Friday, January 21, 2011

GE Rent seeker vs. competitiveness

Obama will appoint Jefrey Immelt of GE to head his "jobs" panel. Immelt is certainly the wrong person to help create jobs for you and me. But he is the right person for Obama because he put aside trying to be competitive in the open field to do his playing on Obama's field of favoritism. Economists call this activity by business "rent seeking" This is like when Obama called out Michigan Governor Jennifer Granholm on his end-the-recession effort because she is an expert in recessions. She sure is an expert: While she was governor Michigan had its own recession when the rest of the US was booming. Wall Street Journal GE has a long track record of innovation in products and processes - for being very competitive. But Immelt has reoriented GE to get sweet deals from the government. Why else would Obama like him? Immelt is playing by Obama's rules. Marc Gunther tells about how GE has changed: [quoting] GE’s Washington operation is a case study in Washington’s revolving door. Nancy Dorn, who runs the office, worked for Dick Cheney at the Pentagon and the White House and was deputy director of the Office of Management and Budget during Bush II. At OMB, she suceeded Sean O’Keefe, who became NASA administrator and is now vice president, Washington operations, for GE Aviation. GE also has Linda Hall Daschle, wife of former Senate Majority leader Tom Daschle, lobbying on its behalf. Meanwhile, Mr. Daschle is on the board of advisors to GE’s HealthyMagination initiative. Last summer, [2009] a leaked email from GE Vice Chairman John G. Rice, soliciting donation’s to GE political action committee, laid out the GE-DC connections. According to Steve Milloy, a right-of-center anti-environmentalist who obtained the email, Rice wrote:
The intersection between GE’s interests and government action is clearer than ever. GEPAC is an important tool that enables GE employees to collectively help support candidates who share the values and goals of GE. [emphasis added] On climate change, we were able to work closely with key authors of the Waxman-Markey climate and energy bill…If this bill is enacted into law it would benefit many GE businesses. And so forth. You won’t be surprised to learn that GE’s “values and goals” were more aligned with Republicans betwen 2000 and 2008, when most of its donations went to the GOP. Now they mostly go to Democrats. To be sure, this business-as-usual in Washington, but it’s revealing.
[And Marc Gunther has much more.] WSJ
GE has high hopes for the [Washington] strategy. It says that over the next three years or so it could bring in as much as $192 billion from projects funded by governments around the globe, such as electric-grid modernization, renewable-energy generation and health-care technology upgrades.

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