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Gus Van Horn blog

Reblogged:What Happened at to Boeing?

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After the worldwide grounding of the Boeing 737 Max, people have naturally wondered, What went wrong? Predictably, in this time of central planning, the most common answer has been some version of The government didn't have enough control. One moment's thought about the history of aviation -- It may beggar belief, but the Wright Brothers were not government bureaucrats. -- should cast suspicion on that idea.

Image by Acefitt, via Wikipedia, license.
So let's assume the best-case scenario for the idea that the crashes were a symptom of a lapse of oversight of the airline industry -- that the government was supposed to perform the kind of (non-government) oversight that, say, a watchdog group or professional association might perform in a fully capitalist system.

Given that Boeing is (or should be) in the business to make a profit off selling airplanes, it seems incredible that such a serious design flaw could make it all the way into production and use. In other words, yes, having a second set of eyes examine design is a very good idea, but having one's livelihood at stake is even better. And as the Times article notes, safety regulations have grown more stringent over time -- and yet the older aircraft, which had to meet less stringent standards, has an excellent safety record. Granted, horrendous mistakes can and do slip through the cracks from time to time, but shouldn't we, in the name of our own safety, double-check the pat explanation that handing more control to the government will guarantee our future safety? The government has all kinds of control in Venezuela, for example, and that place is a train wreck.

As it turns out, we should, for the government has already exercised more control over Boeing than meets the eye. Although the Times makes no mention of it, the Boeing that produced the 737 Max is very different from the Boeing that produced previous generations of the 737. It is, in fact, the product of a government-pressured merger, as Matt Stoller argues in "The Coming Boeing Bailout?" at his blog, Big. One consequence of this merger with McDonnell Douglas was that the new firm was no longer run by aviation engineers as Boeing had been, but by non-engineers who were also used to ... non-capitalistic ways of doing "business":
The key corporate protection that had protected Boeing engineering culture was a wall inside the company between the civilian division and military divisions. This wall was designed to prevent the military procurement process from corrupting civilian aviation. As aerospace engineers Pierre Sprey and Chuck Spinney noted, military procurement and engineering created a corrupt design process, with unnecessary complexity, poor safety standards, "wishful thinking projections" on performance, and so forth. Military contractors subcontract based on political concerns, not engineering ones. If contractors need to influence a Senator from Montana, they will place production of a component in Montana, even if no one in the state can do the work.
There is much more of merit, despite (for example) an apparent leftish bias by Stoller against "white collar" management as such. Given the government's role in corrupting a once-great company by turning it into a monopoly, it clearly deserves at least as much of the blame as a lack of second-checking for this situation.

The title of Stoller's post is telling. This situation could well spell doom for Boeing, and perhaps it should. Pumping cash into this de facto government entity will, in that case, maintain a barrier to entry that Ayn Rand warned about regarding government-created monopolies, while presenting the same moral hazard that bailouts of other sorts always present. In other words, perhaps the best tribute to the old Boeing would be to let the new one die, to be replaced by worthy successor or successors.

-- CAV

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