Greed and Shareholder Value Are Endangering Us All
The tyranny of capital is costs lives and destroys people’s wellbeing
We have lost the ability to build products that last a lifetime. Everything we buy has become short-lived. Here one minute, in a landfill the next.
Buildings used to be built for eternity. People would drive one car their entire life. Goods and clothes were produced to last for years. Not long ago, ordinary people owned three or four sets of clothes for each season, a change for every day and a “good” one for church and festivities.
In my country, you can stay in inns built hundreds of years ago with walls that are more than a meter thick. The furniture in some of these places has survived centuries.
Millennia ago, humans with lesser tools than our modern machines could create things we can see and experience today.
I wonder how we lost the skill (or is it the will?) to build things that last.
Industrialization and imports of resources from the southern hemisphere made goods in the West more available and cheaper.
It gave people access to things they could never have acquired before. The Western Hemisphere prospered. But at some point during the last century, a switch flipped. The race for more production and profits started to accelerate at an unhealthy speed in the 1970s.
Today, we’re at a point where cutting costs to maximize profit is all that counts. Quality is reduced to create earnings for anonymous shareholders, and security regulations are ignored to cut costs.
Greedflation and Enshittification are terms that have become part of our everyday language.
A cheaper material here, one less bolt there, planned obsolescence to make people buy new stuff regularly.
We see it happen all the time. Home appliances, personal computers, and even cars mysteriously fail at a specific time - right after the guarantee runs out.
A mystery that the vendor precisely calculates.
What used to be a personal financial inconvenience is now happening at a frighteningly large scale.
Flying is one of the safest ways to travel, but capitalism is changing this
Can you imagine how scary it must have been for the passengers of the Alaskan Airlines flight last January when their plane suddenly lost a door mid-flight?
I used to travel a lot for work. Flying was often the only way to get to meetings on time. Knowing that takeoff and landing are the most dangerous parts of a flight, I was always very relaxed for the rest of the flight.
But today, we can no longer count on the remaining flight being uneventful.
Thanks to turbo-capitalism, we now have to be anxious for the entire time.
Judging from Boeing's recent history, these passengers have been really lucky. They all made it out alive.
Unlike a friend’s father, who was one of the doomed passengers of Ethiopian Airlines Flight 302. This tragedy and the Lion Air Flight 610 crash led to the grounding of all Boeing Max 737 MAX.
The root cause for the lost door and the crashes are the same: Boeing focused on profit and shareholder value over safety.
The crashes weren’t inevitable. People didn’t have to die. Management was alerted to the potential issues and decided not to do anything because - well - it was cheaper not to.
Managers twice rejected adding the new system on the basis of “cost and potential (pilot) training impact,” the complaint states. It was then raised a third time in a meeting with 737 MAX chief project engineer, Michael Teal, who cited the same objections as he killed the proposal.
Watch “Downfall: The Case Against Boeing” if you want to know more about how cutting costs and ignoring safety concerns led to this unnecessary loss of lives.
It's sad and scary to see how this company’s solid ethics and values were destroyed by greed.
Boeing’s management and workers used to be proud of the expertise, security and responsibility they put into constructing the best and safest planes. Now, whistleblowers die under mysterious circumstances.
And sadly, it looks like they’ve refused to learn from these disastrous crashes. Instead of focusing on making their planes safe again, they seem to have continued to focus on shareholder value only.
According to Boeing’s annual reports, in the last five years Boeing diverted 92% of operating cash flow to dividends and share buybacks to benefit investors. Since 1998, share buybacks have consumed $70 billion, adjusted for inflation. That could have financed several entire new airplane models, with money left over for handsome executive bonuses.
Sure, after the door separated from the plane, Boeing’s CEO David Calhoun had to leave, but he is just a well-paid scapegoat. He walked away with $24 million for his troubles. After all, he did what he was hired to do: make money for the shareholders.
It is evident to everyone watching what is going wrong here. But nothing will change as long as shareholder value, not safety, is the top corporate agenda.
Calhoun will make even more money from his stocks if his successor revives the briefly dipped stock price.
In the capitalist market, people like Calhoun cannot lose. Instead of being personally liable, corporate lackeys like him will always be rewarded with a fat bank account.
Buildings and bridges crumble
We live in a time where profit - mere cents per share - is more important than potential human casualties. Around the world, buildings, bridges, and roads collapse because people refuse to spend money to keep infrastructure safe. Or want to cut costs or time.
In 1981, two walkways of the Hyatt Regency Hotel in Kansas City, Missouri, collapsed in one of the deadliest building collapses in US history. 114 people were killed and 200 injured. The reason? Design changes were made to save time and money that compromised structural integrity.
And in 2018, the Morandi Bridge in Genoa, Italy, collapsed during a storm, killing 43 people. The unusual design and materials chosen for cost reasons, construction speed, and maintenance neglect led to the collapse.
Cost cutting and using cheap, unskilled labor in construction create more and more issues. Nearly every new building now undergoes a phase of “corrections” after completion.
A friend of mine moved into a newly built apartment and had to move out just a few months later.
The ceiling below the bathroom and all the wooden floors were destroyed because the shower drain was never connected to the plumbing, and all the water from the shower had seeped into the ceiling and under the wooden floors of the entire apartment.
If you want to know what cost-cutting and cheap development in the construction industry can mean in the worst case, look at what are called “Tofu Dreg” buildings in China.
Ceilings collapse, insulation falls off the walls, or waterfalls appear on the walls.
If everything is built the cheapest way possible, this lies in store for us.
Killing people for profit in the food industry
If you can’t kill people by crashing planes or collapsing bridges, why not sell them poisoned food to make a profit?
Food safety in a society that focuses on money over lives is not a given.
Of course, it would be bad for business if all your customers died after eating your product, but what if you could keep the death rate low enough?
The Peanut Corporation of America (PCA) is one of the best (disgusting) examples of a food producer who has forgotten they’re producing for real humans. They sold contaminated peanut butter out of rat and roach-infested production facilities to the unsuspecting public.
They sold their product to schools, hospitals, and even the military. And it is said they “ran it (the company) like a plantation,” exploiting their workers to make even more money.
Thirty million dollars in profit a year was enough for Stewart and Michael Barnell to completely disregard people’s well-being.
Expert evidence at trial showed that tainted food led to a salmonella outbreak in 2009 with more than 700 reported cases of salmonella poisoning in 46 states. According to the Centers for Disease Control and Prevention (CDC), based on epidemiological projections, that number translates to more than 22,000 total cases including nine deaths.
The owner of the PCA was sentenced to 336 months in prison. This seems like a lot, but if you saw the videos from the factory, you would think it wasn’t enough.
If you’re wondering how someone in his right mind would knowingly sell poisoned food to other humans or ignore safety warnings, rest assured, it’s easy.
We’ve ensured that there’s a great distance between production and consumption of goods. The people who sell you things don’t know or care about you. No matter how many happy consumers are depicted in the company’s ad campaign.
The free market is killing us and the planet
People like Boeing’s Calhoun or PCA’s Barnell don’t own the companies they run. They have no emotional connection to their consumers. They don’t care about the goods they produce. Or their employees. They don’t pride themselves in creating good products for their customers.
They’re only interested in the numbers. In the money they’re making for shareholders.
Everything comes down to cost and profit.
To them, everything is an expense: the material needed to produce the product, the workers who produce it, and the safety measures to keep people safe or alive.
These expenses get in the way of profit or shareholder value.
Unfortunately, it seems no bonuses are paid for safety statistics. But there are bonuses for increasing stock prices and shareholder value, so CEOs focus on this.
People who love this version of capitalism we currently live in claim that a free market will rectify all issues. But that’s not likely, is it?
Currently, the “free” market is creating most of the issues we’re trying to get under control.
The exploitation of resources to overproduce poor-quality, disposable goods. Poverty among those who build and deliver these worthless products. And even greater poverty and unrest in the countries that supply the the resources for the waste we produce.
The disasters we’re seeing now result from a poorly regulated market, and we can only imagine how bad it would get if we remove the few remaining restraints.
.... and the FDA is all in on it!!!
How they even approved high-fructose corn syrup to be permitted as a sweetener is beyond comprehension - not to mention revoking the approval once it was shown in vlinical studies that hfcs is causing cancer, not to mention advancing diabetis.....
Begs the question who is paying them off.....
All this lobbying in DC is criminal.
"I wonder how we lost the skill (or is it the will?) to build things that last."
I have wondered about this too! While I was doing research for a post I wrote about labor, I discovered some really interesting thoughts that the philosopher Hannah Arendt had about this (in 1958!)
"It consists in treating all use objects as though they were consumer goods, so that a chair or a table is now consumed as rapidly as a dress and a dress used up almost as quickly as food. The mode of intercourse with the things of the world, moreover, is perfectly adequate to the way they are produced. The Industrial Revolution has replaced all workmanship with labor, and the result has been that the things of the modern world have become labor products whose natural fate is to be consumed, instead of work products which are there to be used."
Basically, because the limitless accumulation of wealth requires people to labor without stopping, companies needed to create a demand for a nearly unlimited number of goods. I find it really interesting that she was able to look at the way that labor practices were changing in the mid-20th century, and then predict the rise of Ikea and fast fashion.
Great post!