The Boeing Disaster (With Matt Stoller & William McGee)

10:46PM Jan 18, 2024

Speakers:

David Sirota

Matt Stoller

Bill McGee

Keywords:

boeing

faa

airlines

planes

people

big

airplane

congress

airbus

deregulation

nationalized

work

company

question

power

put

problem

safety

funded

industry

Okay. Hey, everyone. Sorry for the delay there. Thank you, everyone for joining us on today's live event about

So yeah, so I, I study the antitrust and market power and big corporate business, corporate power, and the traditional rules that we use to consult to prevent consolidations of power. They were radically changed in the 1970s and 80s, under Reagan, and then they were at the end of the Cold War. They were changed for the Defense Base by Clinton. And they were changed to facilitate a roll up of economic power, like we've never seen before in this country. Maybe you could go back to maybe the 1850s or something like that. But really, in anyone's lifetime, we've never seen anything like this. And it was

in the early 1990s. What happened is the Defense Department and the Clinton ministration Defense Department under the rubric of reinventing government, sat down with the defense contractors, which Boeing's is big one so it was McDonnell Douglas and a bunch of aerospace contractors and said, Alright, the Cold War is over. We're gonna have to we're not going to be able to raise defense spending any more we might even have to cut it. And the defense contractor said, Well, okay, that's that we understand, but we want you to raise our money. margins. So our revenue will go down, but our profits will go up. So what we want is for you to get rid of some contracting rules, this is the reinventing government thing. But what we also want you to do is is to is to help us merge, right and consolidate. So that there, you know, the government won't have any pricing power. And so that's what happened, right there was the assistant secretary of defense in 1983 convened all the big prime contractors at the Pentagon and something called The Last Supper, and said, You guys are going to merge, and we're going to have a small number. So we had about 100, defense primes, and the beginning of the 90s. In the end, we had five, in one of those mergers was the merger of Boeing and McDonnell Douglas. And those were the two last makers of civilian aircraft in the United States, because both of them had defense businesses, but they were also civilian aircraft manufacturers in the US had a lot of aircraft manufacturers, but gradually there were fewer and fewer. It is a business with economies of scale. So that made some sense. But to consolidate it into one was crazy. And and so in 1988 1989, the Clinton ministration pushed really hard for this merger because there was this vision that monopolization was a good thing that this was the era of deregulation, everything was cool. Larry Summers is the man. And it was also the era of Jack Welch. And outsourcing was awesome. And you know, America is the unit polar power. And so Boeing bought McDonnell Douglas, and Boeing was this magnificent engineering company, that they designed the 707. In a weekend, it was run by engineers, they were very careful people. These were many of them were brilliant, but it was a very unhealthy culture. The unions had a lot of power, it was very profitable to be innovative. And then the McDonnell Douglas people for some reason, McDonnell Douglas, was the one that was bought, but the McDonnell Douglas executives were the ones who took over. And they were much more finance oriented, maybe more like, trained by Jack Welch, much more like private equity types. And so they started to do engage in aggressive cost cutting outsourcing, they moved the headquarters from Seattle to Chicago, so that the executives didn't have to be near the employees that they were laying off, they started moving a lot of production away from Washington State to South Carolina, where there weren't unions. And then they started to move a lot of the production offshore. And they started to do things like they sold Boeing divisions and to private equity firms like air, this spirit aerospace, which was the thing that made the door that just blew off that wood that's basically a Boeing plant, it just they sold it in 2005, to a private equity firm, and gave it a different name. It had been a Boeing plant for since the 1930s. So they did all and that was really just financial engineering to get the balance sheet looking better than it really was. And so, by 2018, you had this company that was over $100 billion in revenue, and look really healthy, and, and profitable. And under the hood, though, the operational capacity was diminishing pretty radically. And this was true. If you looked at the defense side, the defense side of Boeing had been a disaster for quite a while. But on the civilian aircraft side, it didn't really look that way, because they were making a lot of money. And this is because there was they were the only manufacturer in the US and one of two globally, so Airbus and Boeing. And then the 737 max happened, and all of a sudden, it showed these, this huge problem of monopolization and financialization, because what monopolization and financialization do to accompany is they make the executives focus on tax concessions, political power, everything, but making good products, because you're trying to maintain your power, right? If you actually have to compete, then you're focused on what your competitors doing, and you're trying to lure customers and do better, you know, make better stuff and get better pricing. But if you don't have any competition, then you're focused on maintaining that. And that's what Boeing was doing. And so you have this total disaster that that happens in 2018 2019. The Trump administration does not really addressed it in any meaningful way. And so it continues to get worse. Nikki Haley is on the board of Boeing, I know you've done a lot of work. And Boeing has a lot of political power. You know, you roll it forward, and Boeing really didn't fix any of the problems that they had. And they still hadn't fixed them. The board is full of finance ears is there's I think there's one person with any aerospace design experience on the board. And really, we're in this situation where you have this core now national security and social asset, which is both the ability to make airplanes, which is something the US invented, something we obviously need. And we don't really have the tools as a society to fix it, we just, you know, you need a congress, you need a political system that can just sort of grab hold of it, and get some people in there to restore the engineering culture, if it's possible, which I think it is, you know, we have, we've done some other like, you know, SpaceX is new, there's, there's a bunch of cool things happening in adjacent industries, there's no reason we can't fix this. But we haven't figured out politically how to build the consensus to do that, and how to get people with capacity to do that, from government to actually start to address this. And so Boeing is kind of slowly bleeding out. And we're gonna see more, more and more problems like this, because fundamentally, you can't have financiers running these kinds of assets. But I guess the last thing I'll say is that, I think this is really like, this is really a wake up call. And the entities that are actually pushing for Boeing to reform are the airlines because they need the planes, and they need their planes to be safe. And when they have a grounded fleet and and Bill can speak a lot more to this. But when their fleets are grounded, they're losing money, or they're not, they're not getting, they're not able to fly, maybe they're not losing money, because it could raise prices, but like, it is a real problem for airlines when their planes don't work. So the customers are really upset at Boeing too. So this isn't a situation where we have to expect some magic new political consensus. This is a situation where you have powerful people in the economy who are very upset with what's happening at Boeing as well.

I'm glad that you bring up the point about customers, the airlines being the customers, I mean, obviously, the end user or the pilots, the flight attendants and the people and the passengers, but the customers, the people buying the civilian aircraft, or the airline companies. Now, Bill, I will turn to you and and ask that question, which is, there's an argument out there, I'm guessing Boeing would kind of make it which is that, hey, listen, we're the monopoly. So we you only have to talk to one company to talk to the whole supply chain, you talk to us, we can fix it, that I'm guessing Boeing makes some sort of argument that like, you know, it's it's good that we're a sole source, because you only have to, you know, you the arrow, Southwest Airlines, whoever only asked to talk to us, we know our air airplanes, we can fix we can we can fix this or address this. How true is that argument? What's the problem with that argument? And I mean, I know we talked about this on our podcast this week, how safe should the flying public feel right now?

Well, it is an argument that Boeing uses with the airlines because from an airline perspective, you have one manufacturer, or even using one aircraft, I bet Southwest does with the 737. That reduces costs on training pilots, and mechanics, dispatchers, you know, spare parts, all of that stuff. So that has been a Boeing argument forever, you know, like, we're the one stop shop. And if you want larger aircraft, you need 737756, on and on and on. The problem is, as Matt just laid out, is the lack of competition eventually affects the quality. And so that's why we're seeing what we're seeing. And I don't even think we can over we can, it's impossible to overstate how critical Boeing has been to the to the history of aeronautics in this country. It is Boeing's history is our history. They helped us win World War Two when they you know, on the military side, B 52 is b b 17. On and on. And on B 29. It's the space program. But on the commercial side, back when there were competitors, Boeing was understood to be the gold standard, not just here, but around the world that is I had when I worked in the airline industry in the in the 80s and 90s. And it was just understood, every pilot said, Oh, it's Boeing. Good. You know, I just mentioned the other day, you know, to on another podcast about the bumper stickers they used to see all the time on pilots. He's gonna bring bags where they had their their Jepson manuals in there. And they would say, you know, there'll be bumper stickers instead of fitting Boeing nine going that's how it was. Airbus conversely, was was a punch line 30 years ago, now that's reversed. And by the way that the figures just came out this week. In 2023, Airbus sold more airplanes and Boeing, right. So we have seen this reversal. But it's Boeing's fault. And it is really I mean, to me, it's a bit of an American tragedy, because allowing such an engineer driven company and this is not this is not you know, hype this is not you know spin the fact is like the engineers ran the company and they would go to the to the to the executives and the money people and say we need x, y and z this is what we need in order to from you know, from from a drawing board to flight. We're going to build a 747 We're going to build the first wide body are playing that can carry twice as many people, twin islands said of a single while. And we're going to do that in four years. And that's basically what they did. And they were given whatever they needed, built a brand new hangar, and it's in the Guinness Book of Records is the largest building in the world at the time, right? That's what we're talking about, to now saying the same old Jack Welch scrap of you know, well, what's the quarterly earnings, right? This is not an industry that you can focus on on a quarterly basis, when you're in the business of building new airplanes from, you know, research and development on through to flying people on them, that's a long process, you're gonna you're gonna have ups and downs, and you're gonna have costs going out without money coming in. But when you have that, that MBA mindset, it's dangerous.

And we reported recently, just to underscore that we reported recently that there was a shareholder resolution in 2020, to try to require the board to have 60% of its members to have experience in engineering, aerospace and or aviation. And that was essentially the the board of Boeing wouldn't even allow shareholders to vote on that initiative, they went to the SEC, the SEC, essentially bless them keeping it off of the ballot for a vote. So that to me, just the fact that there needed to be a resolution shows how dire the situation is, or at least dire in the sense that it really isn't the people running the company at the very top of the company. They mostly do not come out of the engineering space. They're their financial engineers, I guess, but they're not aviation engineers. I want to go to questions from from the audience. And so if you want to ask a question, you can go to the to the bottom of the of your zoom window here and click chat. Put a question in there. Go ahead, Matt. Yeah, aspect, which

is, which is Boeing was important. Boeing's military wing, their military divisions were always really corrupt. Right, they kept the civilian stuff separate, because they had to make high quality cost effective planes to sell to airlines. But it's like they got the financiers who are in there. Now, the Jack Welch types, but they also have a strong sense of like, they have a strong lobbying, right? mindset as well, like political, like lobbying mindset. So that that's important to remember as well. Yes,

I would just I would just add to that, if I can do it, and that is that, you know, Boeing is very big over the years at throwing stones at Airbus, because it's a consortium for European governments. And they will say, you know, well, you're subsidized and we're not, which is laughable. Boeing has been subsidized from day one, you know, we wouldn't have jet commercial aircraft, if it wasn't for the Pentagon, giving the r&d money to Boeing to build those aircraft in the first place. The Boeing 707, the first successful jet engine jet aircraft, that is just a civilian version of a military aircraft that the Pentagon. So we the taxpayers have been funding Boeing since World War One.

Right. And I saw in Matt's newsletter this week, you know, the essentially Boeing I think you called it essentially, or some something to the effect of a state funded or, you know, state subsidized company. And that's a question that's come up from one of our one of our subscribers, who has mentioned who has asked the question, how, how does Boeing differ from it does have a competitor? It's not an American competitor, but its competitor Airbus, like, how do we think about what are the differences between Boeing and Airbus? Like, has Airbus done things? Right? Or better that Boeing hasn't done because of the way Airbus is structured? I mean, mad. What would you say to that question?

I don't know that much about Airbus. I know there are problems with Airbus jets, right. Like one of the reasons Spirit Airlines is having problems right now is because they have a bunch of Airbus jets with Pratt and Whitney engines that they've have to ground. So I don't I don't know the answer. I, it would be hard to think they're doing a worse job than Boeing. is one way I would, I would put it but Bill would know this better. Yeah,

go ahead. Well, for one thing, you know, all roads lead back here in the United States to the FAA. You know, and we have had a systemic problem. Not for years, but for decades, with the FAA being a captured agency, and with, you know, bowing down to Boeing, and to the airlines. I mean, I've wrote a whole book about it, not trying to sell it, but there it is, everybody inside the industry knows this. And I would say that, as a rule. The European regulators, particularly since there's cross net national, you know, oversight of Airbus and its facilities in four different countries, multiple countries, in fact, that it's the standards are a little higher these days. There was a time where the FAA was also sort of the the Gold Standard, and it is not we all know that. And it is shameful that in 2019, after those two fatal accidents and 346 deaths, that United States was the last country in the world to ground the mat, we should have been the first since we built it. And in fact, we were the last. But having said that, again, you know, so much of this has to do with oversight. When you look at these, you know, we're saying Boeing, Boeing, Boeing, to me when these things happen, there's usually a, you know, quite a bit of blame to go around. The FAA has a part in this certainly Spirit does the supplier in Wichita or wherever it is, and Boeing, and then we'll sell the airline part of it, that's a little more subtle, but there are still a lot of unanswered questions for Alaska, primarily, as someone who's an FAA licensed aircraft dispatcher, I couldn't do it now. But I did back in the day. One of my questions was, okay, when I worked as a dispatcher, we were told, okay, this given airplane has restrictions on it, you can't use it for certain operations, we'll have to be clear on what that was, and why. And then most important, what the hell was the problem? And when was it going to be fixed? So if I was on board, that plane that had a hole ripped out of it last week? My question would be, wait a minute, Alaska, you knew there was a problem. And you restricted it from what the industry called ETOPS, meaning long range, usually overwater flights, they stopped flying that airplane to Hawaii, and just used it up and down the West Coast. And the worst case scenario happened. It wasn't worse than that. No one was killed, thankfully. But you know what they were afraid that would happen did. So there are a lot of questions to go around here. You know, now, but But to me, in a way. And by the way, I just want to say, David, for the record, and publicly, you guys are killing it. You have been doing excellent work. I've been reading it every day. And you've just been really nailing this story. But to me, the second the second day story may be bigger than the first. Yes, we all saw the dramatic thing we saw the whole we know that, you know, a teenage kid had clothes ripped off his back. We know all of that. But it was a few days later, when we started hearing well United trim three planes, and now it's five planes and our system that bolts weren't tightened. I mean, we're not talking high tech stuff here. This isn't M casts with the with the, you know, the man these. This is get a wrench and tighten it. You know, lefty loosey, righty tighty. I mean, this is, you know, pretty fundamental stuff. And I've also heard, you know, people online and whatnot saying, well, that's spirit that's not bowing, bullshit, bowing ultimately, as responsible, they are responsible for the q&a, if you're going to outsource something, and the airplane comes back to you, it comes by train from Kansas and what I was reading, okay, that's fine. You have to double check the work and tightening Bolts is not asking for too much. Well,

and Bill, I know you're on a heart out here. And man, I've got a couple more questions for you after bill goes, but I want to I just want to hone in on that for a second here. What we know of how planes are built, what we know of safety concerns, I'm sure there's a lot of people watching right now who are concerned about flying Southwest Airlines, for instance. The question of how confident we should be that these kinds of potentially catastrophic problems which exist in a plane model that is essentially a throughout the American Civil Aviation fleet? How into your mind? How, how easily, certainly with effort, can the immediate safety problems that have been spotlighted by these situations? How quickly can they be addressed? Or is it something? Is it one of these like, we can't really we don't we don't it's a known unknown? We don't really know how bad the safety, the safety dangers really are?

You asking me? Yeah, yeah. Okay. So two things. One is, we have this specific problem, it's a known problem, we have to address this problem with the plugs. Okay. So that is sure, no clear cut, and every single one has to be checked and double check. That's, you know, that's doable. And that is not at all a big task. The bigger issue, the much more important issue is, well, what else? Don't we know? Right, right. And I will tell you, and I know this from having spent years researching through my book, potential passengers, where I spoke to dozens and dozens of frontline, FAA inspectors, airline mechanics, etc, that there's always a trail on these things. It's very, very rare for something catastrophic to happen on an airplane in flight and nobody suspected it. And we have had we have whistleblowers in this country at Boeing at the FAA, at the airlines and outside repair centers, and they are not listened to. And I really, I mean, I don't mean to get up on a on a stump about this, but I really haven't. I've been saying it for so long. for about 15 years now. We really have to start listening to those people. They are the frontline people. They're not the MBAs, they're not the people in Washington, they're not in the C suite. These are the people that literally turn wrenches and they know when there's a problem, okay, and now We see that thanks to you, in fact, David, that there were problems at spirit that were that were coming to light back in December, we have to start listening to those people. And we have to start putting resources into the FAA. It's been underfunded for 40 years.

And so the last question before you have to go, Bill, I'm gonna

give you another 10 minutes and be like, so. Okay. So, so,

so, so let me let me let me let me just follow up then. Just real quick on that point, though, which is, you mentioned that the FAA doesn't listen to hasn't hasn't been funded? Well, whistleblowers aren't listened to, I think a lot of people. There's some questions in the, from the from people watching this that relate to this. Why hasn't the FAA been better funded? Why aren't whistleblowers listened to? I mean, I get it that Boeing has a lot like a company like Boeing has a lot of political power, but every member of Congress is flying on a plane. It's not really in the interest of the airlines or really of Boeing to have planes drop drop out of the sky or have have these big problems. Right. And and the FAA, a well funded FAA in a much better funded FAA in the scope of the federal budget would still be a drop in the bucket. So then it gets this question is like, Well, why haven't we done that? What what is the how do you explain that?

We better let Matt answer first, then I'll go ahead.

I want to throw something out there and see what Bill thinks. So So one question, one way to put it is, is like, Alright, there's corruption, right? But there was always corruption, right? Why was the FAA fine in the 70s? And now, like, the airlines don't want it right. What happened, right? Airlines clearly have an interest in people thinking flying is safe. So why are they doing this? They didn't do it before something changed. And it wasn't that people got greedy, or whatever it is, the incentive structure changed. And Bill alluded to this when he said something happened in the air, the airlines are kind of responsible for this in some ways, like, why wouldn't Alaska want to put its plane aside and get it maintained? Well, you got to look at how these these planes, these airlines make money. And that gets to how they're regulated. So prior to deregulation, so prior to 1978, airlines were basically treated like utilities, and they basically had a guaranteed rate of return. So you put in a certain amount of capital, buying planes and infrastructure, and we're and the regulators. It wasn't the FAA, it was something called the CIB. So you can make 12% on that, right. And then after deregulation, they said, All right. You know, charge whatever you want, and try to keep your costs below that. And so the incentive flips from spend a lot of money, right, which has its own problems with like pianos on planes and steaks and stuff like that, to cutting everything you can, right. So one of the reasons why why airlines continue to screw workers and continue to screw consumers and screw communities and cut on safety is because the incentive model pushes them to do that, it's about taking costs out of the infrastructure, versus the incentive model prior to 1978 was spend more, right, if you have better consumed customer service, you pay your workers more, and you you do more safety, you make more money. And and that that was just like, that's the cost of deregulation, right? So so the incentive in the industry itself has changed. And I think what we've seen with airlines, treating people terribly canceling flights, being a real problem, and then consolidating because there's certain dynamics in the industry, which leads to consolidation and higher ticket prices, was making people really unhappy. And people are starting to say, we need to regulate this industry, again, maybe not exactly the same way we did in the 70s. But in in a way to flip the presumption to a Cost Plus model. But but it also has these subtler, more dangerous consequences, deregulation, which is to make airlines want to fly planes that aren't safe, when they know. So I guess, I don't know, Bill, whether you what like that's my kind of, I

think, you know, there, there are two things that are happening at once. First of all, let's acknowledge it, it needs to be stated. If we're going to talk about safety. We're in the safest era we've ever been in. But much of that has to do with technology. And I would argue, and I would argue this at length, that we are safer under deregulation, despite deregulation, not because of it. Okay. And Matt nailed it. Because if you were the CEO of a major airline, prior to 1978, you had absolutely no reason to want to cut costs on aircraft maintenance, for example. And this is an area where I've done a ton of research about a third of my book at Central passengers has to do with outsource maintenance. Most passengers don't realize that every single us airline without exception today and 2024 outsources most, if not all virtually, of its aircraft maintenance US airlines to El Salvador to Mexico to Brazil, etc. In China. Singapore, there are two sets of rules, the State Department and the FAA get together and say, Okay, well, you don't need to have a license overseas, you don't need to have drug and alcohol screening, you don't need to have security background checks. So that is what we have done to our own airline system. Prior to that, when I worked in the airlines, this didn't start until about the 90s. When I worked in the airlines in the late 80s, and early 90s, every major airline had its own hangars, its own FAA license mechanics, they all you know, there were if there were 10 people doing an engine change, this is how I described in my book, because the mechanic told me, if there were 10 people doing an engine change, they were all 10, licensed by the FAA and they changed an engine they fitted in eight hours or whatever. Now you will have 10 unlicensed technicians can call the mechanics with one licensed FAA mechanic looking over them. And it's supposed to be the same system. It's not. So we have done this to ourselves, right as as a nation. Now you're asking about the FAA funding. To me, this isn't political and and in fact, I would say I will give credit to the current FAA administrator and DOD secretary, because they responded much more quickly, last week than the last administration did with the with the debacle of the two fatal accidents. They immediately grounded the planes and now they immediately announced a an investigation, we'll see where it all goes and how they give, but at least

we're gonna put on high hopes and dance right.

Now, so no, but but but the point is that now, after deregulating after deregulation, we now have an incentive to cut costs in ways we never did. And you have MBAs that are sitting there and saying, Well, you know, one thing we can do, we can send the planes to El Salvador. That was unthinkable in the Senate, not because I'm waxing poetic about the past, the accident record was worse, the fatality record was worse. But we are better be despite this, it would better largely be cost of technology. But if we continue to push the envelope like that, so we continue to say, well, we're going to cut corners, and we're not going to tighten the screws, and we won't have FAA inspectors. So if you're looking for blame politically, then you have to blame about seven or eight presidential administrations from both parties. Why do we as a nation, not decide that the FAA needs more staffing, more travel budget, more funding? I don't have the answer to that. And I've been knocking on this for 39 years. But I do know that when something goes wrong, everybody's up in arms. And we said, Well, wait a minute, this is unacceptable. Well, then, maybe we need the FAA to inspect what Boeing is doing. Instead of the designee program. Look it up Google it faa.gov designee you have inspectors that are working on behalf of the FAA. But yet they work for Boeing. So Boeing, you know, pays your salary, and pays your rent or your mortgage. And yet, you're you have to tell the CEO of Boeing, your mid level, you know, guy down on the floor, hey, we got a problem, we're gonna have to delay this airplane doesn't work. That's not a system that is tenable to say, you're gonna work for Boeing and get paid by Boeing, but you're gonna also wear a hat when you're representing the FAA and the American public. I mean, please, and now you have to tell the CEO, well, we're gonna have to hold production for three months, while we fix this, and every airline that's waiting for that plane, you know, you're gonna have to pay them penalties for late deliveries, it's untenable. We need the FAA to do its job. And for whatever reason, as a country, we haven't been doing that. Well, we

know that model works, though, Bill. I mean, seriously, let's, let's not let's not forget the financial crisis, when you know, the companies that were doing the investments were also paying the credit bureaus, the credit agencies to rate their investments. I mean, that worked out really well for America. For those who don't, who can't hear tone, I'm being sarcastic here. I want to go to more questions from from our subscribers who are listening, by the way, this, this event is open to our free and paid subscribers. If you like these events, please pitch in to our tip jar, if you can to help us do these events. You can find it at lever news.com/donate. Okay, this is a this is a question from Jonathan. And we'll go to Matt. Why shouldn't Boeing be nationalized, as unlikely as that outcome would seem right now? In a non capitalist hellscape? How would the process of nach nationalizing a natural monopoly public service wise happen? Like and you Matt, I know you just wrote wrote about this, but lay out for us. And if there's historical context for this, if it's this kind of thing has happened in the past, if you could wave a wand, what would be done to either nationalized or break up Boeing like how would that actually work in the real world? Well,

we nationalize institutions in this country, we always have and, you know, one of the ways to do it is through bankruptcy. Right? That's an that's a nationalization of a solution is just the government is taking the losses, or the government is allocating losses, sometimes taking losses if it's a banking system thing, you know, we did it with Chrysler. We've on it a number of times. But but really it doesn't matter. Former ownership structure doesn't matter. It's it's who has control, right. And what we need is public. A level of public control over Boeing, effectively is a nationalized it is a state institution. We put $25 billion in the bailouts during COVID for Boeing are $17 billion, sorry, you know, billion here, a billion there. And, you know, the 40% of the revenue comes from the government, mostly the DOD, like it is, you know, the State Department sells Boeing planes abroad, the Clinton ministration structured, you know, pushed really hard for Boeing to merge with McDonnell Douglas, like, it is a it's a, it's a state institution in the 30s, the government broke broke up a holding company, which created United Airlines, Boeing and United Technologies. It was funded in well, it's this is state stuff, right? It's not that it's, you know, it's private and state, right, like, this dividing line is silly. So the way that you would, the way that we would we would deal with it is you could have someone at the DoD call up and say, Hey, we're really uncomfortable giving you guys any contracts, unless you do XYZ D. Right? You can have the DOJ say we have a deferred prosecution agreement for the Macs. And, you know, we think we want to hold everyone on the board personally liable for criminal behavior. Unless you do XYZ D, or you go, you know, or Congress passes a law, that there were used to be provisions of the Defense Procurement Act that allowed the president to seize assets, you just restore those maybe add a few bells and whistles. And like the legal authority is not the complicated part, the complicated part, is getting people in there, and then figuring out how to fix the engineering culture, and how to simplify and restructure, maybe break up Boeing so that it's, it's still functional, as as an aircraft producer, and figuring out how to build a competitive aerospace industry again, right? Because Because let's not like it, the FAA screwed up, that's a big part of it. But also, there's no discipline from other players in the market, right? It's not like you can, you can't really go to Airbus, because they're full up on orders until 2029. There is no one else but Boeing, not just in terms of buying planes. But if you want for an aerospace engineering, if you want to work for someone else, you can't really work for anyone else, because there's no one else to work for. But you got to get people in there and really get the details out and say, Okay, this is what the institution looks like. And here's how to restructure it. And that's we've done that before. I mean, just in 2019, there was a really great 2020, there was a really great investigation of dominant for big tech firms by the antitrust subcommittee, and he came out with a report saying, Here's how the industry works, here's some ways to restructure, they went through millions of documents like this is, I don't want to say this isn't rocket science, this kind of is rocket science, but like, there's plenty of rocket scientists who are mad, right? And they could do it. And I want to see, like, one of these is important. I seen a lot of the chat people like, oh, it's money. It's greed. It's lobbying. It's like, No, it isn't. People were greedy in the 1970s. And we didn't have these problems. Right? It's policy structure. Right? They so we can fix it, right? I mean, and if you it like we have, we didn't like one of the dumbest things that Boeing did in Boeing was involved in this, and that we did as a country is we became entirely dependent on the Russians for rocket engines. We just stopped building rocket engines, we lost the knowledge of how to do that. And NASA started awarding contracts to SpaceX, which was a competitor to the launch to some of the incumbents. And, and SpaceX developed a rocket engine. And so now we have rocket engines again. And so it's like, this stuff is totally possible. Right. And now space, you know, there's problems with monopolization of launch technology, but space is really vibrant. And lots of in terms of an industry segment, it's almost a trillion dollar projected to be a trillion dollar industry segment. There's lots of cool stuff going on there. This is not like this is really cool. These are airplanes like rich dudes love investing in airplanes, like if you got this right, it would like be you know, there's a lot of talent here too. If you got it, right. There's no reason you couldn't have like awesome new civilian aircraft that do all sorts of different things that you would expect. I mean, think about how much technology has been developed since effectively the 737, which is an A 1960s aircraft really framed like, we should be able to do way cooler stuff than what we've been producing since the 1990s. And we can get back to that and why should we? And

your point about about the fact that people were greedy back in the 70s, right, I completely agree with that in the sense that People didn't become more greedy. It's that the rules and regulations and the incentives around that greed changed to allow that greed to be channeled over into this, rather than where it had been channeled in the past not to idealize the past. The past wasn't perfect. Before you go, one last question for you. A bunch of people have asked this question. And this one sums it up from Wally, one of our subscribers. How would you describe your comfort level if you personally have to or had to fly on Boeing equipment? Today, tomorrow? And I guess I want to add an additional question. Is it crazy for people to use, you know, the kayak search engine to try to search for, you know, their next flight itinerary to be on an Airbus rather than a Boeing?

Well, I'm the wrong person to ask because I have absolutely no fear of flying. I spent three years working for the worst airline in the United States is noted back in the 1980s. And I flew them all over the world to six continents, I was an onboard rep. And that was tower air or nickname was Tara air. So don't ask me. But if you wanted to ask someone else that doesn't have my pedigree. I understand. I personally don't have that fear. I was supposed to fly last weekend and take four flights, I noticed one of them was a max and a max nine, of course, because they're grounded. But I get it, I get it. I mean, the bottom line is to be to be fair, when you step back from these things very cyclical. As we know, this country has a very short attention span. And in six months, we'll probably going to be talking about something else, and nobody will be looking in kayak to see what aircraft is operating their flight. Having said that, I respect those that have have concerns because I have concerns too. And, you know, I want to go back to the to the safety record, because this is what you know, the airline industry and others, they have, you know, they with me, and with many others, they've attacked us for years when my book came out, saying, doesn't this guy realize during the safest era ever, that is not the only measurement. fatal accidents are not the only measurement. The fact is, we know that there are troubling signs, very, very lucky over Portland a couple of weeks ago that no one was killed. I noticed one of your comments. He said, Why were there nobody sitting in that row? I'd like to answer to that tip. Because these days, it's very rare to see an empty row and yet that row was empty. I'm not trying to start any conspiracies. I'm just I think it's a valid question, who was a pretty full flight. The bottom line is, we were extremely lucky. If there had been an a lap child and infant that was not unrestrained, it would have ended horribly, I assure you, as it was, you know, the kid that was sitting in the row in front had his shirt ripped off his back. Why does it have to take something like that? Well, that's, you know, when you look at the history of airline safety, that's how it is it takes these awful things. And that's why in the industry and within the FAA ranks, there's a term called the tombstone agency, the FAA is called the tombstone agency. Why? Because very often, the signs are there, the warnings are there, the whistleblowers are there, but they wait until after something happens and tombstone, you know, sums it up, somebody dies, and then suddenly there's a grounding and, you know, they, that's why, again, I give credit to the FAA, for for, for grounding this airplane right away, because that's not always been the way it's happened. So, you know, we have to ask some really tough questions. You know, we find money for a lot of things, we find money for the Pentagon, if we as a nation decide, well, airline safety is not important, more people die on the highways, okay, then that's what it's going to be. But yet, that's not how we as a nation respond to these things. Right. I mean, we're talking about an event, you know, I mean, what I mean, you know, where is, you know, where is the? Where is the, you know, the human cry, that, well, we have to fix this? Well, I've seen a lot of accidents happen over the years, I've seen a lot of tragedies. And yet I see the FAA when it comes around time, you know, this this goes way above the level of the FAA administrator, the to Secretary, this is the president. And this is Congress saying, well, we're not gonna we're not gonna give you more inspectors.

We're seeing the FAA actually act. Right.

I think that's why I'm giving them credit. Because it's rare. It's rare. Is that

is that you're like, we spent a lot of money on the Pentagon. It's like, the Pentagon spends a lot of money of Boeing. Yeah. Right. It's on the military side. Like we're just monitoring refueling tankers. It's like, so I mean, I think it's just like important to realize that that, you know, there's a broad problem here. Like, David, you made a joke about the, the bank regulatory agencies like there's a there's a broad, philosophical problem here about how we run our society. And I think one of the exciting things about this moment is that it opens the door to seeing what we can do better and what we can do differently. And I think reason I go back and I say things used to work better when we had different incentives baked into the system is because we have to move away from this idea of saying it's about greed, which is innate to human beings, and start to move to things that we can control as citizens in a democratic society. None of this is inevitable. And we don't have to play the game of we need more FAA funding and have all the airlines saying, No, we don't. And they're the ones with power, we can just make it profitable for the airlines to have a competent FAA. Like, the point is, they used to make money, when the FAA had more had more funding, because if there was a safety problem, they could bake that into their pricing, right. So make it profitable to be safe. And like, everybody's gonna be super safe. And then you'll have problems because there'll be putting too much safety equipment or whatever. But it's like, you know, just make just make it profitable to, for them to do the stuff we want them to do. And they'll do it. Right. Right point is, is it's profitable to do all the bad things. Like let's just flip it, right. That's, that's the dynamic here.

And that's what we're talking about here. Human nature hasn't changed in the last 40 years. And And again, there was no, it's not that there was no moral incentive for airline CEOs in the 70s to cut corners on maintenance insisted there was no business incentive, right. And this is a very copycat industry. And I watched it happen in real time. In the 90s, when I saw the first airline starting to outsource, I said, Wait a minute, is a bad trend. And you could see that in the other, you know, C suites. The other CEOs are saying, well, they're doing this and look, their cost just went down. And then finally, we had a point when my book came out in 2012, that American Airlines was the only airline United States that was not outsourcing maintenance. And guess what happened? They went into chapter 11. And the very first thing they did was they got rid of the CEO. They put in a new CEO, they file for Chapter 11. And they started outsourcing, right, and now they're sending planes to Brazil to be fixed. That was because Wall Street penalizes airlines, and they and they downgrade their stock for doing things like putting money into safety or putting monies into labor contracts, right. So when you're good to customers, and when you could to, you know, to, to labor, you get penalized for it under our system. I agree with Matt, this isn't about human nature and saying, Well, let's help people or better this is no, let's incentivize it in such a way that there is no incentive to say let's send planes to El Salvador with unlicensed mechanics to turn the wrenches. So I want to I want to end with that. I'm going to jump okay, but thank you, Bill. Thank

you so much. Man. I want to ask you one, one last question. And this is again, summarizing, again, Bill. Thank you so much. I want to ask you one last question that summarizes a lot of the questions in the chat, which is the question that revolves around what can be done, what can people do? And I would ask that question in the context of the current Congress, the current government, etcetera, etcetera. And what I want to know from you is because you are following the changing politics, of antitrust, of corporate power issues in Congress, Congress as part of the oversight process here. What's the state of play, as you understand it in Congress about an issue, like Boeing, air safety, Boeing and anti trust? I mean, is there a real chance that we will see a kind of bipartisan effort, which is, I mean, I and by the way, when I say that I almost want to laugh and cry at the same time, because every time there's a, there's been a bipartisan effort on or maybe not every time, most times when we feel like there's a bipartisan effort, it kind of sputters, right, like rail safety I can think of in the last in the last year, um, you know, maybe maybe that's not completely dead. But I guess what's your take on on, on whether there there can be some kind of bipartisan progress on an issue like this in a Congress that is perceived to be completely divided, dysfunctional and gridlocked.

So short term, right, like or if you're expecting, you know, Congress to pass a law saying this is the nationalized Boeing act like, that's not going to happen. Right. It, but I think like so I've been working on the antitrust, for 510 years, something like that off and on. And what I think is really exciting is that we, what I didn't understand is, is that there was a philosophical problem with how enforcers thought about the law. It wasn't that they were corrupt. It wasn't that the law was necessarily bad. It was that they didn't think they were they were they believed a bunch of things about the world that weren't true. They thought monopolization creates efficiency, there was a lot of things that, you know, and I wasn't really paying attention to it that closely until the financial crisis. They thought that banks and corporations were technocratic neutral institutions prior to the financial crisis and this sort of the change that's happened since the financial crisis. CES, especially, you know, is, is profound. And the change in thinking about trade, the change in thinking about antitrust, it's a delayed policy reaction to the financial crisis. And what we're starting to move to is a recognition that we have to regulate the industries that matter to us as a society. And that's not going to happen with this Congress. This Congress is not, I think, set up to do it, not because they're corrupt, but because I don't think I mean, there are significant problems with them. But like, there isn't a consensus about what to do, we don't actually have the tools to understand what you do about the one aerospace company where the engineering culture is fundamentally corrupted. We don't know what to do. Right? We can we can hand wave and say nationalize it right, which I did. And break it up. And yeah, but like, it's actually kind of a hard problem. And so we're, we're now a lot of people are they written books about it, they're starting to talk about it, people are learning about it. Same thing is true with the airline industry. Same thing goes to with shortages during COVID. Like we're starting to reconceptualize what politics means and move away from politics as just this kind of like, you know, flag burning was what were the cultural issues used to be, or Maga or whatever it is, and moving towards thinking about how we make distribute sell stuff, right. And now I think it's really conceiving of politics as materially what's materially important and this is a long term project. But we're not at the beginning of it. We're in kind of in the middle of it. And this is an important wake up call, where I think people are going to start to say, in policymakers and their constituents to write just tell her tell your member of Congress, like we need you to do something about Boeing. I think they're, you know, there's going to be hearings. I mean, your favorite Senator JD Vance has called for hearings. But I think there's like, there's a lot of there's a lot of anger on Capitol Hill about Boeing. I mean, there really is, and it's, they fly to, right. I mean, this isn't like, that's the thing about this kind of situation is it's not, you're not asking them to stop, you know, hurting poor people, right, you can be ignored. You're asking them to make sure that the plays that they take, you know, show up on time, and are safe, and neither of those things have been happening. And so that's like a really good opportunity for our policymakers, and our citizens to kind of actually be aligned on something.

So the final question, this summarizes what a lot of people have asked. And it's about specific members of Congress or specific people that should be pressured, written to, et cetera, et cetera. And the context for this question to my mind is, I'm looking at a congress where the in the Senate as just one example, the peep, the two people who effectively wield a disproportionate amount of power, if not control the legislation on stuff like this. One is the Senate, the Democratic senator from Washington State, which has deep connections, obviously to Boeing. The other is the the ranking member is the Republican senator from Kansas, where there's this big spirit aero system plant. Wichita has a big aviation industry. And I bring that up, because it, it feels like lawmakers like that, who, by the way, taken a lot of money from donors at those companies, lawmakers like that are probably going to be somewhat potentially resistant to doing the kinds of things we're talking about. So they would seem to be an important pressure point. So I would ask you as somebody who watches Congress, like people who are listening right now, are there specific members of Congress they should write to or their specific regulators or rules that are

happening in your own member? I mean, right to your own member of Congress in your own Senator like say we I want you to do something about Boeing, like fix Boeing and fix the airline's at that. I mean, that's the best thing I can I wait where I would, I would put it and I'll just say about Maria Cantwell. You know, I don't know what she thinks about Boeing. I haven't really paid that much attention Bill does that. But what I would say is that Boeing did move their headquarters out of Washington to Chicago and now they're moving it to DC so it's like, you know, they does that like the unions are mad they have they have a simple right so so I don't think that you're gonna, you know, like, you know, how this is there are members of Congress that are like just totally bought off and total automatons. But the more common thing is the person who's kind of like, a little bit like a little bit in the pocket of the company, but also really believes the argument. Right. That's the bigger problem. And I think you with somebody like Cantwell, I mean, she's not an idiot, right. She she knows there are serious problems with Boeing. There are plenty of people in Washington state where like, there are serious problems with Boeing. She's not going to be the kind of person who's just going to say no, I do Whatever Boeing wants, I just don't I don't I think this is not that kind of problem. I, you know, I mean, obviously, I think you're going to have issues with members. But I, but I feel like the issue with most members isn't going to be that they want to do what Boeing wants, but that the idea of the government, actually governing is so scary to them as it is to a lot of us. I mean, I think one of the things, one of the biggest push backs I had when I wrote a piece on how it's important to nationalize and break out Boeing is a lot of people were like this government. Right, you're really right, right. Government can do it. And I'm like, Yeah, I mean, but that's I think the large problem is that we as a society, and I think people assume Congress, people are just different from normal people, but in a lot of ways, they're just normal. We're all afraid to govern. Right? And I think we have to get over that fear. Not

Yeah. And look, I completely agree with that. I mean, it's this sort of self fulfilling idea, oh, the government did something not great over here, it means it can't do something effective or competent, over there. And then thus, we end up in this situation with this, this circle of never actually governing, when not governing is helping create the problems that we're discussing.

You guys, you guys helped, you know, we're part of, of forcing Pete Buttigieg to change his posture on the airlines, he then find Southwest 30 times $140 million, which is 30 times as big as any other fine. And then we have the smoothest travel season, in this Christmas than we've had in 10 years in terms of cancellations. In part not entirely, but in part because the airlines didn't promise what they couldn't deliver, because they were afraid of getting fined. And so I think, you know, that like, look, I mean, I'm not, I'm not I'm not a huge, I was not a huge fan of Pete Buttigieg. Right. And I'm not going to dance the high hopes. But that guy did a good job. Right? And, and like, that's, you can, your point is, is government can work and we've seen it work, right. So that's, you know, I am not a pessimist here. Because I believe in that we can build a society, I

mean that I agree with you. And that's why we do the work we do at the lever. And that's by the way, that's why you guys do the work you do at a YLP. I want to thank Matt Stoller, our guest today for his time he is at the American Economic liberties project. He also has a terrific newsletter that I read, literally every time it comes out. It's the big newsletter. So go find it on Google. It's not on Google, but go Google it. And Bill McGee is also at the American Economic liberties project. He was our guest who had to leave how much liberty?

Right, so much. So

yes, okay. Matt, thank you very much. And Bill, I just want to mention his book. His book is called Attention all passengers, the airlines dangerous descent and how to reclaim our skies. I want to thank all of our subscribers for being here. If you liked this event, you like these kinds of events, pitch in and our tip jar lever news.com/donate. Please consider doing that. If you liked this event, it helps us do these events. We are a reader supported news outlet, which means we rely on you, the readers to fund the journalism we did you heard them talk about the journalism we've been doing that has pressured politicians to actually govern. That's what you support. That's what you fund directly. When you find when you pitch in at lever news.com/donate. And if you're a free subscriber, you can either do a one time donation or become a subscriber a paying subscriber at lever news.com. There's a big Subscribe button on our website. Thank you to everybody for being here. And thank you, of course to our reporters and our the folks who put on our podcast, Nick Campbell, who does our live events who organizes these things. We appreciate it and we should have another live event coming up soon. Thanks again.