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Why the airlines will all fail - centralized systems don't scale
Sitting on yet another swa flight on the ramp. This time waiting to fix the toilet for a 45 min flight. Two weeks ago delta kept us on the jfk ramp for two hrs after the pilot showed up late and we missed our takeoff. Course this caused us to miss our connection in slc and spend the night there.
The pilot just announced that we're they're afraid to fly for 45 min with only one bathroom working so they make us wait for an hour to fix it, only to decide to leave anyway.
How many times to we have to prove that centralized systems don't scale? The world's communist based economies have failed along with us conglomerates, mainframe computers (more or less) and of course there's the us govt.
I can't wait for the day we see the headline, "last major us airline goes brankrupt", oh wait, by then there won't be newspapers either:) Sent wirelessly via BlackBerry from T-Mobile.
July 20, 2007 | Permalink
Comments
Yep, thats why I'm investing my money in restaurant chains!
Seriously, I like the free market as much as the next guy, but it does start make you wonder whether we should start to discourage M&A activity more strongly through taxes or something -- creating incentives for companies that come by their growth naturally.
Seems to me conglomerates naturally tend toward larger and larger scales (fed by CEO and investor hunger for higher stock prices and ibankers that get rich facilitating acquisitions), then the businesses ultimately get bloated and lose the ability to function at scale, and finally the private equity guys get rich again taking them private, "trimming the fat" (read: pensions, health benefits), and ladening them up with debt. And when they have finally trimmed them back down to fighting weight, its time to sell them back to the public at a profit and start the cycle anew.
It actually seems like a profound exercise in value destruction.
I'm not saying it is bad for individual investors -- they can jump on and off the train whenever they want, and volatility is good.
But some employees with pensions and retirement benefits are getting completely screwed both on the way up (being acquired) and back on the way down (being divested).
The cycle feels to me like the root of why employment is so uncertain nowadays; why our generation has to hop from one job to the next, or pursue an entrepreneurial path. And other systems that were put in place when there was an expectation of secure employment (say Health care insurance) are also falling apart. Meanwhile, those flight attendants get nastier and nastier as their jobs get more and more stressful.
Of course Southwest doesn't really fit that paradigm (grew organically, right?) so I can't help you there.
Posted by: KidCroesus | Jul 23, 2007 1:58:33 PM
Yep, thats why I'm investing my money in restaurant chains!
Seriously, I like the free market as much as the next guy, but it does start make you wonder whether we should start to discourage M&A activity more strongly through taxes or something -- creating incentives for companies that come by their growth naturally.
Seems to me conglomerates naturally tend toward larger and larger scales (fed by CEO and investor hunger for higher stock prices and ibankers that get rich facilitating acquisitions), then the businesses ultimately get bloated and lose the ability to function at scale, and finally the private equity guys get rich again taking them private, "trimming the fat" (read: pensions, health benefits), and ladening them up with debt. And when they have finally trimmed them back down to fighting weight, its time to sell them back to the public at a profit and start the cycle anew.
It actually seems like a profound exercise in value destruction.
I'm not saying it is bad for individual investors -- they can jump on and off the train whenever they want, and volatility is good.
But some employees with pensions and retirement benefits are getting completely screwed both on the way up (being acquired) and back on the way down (being divested).
The cycle feels to me like the root of why employment is so uncertain nowadays; why our generation has to hop from one job to the next, or pursue an entrepreneurial path. And other systems that were put in place when there was an expectation of secure employment (say Health care insurance) are also falling apart. Meanwhile, those flight attendants get nastier and nastier as their jobs get more and more stressful.
Of course Southwest doesn't really fit that paradigm (grew organically, right?) so I can't help you there.
Posted by: KidCroesus | Jul 23, 2007 2:00:30 PM
