Ian Welsh

by Tony Wikrent

Strategic Political Economy

 “‘If something requires us to cease production, we will do that:’ FAA

[Leeham News & Analysis, via Naked Capitalism Water Cooler 03-13-2024]

“The Federal Aviation Administration (FAA) is considering whether to suspend the Production Certificate of Boeing Commercial Airplanes (BCA) if it’s not satisfied changes to its safety culture are sufficient, LNA has learned. It’s the “nuclear option” LNA has written about on previous occasions following the Jan. 5 in-flight accident/explosive decompression of a Boeing 737-9 MAX operated by Alaska Airlines. Already under heightened scrutiny by the FAA, Boeing took yet another in a series of safety blows when a special panel of experts appointed by the FAA to independently review Boeing’s safety culture issued a scathing report on Feb. 26.” Lambert Strether: “See Water Cooler here; document is now readable.] More: “The FAA levied fines—and suspended some of them—for previous safety violations 36 times, according to a tracking website. And despite pledges and actions taken to improve safety following the 2018-2019 MAX crisis, Boeing still has fallen short.” FAA’s leverage: “So, what’s the ultimate hammer the FAA has? It’s suspending the PC 700 certificate, and this is under consideration, LNA is told…. Boeing holds what’s known as a Production Certificate, named PC 700. This allows Boeing Commercial Airplanes to produce commercial airlines and military aircraft that are based on airliners…. If the FAA imposed a full suspension of PC 700, all 7-Series airliners would be affected. So would the commercially-based P-8 and KC-46A. Deliveries of the inventoried aircraft likely would be suspended. The FAA could choose to segregate the PC 700 more narrowly.” And: “It’s an election year. There is bipartisan Congressional criticism of Boeing, including from Congressional members from Washington State where the 737, 767, KC-46A, P-8A, and 777 are built. Despite the bipartisan nature, if the FAA suspended the PC 700 authority, the damage to Boeing and the affected supply chains would undoubtedly be subject to criticisms of President Joe Biden by Republicans.”

Airplanes and engineering: The way we were

[Star-Tribune, via Naked Capitalism Water Cooler 03-12-2024]

When it changed: “Working for Honeywell in Minneapolis, I was involved in product developments for several Boeing aircraft: new platforms B-757, B-767, B-777 and B-787, and revisions on older designs, including the B-737. Each of these developments involved an intimate relationship between Boeing and Honeywell across multiple levels of organization. At the heart of the work were the customers’ requirements. Meeting these drove daily decisions in the project planning…. One afternoon, we started calling our contacts in Boeing Engineering. Engineering had prioritized the bidders and assured us Honeywell was their first choice. However, they would not confirm that Boeing management had signed off on the selection. We still believed we would win the program. In the past, Boeing always selected the highest technical bidder then renegotiated the price as the program phased into volume production. It was the best process to meet Boeing’s and the passengers’ quality demands… we were notified we were not selected for the program. Through several discussions with the Boeing engineering managers, we later found out that Boeing’s procurement process had changed. Boeing supply management downgraded the engineering assessment from prioritized capability to either meeting or not meeting the requirements. Then, procurement would select the lowest bidder from this pool of suppliers meeting the requirements. Engineering was no longer needed to sign off on the selection. (We heard that Boeing engineers wore a black armband for a month protesting the selection for this program.) The selection process could now be done in a spreadsheet with no account for the uncertainty that engineering often expected and hoped to have some insurance against. This would become a fundamental change in the aircraft industry.”

Who bears the risk? 

[aeon, via Naked Capitalism 03-12-2024] Important.

Under the guise of empowerment and freedom, politicians and business are offloading lifethreatening risk to individuals….

In Individualism and Economic Order (1948), F A Hayek wrote: ‘if the individual is to be free to choose, it is inevitable that he should bear the risk attaching to that choice,’ further noting that ‘the preservation of individual freedom is incompatible with a full satisfaction of our views of distributive justice.’ Over the past several decades, Hayek’s position has gone mainstream but also become somewhat emaciated, such that individual freedom substantively means consumer choice – the presumed sanctity of which must be preserved across all sectors. But devolved responsibility favours those with more capacity to evaluate and make decisions about complex phenomena – those of us, for instance, with high levels of education and social access to doctors and investment managers to call for advice. And indeed, it’s striking that the embrace of responsibilisation as a form of individual ‘empowerment’ has accompanied the deepening of inequality in Western democracies.….

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Use to discuss topics unrelated to recent posts.

Use to discuss topics unrelated to recent posts.

by Tony Wikrent

Global power shift

[X-Twitter, via Naked Capitalism 03-06-2024]

Very interesting interview with Russo-Ukrainian political scientist Rostislav Ishchenko on why the collapse of the West is a big problem for Russia as well:

“Our enemies’ problems are growing. The Western system is no longer able to stabilise itself. It is self-destructing… pic.twitter.com/faWTWELe4G

— Thomas Fazi (@battleforeurope) March 6, 2024

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Ukraine war and Western system’s fatal flaw 

Alex Krainer, Marck 6, 2024 [substack]

One of the talking points that has been making rounds among the West’s true believers, is that we can outspend Russia by a factor of 10 in military expenditures….

As the New York Times reported last September, Russia is producing at least seven times more ammunition than the US and its Western allies combined, and she is producing it at about 1/10th of the cost of western manufacturers. For example, while the cost per round for a Russian 152 mm round is about $600, NATO must budget between $6,000 and $8,000 per each 155 mm round.

Not only is Russia vastly ahead in terms of sheer production volumes but also in terms of innovation, quality and overall effectiveness. Her arsenal spans a very large array of weaponry from ultra-sophisticated hypersonic precision-guided missiles, world’s most effective air-defense complexes and cheap but deadly drones, to the basic stuff like field artillery and ample ammunition to keep it firing 24/7 for months on end. At the same time, the United States and NATO still rely on legacy weapons systems that were state-of-the art in the 1990s, but are in large part obsolete today.

Purpose-driven vs. profit-driven systems: it’s no match

In a superb and important piece of analysis referencing the recent US Department of Defense National Defense Industrial Strategy (NDIS), former Marine and military affairs analyst Brian Berletic dissected many of the reasons why the combined West is now clearly losing the arms race, not only against Russia but also against China. He points out the key differentiator: while Russia’s defense industry is purpose-driven, that of the West is profit-driven….

The undiagnosed malignancy

… Even as it endeavors to maintain a dominant geostrategic position in the world, Western powers have cannibalized their own capability to enforce and defend that position. The inescapable conclusion is that there is a deep, systemic flaw in the Western model of governance.

For generations, we’d all been educated to worship at the altar of private capital’s unrestrained pursuit of profit for the greatest benefit of its shareholders, as Milton Friedman argued in his 1970 essay entitled “The Social Responsibility of Business is to Increase its Profits” (PDF). No other considerations can shape the development of production and distribution of goods and services in our economies, else someone will shriek, SOCIALISM! Worse, we’ve even allowed ourselves to become convinced that individuals’ unrestrained pursuit of their own interests can somehow automagically lead to the best possible outcome for the whole society.

As it turns out, those ideas were the owner class’s self-serving delusions that incubated the fatal flaw within their system, rendering it fragile and weak. The flaw has festered as an undiagnosed malignancy because it enabled the interests who own our Military Industrial Complex and other key industries (the big banks, big tech, big ag, and big pharma) to become extremely wealthy. They also became deeply entrenched in society’s power networks. As such they’ve grown and wholly resistant to any curtailment of their extraordinary privileges, even when it becomes clear that they are driving their nations to destruction….

China and Russia, the industrial production superpowers that could win a war 

[bne Intellinews, via Naked Capitalism 03-03-2024]

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