President Obama continued to exhibit a pleading weakness in his prime-time speech Monday night, so it’s no wonder Monday was the same day that his “jobs czar,” General Electric CEO Jeffrey Immelt, chose to announce the company will be moving the headquarters of its
health-care X-Ray division to China. You want compromise, Mr. President? In your face, sir, with all due respect.
Immelt replaced Paul Volcker as a top economic adviser. The former Federal Reserve chief, who defeated runaway inflation in the early 1980s, was done in by his resistance to letting the big banks and Wall Street resume the business as usual that led to the financial meltdown. Mr. Obama wanted to project a more business-friendly face for his administration. The results of Immelt’s public service have been to barely dent the plight of 24 million Americans who are unemployed or underemployed. I suppose we should be grateful that GE’s domestic employment dropped only 1 percent last year even as net income hit $11.6 billion, topping Wall Street expectations.
Would it be impolite at this point to mention that GE paid no federal income taxes in 2010? Or that GE Capital, the disastrous gift left behind by Jack Welch, was one of the biggest beneficiaries of the TARP bailout? The Export-Import Bank, funded by taxpayers, has given GE $2.5 billion in loans and loan guarantees.
Immelt has said GE plans to hire 11,000 American workers this year. As Marketwatch put it, “If the company follows through, it would represent GE’s biggest hiring binge in the U.S. in at least a decade — an 11 percent increase in one year.” In 2004, GE employed 165,000 Americans (and this was after the massive layoffs under Neutron Jack). Last year the number was 133,000. During the same period, GE’s overseas employment increased from 142,000 to 172,000 in 2007; after the recession, the number was 154,000.
The company claims 53 percent of its sales from outside the U.S. And Monday, Immelt’s minions were working damage control, claiming only “a handful” of top managers would move to China. Still, GE, which already operates a global research center in Shanghai, is investing another $2 billion in China, opening “customer innovation” and development centers. As Bloomberg reported, a large number of engineers are in training there. As China switches to digital X-ray and imaging technology, the division expects what a spokeswoman called “double-digit” growth rates there.
The biggest dilemma, which goes far beyond GE, is why much of these offshore sales can’t be U.S. exports made by American workers? Some of the answers are obvious: The demands of Chinese industrial policy (GE is working on a partnership there for aircraft engines, too), Wall Street greed and less expensive labor. But this doesn’t quite cut it when so many Americans are suffering, and so many fear the living standards of their children will be lower than they enjoyed. And all the while, such companies enjoy corporate welfare and tremendous power over the decisions of government and the Supreme Court.
Tell me again why the federal deficit is our most pressing problem?
Today’s Econ Haiku:
Paccar sped ahead
Net profits more than doubled
Wall Street says “faster!”