Jeff - You Ain't No Charlie Wilson

by BILL WADDELL

Just about everyone has heard one version or another of GM President Charlie Wilson's response in the Senate hearings to confirm his nomination as Secretary of Defense. Senator Robert Hendrickson asked whether Wilson could make a decision that would harm GM if such a situation arose.  Wilson answered, "I cannot conceive of one, because for years I thought what was good for our country was good for General Motors and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country."

Compare that with GE's Jeff Immelt.  "I’m a GE leader first and foremost.  At the same time . . . I work for an American company."

Immelt can set his priorities however he chooses, of course.  I have a whole lot of things higher on my 'first and foremost' list than work - my faith, my family, and, yes, I am an American long before I am a manufacturing consultant.  I am quite sure most of the blog readers have similar priority lists.  In fact, while Engine Charlie was much maligned as a result of the misquoting of his words - it went into popular wisdom as "What is good for GM is good for the country" - he was actually saying that (1) there was no conflict between the company's interests and the country's, and (2) if such a conflict ever arose there was no doubt the country came first.  That is exactly how most of us would see things.  Other than occasionally being late for dinner because a meeting ran late, the job and our personal values - faith, family, country - are not in conflict.  And like Charlie, if they come into conflict the job would be the first thing to go.

As I said, Immelt can set his priorities as he chooses - pretty pathetic for someone to make business "first and foremost" in their life but it's his empty life to live.

The big question is exactly what is the country's obligation to people and companies like Immelt and GE who take full advantage of the benefits of the United States but feel little or no obligation to give back?

The article in which the quote appeared cites P&G as having only 28% of their 128,000 employees in this country.  According to this morning's Cincinnati Enquirer they are planning to reduce that number even though 42% of their sales are here.  IBM has more employees in India than they do in the United States, but I bet they sell a whole lot more technology here than they do in India.  Apple, as we have long noted, keeps ten or more Chinese folks employed for every one American, as does Nike.  They sell their iPods and shoes here though.  More and more the business model is to take and take and take from the United States ... and give as little back as they possibly can.

Back in 1953 Wilson would have been right even if he had said what was good for GM was good for the country.  GM created wealth and jobs and the only controversy was how much of the wealth went to workers and how much went to management and stockholders, but it was American wealth for the most part regardless of how the pie was divided.  The multi-national model of 2011 is quite different.  It is to drain the accumulated wealth of the USA for their own benefit.

The fact that most of the world is safe for them to go into and manufacture and sell as a result of a century of US blood and treasure through wars, foreign aid and treaties to make it so, and they can gallavant around the world secure in the knowledge that the full might of the United States keeps the collection of communists, tin horn dictators and criminals of all sorts from reverting to form and slitting their throats and confiscating their money means nothing to them.  We are simply the underwriters of the secure legal and financial infrastructure they use to get rich, and nothing more.

The mainstream American manufacturer is taxed far too much.  He gives back to the United States far more than he takes in the form of jobs, community support and much more.  Typical American manufacturing leadership is out front in volunteering, donating and doing everything possible for the country.  But the leaders of the multi-nationals are a selfish, shameful lot and even have the gall to look for tax breaks - their taxes should be doubled - no tripled.  What exactly is in it for us to give these folks a break?

Where is the great loss if the Jeff Immelts take their companies and leave?  They won't - they are all in for sending everyone else's job to China, India and Vietnam but there is not enough money in the world to convince them to leave the friendly, safe confines of Connecticut and live in those places.  They won't reduce any jobs - they have the bare minimum here anyway, and they will still do whatever it takes to sell into the biggest economy in the world.  Would investors lose out?  Not hardly.  Let IBM, Apple and Nike move their headquarters and the paltry few jobs they provide to Shanghai.  You can invest in them through the Shanghai Stock Exchange just as easily as you can the NYSE.

We need to cut the tax rate for American companies in half, but we should stick it to the multi-nationals and their 'company first - America when it's convenient' leadership as hard as we can.  In my lean seminars I ask CEO's the question, "What is your commitment to your employees, your community, your suppliers and your customers?  And what would happen if they felt exactly the same commitment to you?"  Time for Jeff Immelt to find out.

Comments

[Dean]

When you put it like that, I think our Canadian companies should pay taxes to the USA as well. :)

You make an excellent point. Ironically, it's one that I see more often from the so-called "big government" crowd on the left. That said, where you differ is your contention that truly American manufacturing companies should pay less tax. That's an idea I could get behind.

[Bill Waddell]

Dean,

I think that the Canucks earned the right to keep their money at Dieppe, Normandy and more recently in Afghanistan.

[Mark Graban]

Thanks, GE:

http://www.washingtonpost.com/business/economy/ge-all-in-on-aviation-deal-with-china/2011/07/17/gIQAgPmTXJ_story.html

[john rackell]

One aspect of corporations on the perpetual take that you don't mention is how their intellectual property is safeguarded here in the US through actually enforced patent and copyright protection. That costs a bundle not to mention an ever increasing threat to our own civil liberties as enforcement becomes more draconian.

The US corporations hardly care whether their IP is enforced abroad outside the US markets because they can get all their profits in the US through IP rents.

We've all heard of the one-CD countries where no one pays the full price of software or books, whereas in the US we are forced to. This amounts to a massive and unfair subsidy to these foreign countries. The US companies needless to say are quite willing to arbitrage the labor differential, while extracting full rents from their protected products in the US.

How can anyone educate themselves in the US when a textbook costs $100+, yet in India/China you can get it for $4?

Maybe the corporations won't be hurt by doubling or tripling their taxes. But they will be hurt if we curtail their rent-seeking activities here in the US. A good way to do that would be to reduce copyright to 20 years max and patent protection to ,say, 5 years.

I remember reading my Dad's MechE journal (British) from the 80s and hearing o stories of british designers of (shoe) manufacturing equipment having their designs copied lock stock and barrel by Taiwanese manufacturers. Did the British government go to bat for these small manufacturers? No way! They could have cared less. Naturally, the Taiwanese could sell far cheaper with no development costs.

So patents only serve to protect the monopoly/rent interests of the multinationals in their home markets while allowing Asian manufacturers to operate without any of these restrictions.

I'd say scrap them.