So Paul Volcker is out and Jeffrey Immelt is in. The former Federal Reserve chairman who broke the back of inflation in the early 1980s never received much of a hearing from the Obama White House. His role as head of the Economic Recovery Board was largely symbolic; most of his recommendations on holding the financial sector accountable for its recklessness and checking future behavior went into the president’s circular file. And no wonder: The real policy power rested with Larry Summers, protege of investment banker Robert Rubin and one of the fathers of financial deregulation.
With Immelt, chief executive of General Electric (hand picked by Jack Welch), Obama is said to be projecting his new “pro business” image. Even the U.S. Chamber, which campaigned ardently and with big bucks against the administration’s policies, is about as happy as it can be with the Immelt pick.I suspect Immelt won’t be a figurehead, but how much time he has to devote to mere American matters is an open question. GE employs more workers overseas than it does in the United States, and the U.S. accounts for a shrinking amount of GE’s focus. It just entered into a risky technology sharing agreement with a state-owned Chinese company to build aircraft engines for Boeing’s future competitors.
Like most major CEOs, Immelt is a citizen of the world, presiding over an enterprise with larger earnings than the GDPs of most nations, answerable to his shareholders and the brilliance inside his own head.. Can America’s interests really coincide with those of GE, or any transnational corporation? We’re just one more market to them. The world, and executive values, have changed vastly since General Motors President Charlie Wilson said, in 1953, “For years I thought what was good for our country was good for General Motors, and vice versa.”
That Immelt won’t be another Volcker is signaled by other personnel shifts in the West Wing. The president’s new chief of staff is William Daley, who worked for JPMorgan Chase. Gene Sperling, who takes over the National Economic Council, was a major player in the 1999 repeal of Glass-Steagall, which helped enable the financial bubble and collapse, before leaving the Clinton administration to work for Goldman Sachs. Remember that GE makes a big chunk of its income through its financial services arm, which also was a recipient of government help during the panic.
So, this is “pro business,” per Mr. Obama. One wonders what they tell him? That average Americans must take more “haircuts” on their wages and living standards to better compete against the Chinese and Indians? That taxes on corporations, the biggest of whom already use a variety of legal dodges to pay nothing, must be cut more? That high unemployment, like stuff, just happens? Just wondering. Now you know the new players with the president’s ear.
Today’s Econ Haiku:
Inflation or not
Food prices are on the rise
Let Ben chew on that