Saturday, June 26, 2010

Tough to take but absolutely correct….

Open Letter to the Head of Boeing

by DON BOUDREAUX on JUNE 25, 2010

in BUSINESS AS USUAL, MYTHS AND FALLACIES, SEEN AND UNSEEN, WORK

Mr. W. James McNerney, Jr.
Chairman, President, and CEO
The Boeing Co.

Dear Mr. McNerney:

One of your company’s radio ads proclaims that an advantage of Boeing’s NewGen tanker over Airbus’s rival product is that, being made in America, the NewGen tanker creates lots of jobs for Americans.  But your ad also boasts that the NewGen tanker costs less to own and operate than does Airbus’s tanker.

If you honestly believe that using lots of labor to produce a product is a benefit bestowed on society by that product, why do you brag about your tanker’s lower cost?  After all, producing the NewGen at the lowest possible cost – that is, efficiently – means that you don’t employ as many workers as you would if you produced the NewGen inefficiently.

Suppose, for example, that you banned computers from Boeing’s offices and factories.  This policy would oblige you to hire many more workers to perform nearly all tasks from aircraft design to managing the weekly payroll.  You could then boast of even more American jobs being created by the NewGen tanker.  But would this result be something to celebrate?

Or ask the following question: if a brilliant inventor devised a means of producing each of these planes at a cost of $50, and using a mere one hour of modestly skilled labor, would that invention be good or bad for the economy?

Sincerely,
Donald J. Boudreaux

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