WSJ's Greg Ip: Companies like Boeing and Intel 'succumbed to the financialization culture'

Our next guest has a new piece in The Wall Street Journal titled Crisis at Boeing and Intel are a National Emergency. He writes that the companies underscore a fundamental problem, that the U.S. still designs the world's most innovative products, but it's losing the knack for making them. Joining us right now is Greg Epp. He's the Journal's deputy economics editor and chief economics commentator. And Greg, I think you're right. This is a national emergency. What's to be done about it? Or maybe before we get to what's to be done, describe what happened. Well, if you go back a generation, Becky, and you looked at a list of the most admired manufacturers in America, you would have had Intel and Boeing pretty near the top of that list. You probably would have also had General Electric. And it's really just sad and shocking what's happened to all three companies in the last 25 years. GE is a shadow of its former self. Intel is struggling to compete with TSMC and Taiwan. And Boeing, well, I mean, the story speaks for itself. It's just struggling. It's not crazy any longer to talk about breakup or bankruptcy. And the point I'm trying to make here, Becky, is this isn't just an issue for shareholders. It's an issue for the country. These countries epitomize what was once the greatest part of American manufacturing. They didn't just make any products. They made the world's most advanced products, which had vastly positive spinoffs for the economy, international security. If we lose any of those companies, I think it's very troubling for the country. What are we to do? I mean, the CHIPS Act was supposed to help Intel and make sure that we were manufacturing chips in this country. Boeing, I think you make the excellent point that neither of these companies are doing this because of cheap imports coming from overseas. These are self-inflicted wounds on both these companies. I think it's easier to say what we shouldn't do than what we should do. I don't think that like an across-the-board tariff is going to be of any help to these companies. There are manufacturers that actually rely on imported inputs, and so they could actually be harmed by a trade war in that respect. Fundamentally, turning these companies around is a job for management and shareholders. The one common thread in a lot of these companies is that they succumb to the financialization culture. They were obsessed with the share price, with earnings per share. They didn't invest patiently in long-term projects. Boeing decided to try and upgrade the old 737 instead of launching a whole new airplane. Intel said no to making the chip for the iPhone. That's number one. What's the role for government? Honestly, I firmly believe that the best thing Washington can do is make sure the world's best manufacturers have a presence here. That's what the CHIPS Act is actually doing. It's handing subsidies not just to Intel and Micron, but also to CSMC and Samsung, which are two magnificent semiconductor manufacturers. As their presence grows in the United States, that helps bring up the local ability. It helps the local supply chain. Another issue I'm going to mention is this takeover bid for U.S. steel by Nippon Steel. Both presidential candidates opposed that bid because they think that it'll be bad for the unionized workers. But think about it. Nippon Steel is one of the world's best steel makers. Don't you want that kind of expertise hand-in-hand, working with American workers, American management to make the best steel here in the United States? Yeah, that seems like it would make sense. You point out that this is financial incentives that were structured the wrong way that caused these companies to basically get greedy and not think about the long term. This started under CEOs long before the current CEOs in both of those companies. Where is the retribution for those who started it? There's been no clawbacks at either company. There's been no kind of anything other than shame on you for making wrong calls and making the wrong decisions. How about the shareholders and the pushback that they might be able to generate? I guess it's easier to just sell and walk away. But where are the repercussions? Books could be written. In fact, books have been written about the mistakes that were made by the managers and CEOs of these companies. I don't have a lot to offer to that. I think shareholders need to look at themselves in the mirror here. Their obsession with getting the share price higher all the time, pressuring management to hit earnings targets, buy back stock instead of investing for the long term. Look, you only have to contrast the attitude of these companies and their investor base with, say, for example, Tesla or Amazon. These are companies that lost boatloads of money for years. But investors gave them a really long rope because they believed in the vision of the you build a great business with a vision on the earnings you want to make five to ten years from now, not in the next quarter or the second quarter. When I see that Kelly Ortberg is talking about bringing management back to Boeing's factory floors, when I see Boeing say they're going to sell stock and the stock rallies, that's encouraging because it tells me that management and shareholders are starting to think long term instead of being focusing on the next quarter. And I think the union has a role to play here, too. They, you know, with some justification, say that Boeing got brought down by the mistakes of managers. But look, they're in this together. What good is the best contract in the world if the company that gives it to you is struggling to be around 10 or 15 years from now? Everybody, I think, has a part to play here.