After Larry Summers announced last fall that he would be stepping down as President Obama's chief economic adviser, I publicly called on the president to appoint GE Chairman Jeff Immelt as Larry's successor. So you might think I would be thrilled by the recent appointment of Immelt to replace Paul Volcker as Chairman of the President's outside economic advisers. But I'm afraid that I'm ambivalent at best. (If you read my last post on GE's deal to do an avionics joint venture with China's state owned Avic, you are not at all surprised).
On the one hand, I like Immelt because on several occasions he has said publicly something that I believe to be profoundly true: Namely, that America cannot prosper without a strong manufacturing base. It is not only that he says this, but that as the head of a global company with more foreign than U.S. sales and employees and very significant foreign shareholders, it takes some courage for him to call for stronger American manufacturing.
On the other hand, there are two linked problems. When I urged Obama to replace Summers with Immelt, I knew that, if he took the job, Immelt would have to resign from GE (which is probably why the job wasn't offered and/or wasn't accepted) and thus operate solely with U.S. interests in mind. As head of the White House's external economic advisers, however, Immelt will remain Chairman of GE. In that role, he cannot, indeed, he must not, think only of what is best for America. Rather he must focus on what he thinks is best for GE.
Thus, if China demands (as it does) that GE produce in and transfer technology to China as a condition of doing business there, Immelt may conclude that, in view of the potential future importance of China's market, he has no choice as the chairman of GE but to comply. This is especially true in view of the fact that China is not a democracy in which, as it does in the United States, GE has big political influence. Nor is it a society with a rule of law under which GE can protest unfair treatment.
But however sensible acceptance of Chinese conditions may be from a GE perspective, it makes no sense from an American perspective, especially because the Chinese conditions are significantly in violation of Chinese commitments to the World Trade Organization and to the United States.
So the question is whether Immelt can serve two masters -- GE and the United States -- equally well? And that leads to the second problem which is the likely evolution of a least common denominator attempt at serving both masters which ultimately leaves the United States sucking air. In fact, you can already see that happening. Just look at Immelt's article -- How to Keep America Competitive -- in the Jan. 21 Washington Post.
There Immelt calls for more Free Trade Agreements like the one just negotiated with South Korea and for more innovation. These suggestions are just motherhood and the flag bromides with the exception that, unlike motherhood and the flag, they are demonstrably insufficient. Sure, just about everyone is for free trade in the abstract, but in reality we have done free trade agreement after free trade agreement over the past sixty years and our trade deficit and the erosion of American manufacturing have only gotten worse. By the same token, we have been by far the leading source of innovation over the past sixty years, but that has not stopped the erosion of our position even in high tech industries.
So there must be a lot more that we need to do or to stop doing. But, for as long as he is chairman of GE, Immelt is unlikely to address that question, especially, for example, if it suggests something like not doing more free trade agreements.
So here's my
big idea. Immelt should just step down from the chairmanship of
GE and devote himself to revitalizing America. Look, the guy is already rich by the standards of all but a few billionaires like Warrant Buffet and Bill Gates and he's never going to be as rich as them anyhow. Moreover, fifty or a hundred years from now no one is going to care what happened to GE and no one is going to know Immelt's name if he serves out his time at GE. But fifty or a hundred years from now people are going to care what happened to America. And if Immelt can really do something to turn the country around and get it back on track, he'll be on Mount Rushmore -- at least figuratively if not physically.
So how about it Jeff? For the good of the country?
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