GE Is The Gatekeeper?

When any kind of shift in a government happens, there will be people and companies who scramble to be part of the new groove and hop on the gravy train.  GE is one such company.  I expect to see Oracle and Caterpillar to show their tickets to the ride soon.

The separation of state and private enterprise ended in 1913 when the Federal Reserve was born to tell the government what would be what.  In a stunning turn of events, Barack Obama’s takeover of the banks, car companies, and financial institutions in 2009 flips that power struggle over to the government’s side and it is making people even more uneasy than allowing corporate lobbyists to run Washington DC for some 100 years.

Yesterday, I ran across an interesting assessment of what fascism actually is:

Fascism by Sheldon Richman

As an economic system, fascism is socialism with a capitalist veneer.

Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it. (Nevertheless, a few industries were operated by the state.) Where socialism abolished all market relations outright, fascism left the appearance of market relations while planning all economic activities. Where socialism abolished money and prices, fascism controlled the monetary system and set all prices and wages politically. In doing all this, fascism denatured the marketplace. Entrepreneurship was abolished. State ministries, rather than consumers, determined what was produced and under what conditions.

Fascism is to be distinguished from interventionism, or the mixed economy. Interventionism seeks to guide the market process, not eliminate it, as fascism did. Minimum-wage and antitrust laws, though they regulate the free market, are a far cry from multiyear plans from the Ministry of Economics.

Under fascism, the state, through official cartels, controlled all aspects of manufacturing, commerce, finance, and agriculture. Planning boards set product lines, production levels, prices, wages, working conditions, and the size of firms. Licensing was ubiquitous; no economic activity could be undertaken without government permission. Levels of consumption were dictated by the state, and “excess” incomes had to be surrendered as taxes or “loans.” The consequent burdening of manufacturers gave advantages to foreign firms wishing to export. But since government policy aimed at autarky, or national self-sufficiency, protectionism was necessary: imports were barred or strictly controlled, leaving foreign conquest as the only avenue for access to resources unavailable domestically. Fascism was thus incompatible with peace and the international division of labor—hallmarks of liberalism.

Fascism embodied corporatism, in which political representation was based on trade and industry rather than on geography. In this, fascism revealed its roots in syndicalism, a form of socialism originating on the left. The government cartelized firms of the same industry, with representatives of labor and management serving on myriad local, regional, and national boards—subject always to the final authority of the dictator’s economic plan. Corporatism was intended to avert unsettling divisions within the nation, such as lockouts and union strikes. The price of such forced “harmony” was the loss of the ability to bargain and move about freely.

GE sees the fascist handwriting on the wall and now appears to bowing down in order to survive, thrive and profit. I am sure that no one is going to be hearing about this story, now that we will have wall-to-wall coverage of Ted’s passing.  BTW, I completely disagree with the title of this article because I believe that if GE thinks they got the narcissist-in-chief’s number, they are sorely mistaken.

Leaked e-mail shows how GE puts the government to work for GE

“The intersection between GE’s interests and government action is clearer than ever,” General Electric Vice Chairman John G. Rice wrote in an Aug. 19 e-mail to colleagues.

Rice was calling on his co-workers to join the General Electric Political Action Committee. “GEPAC is an important tool that enables GE employees to collectively help support candidates who share the values and goals of GE.”

The full letter suggests that “share the values and goals of GE” really means “support policies that profit the company.”

Steve Milloy, a pro-free market investor at the Free Enterprise Action Fund, obtained this e-mail and says it reveals General Electric for what it really is. “GE is lobbying to become the biggest rent seeker this country has ever seen,” Milloy told this column. Rent seeking is using government legislation or regulation to generate private profits the free market wouldn’t provide.

“On climate change,” Rice wrote, “we were able to work closely with key authors of the Waxman-Markey climate and energy bill, recently passed by the House of Representatives. If this bill is enacted into law it would benefit many GE businesses.”

Most of all, Waxman-Markey would profit a GE joint venture called Greenhouse Gas Services, which deals in greenhouse gas credits, products that have value only if a cap-and-trade bill like Waxman-Markey passes.

The leaked e-mail shows how tightly GE connects PAC contributions and lobbying efforts. “Our Company is heavily impacted by a number of issues pending in Washington this fall,” Rice wrote.

GE spent more on lobbying in the second quarter of this year than did any other company, according to federal lobbying files. Since 1998, GE has been the king of lobbying expenditures, according to the Center for Responsive Politics, outpacing its runner-up by 40 percent.

Last election, GEPAC spent $2.4 million, with a slim majority going to Democrats. So far this year, two-thirds of GEPAC money has gone to Democrats.

Rice’s description of how PAC contributions help the company (“we must also make sure that candidates who share GE’s values and goals get elected to office”) belies the true dynamic in political giving, as the rest of the e-mail suggests.

By calling for PAC contributions in the context of GE’s lobbying efforts in coming weeks, Rice is clearly not talking about electing pro-GE candidates in November 2010. He is talking about making current congressman more pro-GE.

If GEPAC was just trying to “make sure that candidates who share GE’s values and goals get elected to office,” why would the PAC give $15,000 each to the Republican and Democratic senatorial campaign committees? Those contributions cancel each other out if they are considered ammunition for allies in electoral battles. But they complement one another if they are considered the ticket price to access with lawmakers.

The recipient list of GEPAC cash also suggests the PAC is more about access to power brokers than support for friendly politicians.

The “intersection between GE’s interests and the government’s actions” is plenty crowded. GE is betting on climate change legislation, high-speed rail funding, electric car subsidies, embryonic stem cell grants, expanded federal health care spending, subsidies for renewable energy, defense contracts and continued financial bailouts.

GEPAC pays the tolls to make sure all this traffic gets through.

By Logistics Monster


  • Diamond… I guess I see this more than some do, because I work for a very large multinational corporation. What has been happening with MNCs is that they, through global trade and emerging markets, have shifted the work stream (manufacturing, distribution, etc.) overseas to third world countries (the BRIC countries (Brazil-Russia-India-China)… many of which have not been traditionally capitalist. It started in the low-tech manufacturing areas, it spread to high tech manufacturing, and now it has spread to white collar jobs (technical and management)… some with a very high level of skill required (not that these countries have the skill… but the companies are actively trying to develop it in those countries).

    These MNCs have now, in essence, become nation-states in and of themselves… increasingly unaccountable to their “home” countries. It is an interesting phenomena to watch, because the MNCs are basically chasing cheap labor, which will eventually have diminishing returns over time. We already see this in India and Brazil, as labor there is chasing ever-increasing salaries and the turnover is very high. What they are trying to do is develop a labor base that is closer to the emerging consumer. They have already essentially “maxed out” the American consumer in terms of what they can buy, because they, with the help of the Fed and the financial markets have encouraged consumers to overextend themselves with debt up to their eyeballs. They have continually pulled demand forward with gimmicks. Now the party in the U.S. is over and they are now trying to replicate it in these other locations.

    In Western Europe, many of the “socialist” countries, which are heavily influenced by labor unions (even more so than the U.S.), have passed laws preventing many of these companies from offshoring jobs, otherwise they would not be able to buy/sell in those countries and/or face very stiff fines. However, in the U.S., many of these same companies have had free reign to do whatever they want (as you often put it… capitalism on steroids).

    So, I think GE, like many other MNCs, are basically trying to set their own terms and come up with what amounts to a MAD (Mutually Assured Destruction) strategy with the economically fascist devil (Obama), so the impact on their continued march to globalism and those precious emerging markets will be largely unabated. However, I think with an AFL-CIO member being appointed to the head NY Fed position, it makes me wonder if we may be heading down a European path to reigning in the union job losses to offshoring. I would also be watching just how much money the Fed is transferring to the IMF and foreign investment.

    You also sited many of GE’s areas in green technology. GE also stands to benefit greatly from any healthcare bill passed, because of Electronic Medical Record systems and other large medical equipment.

    I think you can add practically every high-tech firm to your list here before long… it will be a very long list of well-known companies trying to write their own MAD pacts.

  • GG… no… I had not heard that one. Why… are they planning on moving their world HQ to Australia or Singapore? lol

    I sometimes think a lot of these high tech firms need to relocate their HQs to Bangalore or Beijing. They certainly display no allegiance to the U.S. anymore… if anything, they are contributing to the destruction of our economy and national security by their actions.

  • The separation of state and private enterprise ended in 1913 when the Federal Reserve was born to tell the government what would be what.

    Diamond – If I can disabuse you of that notion; the undermining of our civil society goes back a lot further than that. The entities that created the Federal Reserve Bank are the Corporations – especially the MultiNationals. Had our Supreme Court not made a fateful holding back in the 1880’s, likely most of our problems would be very small in comparison to today.

    Here’s a short read: Multinational Corporations (MNCs): Beyond The Profit Motive that gives a good overview.

    Dug – thank you for your info and scholarship; your commentaries on Diamond’s posts are well worth reading and insightful.

    As usual, you guys send me deeper into our history, and make me wish for a time machine to go back and slap some sense into a bunch of folks. I fear we’re far beyond the slap phase now! Thanks. 😉

  • Dug,

    It was an apparently too subtle Orwellian reference to the Corporation-as-nation state observation. But you are correct – it would be much better if we booted them all out.

    What the hell ever happened to the Sherman Anti-Trust Act?

  • GG… OMG! My bad… it’s been too many years since I read the book… I totally missed it!!! Just another sign this dog is getting older! But, I can still hunt… really I can!!!

  • brityank… thanks for your kind words.

    I’m just trying to do a little color commentary as an old dog whose been around the neighborhood a few times. Diamond is the one who is doing yeoman’s work here. She’s good at throwing the old dog a few bones to go chew on.

  • GG… I’m not so sure the Sherman Act would apply to what we are seeing today. It is a completely different corporate animal.

    Some of the MNCs are transforming themselves into enterprises that are integrated into the global market. The old model was that MNCs were based out of their home country and they had a “country presence” in individual countries and those countries would report in through overseas subsidiaries, etc. Those individual countries had their own autonomy and balance sheets.

    Now what they are doing is this: they still have a “country presence,” but they are trying to get the workforces in all the countries they operate in to operate as though there were no national boundaries. No small feat. This would not even be possible, if it were not for computers and the network infrastructure that has been built in just the last 10-15 years. From a pure profit/cost motive, it is still largely a cost savings play. But, the long-term goal is to shift the production capacity and overall labor pool to countries where the emerging markets are. Many of them consider the U.S. to be a fully-saturated market… even though we are still the largest consumer market in the world… we are now being constrained by our massive debt.

    So… this is what I meant by the fact that they are operating largely outside of any national structure as a nation-state (of sorts) of their own making. It is a different animal from the robber baron railroads and oil companies of the days when the Sherman Act was originally passed. It’s not really a monopoly… it’s something that really hasn’t been adequately defined, as yet. This is how fast this is moving.

    But, speaking of the Sherman Act of 1890, I do think the robber barons got their ultimate revenge for the Sherman Act when they got the Federal Reserve Act passed in 1913. Didn’t take them long.

    btw… I am really wearing the “cone of shame” after that Orwellian reference. 😛

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