the audit

Jack Welch and anti-business sentiment

The former GE CEO, still a business press hero
October 8, 2012

Former GE CEO Jack Welch made waves last week claiming—with zero evidence—that the Obama administration manipulated the unemployment report that showed joblessness dropping to 7.8 percent last month.

Now that’s kooky. But it’s not too surprising coming from Welch (whom I was writing this post about even before his conspiratorial tweet).

Take for example the latest Fortune column by him and his wife Suzy about “Why you shouldn’t hate business.” They lede with the bogus “You didn’t build that” meme and base the whole column on the straw man that Democrats and liberals (read: Obama) “hate business.”

Look, you can be critical of too big to fail Wall Street banks, Walmart, and the fossil fuel industry without hating business. You can oppose industrial concentration and question the outsized political power of corporate America without wanting a Politburo to central plan all production.

But why are there so many people who are critical of Big Business and suspicious of business interests?

One of the big reasons why Americans don’t trust corporate America like they used to is Jack Welch himself.

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Some call the kind of cut-throat, winner-take-all capitalism that has taken hold over the last 35 years or so “Jack Welch capitalism.” The Economist, no lefty rag, for one, is one of them.

Welch wasn’t called “Neutron Jack” for nothing. He got that nickname firing tens of thousands of workers, often outsourcing the work overseas. Jack Welch capitalism discarded other stakeholders like workers and the community to focus almost exclusively on delivering short-term value to shareholders. He was the face of the downsized economy and the end of the social compact between businesses and their workers. He fought to keep GE from cleaning up the Hudson River after it dumped more than a million pounds of carcinogenic PCBs over thirty years ending in 1977, and because his company was responsible for 52 Superfund sites, challenged the law’s constitutionality.

Unfortunately for Welch’s legacy and for the rest of the country, while shareholder capitalism has made the wealthy wealthier, it has largely failed the economy as a whole.

It’s worth noting that the stock market, which Welch as much as anyone helped turn into end-all-be-all measure of corporate performance, is up 70 percent under Obama. In George W. Bush’s eight years, it fell 25 percent.

And as Barry Ritholtz points out regarding the BLS nonsense, “GE’s Jack Welch Knows About Cooking the Books,” from years of managing the company’s earnings to make sure they hit estimates.

Worst of all, perhaps, is that this stuff just isn’t smart. Take this on anti-business sentiment among the elites:

Finally, and perhaps most pernicious because of its outsize influence, is the hostility toward business that radiates from the intellectual elite — the opinion leaders in journalism, academia, and government. To them, business is rotten because it’s just so completely unfair. Otherwise, how do you explain the success of the party animal who lived down the hall in college?

You know what we mean. You have a group of people who once took their studies very seriously and protested for social justice in their free time. After graduation, they took jobs where they felt they could fight the good fight. That was all well and good until 10 or 15 years out, when they started hearing stories about the obnoxious loudmouths who majored in playing the angles and minored in beer pong. These “lightweights” (in their view) had struck it rich on Wall Street. And not by making the world a better place. No — simply by showing up and chumming around.

This would be grade-D stuff on Fox Nation, much less in Fortune magazine.

Despite all this, Welch was and still is a business press hero. It’s long past time to rethink that one.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.