Join us on a wondrous journey through whatever’s on our minds this week. We have no idea what we’re doing. But we’re trying.
Folks, you ever regret paying off a debt because it makes you lazy and slovenly? Show of hands.
Our Goodstuff Patreon Subscribers and listeners just like you! Support your favorite podcasts directly to get access to the discord and more.
[T]he F-35 supply chain does not have enough spare parts available to keep aircraft flying enough of the time necessary to meet warfighter requirements. “Several factors contributed to these parts shortages, including F-35 parts breaking more often than expected, and DOD’s limited capability to repair parts when they break.
1970s Was The Inflection Point
Starting in the 1970s, employers began to shift this balance once again. They became much more politically active than they had been in the mid-century years, and they began to push to limit government regulation on multiple fronts such as the environment, consumer rights, and labor (Hacker and Pierson 2010). As part of this renewed conservative activism, employers ramped up their resistance to established unions and new union organizing. They did so, in part, because they faced a new economic paradigm created by a variety of emerging trends. First, financialization shifted the locus of economic power from manufacturing to banks and investment firms. Second, U.S. corporations, which were the world’s economic leaders in the years after World War II, faced more global competition as countries like Germany and Japan got back on their feet. Third, the rate of profit for private business fell by 29% between 1965 and 1973, and among manufacturers it fell by more than 40% (Brenner 2006). And finally, U.S. employers were more heavily saddled by social welfare costs, like health care and pensions, than were their global competitors because of the U.S.’s employer-based social welfare system (Hacker 2002).
When did offshoring become so prevalent? The trend began in earnest in the late 1970s at large manufacturers such as General Electric. GE’s then CEO, Jack Welch, who was widely respected by other corporate chieftains, argued that public corporations owe their primary allegiance to stockholders, not employees. Therefore, Welch said, companies should seek to lower costs and maximize profits by moving operations wherever is cheapest. “Ideally,” Welch said, “you’d have every plant you own on a barge to move with currencies and changes in the economy.” Not only did GE offshore much of its manufacturing, so did its parts suppliers, which were instructed at GE-orchestrated “supplier migration seminars” to “migrate or be out of business.”
“In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires…the key point is that, in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation…and his primary responsibility is to them.” — Milton Friedman. “A Friedman Doctrine: The Social Responsibility of Business is to Increase Its Profits”. The New York Times. September 13, 1970.
In 2019, Jerry Useem writing in The Atlantic and prominent Democratic Senators Chuck Schumer and Bernie Sanders writing in The New York Times argued that shareholder theory, which promoted a rise in stock-based compensation, has led executives to enrich themselves by implementing stock buybacks—often to the detriment of the companies they work for. The critics argued this diverts company funds away from potentially more profitable or socially valuable avenues, like research and design, reduces productivity, and increases inequality by delivering money to higher-paid employees who receive stock-based compensation and not to lower-paid employees who do not.