done retroactively, starting from the time the illegal act is believed to have been committed. Now it wouldn't be sensible to just "destroy" market cap, but there's an obvious solution here. Looks like the 737 MAX was announced in Aug 2011, when Boeing's market cap was around $50B. Currently it's $114B. You issue new shares, roughly 1.28x as many as the current number of outstanding shares. The government gets all of them and by law is made to sell 20% of them per year. It's only after 5 years, when all of the shares have been sold, that the X years of market cap garnishing starts. I'm sure there's a loophole or two that I missed, but this can all be accounted for. A simple, DMA-like "spirit of the law"-clause works well enough, as we're seeing with Apple suddenly being very quick to accept the Epic store in Europe. Suddenly a whole lot of people will start caring. Sure, it would be great to jail those responsible too, but with that alone you will eventually end up with boards full of fall guys. You need the above to long-term successfully prevent this kind of socially destructive behavior.
  - WorkerBee28474 2y ago
    This idea would kill all capital investment in the country. A country without capital investment is a country in which you will not enjoy the standard of living.
    - maeil 2y ago
      I really don't think it would, because investment follows the money. After the first couple of cases, businesses will adjust their practices. Again, see DMA and Apple for an example of how it's very possible to make businesses do things they wouldn't do on their own. Let's say the US instates this. Will everyone suddenly stop investing in Apple? No, because the chance that they run foul of this would be so tiny as not to impact the RoI. For most companies like Boeing who commit this kind of gross negligence, the act in question only provides a small boost to their market value, if any. If this still somehow shows to greatly reduce investment, there's an obvious way to alleviate this. All proceeds of the stock sales and fines, the government immediately reinvests in a basket representing the market of the country.
- bpodgursky 2y ago
  This is a dumb proposal that benefits nobody. The only way to guarantee that Boeing becomes worse at making planes, is to ask them to stop doing it for 18 months and then start up again.
  - abeppu 2y ago
    Fairness and equality before the law benefits everyone. But we live in a broken society where corporations have the rights of people (including political donations as free speech), but don't have the ability to be punished in a way that is at all aligned with what we inflict on actual people. This also means that punishment is largely not an effective deterrent for large companies, where the penalties when they're caught are smaller than the revenue when they're not caught (see cases of tech giants laughing off penalties in the 7-9 figures). If the cost of being able to actually punish companies is that you sometimes have to actually punish companies with the side effect that we can't spend the whole $900B/yr on war machines to pass on to wars on the other side of the planet ... then sigh, I guess we'll have to settle for only buying $880B of death this year.
    - bpodgursky 2y ago
      This is dated 2019 luxury vibe. Everyone else has gotten the memo grown up. If you're fine actively sabotaging the US for your own pet grievances, go find some other country to live in and annoy.
      - abeppu 2y ago
        Dated vibe? I mean I would have said that about Roe v Wade but apparently it just took a few decades of complaining and making abortion an engine for a political apparatus, and they got it rolled back. If I don't complain about citizens united for at least another 30 years, I'm not trying hard enough. All the good things in this country came from people who were willing to keep pushing when everyone else didn't have the patience. We might not agree about which those things are, but if you think continuing to carp about injustice is out of place here ... maybe you're the one who missed a memo. This country started b/c rich colonists didn't want to pay taxes and they escalated to fighting a war of attrition. These were businessmen, and they picked a fight that started by disrupting all their existing trade relationships and continued rolling production disruptions as a multi year war ran all over the country. So you can take your quiet, lazy acquiesce and go find some other country to be snide about it in.
causal 2y ago
Making the corporate itself a felon is almost a joke. Zero chance this ends their defense contracts- they'll find a workaround. Assigning the felony to the corporation is just a sweet chance for the individuals responsible to offload responsibility. Makes me think a lot of Taleb's "Skin in the Game", which emphasizes that a healthy system cannot have leaders who accept rewards without risks. This deal means Boeing leadership can continue to behave without skin in the game.

by abeppu 2y ago

hdhshdhshdjd 2y ago

DoD will continue to do business with Boeing because there aren’t enough options because we consolidated everything into a handful of mega corps and gutted competition in defense like we have across the entire economy. This “punishment” is a joke, these people are mass killers they should be in jail.

abeppu 2y ago

Also in the "corporations as people" x "criminal justice system" vein, I would be in favor of moving towards a standard where, if a person convicted of the same crime would receive a prison sentence, a company should be forced to cease operations for an equivalent period, and put all its assets into frozen fund which can only be used to pay out debts/obligations, and which earns no interest.

sureIy 2y ago
As bad as this is, nobody wants an Airbus monopoly, so let’s hope that individuals are arrested and Boeing continues to exists instead.
- abeppu 2y ago
  I think the DoD should make clear that the funds previously marked for Boeing would be open for new firms even if staffed by former Boeing employees -- provided diligence checks find no involvement by those parties in the current fraud case. Boeing, if it had no prospects of continued DoD contracts, would naturally want to offload teams and facilities dedicated to that work. If this situation was handled right, it could spark the creation of multiple new American firms with the means and know-how to deliver the various products and services that Boeing formerly provided, while simultaneously delivering a very clear message to shareholders and C-suite officers that this sort of conduct will not make them rich.
  - t_mann 2y ago
    > the funds previously marked for Boeing would be open for new firms even if staffed by former Boeing employees > delivering a very clear message to shareholders and C-suite officers that this sort of conduct will not make them rich And the best way to make that point is to create new investment opportunities that will make some former employees of the same company and many of the same investors rich?
    - abeppu 2y ago
      1. Boeing investors should take a substantial haircut. If those investors subsequently in on new firms, good for them (though initially these new firms may be private). I see no reason they should expect to "get rich" from the investment. The top institutional shareholder is Vanguard whose involvement will have been minimal and whose future behavior is unlikely to change. But Boeing execs whose compensation is largely in stock packages should take a really large hit, and any shareholders who are more apt to be more activist will be more likely to express concern about this kind of conduct sooner. 2. I have to expect that plenty of employees who did not become dead whistle-blowers were not involved in fraud, or poor engineering practices. Certainly a great many long-time Boeing employees expressed concerns about the deterioration of engineering-first culture.
      - t_mann 2y ago
        The investors who got rich through Boeing have cashed in a long time ago. What you're suggesting would be much more interesting to them than Boeing is today. You're basically saying 'this handful of companies is virtually guaranteed to share contracts worth billions per year among them'.
- sitkack 2y ago
  Then nationalize Boeing's commercial airplane unit and put the people who actually want to build quality airplanes back into leadership.
WorkerBee28474 2y ago
That sounds like a great way to make 145,000 Americans unemployed.
maeil 2y ago
Garnish valuation increase and dividends for X years, just like wage garnishing. At the end of every quarter, if the market cap of the company has increased by $X b/million, $X b/million has to be paid as a fine to the government. This means that effectively the share price cannot increase during the period, only go down. Of course, this needs to be done retroactively, starting from the time the illegal act is believed to have been committed. Now it wouldn't be sensible to just "destroy" market cap, but there's an obvious solution here. Looks like the 737 MAX was announced in Aug 2011, when Boeing's market cap was around $50B. Currently it's $114B. You issue new shares, roughly 1.28x as many as the current number of outstanding shares. The government gets all of them and by law is made to sell 20% of them per year. It's only after 5 years, when all of the shares have been sold, that the X years of market cap garnishing starts. I'm sure there's a loophole or two that I missed, but this can all be accounted for. A simple, DMA-like "spirit of the law"-clause works well enough, as we're seeing with Apple suddenly being very quick to accept the Epic store in Europe. Suddenly a whole lot of people will start caring. Sure, it would be great to jail those responsible too, but with that alone you will eventually end up with boards full of fall guys. You need the above to long-term successfully prevent this kind of socially destructive behavior.
- WorkerBee28474 2y ago
  This idea would kill all capital investment in the country. A country without capital investment is a country in which you will not enjoy the standard of living.
  - maeil 2y ago
    I really don't think it would, because investment follows the money. After the first couple of cases, businesses will adjust their practices. Again, see DMA and Apple for an example of how it's very possible to make businesses do things they wouldn't do on their own. Let's say the US instates this. Will everyone suddenly stop investing in Apple? No, because the chance that they run foul of this would be so tiny as not to impact the RoI. For most companies like Boeing who commit this kind of gross negligence, the act in question only provides a small boost to their market value, if any. If this still somehow shows to greatly reduce investment, there's an obvious way to alleviate this. All proceeds of the stock sales and fines, the government immediately reinvests in a basket representing the market of the country.
bpodgursky 2y ago
This is a dumb proposal that benefits nobody. The only way to guarantee that Boeing becomes worse at making planes, is to ask them to stop doing it for 18 months and then start up again.
- abeppu 2y ago
  Fairness and equality before the law benefits everyone. But we live in a broken society where corporations have the rights of people (including political donations as free speech), but don't have the ability to be punished in a way that is at all aligned with what we inflict on actual people. This also means that punishment is largely not an effective deterrent for large companies, where the penalties when they're caught are smaller than the revenue when they're not caught (see cases of tech giants laughing off penalties in the 7-9 figures). If the cost of being able to actually punish companies is that you sometimes have to actually punish companies with the side effect that we can't spend the whole $900B/yr on war machines to pass on to wars on the other side of the planet ... then sigh, I guess we'll have to settle for only buying $880B of death this year.
  - bpodgursky 2y ago
    This is dated 2019 luxury vibe. Everyone else has gotten the memo grown up. If you're fine actively sabotaging the US for your own pet grievances, go find some other country to live in and annoy.
    - abeppu 2y ago
      Dated vibe? I mean I would have said that about Roe v Wade but apparently it just took a few decades of complaining and making abortion an engine for a political apparatus, and they got it rolled back. If I don't complain about citizens united for at least another 30 years, I'm not trying hard enough. All the good things in this country came from people who were willing to keep pushing when everyone else didn't have the patience. We might not agree about which those things are, but if you think continuing to carp about injustice is out of place here ... maybe you're the one who missed a memo. This country started b/c rich colonists didn't want to pay taxes and they escalated to fighting a war of attrition. These were businessmen, and they picked a fight that started by disrupting all their existing trade relationships and continued rolling production disruptions as a multi year war ran all over the country. So you can take your quiet, lazy acquiesce and go find some other country to be snide about it in.

causal 2y ago

Making the corporate itself a felon is almost a joke. Zero chance this ends their defense contracts- they'll find a workaround. Assigning the felony to the corporation is just a sweet chance for the individuals responsible to offload responsibility. Makes me think a lot of Taleb's "Skin in the Game", which emphasizes that a healthy system cannot have leaders who accept rewards without risks. This deal means Boeing leadership can continue to behave without skin in the game.