Marc Gunther on GE and DC, and How to Reduce the Influence of Special Interests

Michael Giberson

I complained the other day about a modest little $13 million grant of U.S. taxpayer money to General Electric for some research into high temperature electronics.  The electronics are intended for deep well drilling applications such as for oil and gas or geothermal resource development.  The program is just one of many, many connections between GE and the federal government in Washington, DC.

Marc Gunther provides a more complete assessment of the GE-DC link under the heading “GE and Washington: Too cozy?”  Gunther notes that GE’s performance since Jeffrey Immelt became CEO in 2001 has lagged the market as a whole.  He sums up a lengthy post, worth reading in its entirety, with the following observations (emphasis added, link in original):

I don’t know GE well enough to say whether there’s a connection between GE’s focus on Washington and its subpar performance. Certainly questions could be asked (by the board?) about whether GE executive time and shareholder money might have been better spent elsewhere—developing new products, say, or improving service to customers. To its credit, GE has sustained a big, global R&D operation while other companies have cut back.

I do know that as the federal government grows in size and influence, corporations will spend more of time and money in Washington. (The Times reported today that the health care and insurance lobbies spent more then $648 million in 2009.) Business will also do more to influence elections, particularly after the recent U.S. Supreme Court ruling.

What to do? Surely one way to reduce the influence of special interests in Washington is to give them less government to be interested in.

4 thoughts on “Marc Gunther on GE and DC, and How to Reduce the Influence of Special Interests

  1. What Immelt took over from Jack Welch was a rapidly growing, but overleveraged financial company with a few legacy industrial operations. I once heard the Chairman of Citibank say that he wanted to remodel the bank on the same lines as GE without the non-financial operations.

    The financial panic of ’08 was a hard blow, and GE needed TARP money to bail out. When a CNBC talking head started the tea-party meme, Immelt and the president of NBC called the talkers on the carpet and told them to lay off the administration. Of course, since the administration is Democrats, this got no play from the MSM.

    Further, the non-financial side of GE is a major defense contractor, and a manufacturer of medical equipment, which is also trammeled up in Washington.

    GE cannot ignore Washington, and won’t.

  2. Agree with Fat Man. GE also has bet the ranch on green tech — pure subsidy farming. It would be negligent of them not to be committing the resources in DC.

    I don’t see the TARP and government financial support as the focus of their activities. It will wind down.

  3. Hear hear! That (less government) has been my response to government corruption for years. In a world of principal-agent dynamics and public choice (i.e., the US), there is NO solution to corruption except (1) clean bureaucrats or (2) fewer bureaucrats. (1) may be possible in Europe (check out Finland’s schools), but not – -I think — the US, due to our history of cowboy exploitation.

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