Jet Age Capitalism Redux

On a summer day in 1985, Carl Icahn, Princeton philosophy grad turned corporate raider, put on a coat. After finding out that that he’d just won control of Trans World Airlines, Icahn grabbed the gold-striped uniform jacket from Harry R. Hoglander, the then-leader of the TWA pilots’ union, put it on, and shouted, “We’ve got ourselves an airline! We’ve got ourselves an airline!” Today you can find a jacket like the one Icahn briefly pilfered from Hoglander in the mezzanine of the old TWA terminal at New York’s John F. Kennedy International Airport. The terminal, designed by Eero Saarinen and completed in 1962, lay abandoned for almost two decades until its rebirth last May as a 512-room luxury hotel: a ruin transformed, at a cost of $265 million, into a monument to forgetting. If you have friends who’ve passed through JFK recently, you may have seen social media images of the new TWA Hotel: the theatrical white tubes of its entryways, its molluscan lobby and runway-facing infinity pool, the red-velvet conversation pit offering a romantic vista back onto the smothering bulk of Terminal 5.

The day I visit, the hotel is virtually empty. There is no sign of any guests, and the vast subterranean network of reception halls and conference rooms appears unoccupied. The carpets smell like wealth. A room tucked under the arch of the lobby’s central staircase features one of the cars used to transport guests around the terminal at the time of its inauguration, a vermillion-red Fiat 500 Island Jolly with a soft fringed canopy and no doors. “It’s 1962,” reads a display on the wall behind the car. “The TWA Flight Center has just opened its doors. Airport drop-offs are as glamorous as the cars!” Over the speakers play “She Loves You” by The Beatles (released in 1963), “We Can Fly” by The Cowsills (1967), “Promises, Promises” by Dionne Warwick (1968), and “Lipstick,” the song that composer David Carbonara wrote for the sixth episode of season one of Mad Men (air date: August 23, 2007). It’s 1962, until it isn’t: a different era pokes through the cracks of the new hotel’s meticulously curated, Instagram-ready facade.

Buildings have always been adaptable: under the Ottomans the Parthenon briefly served as a munitions dump. But the afterlife of buildings in our time seems especially unedifying. I often wonder how it would affect the designers of old structures to see the quiet violence done to their creations today, to see all these music halls and cabaret saloons converted into gyms, armories re-weaponized as middle-class condos, movie theaters mutilated into offices, credit unions disappeared into convenience stores, churches resurrected as places of retail worship, body shops made brunch spots. Would the stout burghers who built a community center one hundred years ago be happy to see it perverted into a boutique offering $300 mohair cardigans and red-line selvedge denim jeans for the callous classes? Would the forgotten builders of all those garment depots, soap warehouses, and chocolate factories care that the structures they poured months, maybe even years, of their lives into were now being peddled online as desirable destinations for loft living?

TWA’s story is less heroic epic than lament; it is not a fable of entrepreneurial ingenuity but an object lesson in the power of feckless political elites to enable and reward corporate incompetence and greed.

In their new skins, these buildings usually see history relegated to the corner—an earnest commemorative plaque here, a terse historical recap there—if not forgotten altogether. The TWA Hotel makes the building’s history—or rather, a saccharine slice of it—a core part of the new venture’s branding. The structure is as much corporate museum as hotel. Exhibits assembled by the New-York Historical Society lovingly recount the nostalgia-drenched story of TWA—both the airline and its terminal—as a triumph of Jet Age imagination and daring. In the process, the true history of TWA, the U.S. airline industry, and the deregulatory pains that followed the 1970s is erased, even as the hotel’s exhibits strain to maintain the cheery lie of capitalism’s “good years” after World War II. TWA’s story is less heroic epic than lament; it is not a fable of entrepreneurial ingenuity but an object lesson in the power of feckless political elites to enable and reward corporate incompetence and greed. The old terminal’s rebirth as a historical theme park encourages this wiping of the collective memory. This is the essence of capitalism kitsch: to ignore all evidence, tell comforting stories about the past, and encourage the kind of collective amnesia that nourishes the delusion of a better tomorrow. A happy past means a happy future—and we used to have it so good! But no, we never had it good: not then, and certainly not now.

There’s some irony in seeing this building in particular resuscitated as a tomb to capitalism’s past. The TWA terminal was the capstone of Saarinen’s lifelong project to define and harness the energy of modernity. The future it envisioned was efficient, smooth, uncluttered, sanitized, and bright, and the aliform swoop of the terminal’s core has remained a staple of futuristic iconography for nearly sixty years. Saarinen’s worldview was fundamentally optimistic; he was enthusiastic about technology, progress, and the conquest of the elements, and he saw the future as something to get excited about. Little did he know that his most famous building, which he did not live to see completed, would eventually come to function as a memorial. Even at its inauguration, however, the TWA terminal was not universally adored. “Saarinen’s buildings are the most popular packages of their time and a revealing image of it,” Vincent J. Scully wrote in 1969, seven years after the terminal opened. “Through them runs the insistent American instinct for simplistic and, in this case, spectacular solutions.”

Saarinen was perhaps the original “starchitect”—not only because his creations, such as the St. Louis Gateway Arch, made an early case for the kind of empty exhibitionism now echoed in follies like The Vessel at Hudson Yards or the world’s current epidemic of curvy, shiny art galleries, but also because he was a dutiful servant of postwar corporate America who happened to be hated by critics and rival architects with equal passion. The typical Saarinen project, Scully wrote, was not “a building thought through all the way” but “a PR package with a few calculated ‘features’ for everyone. Such can be seen in Saarinen’s offerings at Kennedy and Dulles airports. The ingredients are always obvious, and they have remained the clients’ delight: (a) one whammo shape, justified by (b) one whammo functional innovation, here tubes for the one and Afrika Korps troop carriers for the other, and by (c) one whammo structural exhibition which is always threatening, visually at least, to come apart at the seams.” Scully identified the TWA terminal’s “whammo structural exhibition” as the structure’s “pseudo-concrete choked with steel.” The building’s legacy as a “PR package” offering “simplistic and . . . spectacular solutions” has survived its reinvention as a hotel; if anything the terminal’s status as a publicity product is now enhanced. But curiously, a taste for the simplistic but spectacular solution was also, in many ways, responsible for the demise of Trans World Airlines itself.

Leaving the 1962-replica car display, I pass the Sunken Lounge now occupying the heart of the terminal’s old headhouse, then stop by a nook painted to resemble a jumbo game of Twister, the chosen entertainment of the happy 1960s family. Capitalism kitsch is everywhere, its palette bright and infantilizing. At the mouth of the tube leading back to Terminal 5 are several exhibits presenting TWA’s early history as a boilerplate example of Great Man Theory: the enormous globe across which the “eccentric and demanding” Howard Hughes, TWA’s owner from 1939 to 1960, used intervals of string to plan new routes; a bland wall narrative spelling out TWA’s early in-flight innovations (air conditioning, reclining seats); the 1940s desk of then-president Jack Frye, complete with padded office chair, cigar, whiskey-filled tumbler, bar cart, and half-full in-tray (the sheets in it are all blank). The history lesson stops around 1950, over a decade before Saarinen’s new Flight Center opened its doors to the public. This is unfortunate because it’s around that time that the true story of TWA’s decline gets going.

TWA flew its last flight on December 1, 2001, having been acquired by American Airlines eight months earlier. In the popular imagination, the villain of the now-defunct company’s story is Carl Icahn, the self-seeking greenmailer who swept into the TWA ownership suite amid the deregulation-fueled mergers and acquisitions fever of the mid-1980s, then proceeded to strip the joint of all its furniture. The Carter administration’s 1978 deregulation of the airline industry and the leveraged buyout boom of the early 1980s were the structural factors that allowed Icahn to make his move for TWA. These were both part of what sociologist Greta R. Krippner has called the “turn to finance” that successive U.S. governments engineered in the Carter-Reagan years as a tactic to avoid finding political solutions to the distributional conflicts provoked by 1970s stagflation.

Icahn’s takeover is usually situated within the emergence of a “shareholder governance” model of corporate control, set in opposition to an older, more courtly “stakeholder”-centric model. Under the stakeholder model, corporations are run on behalf of a diverse set of interests, including workers, shareholders, customers, and communities. The shareholder model, by contrast, holds that managers are responsible only to shareholders, who are the true owners of the company; the discharge of executive responsibility resides solely in the maintenance of a healthy share price. Icahn’s sin, in the conventional narrative, was to gut the company, culling its workforce and selling off its choicest assets in a vain, years-long attempt to keep the market happy and buoy the company’s stock—blows from which TWA would never recover.

The last part is true. But this version of history obscures the degree to which TWA, even during the supposedly happy postwar decades of full employment, middle class advancement, technological progress, and boundless growth, was mismanaged. And it entrenches the veneration, still powerful today, of a prelapsarian “good” capitalism—the capitalism that lifted the spirits and promoted welfare for all, the capitalism we had before the 1970s, the very capitalism glorified in the TWA Hotel’s peppy Jet Age diorama of martinis in the departure lounge and abundant leg room in coach—that never in fact existed. Hughes was not a fond paterfamilias presiding over a civic project to look after employees or build concert halls for local communities—the guff of traditional stakeholder-centric models of corporate control—but a paranoid aviation obsessive with his eye trained ruthlessly on the TWA share price. He fired Frye in 1947 after a pilots’ strike, among other things, saw TWA’s stock drop from $71 to $9. He was also famously bad at his job, dithering while United, American, and Pan Am snapped up their first batches of jet-powered aircraft in the early 1950s, then panic-ordering a glut of jets once it was too late for TWA to catch up to the competition. These purchases also exhausted the company’s financial resources; by the time Hughes relinquished control in 1960, TWA was loaded with debt and on the brink of bankruptcy.

I find myself meandering through the hotel’s warren of corporate retreat-ready meeting rooms and reception halls. The rooms are named after period-appropriate superlatives (Neato, Groovy, The Bee’s Knees), hairdos (The Pixie, The Bouffant, The Mop Top), and dance styles (The Limbo, The Shimmy, The Twist). There are more reliquaries displaying TWA’s inflight meal choices in the 1960s, the uniforms worn by air stewards in the 1960s, the entertainment offered to passengers during the 1960s. Another exhibit recreates the living room of an average middle-class family “back in 1962:” Tia Maria in the cocktail cabinet, Candid Camera on TV.

In retrospect, Saarinen’s terminal looks less like a projection of capitalism’s kinetic future than a chained bird unable to get off the ground.

Eventually I arrive at a wall display retracing the history of the Trans World Flight Center’s design and construction. The text describes how Saarinen was initially “perplexed” by the engineering of the structure imagined in his early sketches: “One morning at breakfast, as his wife Aline watched, Saarinen flipped the rind of his grapefruit over to form a dome. Then he pushed down on the rind’s center, causing two bulges to rise—an early model for the terminal’s swooping curves!” What we don’t learn is that when it opened in 1962, Saarinen’s terminal, which Hughes commissioned, was too small to accommodate the new class of wide-bodied jets that would dominate commercial air travel for decades to come, and an extension for jumbo jets had to be tacked on in 1969. This was how Hughes left TWA as the “good” years of postwar capitalism wound to a close: in financial ruin, and with a striking new terminal unfit for its original purpose. In retrospect, Saarinen’s terminal looks less like a projection of capitalism’s kinetic future than a chained bird unable to get off the ground. 

Even as Hughes was bumbling his way to the corporate escape hatch, larger forces were gathering to remove the fetters from American industry, airlines in particular, and unleash the full violence of company-on-company aggression. Deregulation and “shareholder governance” were not tricks conjured in a panic from the inflationary delirium of the 1970s, but ideas with intellectual roots stretching all the way back to the New Deal. Columbia law professor Adolf A. Berle and Gardiner C. Means published The Modern Corporation and Private Property in 1932. The book, eventually hailed as “an epoch-making volume” on par with John Maynard Keynes’s General Theory, is now seen as something like the Old Testament of shareholder governance. In fact, the book’s main message was that as American corporations grew larger and more complex, they would need to diversify their shareholder base; Main Street would inevitably be lured into the maw of the markets. Paradoxically, the years following the publication of The Modern Corporation and Private Property—years that witnessed the New Deal, World War II, and the postwar boom—saw the stakeholder model eclipse Berle-inspired shareholder-centric concepts of corporate control. But just as Berle predicted, the middle class bought into corporate America. The big companies grew, markets deepened, pension funds multiplied.

By the time Berle tangled with fellow law professor Henry Manne over these questions in the early 1960s—right as the Jet Age was entering its imperial phase—he’d recanted his earlier enthusiasm for shareholder governance and thrown in his lot with the stakeholder approach. Intellectual fashion was not with him. Economists and lawyers at the University of Chicago, of which Manne was a graduate, had begun to popularize the Hayekian worship of markets. In a back-and-forth that stretched over several journal articles, Manne argued that a company’s share price was the best yardstick of executive performance, and the surest way to discipline managers was through the threat of a takeover. Berle parried, arguing that the rise and fall of a stock has only “a vague relation to the success or failure of [a] corporation.” The stock market, he said, is less an instrument of capital allocation than a mechanism to transfer wealth—to Wall Street. Manne would carry the day. Within a few years, “the ascendancy of the shareholder— the shareholder as owner—spread and congealed into popular belief, a kind of orthodoxy,” writes Robert Teitelman in Bloodsport, his 2016 history of the U.S. mergers and acquisitions industry. “This set of ideas eventually came to appropriate the phase corporate governance, as if there were but one way to govern companies, with shareholders as owners. Like any ideology, corporate governance defined alternatives out of existence.”

Returning to the hotel’s main cavity, I take the stairs up to the mezzanine. A collection of headless mannequins faces celebrity chef Jean-Georges Vongerichten’s Paris Café, where you can buy an egg sandwich for $16. The mannequins recount the evolution of TWA’s in-flight fashion. It’s a sad journey, from the block-color vibrancy of TWA’s early uniforms to the shapeless dad pants of the final line. The jacket worn by TWA pilots through the later years—the same model Icahn draped himself in the day he took over the airline—is displayed off to the side, almost as an afterthought.

The imperative of corporations under capitalism has always been to grow. Restrictions on intra-industry mergers meant that through the 1960s, the best way for TWA to “get big” was through conglomeration. Dutifully the owners who took over from Hughes set about buying up companies outside the airline industry, including Hilton International and Century 21 Realty. The company limped on under the weight of its Hughes-era debts, but within a few years, the economy soured and airlines were at a new ebb. Faced with the triple crisis of energy shortages, slow growth, and runaway inflation, the post-Watergate political class had rallied around a simple, bipartisan, reductive solution: let the markets figure it all out. Whammo, as Scully might have said. Deregulation was a key component of this turn to finance, and airlines were the first industry on Jimmy Carter’s hitlist following his election in 1976; the Airline Deregulation Act duly entered into law on October 24, 1978. But the statute’s animating idea had been flowing through the circuitry of U.S. economic thought for decades before that day. Economist Lucile Keyes wrote a book on the issue in 1951, attacking “the inherent tendency of regulation to favor existing carriers” over newcomers. Other academics of a law and economics bent kept Keyes’s argument alive through the following two decades. The seed of society’s post-1970s marketization was planted early. 

“Why should pilots be paid $130,000 a year when you can get pilots for $27,000?” Carl Icahn once asked.

By the time Icahn took control of TWA in 1985, the legal regime for mergers had been relaxed and leveraged buyouts were in bloom. Small shareholders, who owned 80 percent of all stockholdings in the late 1960s, had waned as a force as pension funds and endowments began to shape the markets to their pleasure. And their pleasure was identical to Icahn’s: to maintain a religious focus on the stock price, now considered the ultimate barometer of managerial success. Shareholder governance was, after a fifty-year hiatus, back in style, and the corporate raiders’ long march through the institutional investors was complete. Bizarrely, Icahn, as he built up sufficient stock through 1985 to take control of the company, received the support of the TWA unions, which saw him as a preferable alternative to the airline’s other suitor, the union-busting Frank Lorenzo. The story from there is a familiar one. Icahn promised to make TWA profitable, buy new planes, and fight for employees—then proceeded to do the exact opposite. He recouped the $440 million he paid for TWA by taking the company private in 1988, a transaction that put $469 million in his own pocket and a $540 million debt on the corporate balance sheet. He under-invested in the fleet and sold off TWA’s prized London routes. He battled the unions for every penny. “Why should pilots be paid $130,000 a year when you can get pilots for $27,000?” he once asked.

In 1992 TWA filed for bankruptcy, then emerged alive and somehow owing Icahn $190 million. Eventually the debt was settled by giving Icahn reseller’s rights over discount tickets passing through St. Louis, an arrangement that allowed him to continue bleeding the company dry well into the late 1990s. A second bankruptcy followed in 1995, and by then the end was in sight.

The final blow for TWA came in 1996, when a flight bound for Paris exploded in a fireball off Long Island, killing all 230 people on board. The circumstances surrounding the crash generated perhaps the first online conspiracy theory—one that survives to this day. Walking back past the Sunken Lounge one last time, its banquettes and Tulip chairs still empty, I pass a group of hotel staffers in 1960s period costume. “Yeah, a lot of conferences, weddings, photo shoots, events,” I hear one say to another. Somehow they start talking to me. I ask a few dull questions about the hotel’s design, and they oblige by rattling off a list of its most dazzling features. “These are the second thickest windows in the world,” one of them says. “Seven panes. Four-and-a-half inches thick.” The conversation turns to the building’s fate in the years between TWA’s 2001 acquisition and today. “TWA operated one of the planes that crashed on 9/11,” my new friend informs me. “The company never really recovered from that.”

He’s only doing his job, and I don’t begrudge him that; maintaining enthusiasm for mid-century aviation cosplay over a whole working day must be tough. But like many parts of the building around him, he has the history wrong: the carriers operating the planes hijacked on September 11 were United and American Airlines. TWA, already finished as an independent concern, was by then in the final stages of the journey down the gullet of its acquirer. With the TWA terminal, Saarinen “wanted to provide a building in which the human being felt uplifted, important and full of anticipation,” his wife Aline once explained. I leave feeling exhausted by the nostalgia for a past we never had.