David Brooks And Luigi Zingales: Capitalist Philosophers

I found a recent New York Times editorial by David Brooks interesting. The title was “I Was Once a Socialist. Then I Saw How It Worked.” Although, I am not necessarily a fan of the New York Times, I am a fan of David Brooks. I like his style and find myself agreeing with him more than disagreeing. He started his opinion piece with “I was a socialist in college.” He then described why he considered himself a socialist while in college. He “read magazines like The Nation and old issues of The New Masses,” and described his dream of “being the next Clifford Odets, a lefty playwright who was always trying to raise proletarian class consciousness.” Brooks then attempted to give us a definition of socialism as “what touches all should be decided by all.” He summarizes this in an economic sense as business enterprises being owned by all of us in common. “Decisions should be based on what benefits all, not the maximization of profit.” Discussing the Democratic Socialism of Sanders, et al, Brooks raises some valid points, “why do we have to live with such poverty and inequality? Why can’t we put people over profits? What is the best life in the most just society?”

Brooks, like so many before him, came to his senses. As a young man he thought that “socialism” was “the most compelling secular religion of all time.” Because it “gives an egalitarian ideal to sacrifice and live for.” I remember having those same feelings when I was college age, but then just like the apostle Paul, I matured and put away childish things. Brooks did too. “My socialist sympathies didn’t survive long once I became a journalist. I quickly noticed that the government officials I was covering were not capable of planning the society they hoped to create.”

As I read what Brooks was saying I recalled a book I read several years ago, “A Capitalism for the People: Recapturing the Lost Genius of American Prosperity,” by Luigi Zingales. In his book he tells a very similar story as Brooks and gave many of the same solutions that Brooks does to the problem associated with the negative view of our capitalist system.

In the introduction Zingales describes his awaking as being similar to, “Most of the Italian economists I know who immigrated to this country – and there are many – came to the United States as extreme leftists, in some cases as active communists.” Even though these Italian budding economists had a hatred of the American system, “the best schools were here.” Zingales describes the resulting metamorphosis, “And I’ve noticed that once they moved to the United States, they tended over time to become free-marketeers.” I find this very encouraging, and why I think capitalism is the best system for a fair and equitable society.

The evolution of Brooks emerged when he “came to realize that capitalism is really good at doing the one thing socialism is really bad at: creating a learning process to help people figure things out.” This innovation has a way for us to create a better life for ourselves. This is contrasted to how “Socialist planned economies – the common ownership of the means of production – interfere with price and other market signals in a million ways” resulting in a declining living standard. As Brooks states, “planned economies have produced an enormous amount of poverty and scarcity. What is worse is what happens when political elites learn what you can do with that scarcity. They turn scarcity into corruption.” An ultimately oppression, like we see in Venezuela.

Capitalism brings with it an improving standard of living, as Brooks states “Human living standards were pretty much flat for all human history until capitalism kicked in.” He proposes that economic freedom leads to better living standards. Nations in the top quartile for economic freedom have an average “GDP per capita of $36,770.” While those in the bottom quartile $6,140. Life expectancy in free economies is 79.4 and those in a planned economy 65.2 years. It also produces better results for the environment. “America’s per capita carbon emissions hit a 67-year low in 2017.” All of this is encouraging.

Zingales identifies several factors that were critical in the development of our American capitalist system. In the chapter dealing with American exceptionalism, Zingales describes how, “a fortunate combination of historical, geographical, cultural, and institutional factors made American capitalism different from the versions of capitalism prevailing elsewhere in the world.” To Zingales this was what made the U.S. free market successful.

To accomplish this a political system that could provide the appropriate boundaries that would allow the system to create capital accumulation but also rules to ensure a level and fair playing field would be required. The fact that democracy predated industrialization allowed for boundaries and rules. This meant the economic players could flourish. Another fortuitous event was that the government portion of GDP was miniscule. This meant that small private businesses would be the mechanism of financial prosperity and not whether you were old money or had a good relationship with a politician.

However, one of the most important elements leading to the success of our financial system was the protestant ethic for hard work. Deeply engrained in our culture was the ability and desire to work hard and experience the fruit of our labor. In some countries today you can ask young people if they are going to start a business to become successful, and they will express concern about how if they start something, and it is successful, some powerful elite will take it away from them. This is so different from what we experience in the U.S.

Both Brooks and Zingales describe a fertile and vibrant arena that has led to the economic prosperity of a capitalist system in United States. However, both argue that our system can be better. Brooks describes a capitalism that is not perfect that has led to systems of inequality. Brooks describes this, “capitalism, like all human systems, is unbalanced one way or another. Over the last generation, capitalism has produced the greatest reduction of global income inequality in history. The downside is that low-skill workers in the U.S. are now competing with workers in Vietnam, India, and Malaysia. The reduction of inequality among nations has led to the increase of inequality within rich nations, like the United States.”

Zingales focuses on the merging of our political and economic systems that lead to problematic expressions of crony capitalism. Zingales poignantly expresses this, “In a socialist economy, the political system controls business; in a crony capitalist system. . , business controls the political process. The difference is slim: either way, competition is absent, and freedom shrinks.” So, what needs to be done to ensure our capitalism thrives, and everyone participates in its fruits?

I will say I agree with both gentlemen as they describe actions needed to create a “more and better capitalism.” Brooks describes, “a massive infusion of money and reform in our educational systems.” See my earlier blog on my thoughts about education. Brooks also describes worker co-ops, which will help build worker skills, wage subsidies, so people can have hope of a better economic life. Low income people often find help, but then lose that help too soon when they make a higher wage.

Zingales describes a necessary inequality that “without some inequality, there are no incentives: people go to college and study hard not just because they love learning but also because they expect to earn more money afterward.” And describes what happens when inequality becomes too great, people lose incentive too. Zingales, also, warns how the negative impact of growing income inequality can create a negative perspective of capitalism, “Increasing income inequality is undermining the popular consensus in favor of a free-market system.”

As I have said several times, I am a Democratic-Capitalist. I believe in democracy and I believe the best economic system working in tandem with our politics is capitalism. I agree with Brooks, we can figure how to do it just a little better than we are right now. We just need the social will to accomplish it.

And that is my thought for the day!

 

The Interagency, Cabal, Swamp: Required Or Expensive Waste?

In every organization bureaucracy is both critical and terminal. Years ago, I used a textbook for my Organizational Theory class that dealt with both mechanical and behavioral elements of developing an organization. The mechanical aspects included describing different types of organization structure like functional, geographical, and divisional. Behaviorally, the textbook dealt with the human comportment necessary for the successful exercise of a business model. It was in this textbook I was introduced to a theory associated with the crisis points of a business as it matures from its entrepreneurial to declining stage.

Typically, a business starts as an entrepreneurship. This is an exciting time. The founders are offering a new product or service that people find useful. The founder, and the people working with the founder, have a wide range of responsibility as they do whatever needs to be done to get the business off the ground. Eventually, the business grows to a point where it needs a bit more organization. A management structure is created to meet the need for effective and efficient processes. This is a critical point, and it necessary for the sustainability of the business.

After a while there is another crisis. Often, the management mechanism described above stifles the creative elements once experienced during the entrepreneurial stage. This is called bureaucracy. Policies and procedures are created so employees have standardized work, and the necessary rules are instituted to ensure all employees are treated fairly. I am greatly simplifying the process, but I think you get my point. The crisis at this stage of organizational development is even more dangerous. It not handled properly the vitality of the organization will suffer. If leaders are not careful, they rely too much on the bureaucracy which can stifle needed innovation and creativity choking out employee engagement. This bureaucracy can lead to a system having the capability of ravenous consumption of resources which can suck the energy out of an organization. This is what I call a swamp.

I mention this today because I see this occurring in our educational system and government. Recently, an education-reform activist, Sarah Carpenter, “expressed skepticism” about Elizabeth Warren’s education plan. At a November rally, Elizabeth Warren described “how she got an increase in Child Development Block grants of 85%.” She told the people in Massachusetts involved with child development that they were going to get an 85% raise “at all our little child-development centers.” The sounds wonderful. More money to develop children. The only problem is none of the 85% made it to the children. Michael Q. McShane and Jason Bedrick described what happened in their editorial in yesterday’s Wall Street Journal. “You know how much of a raise they got? Zero! Somehow it all went to the state government and never made it down.”

It was the bureaucracy (swamp), the administrative system, that continued to grow, that ate up all the financial resources. Just recently here in good ole Washington State we saw the very same thing. Our legislature approved millions of dollars to pay teachers better throughout the state. The problem was, much of that money was eaten up by the administrative bureaucracy. This infuriated the teachers, resulting in teacher strikes across the state, and this does not just happen here.

Kenneshaw State University has been recording school grow for years. They have found “that from 1950 to 2015, the number of students in American public schools doubled and the number of teachers grew by 243%.” These are promising numbers, until we review the growth of the number of school administrators. “The number of administrator and all other staff rose more than 700%” during the same time period.  I think this gives us an idea of what is eating up so much of our resources.

This growth of the educational administration, in my opinion, is similar to what William Daft described in his Organizational Theory textbook. Our educational system has long since moved into the managerial stage of organizational development. This bureaucracy is now eating up financial resources that should go to the children. Parents have been trying to fight this swamp, especially in our inner cities by creating Charter Schools. These schools don’t have the administrative layers that get in the way of educating our young people. From what I have read this can eliminate waste and help provide resources needed to the children they serve.

Let’s look at some numbers. “From 1992 to 2014, per student spending at America’s district schools increased 27%.” I like that, and it seems reasonable. “Over the same period, average teacher salaries fell 2%.” Hmm, that doesn’t sound good. I can understand why teachers get a little cranky. The governor of Arizona planned to give teachers in Arizona a 20% raise “by 2020 providing funding to districts.” Sounds exciting, but what actually happened? “The Tucson Unified School District had other ideas. Local officials opted to give teachers smaller raises and finance salary increases for non-teaching staff, too.”  It is the swamp monster demanding to be fed that seems to be having a negative impact on our educational system. I think McShane and Bedrick have done a good job demonstrating how the swamp, bureaucracy, can eat up resources taking them away from where they are needed, all the while screaming “feed me Seymour, feed me.”

All of us understand this when it comes to government, especially at the federal level. In fact, during these impeachment proceedings we are learning quite a bit about the “interagency.” Somebody should make a film titled, “The Interagency.” Matt Damon could star as the secret agent who exposes it. The Blacklist, a television show starring James Spader as Raymond Reddington, explored a similar theme with the interagency evil called the Cabal. Carl Schramm uses cabal to describe the interagency, an off-the-books informal government organization used to make important government decisions. Schramm states, “The impeachment hearings will have served a useful purpose if all they do is demonstrate that a cabal of unelected officials are fashioning profound aspects of U.S. foreign policy on their own motion.”

Whether we call it the swamp, bureaucracy, Cabal, or interagency the fact is every organization develops activities that seem to be important but tend to be non-value added. In the Japanese philosophy of Lean Manufacturing, the protagonist is fighting against waste. The seven wastes, muda, are overproduction, queues, transportation, inventory, motion, over processing, and defective product, are all activities that fail to produce value for the customer. The customer will not pay for any of these activities. The job of the hero is to eliminate activities that are wasteful.

Two years ago, when I was in Ust-Kamenogorsk, Kazakhstan I attended an accelerated improvement workshop at the Kazakh, American Free University. It was led by a lean group out of the Volga River area in Russia, with the organizing company being an automobile manufacturer in Ust-Kamenogorsk. People participating were learning how to eliminate waste from the activities associated with their work environment. I was impressed.

I know some bureaucracy is necessary, but I also know too much can be detrimental to success. I hope our educational and government systems hire a lean consultant soon. Maybe our kids can get the education they need, and our government will be run by elected officials rather than the Cabal.

And that is my thought for the day!

 

Like Me, America Has A Big Middle; Ignore At Your Own Peril

After my work out today, I was sitting in the steam room. A friend of mine came in, and we started talking about the condition of the world, specifically Washington, DC. He, like I abhor the current impeachment proceedings. We both see it as a huge waste of time and money. I told him there is a lack of leadership being demonstrated by the people involved, but I think that is the plan. For some reason, the party pushing this thinks it will convince those of us in the middle that our President is Satan incarnate. Lawyers attacking children, congress men and women, attacking people testifying, it is a horrible example of what our country leaders are capable of doing.

I am a little sensitive to this because I am watching “The Man in the High Castle,” on Amazon Prime. It is an amazing look at what could have been if Japan and Germany won World War II. As I watch this show, I see the horrible injustices perpetrated by the oppressors, and the actions of the resistance as they pass around films that portray what could have been. I am in the first season and I am interested to see where this goes.

As I watch the impeachment proceedings, and as much as it upsets me, it reminds me of a saying that is often attributed to Benjamin Franklin. It occurred when he was leaving the Constitutional Convention. Franklin was approached by a group of people who asked him what sort of government the delegates had created. He is thought to have said, “A Republic, if you can keep it.” I think we can keep it. As much garbage as there is being presented to us with these proceedings, it is the way our political processes work. I think I need to just relax.

This is not the first time a president has gone through this. It will not be the last either. One of our most popular presidents, Abraham Lincoln, had to sneak into Washington, D.C. for his inauguration. People were so angry with his election that he feared for his life. We’ve had presidents assassinated, we’ve had chaotic political times before and we continue on. This time will be no different. The reason I say this is because, just like me, America has a big middle.

William Galston in the WSJ today wrote a wonderful editorial discussing the results of a recent survey that demonstrates the political center is still alive regardless of what the left or right says. Galston warns, “Both political parties ignore this center at their peril.” The New Center, a bipartisan policy institute, survey shows that 43% of the respondents place themselves on the left-right continuum in the center. 34% say they are on the right. 23% list themselves on the left. Galston writes about how Republicans and Democrats aligned themselves, but I am an independent, so I am curious what other people like me feel. “Fully 60% identify with the center, compared with 22% who claim the right, and 17% the left.”

When I read comments like this the first thing I want to do, is look at the methodology. Who did they survey? Was the method used robust enough to produce a reliable product? Or, was there bias designed in the survey? Remember, for my PhD studies I had to answer those same questions when designing my survey. I do like the results I see in Galston’s editorial.

The people responding to the questions said, “[we] reject the stark choice between a large, activist government and a small limited one. Also, they believe there’s a legitimate role for government in allocating capital, providing healthcare for those who can’t afford it, and combating climate change.” I get that, and I have written about that in my blogs.

When it comes to social issues the center, “rejects the extreme of abortion on demand and a total ban on the practice, and similarly for extreme positions on gun control.” I can live with this, it makes sense. On the issues of religious freedom and social media there is a middle way that the survey respondents identify as important. The center still sees America as a force for good in the world.

What do I think? I don’t like Trump’s style, but I think the people who voted for him want him to do what he is doing. He is shaking things up, and as my friend told me today in the steam room, he is exposing the problems within our political system. However, I also think the media is inflaming the situation with its sensationalism. The news is not reported, it creates a narrative. NPR claims to be unbiased, but when dealing with current politics every question these journalists ask people they are interviewing is skewed to push the person into a negative perspective on Trump, Republicans, and Evangelicals. ABC, NBC, CNN, and Fox all create narratives instead of reporting what happened. To make up my own mind, I’ll read the Columbian, a local paper, the Wall Street Journal, the CNN app, and Fox App. Once in a while I’ll look at BBC. Through those outlets I make up my own mind. Each app or paper have their own narrative they espouse. Rather than just adapt myself to that perspective, I chose to decide for myself.

I am in the center politically and socially. I just don’t care for extremes. The policies of Warren, Sanders, and most of the Democrats have been pushed too far to the left. The Republicans have been pushed too far to the right. There are a bunch of us in the middle that now identify as independent. There are candidates that claim to be in the middle, Kasich on the Republican side and Tulsi Gabbard on the left, who seem interesting to me. Kasich didn’t beat Trump and Gabbard has not qualified for the next Democratic debate.

I do think there is a human desire to ignore the extremes. As they say, the truth lies somewhere in the middle. That may not always be true, but I think in many instances it is true. So, politicians pay attention to the middle. Because we are watching.

And that is my thought for the day!

Marco Rubio, Campus Safe Space, Bloomberg, Oh My (From Wizard of Oz)

What a day in the news. While having my coffee this morning, my emotions traveled the whole spectrum. Marco Rubio’s comments on capitalism made me pensive, Daniel Payne’s opinion piece on intolerance and the university campus made me cry, and Bloomberg’s run for president gave me type to ponder the what ifs.

Recently Marco Rubio, one of the Senators from Florida, spoke at the Catholic University’s Busch School of Business. William McGurn summarizes Rubio’s comments as arguing that shareholder capitalism needs overhauling, and the solution is “politicians such as himself making more decisions about where capital gets invested.” I see this as no different than what John Hickenlooper and Elizabeth Warren have stated in the past. This is nothing more than State Capitalism. Don’t get me wrong, government should be a referee in the economy, but government should stay out of the day-to-day decisions associated with running a business. To ensure this occurs, business needs to make better decisions when it comes to stakeholders. I can’t say this too strongly, business needs to control its own destiny by supporting American workers in their business decisions. Make good business decisions and you keep government out of your face.

The article that made me cry involves the condition of our college and university campuses. Daniel Payne begins his editorial with, “Most Americans know that higher education has for several decades been in the grip of a deeply intolerant, fanatical and uncompromising strain of progressive activism. Students and sometimes even faculty members regularly chase heterodox speakers off campus, demand complete fealty from terrified campus bureaucracies, and denounce and destroy each other over the slightest and most inconsequential ideological deviations.” I think this may be a bit sensational, but I do see his point. Often conservative professors feel uncomfortable on college and university campuses. So much so, it impacts how they teach their classes. I do think Payne is using an accurate descriptor when he says, “The environment isn’t unlike George Orwell’s Animal Farm, a place where no one dared speak his mind, when fierce growling dogs roamed everywhere, and when you had to watch your comrades torn to pieces after confessing to shocking crimes.” I cried this morning because there is some truth to this analogy.

The topic though that has me thinking is Michael Bloomberg entering the presidential primary as a Democrat. The reason I say I am interested is because there is not one Democratic candidate I would even consider voting for, until now. I do have some issues with him. First, I don’t think he should have apologized for stop and frisk policing. First of all, the fill title to the policing method is stop, question, and frisk. The police would “stop people who they suspected of criminal behavior,” then ask them questions to determine if there were problems. It did help to lower the crime rate in New York City. However, I am not black or a Latino which if I were, I would probably see things differently.

Bloomberg, mayor of New York during the use of this method, “defended the policy for years” until just recently when he apologized for it. Whether he really believes what he said in his apology is one thing, but now that he is running for president, he needs to remove hinderances. Elizabeth Warren, Pete Buttigieg, and Joe Biden have all done the same thing.

What I do find so interesting about Bloomberg is the reason he has chosen to enter the race. The WSJ says Bloomberg has an “essentially limitless budget for his Democratic presidential bid.” He has announced his entry into the race as a centrist. But, just like the other Democratic candidates, Bloomberg stated he has entered the contest, “to defeat Donald Trump and rebuild America.” He is worth $54 Billion and can self-fund his campaign. I assume if he is elected president, he will donate his salary as president. Trump who is only worth $3.1, billion donates his, with this quarter’s paycheck going to fight the opioid crisis.

Will Bloomberg win? Probably not! He reminds me of Ross Perot. If I were a Democrat, and I am not (not a Republican either), I would find Bloomberg interesting. At 77 years old, which is eight years older than me, he seems a little old for me as president. However, he does look like he is in good shape. And if what was reported is true, and the majority of Democrats are centrist, then maybe I’ll be incorrect about him not winning the nomination?

If I were Bloomberg, the first thing I would do is tell my news agency to follow the company’s policies. In other words, how they investigate and deliver the news should not change. Yes, he is the owner, and yes, he is running as a Democrat, but to have his agency announce they would not investigate Democrats, just Trump is wrong.

Lukas Alpert reported in the WSJ that “Bloomberg news won’t do investigative reporting on any Democratic presidential candidates now that the news organization’s multibillionaire owner, Michael Bloomberg, has jumped into the 2020 race.” The news agency stated, “We will continue our tradition of not investigating Mike (and his family and foundation) and we will extend the same policy to his rivals in the Democratic primaries.” This so-called courtesy will not be extended to Trump. However, Bloomberg News will publish investigative articles by “other credible journalistic institutions on Mr. Bloomberg or other Democratic candidates.” Although I think this is admirable, I also think it is an ethical dilemma. I do think it will be interesting to see if the same conflict of interest argument rises as we have seen with Trump.

I do think the actions Bloomberg himself has taken to distance himself from his business is good. He has established a management committee to run Bloomberg LP, which is similar to what Trump has done.

I don’t have a problem with a wealthy person running for president. I don’t have a problem with our politicians being wealthy if they have done it ethically. What I do have a problem with is the lack of consistency on how the news media treats progressives over conservatives. It will be interesting to see how this plays out. Howard Shultz is long gone; we’ll see how long Bloomberg lasts, nd what the news media tries to do to him.

This is my thought for the day!

Peter Drucker: The Best Managed Companies In 2019

When I was a manager at Boeing, I remember a situation where an individual was transferred to our plant.  This person was given the responsibility of running our department. I kind of liked the person at first, but over time this person did some things that began to alienate others and eventually me. I understand that a manager doesn’t do the job to be liked, but as Peter Drucker pointed out, trust and employee engagement are critical to the high performance of an organization. As I read the Journal Report today on the best managed companies of 2019, I concluded that these companies are channeling what I learned by watching my peers at Boeing. Some of the managers just didn’t do well, for one reason or another, but the ones that did do well followed the principles illuminated by Peter Drucker.

Wartzman and Tang, The Business Roundtable’s Model of Capitalism Pays Off, start the Journal Report by presenting the new business model agreed to in August. “When the Business Roundtable said in August that its members had embraced a model of capitalism that takes into account the interests of all corporate stakeholders – and thereby renounced the idea that shareholders should always come first – it painted the move as one part affirmation, one part aspiration.” Some, as I have written earlier, are concerned that corporations are moving away from profit, but that is not the case.

181 CEO’s of the largest corporations signed the Business Roundtable statement. The statement called for, “meeting or exceeding customer expectations, investing in our employees by compensating them fairly and providing important benefits, as well as offering training and education so they can develop new skills for a rapidly changing world.” This statement reflects what Katzenbach and Smith, in their classic The Wisdom of Teams, calls high performance: Taking care of employees, who take care of customers, then take care of shareholders. Seems like a good thing.

My first question was, who are the companies? My second question, what was the criteria? In Chip Cutter’s journal report, he identified Amazon, Microsoft, Alphabet, Cisco Systems, Walmart, PepsiCo, UPS, Ford, Progressive, Boeing and many more. The article is clear to point out there are five different criteria, and even though a company has a good index result when looking at all five criteria together, there were many red flags. “While every company has flaws, the ranking aims to point out those firms that are particularly good at balancing what are often competing management priorities.” Now let’s answer the second question.

Peter Drucker is known as the father of modern management. I have read many of his books, and his management philosophy is sound and reasonable. If followed a company can be both profitable and a good place to work. The Drucker Institute, working with the Wall Street Journal, has created a “holistic measure of corporate effectiveness.” The institute defines this as “doing the right things well.” The institute describes why they are doing this, “the measure seeks to assess how well a company follows a core set of principle advanced by the late Peter Drucker, a professor, consultant, author, and longtime Wall Street Journal columnist.” As I stated, I have enjoyed Drucker’s work, and there is a vacuum in the business writing world since his death in 2005.

Drucker’s core principles were customer satisfaction, employee engagement and development, innovation, social responsibility and financial strengths. “These principles serve as touchstones for five dimensions of corporate performance,” used for the rankings. The scores are calculated to be statistically relevant. They describe this as using a range of 0 to 100 with the mean being 50, and a standard deviation of 10. This means, “If a company is one standard deviation above the mean (with a score of 60), its results are in the top 15% to 20% of a larger universe of companies assessed by the Drucker Institute.”

Each area of assessment has various indicators that are used to calculate the final number. The top 250 companies are a part of a larger population of 820 companies that represent the Dow Jones Industrial or the S&P Composite Index. The Drucker Institute uses appropriate statistical data collection and analysis methodology to ensure valid and reliable results. They do this to ensure it describes the companies accurately. It is not meant to be prescriptive. That is the job of those of us who analyze the results.

In looking at the list we can see the Amazon is number one. Microsoft is two, and Apple is number three. All tech companies that obviously reflect our economy. Facebook and IBM are tied for sixth. In that we see a mixture of old and new. Walmart is number fourteen, but it has a red flag in the area of employee engagement and development. The Boeing Company is number thirty-one. Its strengths are in the area of innovation and finance, while it is weakest in employee engagement. I think that is accurate. The farther we get down the list we see corporations that have been around for a while. Hershey, Clorox, Dell, Medtronic, Bristol-Meyers, and many more.

So, what is my point? If the narrative is correct that young people don’t want to work for corporations, then they are missing an opportunity to have a great career and explore many new possibilities. My work at Boeing definitely did that for me. If the millennials think they will find a perfect employer, then they are in for a huge disappointment. I like this assessment. It proves to me that forty years ago, those of us who were influencing the business world did our work well. When I started at Boeing in 1977, I was told in orientation that if I didn’t like my job don’t let the door hit you on the behind on my way out. They told me there was a 1,000 people who wanted my job. That does not happen today. Compared to that, the corporations of today have found employee engagement to provide better results. Valuing employees tend to be more productive than telling them to not let the door hit them in the butt on their way out.

And that is my thought for the day!

On My Birthday: Reflections Of My Life

I love Sundays. I love going to our Sunday gathering at the church building. Today Pastor David discussed what it means to be the Church in this day and age. It was an excellent exposition of Colossians chapter one. While he was speaking, I thought about my life. Next Tuesday is my 69th birthday, which may have had a part in why I was reflective this morning. Today’s blog will be a reflective analysis of my life.

Around March of 1973, the older I get the cloudier the past becomes, I was invited to Calvary Chapel in Costa Mesa, California. It was, and is, a large church at the corner of Sunflower and Fairview in Orange County. I was introduced to the person of Jesus Christ and responded by committing my life to Him. I have now walked with Jesus for almost 47 years. I am not perfect, but my life has been one of amazing blessing. I’d like to share with you my thoughts.

When I first began this life with Jesus, I did not understand all this entailed. Paul, the writer of the letter to the Ephesians, gave me a sense of this life in Jesus. The phrase he used was being “blessed with every spiritual blessing in the heavenly places.” I have found this statement to be true.  As a child of God, I am blessed, because even though I was a sinner he saved me a gave me a new life.

Prior to 1973 I was what Paul described in Ephesians chapter two as “dead in trespasses and sins,” and following “the prince of the power of the air, the spirit that is now at work in the sons of disobedience.” I did a lot of bad things, they may have been fun at the time, but in the light of 47 years of reflection, I recognize just how bad those things were. “But God being rich in mercy” made me alive with Christ when I began this walk with Him. By grace I was saved, but out of that came a life lived in response to God’s direction and support.

After a few years of attending Calvary Chapel, I felt the call to move to the Pacific Northwest. Some friends of mine had moved to La Center, Washington. They were describing the spiritual dryness of the area. Being naïve, I thought I would move to the Northwest and be used of God to do great things.

The first year of living in Vancouver, I attended a small church in Battleground. I was there one year, eventually becoming the youth pastor. It was a lot of fun, but I left due to some doctrinal differences. It was about this time a pastor of large church in Vancouver visited Calvary Chapel. Crossroads Community Church affiliated with Calvary Chapel in 1978, and I started attending. I attended Crossroads on and off for 25 years. I was very involved, but left to start a church in Ridgefield, Washington. After a few years, I Returned to Crossroads because pastoring a church was very hard on my marriage. I ended up losing that marriage, which was the most difficult time in my life. I had served God, and never thought this would happen to me. It did, and it was tough.

I began doing single parents ministry at Crossroads, which is where I met my current (and last) wife. We have been married now for 30 years, going through many ups and downs, but God has blessed our life together. I think it was after two years of marriage that we decided to attend another church to work on our marriage. This is where we met a wonderful man, Aaron Knapp. Pastor Aaron is one of the reasons my wife and I are still married. He pastored us through many difficult times.

After three years we returned to Crossroads, where we stayed for several years. My son ended up on staff, and I did some ministry, things were good. Eventually my son left Crossroads, and my wife and I felt the need to move on to another church.

I like to joke about having attended almost every church on 78th street. Vancouver Church, New Heights, and Crossroads are all on 78th. But, after Crossroads I never felt I was home. I met some wonderful people at each of these churches, but after 25 years at one church, it was difficult to find a home. Now we are attending Summit View on the Westside, and we are home. It has been a blessing. I enjoy the opportunity to support the ministry there, while I do what God has called me to do, teach.

I told you I moved to Vancouver to serve God. However, I did not move here without financial means to take care of my family. I started working for the Boeing Company in 1977. I started as a Quality Control person, moving into Statistical Process Control, and then Quality Auditing. I had a wonderful time doing those jobs, but it was after I finished my Bachelor’s degree that my career at Boeing took off.

The Quality Control job at Boeing and my ministry work at Crossroads and the little church in Ridgefield were occurring simultaneously. After I left the little country church, and experienced a divorce, I decided to continue my formal education. In 1994 I earned a BS in Business Administration, and immediately was promoted into management at Boeing. After a few stumbles, I learned to enjoy managing people, and did pretty well. So well, I decided to get my MBA.

After earning my MBA, I went back to Warner Pacific University, where I had done pretty well, and asked if I could try teaching for them. In 1997 I taught my first class in their adult program and have been teaching for them since. I decided I would retire early from Boeing and teach full time. However, I knew to make any money in academia I needed to earn a PhD. In 2003, I finished my MA and PhD work, while working full time for Boeing and teaching periodically at Warner Pacific in their adult program.

In 2006, I started teaching half time on the traditional campus, in addition to an occasional adult class, which led to a 2008 retirement from Boeing and a full time teaching position at Warner. I did that work until 2018 when I retired. I am now teaching occasional classes at both Warner and Multnomah University.

47 years ago, I began a journey with Jesus. I have had some exciting times, and some very difficult times. I can truly say that in all of this I am blessed. I have tried to pattern my life on the person mentioned in Psalms 1. “Blessed is the man who walks not in the counsel of the ungodly, nor stands in the way of sinners.” I have tried to delight in God’s word, read it and meditate in it day and night. I hope to hear the words “well done, good and faithful servant” when I leave this world for the next. Some days I feel like I am a tree planted by streams of water that yields its fruit in due season. Some days I feel pretty dry.

My life has been filled with joy and sorrow, but because Jesus is in control of my life, I am blessed, regardless of how I feel.

And that is my thought for the day!

Boeing, Agency Theory, Shareholders, And The Community

The other day a couple of my friends read my blog on Boeing and asked what I thought about a recent article from The Atlantic. The article, “The Long-Forgotten Flight That Sent Boeing Off Course,” was written by Jerry Useem. He is a contributing writer at the Atlantic and covers business issues for the New York Times. He has written about Boeing before, and I even used some of his information in my dissertation years ago. In this article he is writing about an event I remember vividly. The day Boeing changed from being a Washington State based company to a Chicago based company with facilities in different national locations.

Useem describes the action taken by CEO Phil Condit and President Harry Stonecipher as, “putting some distance between themselves and the people actually making the company’s planes.” By locating the recently merged Boeing and McDonnell-Douglas company in Chicago, leaders could distance themselves from the day-to-day business operations. Useem says this decision has resulted in the 737 Max fiasco, because the company leaders divorced themselves from the “firm’s own culture.” Leaders no longer listened to engineers but to each other. I think he is right.

I was a Boeing employee when Condit and Stonecipher merged the two companies. I remember how we used to joke that McDonnell-Douglas had taken over Boeing using Boeing’s own money. I have even written in previous writings how the merging of the McDonnell-Douglas MBA weenie culture with the Boeing goggle-head culture was problematic. Useem describes this time in this Atlantic article, “Condit was still in charge, yes, and told me [Useem] to ignore the talk that somebody had captured him and was holding him hostage in his own office. But Stonecipher was cutting a Dick Cheney-like figure, blasting the company’s engineers as arrogant and spouting Harry Trumanisms (I don’t give em hell; I just tell the truth and they think it’s hell) when they shot back that he was the problem.” I think this is an amazing description of the time.

As I reflect on those days working for Boeing as a manager, I remember how even managers didn’t like Stonecipher’s philosophy. We were worried that he would not approve the manufacturing of the 787, which he eventually did. However, we also know that he didn’t care about making a lot of planes, he just wanted to make a buck. This was the tension between Boeing, an engineering company symbolized by the goggle-head, and McDonnell-Douglas, symbolized by the MBA weenie.  I remember the Boeing corporate leaders coming to the Portland plant telling us that we were no longer a family – but a team. We in Portland did not like that.

The tension that Useem is writing about is nothing new. This article got me thinking about Agency Theory. In every for-profit business there are principles, owners, and agents, managers. The theory discusses the tension that naturally occurs between these two entities. Principles delegate the owner’s authority to the agent, manager, to run the business in a way that makes money for the principle. Managers want to run the company in a way where they get good bonuses. Often the goals are different between the two entities. In our example about Boeing, the engineers wanted to successfully create flying machines, while Stonecipher represented the ownership goal of making lots of money. Companies that negotiate both profitability and long-term sustainability have happy stakeholders.

I don’t think Agency Theory is the problem, I think the changing reality of company ownership is the issue. When Bill Boeing started the company in 1917, he had a stake in the company. In other words, he was actively involved in the day-to-day operations of the company. He was personally impacted by the results. Today Boeing is owned by shareholders. If they don’t like what Boeing is doing and are not getting a sufficient return on their investment, they can move their money to something else. Who cares about the employees, the community, or other stakeholders?

About the move, I think Useem is right. Boeing leadership had separated itself from the day-to-day business of the company, and as a result business has become just a number. They don’t walk through the factory and say good morning to Lakeesha, John, or Jose. They look at spreadsheets and decide the future without any thought of community impact. Is it any wonder that corporations have a bad reputation? Useem is describing events surrounding the Boeing Company, but I think it relates to the existential crisis affecting corporations in the United States.

I don’t agree with Elizabeth Warren that corporate boards should be forced to have a certain number of union, or employee, representation. I don’t not like government intrusion in the running of businesses (unless necessary), so to keep the government out, corporations and shareholders need to adjust for the good of our economic health and improved social capital in their relationship with the community.

I enjoyed my career at Boeing. I met many wonderful people and was able to create a comfortable retirement for my wife and I. Throwing the corporate model out is wrong, and I think the Millennials are missing an incredible opportunity for a wonderful career by not wanting to work for corporations. There are many corporations currently operating in a manner that demonstrates a positive business model. So, the concept is there, and other corporations can adjust if they choose to.

And that is my thought for the day!