New Book: Jack Welch Broke Capitalism, Ushered In an Era of Distrust | Amanpour and Company
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- The brutality of corporate America and the malaise of the American labor market are being traced back to one businessman: former General Electric CEO Jack Welch. Walter Isaacson speaks with author David Gelles about the legacy of America’s first celebrity CEO -- referenced in the title of Gelles' new book as "The Man Who Broke Capitalism."
Originally aired on June 13, 2022
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Amanpour and Company features wide-ranging, in-depth conversations with global thought leaders and cultural influencers on the issues and trends impacting the world each day, from politics, business and technology to arts, science and sports. Christiane Amanpour leads the conversation on global and domestic news from London with contributions by prominent journalists Walter Isaacson, Michel Martin, Alicia Menendez and Hari Sreenivasan from the Tisch WNET Studios at Lincoln Center in New York City.
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There is a direct line between Milton Friedman, Jack and the rise of American fascism. Broken towns and broken people get mean.
This is true
Exactly that.
I listened to an interview with Steve Bannon a few years ago describing his life, and the pride his father had as an AT&T lineman and shareholder. Then the disgust as corporatism took over and negative impact it had on all their lives, and how it molded Bannon to the man he is today.
Until America (and the UK) get rid of corporatism and the greedy excesses associated with it, the Donald Trumplethinskin/Boris Johnson phenomena will rear their ugly heads again and again.
A friend was legal counsel at a mid-sized American tech company about 15 years ago that merged with another company in the same sector. About a year after the merger he decided to move on to other challenges and cash in his stock options (worth millions), and was denied this. So he called in the the chairman, the CEO (as well as his former boss, and chairman) and laid out all 4’s malfeasances that would have destroyed their careers (at minimum) and possibly land them in jail….. he got his stock options and a nice bonus “for pointing out their mistakes”……. Their greed and arrogance is typical among many corporate types, and is worshipped as “good business sense” instead of being reviled for the destructive nastiness that it is.
You're absolutely right
Not negating what you are saying, may I ask what you base that on? I would be curious to read a bit more.
Great interview, Mr. Isaacson. But let's not forget Jack Welch's cheerleaders and enablers. Flip through back issues of Fortune magazine from the 1980s and you'll see how uncritically the business press celebrated the destruction of the American middle class. Here's a quote from a fawning piece on Welch ("JACK WELCH: THE MAN WHO BROUGHT GE TO LIFE," Fortune, January 5, 1987): "Welch jolted the staid and sprawling conglomerate to life. He chopped 100,000 jobs, a quarter of GE's workforce, sank billions of dollars into automated factories, and started winnowing the company down to major businesses that dominate their markets, a process that has involved buying or selling over 100 operations." Do you have any idea of how much misery this one individual must have caused when he "chopped 100,000 jobs," and how many lives he must have massively and irrevocably disrupted by that one act? But back then Fortune magazine was cheering on the buccaneering CEOs, writing approvingly of chief executive oafs who chopped, lopped and slashed (macho verbs they used repeatedly) overhead, and "cut the fat." Henry Ford knew it was good business for his employees to be able to afford to buy the cars they were building. But thanks to Milton Friedman and other economists and business school theoreticians, we've conflated capitalism with Darwinism. Fact is, unfettered capitalism fetters competition. Where are the trust-busters when we need them? Corporate America has become our fourth branch of government, using armies of lobbyists to pass rent-seeking laws. It's all so wrong and so obscene.
@Ludwig Nickles Thank you, sir. I really appreciate it.
Strong mayors and city managers of communities have police and courts. It's great when they attract outside companies to build there. When a company starts fidgeting to leave, though, the city should use its police and courts to prevent the removal of a single item of production and a single dollar of past profit. If the company doesn't want to continue, let it be absorbed by the city and see how well they can administer that wealth.
Thanks for those details ... The author mentioned that Welch's ideas were not new - but that he implemented them with an unparalleled scope and ruthlessness, showing others that this despicable behavior was, indeed, possible.
Oh, yeah, and one of the things you didn't mention was creating extreme vulnerability in supply chains that were created on the idea of putting each operation where it was "cheapest" to produce. What a mess.
It's called Savage capitalism 😡
Let's not forget how share value jumped and still jumps on announcements of major layoffs. I believe Welch economics covers the loss of and lack of imagination and skill at the executive level. Short term gains and large bonuses make headlines and, in turn, forces and inspires competitors to do the same. R&D investment suffers. In the end, the companies are truly non-competitive in the World economy.
In 1980 in response to the high quality products coming from Japan, NBC News sent a team there to find out what they were doing that we weren't doing. That team discovered the American management pioneer Dr W. Edwards Deming was teaching the Japanese manufacturing industry his cooperation and continuous learning & improvement methods... the SAME METHODS used by American industry - at his direction - to produce high quality weapons during WWII. The American government had sent Dr. Deming to Japan in 1951 to help them rebuild after the war!
The GREATEST TRAGEDY of American capitalism is that - even though the documentary NBC News broadcast as a result ("If Japan Can, Why Can't We?" led to Dr. Deming being hired by Ford, GM and other companies to help them improve the quality of their products - Deming's methods never caught on the way they could have... and the way Jack Welch's methods did.
This failure - despite the fact that President Reagan created the Malcolm Baldrige National Quality Program to promote Deming's teachings - shows that "marketing" created by a charismatic CEO (much younger than Deming, who was 80 years old in 1980) beats "wisdom" 9 times out of 10. And America is MUCH WORSE TODAY for the failure of Deming to beat Welch in the "marketplace of ideas".
Lastly, to the point Walter raised about profit vs public interest, ANOTHER MARKETING FAILURE is that the Corporate Social Responsibility movement (over 30 years old) is basically INVISIBLE to the public at large (as a movement, even though occasionally actions by some of its members - like Ben & Jerry's Ice Cream - get some attention. The UN's CSR initiative (launched by Kofi Annan in 2000) is NEVER in the news: The UN Global Compact.
I swear to God... the amount of information that COULD change the world if the public knew about it is astounding... as is the failure of American journalism to seek out this information (Deming was never in the news after that 1980 documentary) and broadcast it regularly!!!
Interesting indeed 🤔👌👍
Deming vs. Welch .... agreed, the USA made the wrong choice.
@@coreyham3753 The choice was made for us. Your hubris will be your downfall. You don't understand the narrative.
@@tuckerbugeater Not very bright are you? The choice is never made for you ... there are always alternatives. But apparently you are not astute enough to understand that.
Yeah, the problem was that neither NBC nor Deming identified the real thing that Japan was doing right, and it turned out, corporations couldn't do it either, since the main thing they did was to get defeated by the US in a World War and then get billions of dollars of subsidies from the US government for decades. Turned out, the rise of the so called "Asian Tigers" was pretty much due to massive foreign investment in an underdeveloped market.
Two simple remedies to Jack Welch like CEOs:
1.) A 90% top income tax rate, and
2.) Fining boards of directors instead of the general corporation for corporate misdeeds.
JW was Corporate America’s answer to the likes of Hitler and Stalin sans concentration camps.
I like the way you think 😎
Where's the petition? I'm ready to sign.
The reason corporations were so honorable after WWII is because a war had just ended. Everyone had lost relatives and seen slaughter, and they knew what really mattered in life. They were grateful to still be alive. Most Americans and companies nowadays feel entitled and don't love their neighbor as themselves.
The corporations have become global. They don't have American loyalties.
that is true - do not forget for American companies- they had a huge advantage -most manufacturing companies in Europe and Asia had been decimated by war.
@@pjpredhomme7699 /exactly .... after WW2, the US was basically the only remaining industrial power left standing with no competitors. But that did not last forever and China has been working very smart for the past few decades now.
Which superbly negates the whole peace and love movement from the 1960s. Also, because the economies of Europe and Asia the U.S. and perhaps to a lesser extent Canada was, as the saying goes, the only game in town. Yet even today the model of what I like to call benign capitalism is held up as the gold standard for what an economy should be. And, in most cases you had to do something pretty awful before you would get fired.
Just speculating here,but its possible that elite business schools and celebrity faculty created theory driven ,crony benefitting individuals who replaced the more practical and pragmatic executives,these guys where more interested in their bonuses and careers than the company, these ambitious kids headhunted straight from schools and eager to please their bosses probably had no real allegiance to their employer and treated companies as stepping stones for personal ambition.
Let’s not forget that Jack Welch’s retirement package was so excessive and confusing that no one knows how much of the company’s value he took with him.
What he basically took with him was the retirements of thousands of workers whose lives he ruined.
The $35 job loss also cuts income to the government, as well. Cutting taxes for the oligarchs after they’ve shaved too much off of wages is a double whammy and is killing middle America.
Great article, I worked at GE locomotive division in Erie PA for 42 years. I remember he always called it the piss hole in the snow. Jack hated the Union workers here and always threatened us. When Jack had his book wrote called Integrity , he dumped his wife for the woman who helped him write it. INTEGRITY OK. JACK.
There are tens of thousands of employees who had their careers derailed without knowing Jack Welch was the culprit. Thousands of companies followed his advice to force rank employees and fire the lower tier. It has horrible, corrosive idea.
There are two powerful lessons here. Americans are vulnerable to the logic of sociopathic leaders, and managerial capitalism(the Jack Welch way) is destructive to society. I wasn’t working at GM in 2000, when Welch’s philosophy came down like an avalanche. UAW was fine. So the white collar workforce was decimated.
Pretty much says it all, doesn't it? Also similar stories for Trump, Gingrich, etc. Something about being an entitled right wing blowhard with contempt for working people...
Shocking to watch Boeing implement this nonsense so recently. Thinning out qualified and experienced airplane mechanics leads to spectacular headlines when planes fall from the sky. Who could have guessed?
Daniel you are correct and what you say.
I would also add that during the 1970s many large corporations started building or leasing properties in other countries to have the slave labor make their products. There is more than that. There is a fact that these companies do not have oversight for employees welfare. There there is little to none labor regulations and standards in these countries.
By doing that within a couple years these factories had laid off all their people. The United States saw a complete demolition of these companies. In the area in which you can still see the remnants of buildings and factories. Along the east coast border to Georgia. Of course I just touched on a couple points of interest.
Thank you for your time.
OMG! So true brother!
Boeing had design problems long before the max issues. The 737 had three (some say four or five) major crashes of the 737 classic because of rudder hard over issues, and this was well before some half-baked socialist Netflix documentary could try to pin it on 'greed' (the 737 crashes I'm talking about happened in the 1990s). That was a period when, according to the revisionist history on Boeing and airlines, there was plenty of "good union labor" to prevent such accidents. Come on.
I worked for GE from 2007 to 2013. It was a company of extremes. I met some of the best and worst managers I have ever met. The best were inspirational, supported and developed you to build the best customer-centric organisation that grew by delivering value to customers. I also met some of the worst narcissistic psychopaths I have met in my life. Unfortunately, I believe Jack Welch provided a model for the latter.
You could sum it up by quoting Dickens. It was the best of times; it was the worst of times.
I remember reading how Welch forced employees to spend their time competing against each other rather than competing to develop a better product. That is a recipe for creating a working force of *psychopaths* who do know how to game the system & do not know how to improve the company.
I concur. I worked for a major company and the idea of downsizing, a fancy term for mass firings was in vogue, and across the nation thousands of employees lost jobs and savings. Lives were ruined.Jack Welch was nothing but a little Napoleon ,a disciple of another hypocrite : Reagan.The aim was ,and it worked.: Destroy the American working class. now, the chickens have come home to roost: Trumpism.
I left GE just as Jack Welch became CEO. GE was a great company; well-known to be one of the best managed companies in the world. Designed to stay that way by relentless training of new managers. GE was in the top five of the Fortune 500 every year; for decades. It was a terrific place to work. Good pay, retirement, great benefits, and almost guaranteed job growth if you did your job well. People stayed at GE for life.
Welch destroyed GE while breaking the rest of corporate America. Good job, Jack.
The same thing happened at AT&T. What a shame. But...todays CEO's have NO shame
@@hopefulskeptic42 Yes, exactly. I worked for Bell Labs for a while (before they became Lucent... briefly). They were also a great company.
@@hopefulskeptic42
Yeah, like her mom and sister, my wife worked at two ATT companies. Her sister worked as a line-assigner for Michigan Bell. When the split came along, the company she picked laid her off and then a few weeks later hired her back as a "temp." Same job, less pay and no benefits. Welcome to CORPORATE U S A !
I will bet that those who had shares of GE stock during his tenure will view him as a success... I notice that people lose their ability to reasonably criticize that which has done them financial good, even if the same thing has done others great harm.
I am really curious to know if, and when, Jack Welch sold off his GE shares in retirement...
Didn't Jack start a policy of firing the bottom 10% every year? That's how you build a cut-throat environment where every employee is out for himself, and employees have a twisted incentive to sabotage other employees. I hope Jack is burning in hell (next to Sheldon Adelson)
For a long time, "neutron Jack" was admired by corporate america, and emulated widely. I worked for GE during his time as CEO of that company. The stark contrast between the diminished, fragile GE that exists now and the robust, stable, profitable company that existed before welch is a glaring example of how short-sighted his management style actually was.
The GE factory where I spent much of my career employed about 3500 people in the '70s. Now it sits vacant, waiting to see if some other enterprise can survive there. The same has happened at numerous former GE factories around the nation. Capitalism is badly broken, and has scuttled the very same middle class that at one time made capitalism a viable socioeconomic model.
Ding ding ding. This is EXACTLY what's wrong with the economy and the root cause of everything that's currently wrong with this country. We have CEOs that care about profits above all else, including the wellbeing of their employees. And it's just getting worse and worse. I worked for a small ecommerce company that idolized Amazon, sold products there, and wanted to operate like them. For a while it was a good job, but then at some point they started making us all go to help the warehouse workers pack products regardless of our job, calling for mandatory OT in some cases (probably because they're middlemen who only make a profit by overcharging their customers and underpaying their employees, and they decided it would be more profitable to cut the warehouse workers and have the office workers pick up the slack). The job became utter hell. I tried to find a new one and get out ASAP, but all of the programming jobs I were looking for all wanted you to have previous work experience in particular languages (I was using Excel VBA scripts and didn't have the requisite experience) but there were no jobs where you can actually get said experience, making it a Catch 22 scenario. So I was stuck in that job. Then one day I found a bug in their pricing calculations costing the company thousands of dollars that my boss, who also doubled as the company's legal counsel, implemented. So of course, they wanted to protect his ass and fired me as a scapegoat. And I haven't been able to get a new job and it's been the same story, everyone wants experienced programmers but no one wants to offer said experience.
Honestly, I'm so sick of this bullshit. I never want to work for a traditional company again because this mentality is utterly toxic and has completely destroyed my career, even if I do somehow find a way back into the job market I'll probably just be exploited again by some corporate fat cat that wants to work me to the bone to make 1% more money and it's sickening. So damn right I don't trust businesses anymore. IDK what I'm going to do but it sure as hell isn't that. I would legit rather starve to death than continue to buy into this clearly broken system.
Ad workers care about their pay above anything else!!!
@@5rings16 In the message you are responding to the writer is talking about decent working conditions where you are allowed to use the skills you were hired for and you are treated fairly and with respect. Your comment about wages is not related to these very real issues in corporate workplaces.
@@chirpieone9193 I was responding to the never ending accusation that corporations are evil and greedy. Well, everybodies greedy, especially poor people!
SIR, I read your comment. They have some very good and interesting point of view.
What you say is true in many respects. The important ones.
Whoops whoops I hit the send button in error.
One of the real main reasons for organizing unions is as you say.
We have seen many corporations businesses of large capacity. Mistreat misuse and stifle their employees. That my friend is slave labor. And I do believe that Abraham Lincoln put a stop to that.
Employees in unions have someone at their back. A place where you can go and air your grievances if the conversation with the employer was on successful enriching a amicable decision.
I myself was very pleased to see the organizing unions in Amazon. There's a reason for that.
As a point of curiosity have you thought about retraining yourself for a different position? Perhaps change your perspective of where you thought your life was headed 5 years
ago?
My point of views come from living to a senior age. Employed in different capacities as I traveled across the country.
I have always thought if I needed a job. I didn't especially stick in my comfort zone.
At one time I lived in a small mountain town that was basically supported by the winter ski season. Including the summer tourist season. So I applied several places. I arrived there at the end of the summer season and there were people already applying for jobs. I took the first job that called me. Frankly I was pretty nervous about it. I had never waitressed before. I did get a job because of working in the restaurant with a grocery store up the road.
I hear you're very sincere frustration over the situation of the job market. The pandemic does continue to direct businesses to try and sustain their profits. There is always someone who will exploit if they can. Again I think back to if there was a union in where you worked. There would be a well-organized who would take your grievances to a higher level. Especially if there was cause for medical compensation attributed to the work environment. This would include emotional or mental abuse.
I hope you will read my comments as something to just think about.
Thank you for your time.
Sincerely,
Bottom line Jack Welch was a corporate raider.
He was ruthless.
He was also rootless.
I miss Ruth. I am livestock.
@@TennesseeJed I haven’t much use for roots. I am tumbleweed.
@@Sophiedorian0535
I like to have several roots to get to the city.
When you maximize corporate profits to the exclusion of all else, take a look at the devastation of the middle class and society in general that follows. Only rampant greed and materialism thinks this is acceptable. The results are heartbreaking.
Be careful unless you want half the country to label you a socialist for identifying short comings of capitalism that are obvious.
When the labor unions lost power, corporate executives became more focused on keeping share holders happy and far less on the health and welfare of their employees. This is how an oligarchy or if you will plutocracy gets created. I am also certain that economists who asserted that corporations should focus solely on profit infected our capitalist society with greed. And then there were those who fell prey to Ayn Rand's objectivism, the philosophy of sociopaths.
Absolutely! Middle America bought into the lie that union power caused high unemployment rates, and corporations would deliver prosperity. In reality, the Jack Welch way ushered in the era of income instability, and it crushed the American Middle Class. Now we have a nation of hunger game players. The American workforce must re-unionize or remain in a state of collapse.
“Something happened around 1981”🤣🤣🤣Yes. Something that rhymes with Schmonald schmeagan 🤣🤣
I always said the same thing. No one believed me. Good observation. Glad someone else got it.
I was wondering when someone would mention Republican Saint Reagan, the Patron Saint of union-busting, reckless deregulation, & state asylum closures.
My first inkling was hearing over the radio that IBM was eliminating the jobs of executive secretaries so they could increase the compensation of executives.
The hair rose on the back of my neck.
That was probably 1981 or 82.
@@Tupelo927 I keep running across right wingers who blame the closing of asylums on liberals.
I remember the anger of right wingers at the "gold Brickers" in institution's who were "malingering" to avoid working for a living.
It seemed they and "welfare queens" were the major blights on America in the eyes of Reagan's supporters. Listed among Reagan's scapegoated minorities. They got almost as strong a reaction as trump's alien invaders.
And thatcher
Crazy how I was taught to idolize Welch in business school. The more you learn, the more you realize you don't know.
Same. I don't know how I did it...but I've managed to slough off a good deal of the neo-liberal indoctrination I got there.
My dad was fortunate to work for AT&T prior to the 1980's. He retired after 40 years with a pension, stock, and Social Security. The most he ever made was $20,000 a year but he was able to live a comfortable retirement with an income of about $4,000 a month. His insurance that was still paid for by AT&T in addition to Medicare took care of all of his health care needs after his retirement and paid for the majority of the time he lived in a nursing center. The cost of the nursing center was over $10,000 a month. Our generation is basically f*cked.
And those who come after us. 💔
Profits arent guaranteed. so how can comfort in retirement be guaranteed?
Hi Dave, I'm curious what did your Dad's job at AT&t?
Thanks.
@@sadlemayfriedman5564 He worked for AT&T before they were split up and was a manager for Southwestern Bell.
Thank guys like Welch and their evil greed.
I worked at a company that “followed the GE model.” Maybe it could provide value if you had good metrics and kept all the good employees, but the arbitrary nature of those decisions, the pressures to meet the metrics and the constant uncertainty of keeping your job means the difficult jobs and the risky things don’t get done. Part of the unspoken rules are that it’s 55 and out. So even the best see the time limit on their career and plan on a short time in those companies. That was made more difficult when you realize the prevalence of companies following the GE model.
Cisco Systems pretty much followed that model under John Chambers. I used to date a Cisco engineer who had degrees from MIT and Stanford. She should have felt secure, but she lived in constant fear of losing her job. Back when she worked there, management would meat ax the bottom fifteen percent of the workforce at the end of each year. Cisco used an employee evaluation system called stack ranking to weed out under-performers. It's a nice, neat, logical process that takes into account everything except human nature. You can end up with people who did better at charm school than at engineering school.
@@grahamwritesagain Exactly. Fear of being fired is paralyzing, demoralizing to all, including the top performers. These companies don't even understand that they destroy the spirit of creativity and freedom of independent thinking so important in modern world. They promote groupthink and conformity. No wonder GE eventually failed.
What about Lloyd Blankfein ??
@@Tamara-qd5dc Sadly, you are so right.
The reality of the GE model under Jack was Jack promoted under achievers to top jobs to float his ego and give outlet to his rage addiction. I didn’t follow Immelt’s act but I am sure he was dancing as fast as he could and sweating his every move.
The economic lives of Americans became more precarious not only because of cut-throat capitalism, but also because of a weak social safety net. Health insurance was tied to corporate jobs. Loss of a job meant a loss of health insurance.
Very true. You see people desperately clinging to jobs they hate, putting up with bullying and harassment, because their family needs the health insurance. When employees step into their workplace, they leave some of their fundamental rights at the door. Corporate America ain't America--only a cruel subset of it.
When basic human dignity is tied to greedy predatory under-regulated corporations, society's well-being suffers which transmits down generations. Underpaying and indiscriminate layoffs should not be allowed and corporations should have to be made to act responsibly, to sustain proper functioning of intertwined systems
What about Lloyd Blankfein ?
Welch is one of the worst ceos ever.
Everything said on this thread should be forwarded to progressive talk show host Thom Hartmann. I may end up doing this job myself.
I witnessed this shift firsthand. I can vividly recall in the 1970s, if a company had a layoff its stock took a dive and the company was derided. Then in the '80s, it flipped and layoffs would make a stock soar. It was and is insane.
There was a time when corporations were required to operate for the public good as the price of limited liability protection of shareholders.
That was a fragile sense of responsibility whose demise Jack helped facilitate. Just like the fragility of all institutions and civic mindedness that Trump's destructive term reminded us of. If enough minds stop agreeing on a certain style of civic comportment, then no set of laws will save us from anarchy.
Capitalism has failed and the executive class has to answer for their failures.
@Daniel Dashnaw ,
You are quite correct that in today's USA there is no way to hold these robber barons accountable.
If there is truly any justice, they will have to have their beehinds roasted for all eternity.👹
@Daniel Dashnaw O RLY? Have you looked at history? If the French could guillotine the king, nobles, and their families, Americans can surely do the same?
Crony capitalism is failing. Capitalism is fine, we should probably try that again.
@@jc.1191 Capitalism isn't fine, landlords ruined home ownership, employers pay starvation wages, health insurance is a thing instead of healthcare.
To say crony capitalism is the issue instead of capitalism is like saying crony feudalism is the problem, regular feudalism is good. It completely misses the point
Corporations were originally created by governments for public benefit (e.g. canals in early America). There is a long list of tax benefits when incorporated. And limited liablity is an especially beneficial privileges that unincorporated companies can't take advantage of. Corporations are highly regulated if it accepts incorporation because they were given privileges. Financial disclosure among others. Incorporated businesses have learned how to take advantage of these privileges while minizing public benefits. Over the years, since the 80's, as the author declares, the public benefits have been minimized while benefits to management and shareholders increased, by design. The result, labor is seen as an expense to be minimized rather than an asset to be developed and improved for both worker and corporation benefit.
It's complex, and there could be unintended consequences, but changing the corporate tax scheme and its privileges could put it back on track for public benefit. Corporations would adjust themselves for profit as the privileges are tweaked. Politically very difficult to make those tweaks.
Possible tweaks(increase/add): deductions for employee training & education; deductions for local sourcing; deductions for paid time off (pregnancy); unhinge healthcare from job; deduction for contributions to workers' IRA's;
Some of these are in place today, in some measure, but not universally applied.
It's amazing how one particularly Bad Apple can cause the whole Barrel to rot! American and one would argue first world societies have been disrupted by the greed and immorality of men such as this.
And, his acolytes have destroyed other companies like Boeing.
I'm glad you wrote this book. Hope you follow up with the corruption of the culture at Boeing.
My heart sunk when Nardelli, from General Electric came to the Home Depot. The Welch mind set that Nardelli brought would have destroyed HD if he had remained. Welch did give business a black eye I believe. I felt the bruises in Nardelli. Home Depot didn't recover in my mind in a positive way but the HD is still there. Nardelli is yet to come to terms with his theories on corporate behavior.
Greed will continue to increase unil capitalism eats itself.
...and us.
I continue to be amazed that shareholders are empowered to pool their resources in their own interest, and by consequence against the public interest, AND they are explicitly protected from liability. All too often I see these massive mobilizations of wealth that will have a incalculable consequence of harm to others, but when I think to suggest the legal consequences, I realize limited liability. And they can take this ill-begotten capital and reinvest it yet again into a venture of questionable ethical standard. And this is from the most litigious society on earth.
So, no protection for capital? Sounds silly.
@@5rings16
If you would ever a few hours away from opinion writing, and actually READ Gelles book, you wil understand the difference between sensible regulation and NO regulation.
@@j.d.schultzsr.9215 I do. And thats why Im right.
@@j.d.schultzsr.9215 A corporation reason for existing is to make profits, it isnt to make sure every unproductive retard has a job and a pension. And is treated really really nice!
Tort reform, where legislated, hasn't helped us at all.
As Texas gov, Dubyu got caps put on jury awards for medical malpractice.
The theory was that without big malpractice awards driving up their insurance, we could keep.more doctors.
It seem like a lighthouse of hope for anyone getting hammered for malpractice.
A big sign saying COME TO TEXAS, you can stay in practice here.
this happened at AT&T late 1980's my mother worked at ATT,, suddenly they were cutting costs laying off employees close to retirement, my mom grabbed a package for older people the workers dubbed R.A.P.E. "Retire Aged Personnel Early" and got some money to get out of the company. it was either take that package or get fired before you got your full retirement package.
back then many people had full retirements from their companies but suddenly companies were cutting costs especially especially employee benefits.
her job in customer service was no longer about helping the customers, but about getting them off the line as quickly as possible, using as few customer support people as possible rather than helping as many customers as possible. she loved her job as a career AT&T employee, but then they changed the company so she hated every moment on her stressful job.
Capitalism trends this way by design, not because one man made it so.
Capitalism doesn't trend this way by design. There are corporations around the world (not American ones) that operate within the framework of pursuing profits while protecting the "greater good". Ruthless capitalism wasn't brought about by Welch alone. It was a concerted effort by many to amputate Adam Smith's "invisible hand" in order to game the system to maximize wealth at the expense of killing the host.
it's still going on, look at CEO and top management salaries
What a refreshing conversation
2022-06-13. I’ve noticed a number of Welch’s original autobiography being recycled through used book at the library. [$,25 cents, please]. I hate his smiling “jackass” face on the cover.
As our company reorganized at the end of the Cold War a former Vice President from Welch wanted to come to work for us. [$10 million, please]. We didn’t take him up on his offer.
CEOs today will never go back to sharing the corporate wealth with workers & the public good. Their share has just increased to $641 to $1. Greed will win, ethics will lose.
The government had something to do with that limiting ceo's salaries and now their income mostly comes from stock options. Hence the drive for short time profits.
The problem here is that there is a wall that will be hit and some of these CEOs may find themselves swinging from a lamp pole. I wish I were joking. But people will only take so much. These guys should remember the French Revolution. It's getting so bad that and so obvious with the gluttonous greed at the top, that eventually a tipping point will be reached. And that kind of societal implosion is something no one wants to see in their lifetimes.
(Edit) - I should add that one of the reasons I'm so worried is the way Americans are arming themselves. That's one heck of a lot of fire-power out there in the hands of just about anyone.
It list long ago when during that era of ge paying good wages to its employees even mediocre people those workers became arrogant believed they were essential individuals that did not need union representation and voted for Ronald Reagan and the greedy corporate elite like jack Welch began taking back what was earned by the worker withholding the workers share of the profits. The working fools did it to themselves . Their children and grandchildren will suffer for it in lower wages. Lower quality of life.
I'm 75 yo. AFAIK, the may not be a law now that mandates corps to serve the public good, but there was in 1800. Every state had such laws. IMO, this was because the Founders knew that allowing businessmen to be protected from total bankruptcy by incorporating was and still is a huge gift. It let Henry Ford go bankrupt 3 times before he hit it big, IIRC. Today businessmen take that gift for granted, and give nothing back for that gift. Instead, they have become devil worshipers who reject the main points of Christianity, love they neighbor, what you do for the lest among you, you do to me, etc. They are ruthlessly selfish to the nth degree. And, "It is easier to get the largest animal any of you have ever seen through the smallest hole you have ever seen, than to get a rich man into heaven."
Sounds like a great book.
As companion books in understanding the trajectory of late 20th Century American capitalism I recommend “Flying Blind” by Peter Robinson. The Welch effect had a big impact on Boeing and its downward trajectory of the quality of its means and methods for bringing new products to the market…most notably the 300 Max.
Duff McDonald’s 2017 “The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite” is also a great read…especially in overview of the “history” of business and business education, starting in the 19th century when the closest thing to a “business school” was West Point. When Harvard Business School was founded it was considered an oxymoron but it’s founders actually believed that some form of of “managed” stakeholder capitalism was necessary to save capitalism from itself and eventually be overthrown by labor strife and socialism.
I have no problem with the "bell curve of life" and stating that approximately 20% of employees are outstanding, that the vital 70% are in the middle, and 10% are problems. I disagreed with the notion that the company had to terminate EXACTLY 10% of the workforce yearly. I hate arbitrariness, but also it bothered me that it never occurred to GE, and others, to invest in attempting to grow these employees so they could contribute more effectively.
The assumption by management was the rating system is the best way to manage employees. A question is also how you rate smart and creative people? Metrics don't always apply in these situations. A bad or abusive manager can damage a company's reputation in this Linked-in world. In a battle for talent, management has to be responsive and has to invest in their development and training.
Having supervised employees for 45+ years, I have learned that 97% of your workforce will work their hearts out for you as long as you provide them with adequate material, direction and leadership. The 10% number is just an arbitrary number to cover management's mistakes and to give an excuse to cut the workforce.
Exactly. Just the fear alone that you may end up in the bottom 10% can stifle any good idea, it forces employees to be risk-averse and increases kissing up to the managers. I worked for a company that terminated almost 1% of staff every month. It was a terrible place to work for, full of distrust, fear of management and lost focus on doing the actual work. I was relieved to find another job and move on as soon as I could.
This is true. Too many managers lack leadership skills. Surely, part of a manager's job is to release the genie from the bottle--to encourage and inspire subordinates to realize their full potential. When managers fail at that function, the company punishes the employees.
Only the mediocre are always at their best
"Something happened in 1981... "
Yeah, REAGAN happened. That's the year Reagan took office. Not a coincidence.
agreed..he also sucked out Roni Raygun's brain..before he bacame Prez.
Don't under estimate the damage of the MBA degree in the ascension of greed in American capitalism, as well as Milton Friedman--the worst economist in the modern world.
Very true. You can trace the origins of the destruction of the American middle class to a paper Nike cofounder Phil Knight wrote at Stanford Business School in 1964. That's where those heartless strategic gambits--offshoring, outsourcing and so on--were dreamed up and fanned into virulent life.
What an excellent interview. Thank you.
The "Golden Age of Capitalism" is simply the time when the US faced no competitors (I guess it's implied that that was when America "was great"...). As long as that was the case, it was a worker's market and companies did everything to attract, nurture, and keep workers. The very minute it became clear that Post-War competition was going to be a real thing, companies folded on these principles like a portable tent. Then our two-parties abandoned the worker and joined the short-term thinking bandwagon. The Justice Dept. really stopped doing its job keeping businesses honest (the Microsoft anti-trust suit aside); incredible money went into politics and politicians became advocates for business over their own constituents; the Fairness Doctrine was gutted, which led to Fox News and toxic opinionizing both on radiio and TV. Couple that with a shift in focus at the University level to helping people get jobs, rather than turning out well-educated citizens, and you can guess where this leads...
...right to the disgusting character of Donald Trump.
I think this book is brilliant and really encapsulates what has happened to our country over the past 50 years. Trump is a symptom, not a cause. He is a metastasized cancer of the kind of short-term, me-first thinking Welch evangelized to the business world of the time. His acolytes took his philosophy overseas and now scores of countries have this toxin to deal with.
Interesting stuff! Wondering if there's any context in the book about the previous times before the 2nd world war that the same ruthless dynamic happened in capitalism - i.e. the guilded age, where rampant monopolies and massive exploitation of workers eventually led to the formation of workers' movements and labor unions (that brought about the 5-day week, the 8 hour day, the 40 hour week, etc.).
It was the breaking up of monopolies - the googles, apples, amazons of the day - that allowed labor unions to have a chance at gaining some semblance of bargaining power with massive capitalist bosses. This was ultimately what led to the possibility of a middle class.
Capitalism needs strong regulations and limitations, or some of the power hungry psychopaths and sociopaths of society will inevitably find their way to the top to become the celebrated CEOs of the age, like Jack Welch. The whole point of democracy and modern society is to limit the amount of power any one individual can wield over others.
Yes, I remember when I worked at Msft, they wanted to get rid of 1/3 of their employees each year and replace them, usually with people from other countries. I knew several people who trained people in India to take over their own jobs, working from India.
Even today, there are publicly traded companies that still hold true to the values of profits for owners and investment in communities. Cummins is a good example. Even J&J is still in that mold. Snap On Texas Instruments also. Jack ultimately wrecked GE although it collapsed after he left but he was the architect of the destruction. So I would agree that Jack’s leadership really was more exploitation than building a durable business with real values. It is a terrible legacy that is still emulated.
Ten years ago I was a manager at Honeywell which was using the GE model of metrics. Everything was short term, meet the month's metrics, the quarter financials. Management did not care about the details as long as your metrics and financials were met, they were disconnected from the field. You quickly learn how to play the game and satisfy them, often to the detriment of the company. They also destroyed the attachment employees had to the company.
It's easy to label Jack Welch a villain, in hindsight. You could also say he mastered the game at the time he played it.
This is an example of the catastrophe of unfettered capitalism, profit at all cost, the only measure of success. The Chicago school of economics calls to let the market take care of itself, to self regulate. The market will correct itself. Agreed, but at what cost? The volatility, the collateral damage of unregulated, profit only driven capitalism,...is it worth it?
The Chicago School is incorrect
@@MichaeldeSousaCruz My point exactly
@@michaelkurutz2055 we don’t agree on the statement “the market will correct itself”. That is incorrect. Markets are clearinghouses for debts in the government’s currency, which is a tax credit. With taxation (ie, tax liability, hiring, spending, tax credit issuance, tax payment/revenue) the idea of a free market is inapplicable.
Like children, capitalism needs boundaries. "Play all you want but don't do it in the busy street, at the edge of a cliff, in front of a train tunnel" etc.
The Chicago School of Business is steeped in the theories of Milton Friedman
Great interview! Great conversation! Spot.on! Corporate America = Corporate GREED!🇺🇲👈
I'm not an expert on historical capitalism, but I wonder about the degree to which Ronald Reagan's policies and appointments to federal courts set the stage for the rapacious "shareholder primacy" and the overall decline of the US forty years later.
Breaking labour unions and their ability to participate in production, work decisions and pay , sharing profits surely had and has its effect on the sad state of t bg e middle class.
@@patriziacasagrande3833 Just your biased opinion.
@@5rings16
And your opinion is based on what? Right-wing tRumptin propaganda?
If you're too young to have witnessed Bonzo Reagan's "deregulation" and middle-class destruction for yourself, READ THIS BOOK!
@@j.d.schultzsr.9215 We were never so wealthy under Reagan! He rebuilt the country after Carters inflation disaster!
@@j.d.schultzsr.9215 Dont worry, Desantis will come in and fix Bidens inflation fiasco in 2024! LOL
Fascinating! Thanks for the interview.
I had the displeasure of working for one of Jack’s How do you spell protégé. When he arrived, he managed to destroy the culture, spirit and job satisfaction within a few short months. The company ended up with lots of opportunist VPs jockeying for position, who had no industry experience, and lots of unhappy employees at the bottom, sitting around waiting for the next restructuring. I had 4 (all gutless and yes-we/men in 2 years.
On paper the company’s stock value did rise, while the company hollowed out from within. Needless to say, that company does not exist any more. It eventually got acquired by a larger, also poorly run company. This company’s direct rival, a German company still exists and runs strong. German corporate laws are different from that of US’s. Many of Jack Walsh inspired tactics are not allowed.
Greed and immorality have been around since the garden of Eden. When your #1 there is nowhere to go but down.
great interview, thank you
As someone who lived through the Neutron Jack era from inside GE I marveled that the view inside did not match the public face. I saw, again and again, the manipulating of quarterly earnings or short term earnings. This was done in a large measure by selling off various packages of GE Capital assets on short notice. I always argued that this was a destruction of shareholder value. You cannot get a maximum value of any asset by selling it with only several weeks notice. It was only when Jeffery Immelt tried the same trick amidst the debt crisis that GE missed their consistent quarterly earnings. I still think that this destruction of shareholder value or economic value has never been understood. I also viewed the interplay between GE and GE Capital. There was panic when GE Capital's earnings approached half of total GE earnings. The price earnings multiple for a finance company is twice that of an industrial company. If the analysts viewed GE as a finance company then the stock price would halve. I've always argued that GE Capital and GE should have been split and let the market decide.
I am no expert or historian, but this is something I felt for decades. He used to go on TV and brag about himself and what he did for stock price, not his country or community.
THAT really needed to be said and said again and again AND again. Thank you. D.M.
EXCELLENT AND WISE INTERVIEW...BRAVO AND THANK YOU TO YOU BOTH!!!!!!!
Excellent interview!!
Great discussion !
My second presentation of Mr. Jack Welch. He was discussed at length in a book titled the Psychopath Test. Still relevant today.
Excellent interview ty!
Mack Trucks , Bethelem steel, AT &T/Lucent.
Superb interview. I look forward to reading this book. Thank you, Mr. Gelles and Mr. Isaacson. No wonder the angry suspicion of (and rebellion against) 'Corporate America' is robust. Welch's normalizing of this grotesquely greedy behavior was destabilizing, to say the least.
Jack Welch wasn’t called “Neutron Jack” for nothing. He was as destructive as a neutron bomb.
DG. Great book. I've been waiting for this explanation of todays American society for a long time! And now it seems so obvious.
thank you, thank you!
This interview is Right ON!
Blaming Welch for the "Reagan Revolution" is mistaking the effect for the cause. Reagan's Supreme Court gave our rights to company's and that ended America's greatness.
Great interview thanks
super interesting. thank you. will read.
Welch would get rid of the bottom 10 percent of his workforce year after year.
Great interview.
If only it weren't for that guy who broke it capitalism would be fine. That is great news! Here I was thinking we got to this point of planetary collapse due to the internal dynamics of a system based on the accumulation of value for accumulation's sake. Knowing that some guy just broke it means it can be fixed! You have absolutely no idea how much that puts my mind at ease.
I suppose China is trying to avoid the fate of short term and heartless capitalism with 'Common Prosperity'.
Ni doubt you are correct. It would be foolish, though, to think that anyone can tame capitalism. Not even China will be able to do that, I'm afraid.
I was amazed of why jack welch was adore , I remember his nick name was Neutron jack, he left building standing after firing everybody , he wreck the buildings and took the tax credit for the loss, "Neutron Jack" he destroy GE and in the process America know how.
excellent interview
“…their success as the county’s success.” Where are we hearing that now!?
I worked at GE Lynn, MA when Welch was in ceo, many people lost their jobs, family’s were struggling, pensions were be toyed with. Welch was a real bastard. You either took pay cuts, less work hours,
All for the love of money! GE was never the same. I think 80% of the city of Lynn worked for GE way back, best place to work until Welch took over.
Simply put: Replacing engineers with accountants.
Welch's idea of firing the bottom ten percent every year showed up at my company in the nineties: utter garbage, horrible for morale, very big incentive for his people to bail and/or start their own companies.
Wish this was written 25 years ago because Jack Welch was such an annoying presence on CNBC. Welch sacrificed future stability and financial health for near term paper gains. He liked bs over accountability and community.
General Electric: World Class Polluters.
Well done
Yeah capitalism is broken but a little martinet like Jack Welch didn’t do it. It was the sad creep towards libertarianism and Ayn Rand apologism for unfettered greed. Harvard business school championed optimising share holder value, not Jack Welch. Jack sucks but you can’t hang that on him. And why would a large corporation ONLY focus on ROE when they have so many stakeholders. Sure a reasonable return for investors, but creating a nurturing culture for employees, supporting communities, advancing product in their sector are just as important. After all the Supreme Court ruled that corporations have the same rights as actual human individuals. If that’s true, they also have a responsibility to be good citizens.
@D D - and there you have the problem: Rights *+ Responsibilities*
Well especially now that the SCOTUS has ruled that corporations are PEOPLE.
Excellent! 😢💯🙏🏽
The BOTTOM percentage of those being compensated by any company exist in the Board Room.
As the child of this nightmare from the age of 17 I take credit for being the biggest non fan of this tragic hyper narcissist. He broke my stepfather - page 75 “JACK” calls my dad his “business soul mate”, they were actually best friends while Jack rode Tom’s coattails taking Plastics global when Tom was the talent and brains behind it. Jack, the wily user opportunist was 10 years younger; his eulogy to Tom at the memorial was three times, “WHAT A JERK I WAS!”. Any insider of the time knows why. Welch, in the 70s, Pittsfield MA, his name coming out of everyone’s mouth every single day, made me sick. I knew it would go bad, worshippers of greed never succeed. There is nothing new under the SON! Message to all Information Age Capitalists! Put your faith in God and find morality or go to hell where you can hang with Jack for eternity. I love you, Tom Fitzgerald, and I know you are at peace and with the Lord. God bless Tom’s true friends. God protects me and God fights my battles. No weapon formed against me shall prosper! AMEN! Support Project Veritas! Be Brave, Do Something!
No one who works making weapons would be fired we need their output for the armies and our wars
Finally we have a book outlining the failure of Jack Welch as CEO of GE. The once proud industrial juggernaut of the USA is no longer in the Dow Jones Industrial average...replaced by Walgreens in 2018😕. Jack Welch is a great example for American CEOs as to what not to do with their companies.
The change was when wages went up and Corps were furious.
Then reagan.
13:20 "I think it is impossible to _underestimate_ his (Jack Welch's) influence on other CEOs" --- the word you are searching for is _overestimate_
I have to get this book.
I know someone who worked for MA Bell she has stocks galore now. She is in her 80's
such cruel practices
"Something happened around 1981". The evil of reagan happened.
I've been preaching for years to government officials about how their environmental and labor laws, all with good intentions, have moved manufacturing offshore reducing US jobs and tax revenue. So what happens with less jobs, increase crime, drug use, the need for more social programs and taxes. This is not difficult stuff. And what does the government do but to let the cheap products from offshoring come right back into this country with the abuse of labor and the environment not in the US but in those "other" countries. I think this is called hypocritical in all ways. The government basically opened the door for the abuses noted in this book that are now ripping our country apart.
When I was in the MBA program at my university, the school of business was proud to have hired a gentleman who was trained by and worked closely with Mr. Welch. This gentleman taught (among others) a class I took called "business English". Today, I still think it was an excellent class, which focused on the "concise, clear, and conscious" use of language to persuade the listener (or reader) to a desired course of action.
"All writing is an argument to support a vision . . ." and "it does not take many words to tell the truth" (to quote Chief Joseph of the Nez Perce) were axioms liberally thrown about.
Having said, there was little about actual, fact-based truth supported by fact and the power of the employment of language to move a person to good. Just manipulation.
Interesting.
Gratefully, I noted it then.
Lamentfully, I'm noticing it now.
GE we bring good things to life. Like individual greed over public good.