It was heavily promoted well in advance, and I signed up early and waited with anticipation for GE's program on American Competitiveness: What Works, that played for four days last week at Washington's Mellon Auditorium. It was well-organized and smoothly done. The only problem was that it didn't talk at all about American Competitiveness.
GE Chairman and CEO Jeff Immelt opened on an elaborate stage set on Monday with the ubiquitous Power Point presentation -- ten bullet points on what GE says makes it and America competitive -- stuff like customer orientation, operation across the value chain, networked talent, and similar business school speak phrases. Immelt is a practiced presenter, informal, tells good jokes, self-deprecating, extemporaneous, and smooth. Yet, by the end of his solo session I knew no more about the state of American competitiveness than before he began. There was no discussion of the trade deficit, the increasing gap between rich and poor, off-shoring, out-sourcing, income stagnation, relative international technological position or any other benchmarks of competitiveness.
The Immelt solo session was followed by a three man panel discussion moderated by Meet the Press host David Gregory. In addition to Immelt on the panel were Boeing CEO Jim McNerny and Dow Chemical CEO Andrew Liveris. Their discussion wandered a bit because Gregory had little concept of the competitiveness debate or even of what competitiveness means and wasn't well aware of when the CEOs were saying something significant and when they were just blowing smoke which was most of the time. So he couldn't dig in and ask good probing journalist questions. He did, however, ask the key question which is "what is preventing you and other CEOs from investing more in America, producing more in America, and bringing jobs back to America?
Because Immelt is the Chairman of President Barack Obama's Commission on Competitiveness and Jobs, you would have thought he would have a quick five or ten bullet point response. But neither he nor his fellow CEOs did. In fairness, Liveris, who has written a book entitled Make It In America, did emphasize the importance of making things in America. But the main response to the question by all three CEOs was U.S. government regulation. There is too much of it and it is too unpredictable and causes too much uncertainty, they said. McNerny said he thought the government should just get out of the way and let business do its thing. Liveris and Immelt were a little more moderate and did admit that sometime government regulation is actually necessary to assure proper working of market forces. But they too jumped on the excess and uncertain regulation bandwagon as pretty much the main reason why business can't invest and produce more in America.
That was it. No mention of the chronic overvaluation of the dollar as a result of the currency management policies and practices of a number of big exporting countries. No mention either of the big tax holidays and other investment subsidies offered by the likes of China, Singapore, Ireland, and others. Nor was there any talk of the influence of value added taxes that are rebated on exports but added to imports in countries that have such taxes. That the United States is not one of those countries puts it at a disadvantage in the global trade competition because its exports bear a full tax load when they leave the United States and then have the additional VAT added on at their destination. But, as I said, this was not a topic of discussion. (Nor was the format such that questions could be asked from the floor). There was also no mention of the policies of China, Brazil, and others that often condition access to the market on doing local production and R&D.
Indeed, Immelt had just concluded a deal to move his avionics division into a joint venture with a state owned Chinese company that has little or no prior experience in avionics. When I asked him if he had done the deal because that was the only way to get access to the Chinese aircraft market, he avoided a direct and answer and told me that GE had not been forced into the deal, that it had, in fact ,sought the deal, and that the arrangement would create jobs in America. That's all true, and yet it's not true. I'm sure GE did seek the deal, but because they could read in China's Five Year plan that aircraft and thus avionics are industries targeted for development. They could deduce that the only way to hope to get a significant part of the business was to do a joint venture and transfer technology into a Chinese entity. So they sought to do that. Yes, the deal will produce some jobs in America, but it won't be nearly as many as it would have been and should have been in a truly free trade environment.
Now, I actually don't mind the deal as such and if I were Immelt I probably would have done the same thing myself. What I mind is that the CEOs don't discuss honestly what lies behind their actions. They should be coming clean with the U.S. government and the public on the real forces that act upon them and on what the U.S. could do to influence those forces. The CEOs are not fulfilling their duty as citizens when they blow smoke about excess or uncertain regulation. Sure that is a problem sometimes, but it is not the only factor by a long shot.
As for the government just getting out of the way and letting business do its thing, the three CEOs didn't really mean it. In closing their remarks they all called for more funding for the Export/Import Bank to help finance their exports and they all called for Washington to redouble its enforcement of laws protecting intellectual property.
In short the show was a sham. I don't understand why Immelt allows his staff to get him involved in this kind of thing. He's a better man than that. He instincts are public spirited. Instead of government letting business be business, Immelt needs to urge that his staff let Immelt be Immelt.
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Clyde Prestowitz is the president of the Economic Strategy Institute and writes on the global economy for FP.