| HN Mirror

Being cheap on quality is only good for business in the short term, but bad for business overall. People are assuming the greedy capitalists sacrifice their capitalism for short term planning. I don't see evidence that this is true.

Then, to quote a certain overly popular series, You know nothing, cubefox.

Hell, ex-McDonnel-Douglas engineer at Boeing explicitly called out financial "engineering" that looks good on stock market but doesn't work well long term with explicit example of DC-10.

This horrifyingly played out with 787 (which also had design issues, some that FAA smacked them about - fortunately as a new plane and one of the first with AFDX in US market, FAA could assign enough people to checking twice what Boeing did). A lot of the subcontractors were companies that used to be part of Boeing - but which now could be squeezed for cheaper prices.

And the thing you're missing is that the capitalist aren't sacrificing their capital if they can cash out the gains - for example thanks to only playing on the stock market and pushing publicly traded companies towards practices that enable better returns for them. While Boeing managed to keep considerable amount of shares under corporate ownership, it's less than enough to veto anything.

And Vanguard (biggest individual owner of Boeing stock) or any other big fund thanks to stock market can get benefits from short-term planning and get positive returns. In fact, it's arguably beneficial to not hold out too long and always be ready to cash out.

And the same kind of thinking led to a lot of cutting at IBM (the principal guideline was EPS value) and Digital in 1990s (where many units were sold off despite turning profit or being profit-drivers for other units).

I don't see why this would bias people towards short term benefits rather than medium and long term benefits. E.g. why investment funds wouldn't optimize for the latter rather than the former.

Mobility of capital coupled with no liability for shareholders means that many short-term plays can be theoretically more profitable (in fact, in face of lack of profit-sharing schemes etc, trading stock is going to be main source of profit), and decouple you even further from possible risks.

This is the basis of how considerable portion of financial markets operate, with total reduction to "game of numbers" being the ultimate form of capitalism - i.e. capital making more capital.

g-b-r 884 days ago

Greedy capitalists don't sacrifice their capitalism, they sacrifice their company's long-term capital and move on to the next company.

If you don't see evidence you might need to widen your media bubble, just an idea....

Maybe they aren't greedy after all? People live long. If a CEO ruinw a company with short term mismanagement, they do ruin their reputation. It's not like politicians who are often elected just once and only for a few years.

Ruining a company does not necessarily mean they failed the goals placed in front of them, especially in a cult of "shareholder value maximization" that makes people think it's a fiduciary duty to take shareholder value as primary goal.

Multiplying shareholder capital through short-term dismantling of existing businesses while ensuring the shareholder do not have negative effects from it is very much a rewarded operation.

But the shareholder value goes down if you have quality and safety issues? Boeing stock did go down.

But before that, you can squeeze so much shareholder value and be rewarded by the people setting the goals (shareholders choosing the board)