Sunday, January 23, 2011

More Faux Centrism - Obama Appoints Immelt To Head "Jobs" Council

What we need to create jobs in this country is more free market economic policies and a halt to the regulatory tsunami that we face. Yet on Friday, Obama announced that he was naming General Electric's CEO, Jeffery Immelt, to head the newly formed President's Council On Jobs & Competitiveness. This isn't a move to the center, regardless of how its spun. To the contrary, it's yet one more move towards ever greater crony capitalism.

True free-market capitalism is, for the consumer and the economic health of a nation, the best possible economic system. The polar opposite is the wholly failed communist system, where the government has complete control over the economy. Far along on the road to that polar opposite is crony capitalism, where the government significantly involves itself in the economy and, as a part thereof, picks winners and losers. It is deeply distorts markets to the detriment of consumers and workers.

We see crony capitalism in its most pure form in banana republics, where government favortism allows wealth to be concentrated at the top among the politically favored. Those countries are marked by corruption, a non-existent or declining middle class, and problematic unemployment. As Powerline describes some of the noxious aspects of crony capitalism:

[A big business that embraces crony capitalism] can sell products to big government. It can bulk up on direct and indirect subsidies derived from the labor of ordinary citizens. It can take pressure off pricing by creating barriers to entry for potential competitors. It can mitigate the difficulty of persuading ordinary citizens to buy what they are selling at a price that reflects market value.

We have been on a path towards crony capitalism since, in 1887, the ICC was established and became a tool to protect the profits of the railroad barons. But probably no President has moved us so far along the path to crony capitalism than has Obama, with his picking of winners and losers in the energy sector, his outrageous favortism towards unions, and his takeover of vast swaths of our economy from which he can reward political favorites.

No person or entity has been more embracing of this expansion of crony captialism than GE under the guidance of CEO, Jeffery Immelt. This from Immelt within days of Obama's inaguration, telling shareholders:

The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner.

And Immelt has attempted to make GE the prime beneficiary of Obama's "reset economy." As Matt Kibbe observed two years ago in an essay at Town Hall:

. . . Few corporations better represent the crony capitalism business model than GE. Hardly described as a bank, GE became a major recipient of the bailout, issuing some $74 billion in debt backed by taxpayers under the Temporary Liquidity Guarantee Program-a program that GE persuaded the government to expand so it qualified as a recipient. At the same time, GE managed to avoid new federal restrictions on executive compensation required under the TARP program.

Elsewhere, GE has joined forces with a number of other companies under the banner of USCAP to endorse a costly cap and trade energy program that would drive up the costs of fossil fuels while promoting new forms of energy.

That such companies are interested in alternative energy is admirable; however, forcing American consumers and businesses to subsidize their forays into green energy may not be. Estimates from a number of sources suggest costs could be as much as $1,700 per year per family, and that up to 2.5 million jobs could be lost. . . ..

Consumers and the U.S. economy would bear the burden of this energy policy, but GE and other companies view the bill as an opportunity legislate profits. Senior Fellow with the Free Enterprise Project Tom Borelli notes, "By promoting cap-and-trade, Wall Street is once again betting it can profit from embracing left-wing politics. CEOs see an opportunity to garner praise for themselves as "socially responsible" businessmen while they profit from the sale of renewable energy products, such as wind turbines, and from the trading of carbon dioxide emission credits." . . .

GE typifies the large rent seeking companies that wage battle not in the marketplace, but in the halls of Congress. Taxpayers and consumers cannot afford to fund the pet projects of politicians and corporations, especially in an economic downturn. Unfortunately, the consumer's voice has been lost in the din of corporations scrambling for government handouts.

Having Jeffery Immelt advising on government economic policy is not a move to the center, it is a move towards greater crony capitalism. This is nothing more than smoke and mirrors from Obama as he tries to portray himself as a newly minted centrist.

Update: Hot Air adds:

Obama wants to expand his authority through regulatory adventurism, from which Obama imagines that a “fair” economy will then grow. That strategy has been repeatedly confirmed through actions at the EPA and FCC, as well as the entire ambiguous approach of the ObamaCare law that all buts sets up the HHS Secretary as the Health Care Czar.

Entrepreneurs would resist that approach and would use the platform created by Obama to push against it. However, large stakeholders in markets like regulation for the precise reason that their economies of scale allow them a competitive edge on compliance over entrepreneurs and start-ups. A CEO like Immelt might talk about reducing some regulation, but GE and other massive conglomerates will usually end up backing government interventions in order to secure their own market share.

Either way, though, Schoen is right that Immelt and GE aren’t the solution for what ails the nation. If we are to get the economy restarted, we need to do so by untying the hands of innovators and preventing the punishment of their investors. One has to wonder how the populist Left that got Obama nominated and elected can sit so quietly while he links himself to a company that pushed so many jobs overseas during the last few years, too.

NRO weighs in similarly:

. . . GE, you will not be surprised to know, spent $32 million on lobbying in the last year and is a big political donor. Like its colleagues in most Big Business sectors, it heavily favors Democrats: It was a large contributor to Barack Obama’s senatorial and presidential campaigns, and the single largest recipient of GE money in 2009–10 was, you will not be surprised to learn, one Barack Obama.

Many in President Obama’s union-goon constituency are disappointed with the decision: Mr. Immelt, they complain, is an “outsourcer,” sending their jobs (“their” jobs) to China. Case in point: GE is shutting down two U.S. factories that made incandescent lightbulbs; the replacements will be made in China.

But hold on: Those incandescent lightbulbs are going the way of the dodo and the pro-life Democrat not because of nefarious plotting by the infernal Chicomms, but because the United States is banning them. Who banned them? The Democrats did, as part of their first-100-hours push upon assuming the majority in Congress. (And who lobbied the Democrats to ban them? GE, of course, for its own Machiavellian reasons.)

Having been the target of a Teamsters picket, I can attest that organized labor is not full of the brightest bulbs in the great American light show. But: How do you give your money and your votes to the party that plans to ban your product and then turn around and whine when they ban your product? Keep up with the news, geniuses.

Speaking of Chicomms, GE was in the process of signing a bunch of deals with them even as Mr. Immelt’s appointment was percolating. Which must have put him in a sweet negotiating position.

GE is the poster child for corporate welfare, having encouraged the supersizing of Obama’s stimulus lard-loaf as a prelude to chasing after its green-tech and energy giveaways. Immelt tagged along with Obama to India, where the president acted as vice president of marketing for the gaggle of CEOs he had in tow.

GE’s cozy relationship with government is paying off: The company has been given a multibillion-dollar contract to build an engine for the Joint Strike Fighter — which already has an engine, built by another company. Having two companies building redundant engines for the same plane was enough to get defense secretary Robert Gates’s attention; he called it a “wasteful boondoggle.” The Pentagon doesn’t want it. But GE got the deal, all the same.

In truth, I can’t think of a more appropriate adviser for an overreaching, arrogant, big-government administration than the head of GE, an overreaching, arrogant, big-government corporation. If we can have a tax cheat overseeing the IRS, why can’t we have a corporate-welfare case telling us how to get productive

No comments: