Scandal-hit Boeing shows that our society stands at an ethical crossroads

Is it reasonable for businesses to consider safety and profit equivalent priorities?

Boeing whistleblowers have alleged extreme negligence in the company's aircraft manufacturing processes. Reuters
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Earlier this year, The New York Times published an article titled "Boeing faces tricky balance between safety and financial progress" to much outcry online. Readers were appalled by the notion that a major aeroplane manufacturer might contemplate safety compromises in pursuit of profitability. But while it may seem shocking to the general public, evidence suggests that in boardrooms everywhere, it is a grim calculus that is all too common.

Once considered radical, the free market ideals propounded by Milton Friedman – who wrote one essay titled “The Social Responsibility of Business Is to Increase Its Profits” – are now accepted almost as received wisdom, and the trend of subjecting every area of our lives to economic analysis, popularised in books like the bestselling Freakonomics, is widespread. But in embracing the pre-eminence of profit, has our society in general – and big business in particular – lost sight of its ethical obligations? Is it reasonable for businesses to consider safety and profit equivalent priorities?

Despite Boeing’s current high-profile problems, it is certainly not a mind-set exclusive to the aviation industry. A Goldman Sachs report from 2018 questioned whether curing patients is a sustainable business model, epitomising the stark disconnect between financial interests and human welfare. In the US this week, the Environmental Protection Agency finally passed a limited ban on the use of asbestos, a substance known to cause 40,000 deaths a year from various cancers, after three decades of being stymied by vested interests in industry. Yet even this ban is only on one variant of the material, and will likely prove easy to circumvent. The very notion that there might not be a business case for curing diseases or preventing the use of a deadly building material is a chilling reminder of the perverse incentives encouraged by capitalism run amok.

Despite Boeing’s current high-profile problems, it is certainly not a mind-set exclusive to the aviation industry

To return to Boeing though, questions are finally being asked about how ethical a slavish pursuit of “shareholder value” is at the expense of all other metrics, and how Boeing’s alleged negligence has corroded the values of a company once renowned worldwide for the quality and safety of its products. These discussions have undermined the confidence of Boeing’s customers, operators and the travelling public massively.

Some industry experts have said the slow shift in corporate culture that began in the wake of Boeing’s 1997 merger with McDonnell-Douglas saw senior management consciously distance itself from engineers and those on the shop floor. This argument is supported by allegations of subsequent moves to outsource more of the manufacturing work and to suppress union activity in pursuit of lower wages and higher productivity, as well as an unnerving fixation with mammoth stock buy-backs (over $70 billion between 2015 and 2020) and a concurrent decrease in R&D investment.

This is where the shareholder model can collapse in on itself. In so many cases, boardroom obsession with short-term profitability that lends the appearance of growth and success to the detriment of core competencies and long-term business health has led to disaster. For Boeing, the apparent lack of appetite for innovation led to a rehashing of older designs, such as the 777 X and the 737 Max. Defects in the latter model were blamed for two deadly crashes, in Indonesia in 2018 and Ethiopia in 2019. In a US flight earlier this year, the door panel of a 737 Max blew off mid-flight.

Across the Atlantic, the company’s chief competitor, Airbus, has continued to innovate, and now comfortably holds the dominant market position as Boeing’s former customers become increasingly dissatisfied with the products on offer. The quality of the aircraft Boeing does sell has declined markedly as well, as the effects of a disheartened and disenfranchised workforce, scattered across the country in jurisdictions that offer favourable business rates and less rigorous worker protections, begin to manifest themselves. Attempts to flag concerns by those staff still motivated enough to fight the prevailing winds have allegedly been met with silence or suppression.

Aviation is proud of the “no blame” culture it has developed from years of harsh experience. The theory behind it is that the best way to ensure safety is to ensure people feel able to speak up and, if necessary, admit to their own errors. But many employees have alleged that has been reduced to a mere sound bite. Of course, had Boeing taken heed of warnings from the shop floor during the construction of the 787 – the model at the centre of the latest safety concerns, as one flight dropped altitude abruptly this month, injuring 50 passengers – the firm might have saved a lot of money.

Had they done the same with the 737 Max, they might have saved lives.

The American author Kurt Vonnegut, known for his dark humour, once remarked: “We’ll go down in history as the first society that wouldn't save itself because it wasn't cost-effective." This statement speaks volumes about the priorities of human society as a whole in its present state. In a world where cost-effectiveness reigns supreme, the idea of saving the planet or even ourselves becomes secondary to economic considerations.

The shareholder model is not inherently evil, but it clearly leaves a lot to be desired. When regulated effectively and guided by ethical principles, capitalism can be a powerful force for good. It has the potential to drive innovation, create wealth, and lift millions out of poverty. But on the other hand, when it is left unchecked, it can give executives an excuse to behave unethically and risk lives. The key lies in prioritising ethical considerations over economic profit, ensuring that the pursuit of the latter is not allowed to come at the expense of fundamental human values.

So what is the answer? Change. A change, for so many of us, in the way we think, and in our tendency to accept as inevitable the relentless pursuit of profit. And change in the way the model works, to stop incentivising chief executives purely on the basis of share performance. And to encourage more government oversight over the largest and most important companies, meaning more effective legal mechanisms and harsher punishments for executives who behave unscrupulously. Even the hardest-working and most visionary executives ought to be reminded regularly that they are human first.

Published: March 25, 2024, 4:00 AM