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This-and-Thats About Boeing, Chesapeake and Christmas Music

Joe Nocera

(Bloomberg Opinion) -- Greetings, readers. In the spirit of some of my fellow Bloomberg Opinion columnists (with last names like Bernstein, Levine, and Sutherland) I’m going to write an occasional compilation of short items about topics I care about. Mine will post on Fridays and this is the first installment.

I Remember Aubrey

The unsurprising recent news that Chesapeake Energy Corp. might not survive as a “going concern” if gas prices don’t improve got me thinking about its late, flamboyant founder, Aubrey McClendon. McClendon was the original shale cowboy; Forbes once called him “America’s most reckless billionaire.” Indeed, who can forget the time he sold his own company a collection of historical maps for $12.1 million? (He was later forced to buy them back as part of legal settlement.) My colleague Liam Denning and I were recently recalling the incident and he emailed me Chesapeake’s 2009 proxy. It contained the company’s explanation for the purchase:

These maps have been displayed throughout the Company’s headquarters for a number of years, complementing the interior design features of our campus buildings…Our employees and visitors appreciate the maps’ depiction of the early years of the nation’s energy industry…In addition, the collection connects to our Company’s everyday use of mapping in our business of exploring for and developing natural gas and oil.

As Liam told me: “The rationale for buying the art is a work of art in itself”….

Maxed Out

Another week, another brutal takedown of the Boeing Corp., this time in the New Yorker. Titled “The Case Against Boeing,” the article marks the 1996 merger of Boeing and McDonnell Douglas as the moment “when Boeing went from being led by engineers to being led by business executives driven by stock performance.” The author, Alec MacGillis,(2) recounts an anecdote told to him by a union executive named Stan Sorscher, who was trying to explain to a stock analyst in Seattle that “bottom-line business models did not apply to building airplanes.”

According to Sorscher, the analyst replied, “You think you’re different. This business model works for everyone. It works for ladies’ garments, for running shoes, for hard drives, for integrated circuits, and it will work for you.”

Boeing's well-documented cost cutting in building the 737 Max would certainly suggest that Sorscher was right – and that the desire to “maximize shareholder value” was at the root of what went wrong. (Flawed flight-control software made the 737 Max responsible for two fatal crashes.) If the Business Roundtable’s recent attempt to reduce the primacy of the shareholder is to mean anything, it has to mean that companies like Boeing will stop looking at the share price when it’s time to build a new airplane….

Ka-ching

I heard my first rendition of “The Christmas Song” this week; I’ll no doubt hear it 4,000 more times before we get to December 25. It’s said to be the most-performed Christmas song ever. Every year, after the first few hundred times, I always have the same question: How much does that one song generate for the estate of Mel Tormé, the great jazz singer who wrote it in 1945? It’s gotta be millions. Various (and possibly very unreliable!) websites speculate that $16 million to $19 million has flowed to Torme’s estate, but who knows…

Crony Capitalism

For four years, the Republican Senate crippled the Export-Import Bank of the United States by refusing to confirm nominees for its board and its chairman. It was an ideological stance: They claimed that the bank, a federal agency which guarantees loans to boost exports, was practicing “crony capitalism,” favoring big companies over small businesses, and putting taxpayers at risk if the loans defaulted. U.S. exporters, they said, could get along just fine without it.

But in May, the Senate finally confirmed President Donald Trump’s choice to be chairman, Kimberly Reed, as well as new board members. And guess what? As far as I can tell, the Ex-Im Bank is doing exactly the same thing in this administration as it did in previous administrations. In September, for instance, it approved a $5 billion loan — not a guarantee, mind you, but an actual loan — to finance a liquified natural gas project. The taxpayers are definitely at risk if this deal goes bust. And the main contractor for the Mozambique project is not some small business but a major oil company, Total S.A.

I happen to be a big believer in the Ex-Im Bank. I think it helps create jobs in the U.S. To my mind, this $5 billion deal is a very good thing. Still, it’s hard not to be at least a little cynical about how pointless the Republicans “ideological” opposition turned out to be….

Bye Bye

This was fun. Let’s do it again next week, okay?

(1) MacGillis is an investigative reporter with the nonprofit news site, ProPublica. The article is a collaboration between the New Yorker and ProPublica.

To contact the author of this story: Joe Nocera at jnocera3@bloomberg.net

To contact the editor responsible for this story: Timothy L. O'Brien at tobrien46@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."

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