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Just as deceit deceives the deceiver, so also economic bullies see paper where tigers await. And it is related to the common human ailment:

The Authoritarian Personality as it operates in Economics.

The high profile case reviewed below is a perfect example of what ailed Rome in its heyday. And now America seems to be afflicted. Instead of facing reality and dealing with terror as we uniquely can as a people, we behave as tin gods, believing the world thinks as we do, that we can do no wrong in our arrogance.

That view is in fact a projection and projection is a hang-up; never mind that it is the most common one around. People with this hang-up believe the world believes as they do; they find it difficult, often impossible to accept any alternative. The example below illustrates this feature in current time.

    Wall Street Journal Article excerpted

    Dog Fight


    December 23, 2004; Page A1

      "Air Berlin, a discount airline that is Germany's No. 2 carrier, built its business around the Boeing 737. So when Chief Executive Joachim Hunold in March 2003 told Boeing Co. the price he wanted for his next big plane order, he expected the aerospace giant to be flexible. Instead, Boeing failed to budge for the next 11 months."

      "Fed up, Mr. Hunold flew to Airbus's headquarters in Toulouse, France. After a 90-minute meeting over lunch with top executives, Mr. Hunold shook hands on a $7 billion deal for up to 110 single-aisle planes. Boeing , he says, 'never thought we would go to the competition and they took us for granted. That's a dangerous thing to do when your competitor is so strong.'"

      "...Boeing is finally acknowledging it has a serious problem in its core business of selling passenger jets to the world's airlines. But even as Boeing scrambles to turn the tide, a debate is raging among executives and customers over why the once-dominant player is losing order after order."

      "Boeing Chairman and Chief Executive Harry Stonecipher puts most of the blame squarely at the feet of the company's sales force... "The long and the short of it is we are not engaging with the customers," Mr. Stonecipher said." [This is an Authoritarian statement from one who sees the world of sales as black and white: engage or not engage. It may be that no amount of engagement could have kept Berlin Air in the fold. When a customer can't pay, no amount of friendliness will win the day. Is this delusion? Maybe. But Stoncipher is at the level where the buck stops, and he bucked it back down. He had the direct responsibility for Boeing's financial health. If that meant keeping customers happy, then where was he? See below for part of the answer.]

      "But some in the industry say the problems go beyond the sales team. They say that Boeing insists on clinging to higher prices on the theory that its jets save airlines millions of dollars in long-term costs, while airlines are operating on a shorter time frame than ever. They say that Boeing 's sales process is slow-footed and committee-driven, giving little room for its sales force to make on-the-spot decisions. Airbus, by contrast, has empowered its globetrotting chief salesman to cut deals without checking in at headquarters."

      "The big question is this: In a travel industry increasingly dominated by discount airlines, can Boeing keep acting like the Mercedes of the sky?" [Exactly. So why does Mr. Stonecipher persist in his delusion? Because Authoritarians, with Mr Hitler the prime example, try to fit their schema to a world that cannot be so fit.]

      "'Boeing 's senior management is going to have to roll up their sleeves and really get competitive, or they will be strengthening the perception that they are conceding market leadership to Airbus,' says Steven Udvar-Hazy, chief executive of leasing giant International Lease Finance Corp., the largest customer for both Boeing and Airbus. "The next six months will be very critical."...

      " major airlines dart in and out of bankruptcy these days, they are increasingly going for the best deal on the table above all else. People familiar with Boeing 's recent losses say that, in almost every case, Boeing was unwilling to match Airbus's lower prices. In recent months, a number of Boeing 's sales executives have complained that going into battle with Airbus feels like taking a knife to a gunfight. "Airbus seems to know what our bottom line is, so they go two steps beyond that and we're finished," says one sales executive."

      "Mr. Stonecipher rejects that as an excuse. He says that a failure to maintain relationships is Boeing 's biggest problem. Boeing has bungled early in some key sales campaigns so that at the end, 'the only option you have is to throw bags of gold through the door,' he says. 'If you get down to where price is the only discriminator, then you lost the campaign long before that.'" [This is not reality in today's world where airline solvency is the issue. Bin Laden must be dancing in the streets!]

      "People familiar with some of Boeing 's most frustrating losses say that top managers sent sales teams into competitions with offers the teams knew were inadequate. "We told them what it would take to win, and they sent us out with something less than that," said one salesperson."

      "Boeing sales officials say that higher-ups have instead pushed them to persuade airlines, some of them teetering financially, that Boeing's planes should draw their usual price premium because they are generally lighter in weight and more fuel-efficient than competing Airbus models. Messrs. Stonecipher and Mulally defended that approach, saying that Boeing 's planes "create value for the airlines" and that Boeing should be compensated for that." [This follows naturally from the above.]

      "...In the Air Berlin deal, Mr. Hunold says he simply wanted Boeing to give him a price near one that Boeing had recently offered to discounter Ryanair. Boeing 's sales team was in favor of meeting the carrier's terms, according to people familiar with the matter. But the team didn't have the authority to sign a deal on the spot and a Boeing committee rejected the proposal, saying the suggested price was too low. "The general sentiment of the committee was, 'They'll never switch to Airbus, so why go so far?' said a person familiar with the situation."

      "When Mr. Hunold finally sat down in Toulouse with John Leahy, Airbus's top salesman, and President Noel Forgeard, the European officials couldn't believe their good fortune. 'Frankly, we didn't think we stood a chance with Air Berlin,' Mr. Leahy recalls."


Corrections & Comments:

Harry Stonecipher was president and chief executive officer of Boeing Co. This article incorrectly said he was chairman. In a later development, Mr. Stonecipher was relieved of his duties for trysting with a female employee. His dismissal was proper, but the reason cited was minor compared with the problems arising from the arrogance natural to the stone-wall fortress Boeing had become under his leadership.

    Is Boeing a metaphor of what ails America?

We fear Boeing has become just that. At the same time, we hope it can continue to be, for Boeing was able to change its ways. Latest reports show a significant turn around in the order pattern under new leadership.

The Boeing case is a perfect example of what ailed Rome in its heyday. And now we seem to be afflicted. Instead of facing reality and dealing with it as we uniquely can as a people, we behave as tin gods, thinking the world thinks as we do; other societies must be like us. Well not exactly, we expect other societies to yield to us witout a fight. And to that degree we are indeed out of touch. Wall Street (business), Madison Avenue (propaganda), and Pennsylvania Avenue (governance), have fallen victims to special interests with bulging wallets (eg. oil and defense companies) and voting blocks (eg, religious right and gun lobby.)

Hopefully, America can learn from Boeing. After cleaning house at the top, and recognizing that Boeing needed clients more than they needed it, the great and mighty ship called Boeing, is righting itself. To be sure, America still has a lot going for it; it does many things right, innovations driven by science and technology, for example. America wins Nobel prizes. And America leads in cultural exports such as the Internet, language usage, fast food, dress style and music. These latter may in the end do more for peace than counterterrorism. It will take awhile before we can be sure.


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