Comment by dmix
5 years ago
You're probably right but also missing the giant elephant in the room which is regulatory capture. aka politics.
This being a partial byproduct of the mass centralization (aka conglomeration) of most every big industry that started in the 80s, accelerating in the 90s, when globalization became a hot thing. And [insert massive finance company's hackery here].
Tons of these conglomerates have strong legacy gov connections and are often the only shop in town for critical industries and are treated like special semi-national bodies. This puts plenty of natural pressure on regulatory bodies.
Boeing is not the only one. This is a phenomenon wide across the western world. Plenty of this exists in Europe too.
Well, if I remember right, consolidation across the entire economy is at a record high.
In every sector, there's more regulation, much fewer & larger players. If the rot at Boeing is a symptom of this, we're in for a bad time: every firm across the entire economy is now larger and has fewer competitors than previously.
The mainstream and most-politically-accepted economics of the day in western countries is state-capitalism (the levels of state vs capitalism is debatable in various countries and is obviously never stable). I think this is what the standard downside of that economic system looks like in practice... plenty of regulatory capture + moral hazards due to low punishments when 'caught' + little if any competition.
Like most things in economics the best route is looking for the least-bad option. We will find out over time if the state-capitalism balancing act really is the best, assuming there are any realistic alternatives and/or the scales/ratios of state vs capitalism are meaningfully measurable.
This experiment is only decades old in the modern technological era and one could argue it has only really peaked in the last two decades, with ever more industries getting merged to this day (which Corona will accelerate no doubt, just like 9/11 did with the US defense industry).
The state/nationalism part of this means these potentially poorly run companies could stay propped up for decades, despite the industry's potential in other forms.
I recently spent time reading about some chartered airline companies from the 70/80s and their stories is probably the best example of this sort of slow march towards industry conglomeration, with plenty of state involvement and protection. It probably provides a good timeline to base this stuff on and at a minimum plenty of analogies.
One example (see History): https://en.wikipedia.org/wiki/TUI_Airways