Capitalist conundrum

By Erik Dolson

Office Depot put my local stationary store out of business, then the men’s store downtown that carried shirts I liked closed their doors because of the new mall. And there is always Walmart. Capitalism may be efficient and creative, but has some serious side effects.

I think of myself as a capitalist (and a liberal, but those are not really incompatible). But I worry that unintended consequences of unfettered capitalism may harm “we the people” it ostensibly serves. Since we’ve given the rights of “personhood” to corporations, perhaps we’re the servants.

Lower costs certainly benefit consumers. The savings may come from efficiency gains and purchasing power. I love Costco, but it’s instructive to listen to companies that sell to that big-box giant. Walmart sells t-shirts made so cheaply in China that consumers in America, at least those who still have jobs, can buy new ones whenever they want. That does not include out-of-work textile workers in Alabama.

Amazon sells for less by eliminating the cost of brick and mortar stores. Of course, I can no longer go in and feel if a product is well made, but I can always return it with the cost carried by the seller. They may lose money, but they have no choice because Amazon has become the market place. If a seller is not there, they’re nowhere.

Wealth and profit are driving forces of capitalism, and are not dirty words. But when profit is the primary motive of company leaders, and a higher stock price rewards executives who cut costs by stepping on workers and buying back shares, then capitalism can lead to wide-scale destruction of value, and often of corporate values. See Boeing, 737 Max.

Why does VISA own our money, charging the businesses we buy from a couple of percent off the top and setting us up to fail so they can charge usurious interest on underpayments when we get in a jam? Of course credit cards are convenient, and possibly cleaner as we consider coronavirus, but what is the true cost of VISA to national productivity? Would it be wise to bring money back under national control?

The “free market” does not serve us well when it comes to health care.  Proof is easily found by anyone who cares. I won’t waste effort defending the statement.

These trends will accelerate, and hardship become worse, when Amazon buys Tesla robot semi trucks to move goods, further reducing Amazon’s cost by eliminating truckers, one of the last sorta kinda well-paying jobs for the undereducated. Then all those truck stop cafes will close, putting all the Serving Shirley’s and Grillin’ Gary’s out of work, too. Then the companies that provide the pre-prepared chicken fried steaks, and frozen blackberry pies.

Car manufacturing is increasingly done by robots, as recent photos of factory floors and employment numbers from Michigan have shown. It’s not just that jobs are going to Mexico, though they have, but it will be even worse when we start importing electric cars from China made by robots built in Germany. Even logging in my home town uses huge cutter/buncher machines that do the work of seven or nine men with only a crew of three.

Capitalism makes companies more efficient, they make more profit, and can compete more effectively in the “free market.”

So capitalism may lowers costs (unless there’s a monopoly, or collusion in the market to keep prices high — see AT&T, Verizon), but when the primary cost is labor, that means jobs are lost. Politicians owned by corporations sell it as “freedom” in the “free market” and giving people the “freedom to choose.” Capitalists say, “… the unemployed should retrain for jobs that are in demand.”

Okay, maybe some of those unemployed loggers will retrain and get a comparable job writing software. Maybe they can go into real estate. By the way, thanks for cutting funds for their education and health care while they’re out of work, and for making student loans unassailable so those with dreams can live in servitude for decades after getting a worthless degree from Trump Chump U.

Of course many give up. Change is happening so quickly now, retraining for most is a pipe dream. So pass that pipe, because “worrying about all this shit aint getting me nowhere when there aren’t no jobs in the first place, and big business has bought all the companies that used to pay a living wage.”

So perhaps there’s an element of self destruction in the creative destruction of capitalism. After all, workers who are getting squeezed are also consumers that power 60 percent of the economy. At some point, would it be wise to consider the total impact of individual decisions, and protect the system that supports all of us? Might that be the role of government?

Ultimately, we’ll also have to confront the question of our indvidual value in this brave new world. Traditionally our value, to ourselves, to our families, to our society, was measured at least partially in terms of our work. That’s different than our value to the market, defined by capitalists who manipulate our consumption, which is primarily as a consumer.

What happens to our “value” when we no longer have a job, and not enough money to consume?

The 1950s are gone

By Erik Dolson

There was a time, 70 years ago, that liberals are now looking to with nostalgia, as are Republicans who want a return to that golden age. The problem is, that era was an exception, not a norm. The conditions that created the 50s no longer exist.

The U.S. had just won WWII, and thanks to the Marshall plan, was rebuilding the rest of the world. Europe and Asia had no industries left, their cities were shattered, and we had it all, including a pent up demand for homes and jobs.

In this situation, U.S. capital and labor were in high demand, with income from around the world that needed to buy what we could produce. The current “American Dream” was built on that foundation, especially that children would have a better life than their parents.

If there is something that should be called “American Exceptionalism,” it is that America was in an exceptional position after winning WWII and defeating fascism.

But remember what preceded that: the Great Depression. This was a time when the forces of industrialization and capitalism, mostly unchecked, led to violent swings in the well-being of the average person. It was also a violent time in Europe, after WWI.

We seem to have forgotten those wars and how they affected the world. In the last 70 years, we have seen nothing like that fear and turmoil.

There are ways to improve our “economies,” but we have to face a few facts.

We have to recognize that there will be winners and losers, through no fault of their own. That is both the strength and horror of capitalism. How do we remain a civilized society, a community, “one nation, indivisible, with liberty and justice for all?” (version until 1954).

We have to recognize that democracy and freedom are often enemies of each other, and that liberty, often tied to property rights, is fundamental in America.

We have to recognize that there is no such thing as a “free market,” that government setting rules to achieve a better society is often the only constraint that capitalism will obey.

No system is perfect. There are European countries that have achieved a fair balance. I am pessimistic that we can follow their lead, because our “system” has been captured by vested interests (banks, pharma, energy, tech, educators) that are not going to just give up what they have won, and we have a populace half of whom think science is an opinion and who are easily manipulated into advocating against their own interest.

Lest someone think I am blindly liberal, I believe in capitalism, business (especially small business) and capitalism as practiced elsewhere. And I know that only large business will be able to compete against the Chinese.

While I probably have liberal “values” such as universal health care (lose your job AND your health insurance?) and universal K-12 education (let’s make it more effective), the arrogance of the Left and the thrust that actions should not have consequences have had almost as corrosive an effect on American dialogue as unrestricted political contributions and the resulting concentration of power.

Failure of “free market” health care

By Erik Dolson

In the last two weeks of March, nearly 10 million people lost their jobs. Of those, more than 3 million also lost their health insurance.

With the coronavirus looming over every household, think how this might feel — your father is sick? Your child? Everything you worked for is on the line when you sign those hospital forms. Feeling sick yourself? Maybe just see if it clears up, right?

That loss of health insurance affects not just you and your family, but everyone you come in contact with.

The brilliance of capitalism is the efficiency with which it allocates resources. In theory, capitalism balances costs versus quality by giving buyers a choice in a transparent market place. This is the essential mechanism.

But health care has disconnects that violate the basic rules of capitalism: consumers (patients) don’t pay the bills and don’t really make the choices. Insurance companies and government pay the bills, and consumers rarely “shop around” for the best or least expensive care.

This malfunction of the market place is seen by comparing costs of health care in the U.S. versus other countries: U.S. health care is twice as expensive, for mostly mediocre results, than any other developed country in the world. Ultimately, the burden of this falls on citizens through high insurance rates and taxes. We just don’t get to choose.

It’s legitimate to ask, where does the money go?

Drugs cost ten to twenty times more in the U.S. than elsewhere in the world because drug companies have purchased the U.S. Congress.

Private equity firms have swooped in and purchased doctor’s offices and hospitals across the country. Like insurance companies, their goal is to maximize profit, which they do by increasing fees and cutting costs. If you notice absurdly high charges and confusing write offs on a hospital bill, or long wait times and hurried doctor’s visits, this is part of the reason why.

But wait. If the payers and the providers are both interested in reducing cost, why don’t we have the least expensive health care in the developed world? Because insurers and corporations take a large share, and fighting over that share costs about 30% of every dollar spent on “health care.”

Why don’t we have the best health care in the world? Because when we talk about payer and provider, what’s missing from the “free market” equation? The receiver of the service, the patient, you. The one who is most concerned about the outcome. For a market place to work, the receiver of the product or service has to make a choice between price versus quality, and that doesn’t happen in health care.

And, as we see with the coronavirus crisis, health is not an individual concern. You choosing which car to buy doesn’t really affect me. You coughing in line behind me at the grocery store does.

Boeing should go

By Erik Dolson

Boeing, maker of airplanes in America, employer of more than 100,000 Americans, major component of America’s economy and hero of America’s past wars, has become cancerous and should be cut out of the body of our capitalism.

For the good of America.

Boeing was once a company of engineers. It employed the best and the brightest who took ideas that were almost science fiction and built them into real, market-dominating airliners.

Like a healthy organ, Boeing did its job wonderfully well with a minimum of attention. Tucked up in the wet Pacific Northwest, Boeing dominated that part of Washington state not owned by Weyerhaeuser: the glacial plain from Boeing Field in the south to Everett in the north, and most of Seattle, long before the gestation of Microsoft and Amazon.

But in the 1980s, Boeing began to change. Focus shifted from building planes to growth. Originally intended to protect profit, growth became an end in itself, as did a focus in management on share price.

The hallmarks of cancer include continuous growth, limitless number of cell divisions, and invasion of tissue and formation of metastases. Boeing began to fit this description.

As with many cancers, there was an environmental component. The 1980s included a seismic shift in the concept of “success” in corporate America, epitomized by the genius of General Electric’s leader, “Neutron” Jack Welch. Neutron bombs kill people but leave buildings. Welch got his nickname by firing employees but keeping businesses, lowering cost and increasing profits.

One of Welch’s tools was “Six Sigma,” a data driven system to improve efficiency. He also had a policy of firing the bottom 10 percent of sales producers every year, regardless of their absolute performance. Stock price became a primary focus. At first Welch’s methods were successful. G.E. value skyrocketed as Welch bought and sold divisions, looking for maximum return.

Welch wanted G.E. to be the largest company in the world. Men who worked for him were sought by other companies hoping for some of the G.E. magic. This was also during a time of overall increase in stock valuations, but Welch’s G.E. and others outperformed indexes such as the S&P 500.

Welch also distributed stock to his management teams, took a good chunk himself. G.E. grew rapidly, gains in stock price became a primary measure of success, and Welch was regarded as a hero of capitalism. (It didn’t always work. Even G.E.’s stock lost half its value after Welch retired, and many of the companies that adopted his ideas did not fare much better.)

But other companies took note, including Boeing, in the 90s under the leadership of Phil Condit. Condit expanded Boeing, bought rivals such as McDonald Douglas, Rockwell Aerospace and Hughes Space & Communications, expanded operations to North Carolina and South Carolina (possibly to get away from the unions in the Pacific Northwest).

Condit doubled the size of the company and eventually moved Boeing headquarters out of its Seattle birthplace to Chicago in 2001. Boeing grew, it was profitable, but the cancer had metastasized. The company was showing early signs of disease as focus shifted away from building the best airplanes in the world to becoming one of the most valuable companies in the world.

Harry Stonecipher succeeded Condit in 2003 after it was disclosed that Boeing had been in discussions to hire an Air Force officer who was in charge of procurement of Boeing planes. One got the sense that values were open to question.

Stonecipher had worked for G.E. under Jack Welch prior to heading up McDonnell Douglas, until Boeing bought that company. At Boeing, Stonecipher was proud of the fact that he was blowing up the engineering culture at Boeing so that it would be run “like a business rather than like a great engineering firm.” (JOE NOCERA, Bloomberg) Stock price rose.

Two years later, Stonecipher was replaced by James McNerney, yet another G.E. man. McNerney had no experience in aviation. But he too was an avid cost cutter, and it was under his watch that the decision was made to “upgrade” the 737 series to a 737 MAX instead of developing a new model.

It’s important to realize that this was gaming the system. A new model would have required a full review by the FAA and other regulatory agencies. More training would be required of pilots, etc. This would slow down approval and make the plane more expensive.

In a hurry, management was more interested in driving down labor cost, outsourcing work to the cheapest subcontractor, reducing staff, and misleading the Federal Aviation Administration. Presentation of the 737 Max plane as “just another 737” was critical to its planned success, and necessary to jack up the stock price. Money saved would be used for stock buybacks, executive compensation, and growth.

Internal communication was fraying, because what employee wanted to bring problems to a manager who was trying to eliminate his/her job?

McNerney was succeeded by Dennis Muilenburg. While Muilenburg was an engineer by training and a long time Boeing employee, at this point the Boeing mindset was squarely focused on profit and share price. No one at the top seemed to be aware of, or willing to consider, what was happening on the shop floors, in the warehouses. In fact, one of the goals of the move to Chicago was to isolate management from day-to-day concerns.

So, 40 years after it began, the cancer finally resulted in catastrophe when 346 people in two Boeing aircraft died when the planes flew into the ground due to flaws in software design, possibly hardware problems, and a lack of pilot training, all of which were the result of Boeing’s focus on profit and cost cutting rather than engineering.

The company’s internal failures were exposed in 2019, but they’ve been obvious to thousands who worked for Boeing for years. Employees were not reluctant to share their opinions that the company had been floundering, but were unheeded. 2019 was simply when the disease at Boeing became known to the world. When Muilenberg told Congress after the two Max crashes that “safety is in our DNA” at Boeing, he was describing a company that had not existed for years, if not decades.

The crisis of the 737 Max is not the only example. Boeing is failing to meet military requirements for new refueling tankers, faces a lukewarm reception for its revolutionary 787 plane that was years late, and recently had an embarrassing failure when its space division shuttle failed to rendezvous with the space station.

Muilenburg was fired a month ago on December 23, 2019, but he was replaced by yet another G.E. alumnus, David Calhoun, who had worked for G.E. for 26 years and also had no background in building airplanes beyond being a director of Boeing during the time when the problems festered.

So, what’s to be done? Many will say that Boeing is too big to fail, that the impact to America and to the communities Boeing supported for generations is simply too great. But there’s another way to look at this.

The social and economic community of America is a very strong organism; diverse, vibrant, and resistant to many ailments. It often demonstrates the success of capitalism, a paradigm of production and distribution that has vastly improved the human condition.

Capitalism also heralds its accomplishments through “creative destruction.” Perhaps an American icon needs to be destroyed by the very forces that led to its dominance. Perhaps Boeing should fail so that American capitalism itself can improve and become healthy.

A healthy body sloughs defective cells so that good cells can flourish. It is when this process stops that cancer spreads and bodies die.

Corporate leaders often stress “consequences” for the less fortunate. Consequences for mismanagement are equally appropriate.

Stockholders should lose their equity. Stockholder risk will sharpen oversight. Only then can there be a return to responsibility.

Boeing should be parted out. Whatever value is reclaimed should protect hundreds of thousands of Boeing workers, pensioners, subcontractors, and customers. Subsidiaries like the military division and the space division should be broken off and sold. Money raised should be used to make reparations.

There has been an impact on subcontractors, and their employees. Communities have been harmed, and this is likely to continue. They should be revitalized.

Businesses have been disrupted. Southwest Airline built its business model around the 737, and purchased new 737 Max planes that will have been grounded for over a year. Southwest and other airlines have been harmed. They should be compensated.

Executives and board members who were complicit in the destruction of Boeing and the loss of lives should be held accountable. Money made off their dereliction of duty, if not outright criminality, should be clawed back and redistributed. It is obscene that Dennis Muilenburg’s separation package is equal to the amount set aside for families of those who died in crashes of the 737 Max.

Attempts to “save” the Boeing of the last century are doomed, because that Boeing hasn’t existed since then, and Boeing of the 21st century is collapsing. For the good of capitalism in America and the communities where it once thrived, Boeing must be excised. Several new companies could take Boeing’s place. This should be expedited and American capitalism set on a path toward a future once promised but forgotten in a maelstrom of corporate greed.

Then an biopsy should be performed, to see if Boeing, Enron, Lehman Brothers, Washington Mutual and Wells Fargo (with some executives finally facing prison) are exceptions or the inevitable result of capitalist energy. Questions need to be asked:

What is the impact on a company when stock options outstrip salary as a portion of total executive compensation? When stock price reflects an emphasis on lowest possible cost, rather than the best possible product? When the take home of top floor executives is based partly on suppressing the livelihood of shop floor workers?

Is a balance possible in capitalism between competing values, or does the system itself require dynamic experimentation, excesses, crashes and disruption that characterize the current situation at Boeing and events like the Great Recession earlier this century? Was that recession caused by anomalous corporate greed in an era of deregulation, or simply the natural outcome of a dynamic, self-regulating capitalist system? Are rules effective, even possible?

What happens when a company begins to focus on its success rather than on what created that success? When does a healthy system grow out of control and become malignant?

The Third Inauguration

When I flew out of Portland International Airport before 2023, I usually stayed the night before at an airport hotel that provided free long-term parking and a shuttle to the terminal. It was a good deal and reduced stress.

But that was before Oregon had to pay for its share of the new Interstate 5 bridge over the Columbia. When the old bridge collapsed, the loss of commerce and reputation hurt the Portland / Vancouver area pretty badly. Truly Exalted said the federal government would help with 20 percent of the replacement cost, but only if Oregon and Washington came up with a “terrific” plan to pay the other 80 percent.

Washington added one percent to their sales tax. Oregon sold the airport to Koch Industries.

When I tried to reserve a room at one of the airport hotels just after Third Inauguration 2025, the Hotel Ivanka was booked for a Mary Kay convention promoting a perfume called “Melania.” Hotel Donald had tripled its rates except for corporate clients, who received a 70 percent discount. Hotel Eric was under extensive renovation after receiving a tax credit for coming out of bankruptcy.

So I was stuck with driving for five hours and long-term parking provided at Koch International for my old Taser, the first electric car I could afford. It’s not luxurious, but it’s real quick and I was able to hack the software so I can drive it myself some of the time, at least in rural areas where the Insurance Central Safety signal is still weak.

For the month I planned to be gone, the price for a space in “Blue Safe and Secure Parking” was more than my plane ticket, so I opted to take a shuttle from a space about two miles away in “Brown Open Park.” At least the shuttle waiting room was a Starbucks.

I bought a Coffee Mega and waited in line to buy a shuttle ticket. I had three choices. Actually, I had six. Each of the three shuttle companies had two levels of service, but it was like they had agreed on what they would offer. The fastest of each took about five minutes to the airport, but it cost $75V in Visa currency guaranteed against inflation. The slowest took more than an hour and cost $10V.

At&T’s shuttle kiosk was red, Verizon’s was white, and Comcast’s was blue. I couldn’t afford the faster service, so it really came down to whether I wanted to watch Disney, which Comcast broadcast to passengers through seat-back screen, Fox Real News on Verizon, or an abridged movie on the AT&T shuttle. It was a tough decision and took me a while.

“I don’t understand why we have to pay so much to get to the airport in a reasonable amount of time,” I muttered to the man waiting behind me wearing a red “We’re Still Great Again” hat left over from the Third Inaugeration.

“You have a choice,” he snarled. “Why don’t you make yours so I can make mine, commie libtard?”

“I’m not a communist. I was just wondering…”

“Shove it,” he said, pointing at my Lock Him Up t-shirt, and went over to the Comcast line.

“I heard your question and I have the answer,” said a very pretty young woman who looked like she was dressed for a beauty pageant in red, white and blue. She must have been employed by all three carriers.

“The prices are what they need to be so we can invest in infrastructure and keep shuttles running on smooth roads,” she said.

“Aren’t these public roads?”

“Well, yes, but we have an exclusive license to use them, and we own those licenses. We also have to paint lines on the road to separate the fast and the slow lanes.”

“So if you didn’t have to paint the lines, it wouldn’t cost so much? And why does the slow shuttle take so long?”

“I don’t think it works like that,” she said with a look of concern. “The slow shuttle needs to make up for its lower cost to you by carrying municipal passengers to their destinations all over town. It’s just the free market. You believe in the free market, don’t you?” The look of concern now furrowed the thin space between perfectly plucked and painted eyebrows.

“Okay, but why is the fast shuttle so expensive?”

“You just answered your own question!! It’s expensive so it can be fast! But the best thing is, you have a choice!” She laughed, flashed a brilliant smile, and gave me a coupon for free coffee sugar.

I finally bought a ride on AT&T Slow Red and got another coffee so I could use the free sugar coupon. I was looking for a place to sit when a man with an umbrella made eye contact and nodded at an empty chair at his table. When I sat, he moved the umbrella off of a ragged newspaper.

“Is that a newspaper? A real one?”

“Yeah,” he smiled. “From 2019.”

“May I look?”

“You know, that’s probably not such a good idea. It makes a lot of people uncomfortable these days. I like to keep it kind of out of sight.”

“You let me see it.”

“Yeah, but I heard your conversation with those two, and figured you were safe. It’s not illegal to own a newspaper, they just make people uneasy and that can lead to awkward situations. By the way, would you like to get to the airport a little sooner?”

“How?”

“I’ve got a ride out there in the parking lot. We can be there in fifteen minutes and it will only cost you $25V.”

“I already paid for the slow shuttle.”

“And you can wait for it, and maybe you won’t miss your plane. The slow shuttles aren’t very dependable, you know. Sometimes they just stop, and they’re never on time. The carriers says its because of congestion, but I think they slow shuttles down so they can sell more tickets on the fast lane.”

“I don’t know. Is it legal to go with you?”

“Mostly. If we get hit by Curbies, just say we’re friends and I’m dropping you off.”

“Curbies?”

“Guys looking for curb bounties. They get a cut of every fine. They’re real good at recognizing cars they’ve seen before, but the Jeep I got now is pretty new, at least to me. It should be okay for a while, then I’ll get it painted again.”

“Okay,” I said at last, and pulled out my credit card to give him $25V.

“Oh, dude, I can’t take those. It’s not like I’ve got a sign on my door.”

“Yeah, I suppose,” I said and pulled two worn $20 bills out of my wallet. “Got change?”

“Um, you know, those might not be worth $25V by the time we get you to the gate. You got any Bitcoin on you?”