Boeing and the American Disease

Boeing’s problems have been in the news for some time now, going back to two deadly crashes of the 737 Max in 2018.

As discussed here before, a big part of the problem is that Boeing changed from a company that placed quality engineering at the top of its values list to one that focused much more aggressively on quarterly earnings and attracting Wall Street’s admiration.

Over time, engineering excellence – the company’s hallmark – became less important in the company culture than “making the numbers.” The shareholders of the firm became of greater concern than the people who flew – or flew in – their aircraft. Doing things the right way – when in conflict with short-term financial results – became optional.

With their CEO Calhoun ticketed for departure, Boeing has been searching for their next CEO. It appears that there are few takers among the qualified. Larry Culp, the CEO of GE Aerospace, is known to have turned them down. (Boeing might be well-advised to steer clear of the Jack Welch Alumni Club.)

But what happened to Boeing in recent decades typifies the larger changes in the American economy since the early 1970’s. This didn’t just happen to Boeing. It was a pervasive trend throughout American business.

Beginning in the late 1970’s, American business lost its way.

All of the lessons that should have been learned as we shrugged off the Great Depression and became the great “arsenal of democracy” during the 1940’s, were tossed aside in less than a decade. The management of money rather than the making of useful things became the object of our veneration. Gordon Gecko replaced Henry J. Kaiser in the pantheon of American cultural heroes and the apotheosis of William Jefferson Clinton sealed the deal.

Starting in the 1980s, we began to offshore our manufacturing capability to countries like China and failed to notice that generations of specialized skills required for such manufacturing success went with them.

The loss of our manufacturing base went hand in hand with the slow-motion destruction of the American Middle Class. In effect, we exchanged high-paying manufacturing jobs for minimum-wage service jobs.

It was a bad trade.

This change even affected the so-called Military Industrial Complex in the following way: the priority for weapons systems became profit margins instead of effectiveness on the battlefield.

If you’re wondering why the Russians can outproduce not only the U.S. but the Europeans…it’s because they never quite caught the same disease.

In a business setting – or sports or most other fields – a lack of success usually leads to some self-examination.

When I used to take my SDSU students to Camp Pendleton to run some leadership exercises under the supervision of the Marine Corps cadre there, each exercise was followed by the students being asked to answer the following questions on the spot:

- What did you do right? ?

- What did you do wrong? ??

- What would you do differently the next time?

If we were to do a quick version of such a self-evaluation for the U.S.A. of today, what might we identify as some key structural issues in need of correction? My shortlist would include – but not be limited to:

- Our persistent short-term mentality ????

- Our blind spot when it comes to history

-The financialization of the American economy

I could think of many more (and so could you) but let’s cover these first three – briefly – in turn:

Short-Term Mentality There’s a funny anecdote about Chou En Lai, the late Chinese Premier, being asked – sometime back in the 1970’s - whether or not the French Revolution (circa 1789) had been a success.

“Too soon to tell,” deadpanned the Premier. ???????????

The joke – funnier perhaps to Westerners than to someone from the East – was that two centuries in Chou’s mind was just the twinkling of history’s eye... chronological chump change.

In the U.S. we are much more focused on the short-term…often at the expense of future well-being. Whether it’s the Wall Street-induced focus on quarterly earnings or the political focus on the four-year election cycle, Americans dance to the beat of a frenetic drummer.

If the Chinese move to the sound of a distant gong, Americans respond to the patter of bongos.

Blind to History Santayana made the famous observation that those who forget history ‘are condemned to repeat it.” He wasn’t wrong.

If you don’t have any idea how you arrived at your current reality, your ability to chart a course forward is deeply compromised. Any effective problem-solver will tell you that the backstory of the problem is critical. You must understand it before you attempt to design a remedy.

Here, again, Americans are noteworthy for their shrunken awareness of the facts of history – their own and everybody else’s.

Author Gore Vidal used to call us “The United States of Amnesia.”

I get it.

Financialization

Sometime, roughly about 40 years ago, a slow, corrosive change began to take place in the United States that has turned out to have some grave implications.? What happened was that the financial sector of the economy, which traditionally had functioned in an intermediary role within industry began an aggressive move toward the center and began to seize the levers of power from those who had wielded it before.

Initially, and from a distance, this looked something like success.

If you didn’t look too closely, the 1980’s and 1990’s, despite a recession here or there, seemed like a long upward swoop in growth and wealth. But it turned out to be largely an illusion of prosperity masked by serial bubbles in technology and real estate, which, like all such ephemera, soon burst.

What we have been left with – after forty years of this progressive “financialization” – is a hollowed-out manufacturing base, a structural and potentially long-term employment problem, a decimated middle class, and a set of supposedly “too big to fail” banks that have apparently rented the services of the U.S. Congress and the White House on a permanent basis.

At its root, this flawed model mistakes the medium of exchange for the objects of exchange. Money – of whatever kind – is the medium. The objects are goods and services…the things humans fabricate that have value in use. Once you start getting the two confused, you are on the road to perdition.

Any attempt to improve our position as a country will have to deal with these underlying issues as well as a host of others.

Change is painful under virtually all circumstances. Accordingly, the essential ingredient needed for successful change is leadership.