July/August 2001 - VOLUME 22 - NUMBER 7& 8
E D I T O R I A L
You dont know Jack. But how could you? In the last two decades, General Electric CEO Jack Welch has practically
been beatified by the U.S. and especially the business press. This issue of Multinational Monitor shows a different side of the Welch
era, the immense costs of GEs relentless focus on short-term earnings
and share price. GE under Welch indeed has been a leader; it has set the
tone for the hard-edged, stock price-obsessed, anational, ruthless and
cutthroat orientation that is now accepted as the norm, or at least a
shared aspiration, for corporations. GEs business model can be considered a global system of management
by stress, with the company viewing stress as the magic bullet for efficiency.
GE believes stressing its workers with fear of job loss improves their
productivity. It believes that stressing its global production system, by constantly
looking to cut costs through layoffs, subcontracting, outsourcing or moving
production to lower-wage and non-union environments, enhances company
performance. It believes in stressing suppliers, going so far as to order U.S. suppliers
to migrate to Mexico to service GEs already migrated
production facilities. It believes in stressing communities, using the threat of plant closings
to extract tax breaks from communities that can ill afford to subsidize
GE, but believe they can even less afford to lose GEs jobs. It believes in stressing the regulatory system, pushing to the edge
and too frequently beyond of legal proscriptions on environmental
pollution, tax avoidance, defense contractor fraud and anti-competitive
actions; and it seeks to use its political muscle to stretch the bounds
of what is permissible. The human results have been disastrous. Welch has left behind communities
across the United States suffering from mass layoffs and disinvestment.
While it is hard to get a fix on the number of GE layoffs over the last
two decades because of the constant churning of its businesses, GE has
dismissed well over 100,000 well-paid workers in the United States. It
has undermined union power in the United States by shifting operations
to non-union subcontractors. It has practically abandoned its once-strong
research-and-development infrastructure. It has compiled a shoddy record
of repeat violations of workplace safety rules, defense contractor safeguards,
and other public interest regulations, with workers lives put at
risk and taxpayers bilked as result. One particularly instructive example of the consequences of Welchs
hard-driving style involves upstate New Yorks Hudson River, which
is polluted by 1.3 million pounds of PCBs (polychlorinated biphenyls)
dumped by General Electric. PCBs are probable human carcinogens, and linked
to endocrine system disruption and other severe health consequences. After a decade and a half of study, the U.S. Environmental Protection
Agency (EPA) in December 2000 announced it was ready to order a cleanup
of contaminated hotspots along a 40-mile stretch of the Hudson. Under
the Superfund law, GE would be liable for the costs of cleanup. In typical Jack Welch style, GE has responded with a full-blown campaign
to block the EPA order. (EPA is scheduled to make a final decision in
the case in August.) Among many other tactics, GE has assembled a lobbying
dream team, which includes former Senate Majority Leader George Mitchell
and former House Appropriations Committee Chair Robert Livingston. The
company has even deployed NBC President and GE Vice Chair Robert Wright
to lobby New York City council members to oppose a bill endorsing dredging
of the Hudson. What the Hudson River dispute reveals so clearly is Jack Welchs
strident opposition to any societal rules that impose costs on GE; and
his companys willingness and ability to leverage its economic power
into political influence
and to use that political influence to
enhance its economic power. As Jack Welchs reign comes to an end, it is time for society to affirmatively reject Welchs business model of comprehensive and global management by stress. The first way is for EPA to authorize the go-ahead of the Hudson dredging, without delay. Not only will such an order commence the desperately needed cleanup of the Hudson, it will demonstrate that countervailing institutions can succeed in disciplining even the most aggressive of corporate titans. |