On January 21, 2011 President Obama named Jeffrey Immelt, CEO of General Electric, to head the newly created Council on Jobs and Competitiveness. On the same day, Mr. Immelt published an op-ed piece, “A blue-print for keeping America competitive“, in the Washington Post. I wrote the following letter to the editor, which the Washington Post declined to publish:
Dear Editor,
I wish Jeffrey Immelt the best of luck in his new position as head of President Obama’s Council on Jobs and Competitiveness. Mr. Immelt is one of the few CEOs of major US corporations who has been saying that US business corporations must take responsibility for helping to create jobs in United States. In his op-ed, “A blueprint for keeping America competitive” (January 21), he states: “It is possible to be a competitive global enterprise and still care about your home. In fact, it is not just possible but imperative.” He points out that his own company, GE, “is investing more than ever in research and development – about 6 percent of revenue – aimed at solving challenges in transportation, energy and health care. ” That is good, but surely Mr. Immelt is also aware that over the past decade, GE spent $52 billion repurchasing its own stock, twice the amount that it spent on R&D. That’s in addition to the $89 billion in dividends that GE paid to shareholders. While dividends reward shareholders for holding GE stock, repurchases reward them for selling it, and simply represent a manipulation of the company’s stock price. During the last decade S&P 500 companies such as GE have spent over $2.5 trillion buying back their own stock, at great cost to innovation and job creation in the US economy. I would hope that in his new public position, Mr. Immelt will take the lead in advocating an end to this irresponsible use of corporate resources.
William Lazonick
Professor & Director, UMass Center for Industrial Competitiveness
President, The Academic-Industry Research Network
