President Barack Obama will name Jeffrey Immelt, General Electric Co.'s chief executive officer, to head his outside panel of economic advisers, replacing former Federal Reserve Chairman Paul Volcker.
Immelt wrote in an op-ed today in the Washington Post that Obama asked him to take the helm of the newly renamed President's Council on Jobs and Competitiveness. The group will reach out to labor and business leaders to serve "as a catalyst for action," he wrote.
Immelt, 54, is an original member of the panel, which was formed as the President's Economic Recovery Advisory Board in February 2009. GE's CEO since 2001, he heads the world's biggest maker of jet engines, medical-imaging equipment and power-plant turbines and gives the White House a corporate heavyweight to help burnish Obama's pro-business credentials.
Multinational corporations, GE foremost among them, have led the globalization movement that has caused US middle class incomes to stagnate and a rapid decline in the percentage of American adults who are working. Immelt has said that US wage levels must continue to decline in order for US manufacturing to be "competitive" with imports.
In Obama Administration happy talk about middle class incomes is not supported by any strategy or plan I said this:
The clear implication [of a then recent Larry Summers speech] is that it is Obama Administration policy to bring middle-class income growth rates up to, or at least nearer to, the growth rates enjoyed by the top few percent. (That they have been lagging since about 1973 is documented here and here.) Another clear implication is that exporting more and reducing imports of consumer goods is the route to this goal. I suggest the Administration has no plan to achieve either of these goals and that mushy thinking and immense political obstacles stand in the way.
At present, MNCs are the predators, and strictly domestic businesses and labor are the prey. Making one of the chief beneficiaries of the status quo his chief advisor on such matters pretty well guarantees there will be no important relevant policy changes in this Administration, doesn't it?
Skeptic
Many others have had generally the same reaction. Tobin Harshaw surveys the blogosphere in Obama’s Corporate Makeover. Several opinions are published in Another Big Kiss for Big Business? Volcker Out, Immelt In at New Deal 2.0.
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As Robert Reich says, hiring more people in the US is likely to be inconsistent with the profit motives of MNCs. Therefore, on the question of US job creation, they have potential and maybe inherent conflicts of interest that ought to be obvious to Obama and the rest of us.
In case you haven’t noticed, the profits of American corporations are soaring. That’s largely because sales from their foreign-based operations are booming (especially in China, Brazil, and India). It’s also because they’ve cut their costs of production in the US (see the first item above). American-based companies have become global — making and selling all over the world — so their profitability has little or nothing to do with the number and quality of jobs here in the US. In fact, it may be inversely related.
Skeptic
Philip Delves Broughton looks at GE's job destruction record using data from GE. Includes a graph. Hat tip to David Ruccio at Real-World Economic Review Blog.
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Mike Konczal points out that growth of the US economy and employment is something citizens want but is not a priority for multinational businesses.
I find it funny that it’s only been a few days and already Cato people like Dan Ikenson are writing non-ironic headlines like “Obama Hasn’t Given Enough Ground Yet To Business To Spark Growth.” We do understand that businesses don’t want growth, right? They want to consolidate, handicap their rivals, rent-seek and guarantee profit streams. Remember that right now fewer small businesses are opening, and they are more likely to fail when they do. This is a great deal for incumbent businesses.
The last time we had a problem this big--in the Great Depression--General Electric proposed and the Chamber of Commerce endorsed the Swope Plan to feather their own nests.
His Swope Plan is considered one of the main documents for the idea of an associationalist economy, or what we would now call a corporatist economy. Let businesses collude and form price-fixing organizations, and in response they’ll hire more workers and even provide a social safety net for those workers. The government will need to suspend all anti-trust laws first, obviously, before all the sweet growth and jobs show up.