Flying Blind: The 737 MAX Tragedy and the Fall of Boeing

by Peter Robison

At the SEC, run by a former executive from the E.F. Hutton investment bank, the implementation of Rule 10b-18 in November 1982 drew little notice in the press but opened the way to a sustained transfer of wealth. The rule gave companies that purchased shares of their own stock in the open market “safe harbor” from charges of manipulation, as long as they didn’t exceed a limit of 25 percent of the daily trading volume. Over the subsequent decades, the University of Massachusetts economist William Lazonick wrote, “stock buybacks have channeled the productivity gains of U.S. business into the hands of the richest households, while the persistent gushers of corporate cash have played a major role in the rise of the financial sector over the once-dominant manufacturing sector.” From 1981 to 1983, he calculated, buybacks consumed only 4 percent of net income for the largest U.S. companies. By 1996, it was 27 percent; by 2006, 46 percent; and by 2016, 50 percent. Two generations later, in any prosperous American city, the unequal effects are plain—Teslas, luxury high-rises, avocado toast. And tents.