Boeing and the “glass cliff”

Make Me Smart March 27, 2024 Transcript

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Kai Ryssdal

All right. Let’s go.

Kimberly Adams

Okay.

Kai Ryssdal

Oh, wow. Sometimes I say, and it doesn’t actually happen. And then it does and I’m like, wait what? Oh, my God. Hey everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart, making today make sense is what we do on this podcast.

Kimberly Adams 

And I’m Kimberly Adams. Thank you for joining us on this Wednesday. It is March 27. Today, we’re going to keep it short and sweet. Do some news, some smiles, and move on with our day. Mr. Ryssdal, what’s your news?

Kai Ryssdal 

So, mine is not so much news as a concept, and the concept is the greater fool theory. And I introduce to you today, actually three days late. Well, two days late because it started trading on Monday, ticker symbol “DJT,” not the Dow transports, but Donald Trump’s social media company, which started trading on Monday. And the only reason I’m bringing up this item today, though I am loathe to because it’s just a nonsense story, is that for some reason people are still buying shares in this company. So, let’s back up. Donald Trump at a company called Truth Social. It merged with a SPAC, which is called a special purpose acquisition company, which is designed to make it easier for companies that are privately held to go public. Donald Trump’s media company, Truth Social, basically, of which Donald Trump is the main client and user really, now is a publicly traded company. And shares are up something like 17% today after being up some ridiculous amount the last two days. And I say that not because of Donald Trump himself, but because of the investing public. This is a company that is losing users, has a price to earnings ratio that is negative 70 something, which is to say the ratio of the price of the stock to the earnings of the company, which you want to be positive. Sometimes it’s 4x. Sometimes it’s 8x. In the dot com bubble, it was 1,000x. Whatever it was, right. This has a negative price to earnings ratio. And yet somehow people are still buying this stock. I don’t understand why. I don’t understand what they think is going to happen. I don’t understand any of this truly. I don’t get it.

Kimberly Adams 

I mean, maybe they think it’s a way that they can, you know, support Trump while also potentially you know, maybe getting rich themselves. I feel like the same way that people are donating to his campaign and some of the money is like, going to legal fees.

Kai Ryssdal

Right, not some. Hundreds of millions of dollars. Yeah.

Kimberly Adams

Yeah. And I have to imagine that people are aware of this and are deciding that this is how they want to spend their money to support him.

Kai Ryssdal 

I guess, but do they but do they understand that that’s? I mean, cause what’s going to happen in six months or sooner if the board of directors, which he controls approves him selling his shares, the price is going to tumble price. It’s going to go down the drain because he owes a bazoodaful of money. It’s all. I don’t. I don’t get it. I don’t get it. Do not get it. Do not get it. Anyway. Anyway, so.

Kimberly Adams

I don’t think there’s much to get though.

Kai Ryssdal

I guess. I guess. I guess. I guess. Anyway, so, my news of the day is the greater fool theory. Case in point, “DJT” the ticker symbol, not the Dow Jones transportation, but Donald Trump’s media company. That’s it. That’s what I got. That’s enough of a rant.

Kimberly Adams 

I love on the Wikipedia page for the greater fool theory the example that they use is cryptocurrency.

Kai Ryssdal

Right? I mean, you know.

Kimberly Adams

It says “cryptocurrencies have been characterized as examples of the greater fool theory. Numerous economists, including several Nobel laureates, have described cryptocurrency as having no intrinsic value whatsoever.”

Kai Ryssdal 

Greater fool theory is you buy something that is overvalued or that you don’t understand the value of in the hope that somebody, a greater fool, is going to come along and pay you more for it. That’s the greater fool theory. That’s what I got. I’m done.

Kimberly Adams 

I’m trying to decide if this story that I have is related or not.

Kai Ryssdal

Oh, that’s interesting. Go ahead.

Kimberly Adams

So, we’ve covered at length the troubles that Boeing is having, and Boeing’s CEO announced that he was going to be stepping down. And stepping up will be a woman. Stephanie Pope, who will be stepping in to run Boeing. She’ll be the new CEO of its commercial airlines division. And as Business Insider points out, “Boeing just pulled a classic corporate America move and promoted a woman to clean up its mess.” And “this promotion is part of a gendered pattern researchers identified years ago: the ‘glass cliff.’” I’m going to read here how they describe that. “In times of crisis, male-led companies often pick women and people of color to try to right the ship. ‘If women are appointed in a time of crisis, it’s not that women are unable to lead, but leading in a time of crisis is more difficult and more precarious than leading when everything is great,’ said Michelle Ryan, the researcher who helped coined the phrase. To see the glass cliff in action recently, look at X, formerly known as Twitter. Elon Musk named media veteran Linda Yaccarino to succeed him as CEO. Other glass cliff examples include Carly Fiorina at HP, Marissa Meyer at Yahoo, Sue Gove, who took over as CEO of Bed Bath & Beyond in 2022 amid falling sales.” And so, people who want to have data about women being bad at running companies can see all of these companies in distress with women at the helm. But these women are getting these roles when companies are already in crisis, women and people of color. And so, this woman is obviously eminently qualified to be in this position, just it’s fascinating how it always seems to happen in this way.

Kai Ryssdal 

It’s amazing. It’s amazing. Look, this is perhaps a bit pejorative, but maybe not too much. And I doubt that it’s intentional, but the board of directors and leadership at Boeing is setting her up to fail. Right? I mean, they are absolutely not setting her up to succeed. They’re handing her a poison chalice, right? Boeing used to be, I mean, think back to the 747 and the 77 and all these great airplanes that this company has come up with, you know. Let alone its defense production side. It used to be the crown jewel in a lot of ways of American heavy manufacturing. And now, it has fallen on desperately hard times, existentially hard times. And here’s now this woman who’s a Boeing lifer to be clear, and I’m sure she wants this job. But man, she’s getting it at a really bad time.

Kimberly Adams 

And yeah, and, you know, we’ve all seen so many examples of this. And I wonder what, what will it take people to do differently? You know?

Kai Ryssdal 

I know I’ve shared this with you. The Onion headline on the morning that Obama was inaugurated? Black man gets the worst job in the world. Right? I mean, you know,

Kimberly Adams 

Well, you know, I thought about this early in the Biden administration when he appointed Kamala Harris as like the person to deal with immigration and the border crisis. I was like, really? That’s the unsolvable problem.

Kai Ryssdal 

Totally, totally.

Kimberly Adams 

And it’s another example of it. So anyway, that’s my news.

Kai Ryssdal

All right.

Kimberly Adams

Let’s move on to some smiles.

Kai Ryssdal 

I will tell you; I don’t have one today, but I have thoughts on yours. So, go ahead.

Kimberly Adams 

Okay. Well, mine is news out of Hungary. There’s a study that shows that dogs may understand certain object words using what’s called referential. Let me get the the exact language. Referential understanding. And this is something that scientists have previously thought is uniquely human. And this is when you hear a word and recognize that it stands for something and you kind of call up a mental image of it in your head. And so, this study they basically did like EKGs on dogs and their brains. I’m sorry, EES non-invasive electroencephalograms.

Kai Ryssdal 

Electroencephalogram. I’ve had several. I had a lot of concussions in my youth. Yes.

Kimberly Adams 

Oh, okay. I’m glad that you know that. I’m sorry about your head.

Kai Ryssdal

That explains a lot.

Kimberly Adams

Well, anyway, the dogs had these as well. And it seems that basically they light up when their toys or their slippers or things that they like, when you say that, and they will, it registers brain activity in a way that’s very similar to humans. I feel like this will not surprise any human who has had a dog and knows that when you say ball or walk or any other trigger words, they will respond.

Kai Ryssdal 

Totally, totally. And that’s my dogs, right? You can say walk and they go. I mean, I’ve got a golden retriever. Love her to death. But oh man, is she goofy? And you say walk, and she goes bouncing off the walls. It’s great. She totally knows it. You pick up her leash, and she knows it. And look, everybody’s got dogs like that. I get that. But those are mine.

Kimberly Adams 

But if you say something similar, like water, which is not super similar, but something that sounds similar, like balk, or like, is there nuance to how they understand it?

Kai Ryssdal 

Oh, that’s a really good question. I don’t know. We will do a natural experiment over the next several days in my house.

Kimberly Adams 

Okay. It would be curious. I’m interested to know like, how, because dogs have amazing hearing, obviously, how sophisticated their understanding of these words that matter to them are. Jasper can’t test because he can’t hear anything.

Kai Ryssdal 

Well, cause he’s deaf. That’s right. But does he do like a visual thing too? I mean, like.

Kimberly Adams 

I mean, he used to. Whenever I would shake his treat can, he would always come running, you know? Like it was a very clear sound association. He knew what it meant. And if I would call his name, he would sometimes come because you know, he’s a cat. But other than that, I don’t know. I did teach him to sit at one point. He would respond to the sit command when he felt like it. But, you know, that’s about it before he lost his hearing.

Kai Ryssdal 

There you go. And now he’s just an old cat sitting around.

Kimberly Adams 

Sleeping actually. All the time. All right, that is it for us today. We’re going to be back tomorrow with our show with audio clips. So, if you have any of those you want us to talk about, send them our way. You can send your thoughts, questions, comments, those audio clips we should talk about to makemesmart@marketplace.org. Or leave us a voicemail at 508-U-B-SMART.

Kai Ryssdal 

That’s the Jay Siebold I know and love. You got it right. Make Me Smart is produced by Courtney Bergsieker. Ellen Rolfes writes our newsletter. Today’s program was engineered by Jay Siebold. Thalia Menchaca is our intern.

Kimberly Adams 

Ben Holliday and Daniel Ramirez composed our theme music. Our senior producer is Marissa Cabrera. Bridget Bodnar is the director of podcasts. And Francesca Levy is the executive director of Digital.