Socialism vs. Crony Capitalism
4/8/2016
This week, a war of words broke out between Democratic presidential hopeful Bernie Sanders and General Electric CEO Jeff Immelt, ostensibly over capitalism. The first salvo came from Sanders, who says JP Morgan and GE are “Destroying the fabric of America.” The replay from Jeff Immelt points out that GE has been in business for 124 years and never became a “big hit with socialists.” He further points out that GE created 125,000 U.S. jobs, and the fact that Sanders never bothered to stop by the company’s aviation plant in Rutland, Vermont, where the company has invested $100 million dollars in recent years. I will always defend capitalism as the best way to grow wealth, and to provide the individual with the ability to change his or her circumstances. Yet I think Sanders picked the right target with respect to GE, which has moved away from a trailblazing innovating company that once dazzled the world and the stock market. Sadly, it’s become more of a poster company for crony capitalism, which is ripping the fabric of the country. When Immelt headed up President Obama’s Council on Jobs, many snickered at the absurdity, considering the number of jobs that GE was shipping outside the United States. Like most multi-national businesses, growth means taking advantage of a changing world that added a billion people to the middle-class over the past decade. You can have 300 million potential customers or 5 billion; it is one thing to sell to those folks and even hire locals to effect local transactions, but it’s another thing to ship ‘American’ jobs. Is this what GE has been doing? In the last 20 years, the rate of growth in workers is significantly higher than the rate of growth in business.
There might be extenuating circumstances to the outsized growth outside America, but how does GE explain the decline of U.S. workers to 125,000 from 161,000 in 2005? My beef with GE is the cronyism and its cozy relationship with the government, particularly the Obama administration. Export Import Bank GE has received billions in guarantees from the bank to fund projects outside the United States, even though the company is sitting on approximately $120 billion offshore. Bailout There were so many layers to the bank bailout that it somehow included GE; it is hard to tally how much the company actually benefited, but what I do know is the following:
The Real Problem That is greed and that’s selfishness. That is lack of respect for the people of this country. -Bernie Sanders on GE moving jobs overseas So, Bernie picked a great target to rile against, but his premise is wrong. To be sure, Bernie Sanders and Barack Obama share resentment toward profit motivation, and romanticize the notion that mankind is best when it’s working for a communal good. They both think people and businesses can make too much money. And believe it’s the role of the government to make sure that doesn’t happen. Bernie doesn’t care about jobs going overseas; he cares that such moves may bolster corporate bottom lines. Bernie Sanders, and maybe Hillary Clinton, would further bludgeon businesses for making money, effectively squeezing the economic supply line that oxygenated the success of America. I get that it is a populist issue, and many Americans want to bring jobs back and stop international trade; however, it’s a key pillar of our success. We have to do a better job and take it out of neutral, a big part of that would be getting the government out of the way:
On top of it all, we need the President of the United States to be a cheerleader for success and to promote the fact that there is no such thing as too much in the land of plenty.
Charles Payne
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