Somewhere Theodore Vail must be smiling.
This morning GE CEO Jeffrey Immelt, recently tapped by President Obama to chair his Council on Jobs and Competitiveness, has an op-ed in the Washington Post sketching his thoughts for the new council. The preliminaries rest on three principles: re-emphasize manufacturing and exports, free trade, and innovation.
I wholeheartedly endorse this:
The assumption made by many that the United States could transition from a technology-based, export-oriented economic powerhouse to a services-led, consumption-based economy without any serious loss of jobs, prosperity or prestige was fundamentally wrong.
which I’ve been saying for years. However, I think that there’s reasonable concern that the increased manufacturing output of the last couple of years hasn’t resulted in substantially increased manufacturing employment. I also note than in his paean for General Electric Mr. Immelt fails to mention that GE closed its last U. S. incandescent lightbulb factory back in September (most compact fluorescents are made in China). I also note that GE is preparing China to compete with Boeing. I would be interested in his views on how he reconciles these things.
IMO part of the problem is that manufacturing is to some degree a misnomer. Increasingly “Made in the U. S. A.” means “Packaged and Sold in the U. S. A.”.
Securing the approval of the Senate for the free trade agreements already negotiated by the Bush Administration might be a start, something the Obama Administration has been unable to do so far. Getting these agreements past the free trade skeptics in the Senate might prove challenging. The campaign season for President Obama’s 2012 re-election campaign will soon be hard upon us. Should we expect him to expend political capital to get them passed and further alienate portions of his base?
As to innovation, I’m reminded of something my old business partner used to say in parody of Voltaire from time to time, I agree with what you say but I deny your right to say it. Among the greatest barriers to innovation are the industrial giants like GE which have shed jobs at an alarming rate over the last 30 years while wielding intellectual property laws and political clout to crush upstart competitors which are hiring. One way of spurring innovation would be to get dinosaurs like GE, grown huge through rent-seeking, the hell out of the way. I doubt we’ll see suggestions in that vein from Jeffrey Immelt.
Theodore Vail was the legendary CEO of American Telephone & Telegraph (later AT&T Corp.) during its heroic period in the late 19th and early 20th centuries. He believed that competition in business was inefficient and immoral. His vision for America was one in which each industry was dominated by a single massive company and these titans would meet together to set the course for the future. Welcome to Theodore Vail’s America.