UPDATE: I just posted this entry on lvmises.ca
On January 21st Barack Obama appointed Jeffrey R. Immelt to replace Paul Volcker as head of the Economic Recovery Advisory Panel. The Panel was established shortly after Obama took office with the purpose of providing the president advice on how to quicker end the recession in the US. It was originally meant to last for a two year period after which the president would determine whether its existence was still necessary.
Bloomberg reports that “The advisory panel that he [Immelt] will head was originally meant to bring together business executives and other experts to advise Obama on combating the worst recession in seven decades.” The composition of the panel is to make sure the president’s decisions on the recession stricken economy would be influenced by voices “beyond the Washington echo chamber.”
Other prominent members at the time of the Panel’s creation included Robert Wolf, Chairman and CEO of UBS Group America; Jim Owens, Chairman and CEO of Caterpillar Inc.; and Monica C. Lozano, Director at Bank of America. Immelt’s position will be renamed the Chairman of the Council on Jobs and Competitiveness. This is part of an effort to give the Obama administration a “pro-business” appeal. Bloomberg reports that the Council is now “being reshaped to have more of a business-outreach mission.” Immelt, who has been on the Panel since its founding in 2009, has hailed Obama’s policies saying he appreciates “the tone of just being open to work with business.”
According to Forbes, GE is the second largest corporation in the world, after JPMorgan Chase. Immelt will not resign from his post at GE.
Arguments about the government’s inherent inability to actually improve the economy aside, one has to wonder if Immelt, or anyone from GE, is a good candidate regardless. According to the Free Enterprise Action Fund, Immelt was ranked as one of the worst five non-financial-crisis-related CEOs of 2008. “Under Immelt’s leadership, GE’s share price has dropped to 14-year lows and has underperformed in both bull and bear stock markets.” Presently the “…Federal Deposit Insurance Corp is temporarily guaranteeing up to $139 billion of GE’s financial unit’s debt”. And, “Stock analysts and bond rating agencies recently stated that GE’s triple-A credit rating and its dividend are in jeopardy.” Furthermore, in 2008 the US Federal Reserve provided GE with $1.6 billion by buying short term IOUs from the company.
Members of the economic elite getting together with the political class to plunder the tax base is a healthy American tradition and essential to state corporate capitalism. Close cooperation between large industry, finance and the government has existed in the United States since at least the first World War. (See Murray Rothbard’s essay, War Collectivism in World War One).
Immelt is not shy in promoting his own corporatist beliefs. Despite donating both $2300 to the Clinton and McCain campaigns in the last election, he does not shy away from working with Obama. He recently said that “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.” Immelt approved of the political economy in Germany because they believe in “government and business working as a pack.” Speaking of China, Immelt said, “What you see in China . . . is an incredible unanimity of purpose from top to bottom.”Speaking of recovery in the US, Immelt said, “We have to become an industrial powerhouse again but you don’t do this when government and entrepreneurs are not in synch.”
US corporate profits in the third quarter of 2010 were the highest since 2006, before the economic crisis began. Furthermore, “Optimism about the economy among CEOs of the largest companies rose in the fourth quarter to the highest level since the start of 2006, according to a Business Roundtable survey.” GE was the 12th most profitable company in the world in 2010, just behind JPMorgan Chase, which is in the lucrative business of servicing food stamps. The top financial and investment firms in the United States earned a record $144 billion in compensation in 2010.
In contrast, Economic Collapse Blog reports that the number of Americans kicked out of their homes hit a record high in 2010. Only 35% of Americans now posses enough “emergency savings” to last them living costs for three months while, the average time to find a job had reached an all time high in 2010. The amount of people so discourage with finding work that they gave up reached an all time high in 2010, the number of Americans on Medicaid and food stamps has also reached record levels. It is estimated the US public debt will rise to $15 trillion in 2011.
As the economy gets worse, the power of the state will grow. More solutions will be offered by various government bureaucrats and corporate elites through government created bureaus and panels, such as the one chaired by Immelt. Corporate leaders close to the state will be given more favours in the form of regulation, contracts, subsidies, and bailouts while the government will increasingly tax and terrorize its own citizenry.