If President Barack Obama had announced this week that he was appointing Japan’s Takanobu Ito, president and CEO of Honda, to head his new Council on Jobs and Competitiveness, one can imagine the shock wave that would go through the American body politic. A foreigner!–and one from one of America’s major competitors–to head a White House advisory panel on jobs and competitiveness?
And yet, at least the president could argue that Ito represents a company that earns the bulk of its revenues from its operations in the US.
But what are we to make of the actual announcement, that the president has named Jeffrey Immelt, chairman and CEO of GE Corp., to chair the President’s Council on Jobs and Competitiveness?
Immelt heads a company that has for years topped the list of transnational corporations as ranked by the size of their foreign asset holdings. More significantly, GE is a company that for years has also received more of its revenues and its profits from abroad than from its US operations (a record 60% in 2009), that has far more of its 304,000 employees overseas than in the US, and that has more assets abroad than at “home,” where its headquarters offices are located.
Even those domestic revenues and earnings are less than they might appear, in terms of jobs at least, since they are primarily from the company’s financial subsidiaries, while most of the revenues and earnings from abroad are from its manufacturing operations.
What this means is that in very real terms, GE is not an American company. It is a foreign company that happens to be headquartered in the US, and that happens to have a chairman/CEO who was born in the US, and holds a US passport.
If Congress were serious about enforcing government rules on foreign lobbying, and if the Federal Election Commission were serious about enforcing its rules about foreign influence in US elections, Immelt and GE would have to register as foreign agents when they lobby Congress and the White House, and GE would be barred from donating funds to election campaigns.
It’s ironic, isn’t it, that people on the loopy right are still making a fuss about whether President Obama was really born in Hawaii, or might really have been secretly born abroad before being sneaked into the US territory by his mother, but aren’t outraged at the appointment of the head of a functionally foreign firm to advise him on his domestic jobs policy. The truth is, it would hardly matter where an American president entered the world from his mother’s womb. The important thing would be where he grew up, how he viewed his national allegiance, and of course, whether he is an American citizen, none of which is in question in Obama’s case. On the other hand, there are plenty of good reasons to wonder whether GE’s chief executive, in becoming the president’s top advisor on jobs policy, really has America’s and American workers’ best interests at heart. (He isn’t even being required to resign his posts at GE, which makes the question of where his real loyalty lies even more grave.)
Between 2005 and 2009, according to GE’s own 10-K financial reports, the company shed jobs in the US so fast, and added them abroad so fast, that the US employee share of GE’s total workforce dropped from 51% to 44%, a process of job destruction that has continued apace since then. In 2009 and 2010, according to information compiled by the United Electrical Workers (UE), GE closed down 29 manufacturing plants in North America, 28 of them in the US and one in Canada. A total of 3000 workers lost their jobs in those closings, with many of those jobs being added at GE facilities overseas in low-paying countries like China and India. But actually, the job losses were greater, as those shuttered facilities had until recently employed twice that many workers, UE reports.
Just last September, for example, GE announced that it was shutting down its last US lightbulb manufacturing plant and moving that operation to China. The 200 workers at the factory in Winchester, VA, who had been earning some $30 per hour making lightbulbs for the US market, were all added to the US jobless rolls. Why? Workers in China could make the new substitute fluorescent bulbs cheaper, and then GE could import them back into the US duty-free.
Meanwhile, Immelt recently told Forbes magazine about his company’s plans for expanding jobs…in India. As he put it to the magazine, the company’s approach to expanding its markets in the rest of the world is “to be ‘local’ in every sense of the word. That means migrating P&L (profit and loss) responsibility and major business functions (like R&D, manufacturing and marketing) from a centralized headquarters to an experienced in-country team.”
Doesn’t sound like the kind of model that’s likely to be adding many jobs here in the US, does it?
And yet, President Obama, in naming Immelt to his new post, said, “We think GE has something to teach businesses all over America.”
On the evidence, let’s hope not!
You have to wonder what kind of advice Immelt will be giving the president (and American businesses). GE likes international trade agreements that allow the company to shift production abroad and then import the goods to the US tariff-free. The company also likes the idea of lower corporate taxes (for the years 2007 to 2009, according to Citizens for Tax Justice’s Bob McIntyre, Immelt’s GE managed to finagle a tax rate of -14.1%, which is to say the government gave the company an extra 14.1% over and above its profits!), and of course all kinds of tax incentives aimed at increasing hiring, though these measures, while helping corporate bottom lines, have demonstrably failed to lead to significant job creation. GE also opposes measures that would punish companies for outsourcing production, or that would make it harder for it to bring in high-skilled workers from abroad to replace educated but higher-paid American workers. A key reason GE’s US tax rate is regularly negative is that it writes off against US income the higher taxes it is paying to foreign countries on the much greater earnings it books on production and sales in its operations in those countries.
Arguably, from the point of view of American workers, it might be better if Obama had hired Honda’s chief executive, whose company at least has been adding jobs in the US, not eliminating them.
Looked at another way, it’s ironic to note that the US Justice Department is currently trying to cook up a legal concoction that will allow it to arrest and prosecute Australian Wikileaks founder Julian Assange for espionage, because he dared to do what US journalists should have been doing–digging up the documents that expose US misdeeds abroad. They might more appropriately be looking into the way ostensibly American corporate executives like Immelt have been using their companies to sabotage the nation’s entire economy and political system.
Come to think of it, that kind of thing–undermining the country–used to be called treason. Now it’s just a ticket to a job as White House adviser.