Qasim Rashid, Esq.Dec 29, 2022

As Southwest CEO Bob Jordan pretends to apologize—remember—SW got a $7B federal bailout, spent $5.6B of that on Stock Buybacks, gave their CEO a raise to $9.1M, & forced frontline workers into 16 hour shifts under threat of termination—while spending $0 updating SW software😳

Southwest’s debacle isn’t an accident. It’s the predictable result of billionaire & corporate corruption & greed—& thousands of workers & travelers are paying the price.

In a just world SW execs will face criminal charges.

Show threadmhoye
@QasimRashid I ... don't know if this is corruption in the way we usually mean it. I mean, it's professional negligence and should be criminal negligence for sure, but I'd wager you could subpoena every paragraph written at that company and not find any criminal intent; you'd just find a total commitment to the idea that "shareholder value" is the most important thing that company produces, and not "happy humans delivered to their destinations."
Dec 30, 2022 at 3:56pmWeb
Show threadmhoyeDec 30, 2022

@QasimRashid I think there's some sort of economic torment nexus at the intersection of Goodhart's Law, the idea of the primacy of "shareholder value", and Sinclair's observation that "It is difficult to get a man to understand something when his salary depends on his not understanding it."

That being, the moment an company's executive strata reward metrics are established by shareholder value, the company is going to turn out like Southwest did.

https://en.wikipedia.org/wiki/Goodhart%27s_law

Goodhart's law - Wikipedia

Show threadmhoyeDec 30, 2022
@QasimRashid In the same vein, a deep commitment to the combination of shareholder value and just in time delivery of any god or service effectively requires both a fully subjugated workforce and zero investment in long term stability or process improvement, both of which take investments of time and effort that won't show up on this years' balance sheets or comp cycles, and so must be deferred indefinitely.
Show threadmhoyeDec 30, 2022

@QasimRashid So again, I don't think "corruption" in the classic sense is what's at play here - it's a corruption of institutional metrics and goals, not of people, of treating money, as delivered to investors, as the measure of success. It's the willful blindness of a management strata that's well-rewarded for that blindness.

Jack Welch was right when he said that shareholder value is the dumbest idea in the world.

Show threadmnemonicoverloadDec 30, 2022
@mhoye @QasimRashid It's also fiduciary negligence from a traditional perspective as well. These sorts of decisions are short term profit driven and hurt the overall long term outlook of the company.
Show threadmhoyeDec 30, 2022
@mnemonicoverload @QasimRashid While that's true, if "the long term outlook of the company" isn't part of the reward cycle - or worse (and likely) the golden parachutes make long-term planning irrelevant - then that long term outlook doesn't matter.
Show threadmnemonicoverloadDec 30, 2022
@mhoye @QasimRashid The long term outlook is of course largely irrelevant to the modern fiction we call "the market" but it has very real consequences to the actual economy (jobs, stability, continuity of service, negative externalities, etc).
Show threadmhoyeDec 30, 2022
@mnemonicoverload @QasimRashid I absolutely agree with that, but I think the logical next step of that argument is "... the modern fiction we call the market is not actually good for the parts of the thing we call the economy that matter to people."
Show threadmnemonicoverloadDec 30, 2022
@mhoye @QasimRashid Well yes, exactly. Personally I'd go one further and say capitalism itself, like previous economic systems we've discarded once their utility was at an end, was only necessary within a specific context of societal development and that time has passed. IMO it's no longer fit for purpose.