Boeing and the new feudalism
In the current Business Week, we see an example of what can be called the "new feudalism" at work. The people of Washington State, through their government, gave a tribute of $3.2 billion dollars over 20 years. In return, the lords of Boeing agreed to deign to grant a boon to the local rabble, namely, not to move production of their latest jetliner out of state. When giant companies threaten, local officials give.
Presumably, the numbers say that Washington State gains more in salary taxes and other business than it loses. But who ran the numbers? It turns out that the state's consultant in the matter was the consulting arm of accounting giant Deloitte & Touche. It also turns out that Deloitte & Touche earned about $92 million in fees from Boeing in the years when it was consulting with the state of Washington. Of course, both Boeing and Deloitte claim that there was a firewall between the departments involved. The article ("Behind Boeing's Sweet Deal", 3/29/2004) quotes an activist for the public interest group that turned up this quasi-secretive connection, "'if this isn't a conflict of interest, what is?'"
Boeing is not a company that is shy about using its muscle. In 2001, it moved its headquarters from Seattle, where it was a pillar of the community, to far-away Chicago, where it had no manufacturing operations. It's worked with Microsoft to keep receiving major export tax credits from the government when those were threatened earlier this year. It was, of course, involved in the scandal of hiring a Pentagon procurement manager who came up with an outrageous leasing plan before she left the government. In spite of repeated fraudulent practices, such as pilfering secret documents from competitor Lockheed Martin and installing known faulty equipment in military helicopters, it still gets loads of military contracts partly because its few competitors are little better.
Like a medieval king versus his powerful vassals, the Pentagon and local governments are so dependent on Boeing that they can't really punish its misdeeds. Boeing runs its own little fiefdom.
7:32:15 PM 
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