Dwayne Madigan, Teresa Golightly, Dave Rusk, and Cecil Affleck all worked for Jeff Immelt. They manufactured General Electric's most iconic product: the old-fashioned light bulb, as invented by GE founder Thomas Edison. GE sacked them all in September 2010, when CEO Jeff Immelt shut down the Winchester Lamp Plant in Virginia, blaming "a variety of energy regulations that establish lighting efficiency standards" that would "make the familiar lighting products produced at the Winchester Plant obsolete."
GE was referring to the 2007 U.S. law that foisted fluorescent bulbs and more expensive LEDs on consumers while outlawing the 25-cent product Americans wanted and Winchester workers made. Of course, GE, under the leadership of CEO Immelt, lobbied in favor of that law, which probably never would have passed had Immelt opposed it.
Even though GE dominated the market for the ordinary household incandescent, the company still had razor-thin profit margins — which is the beauty of capitalism. GE wanted some barriers to entry, and so they lobbied to outlaw the product their founder had invented. This would force consumers to buy more expensive, less proven, higher-margin bulbs — which GE would make overseas rather than in Winchester.
Thus, by bringing big government into the light bulb industry, GE became the liberal caricature of capitalism: big business using its lobbying clout and political connections to make people pay more money for a product they don't want, thus expanding profit margins while giving workers the shaft.
On Thursday, two business days before Immelt announced his retirement, GE announced it was selling its lighting business, which had become the company's least-profitable division.
The light bulb story is a perfect microcosm of Immelt's 15 years at GE: trying to circumvent market forces through corporatist collusion with Washington but ultimately failing.
Consider these two superlatives of the Immelt era:
No company spent as much on lobbying the federal government during Immelt's tenure as did GE.
No company in the Dow Jones Industrial Average did as poorly during Immelt's tenure as did GE. GE stock fell 27 percent, while the Dow more than doubled. Put another way, the stock price is about one-third what it would be had it kept pace with the rest of the market.
Shareholders, of course, aren't the only ones who lost out from their association with GE.
In 2001, GE employed 131,000 people in America, according to the company's annual report. Immelt reduced that to about 104,000 by 2016, a 21 percent cut in a time period when the working-age population increased by 13 percent.
So Immelt's GE harmed its customers by using government to make them buy the more expensive products they didn't want, harmed its shareholders by destroying value in the company while GE's peers doubled in value, and laid off more workers than it hired.
Throughout those 15 years, Immelt's game was cozying up to government. It wasn't just about being a government contractor or trying to master the complex tax code. GE invested in businesses and technologies that depended for profits on mandates, regulations, tax credits and handouts and then invested in lobbyists to ensure those favorable policies. Immelt was a political entrepreneur from start to finish.
In 2005, Immelt created "EcoMagination," a venture that would try to find ways to profit off green energy and similar ideas. When former President George W. Bush in his 2007 State of the Union address laid out eight technologies he wanted to subsidize, at least seven of them — including "clean coal" — were GE specialties.
Then came the Wall Street bailouts and Obamanomics, which Immelt said marked a "reset" of capitalism. "The interaction between government and business will change forever," Immelt wrote in the 2009 annual report. "In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner."
Obama in 2010 traveled to a GE turbine factory in upstate New York (that was pocketing federal subsidies) to announce that he was appointing Immelt as chairman of his "Jobs Council." Immelt wrote an op-ed about that gig, promising "coordinated commitment among business, labor and government...." "[G]overnment should incentivize … investment in innovation," Immelt argued, calling for "partnership between business and government on education and innovation in areas where America can lead, such as clean energy...."
This was blatantly a call for corporatism and state-run industrial policy, which was a standard theme for Immelt.
"Germany is the model," Immelt said at the 2010 annual conference of the Export-Import Bank, a federal agency that subsidizes exporters. GE has received Ex-Im subsidies as an exporter, a financier, and even an importer (when the company moved its refrigerator factory to Mexico, Ex-Im financed equipment sales to the factory complex).
Immelt in that address praised Germany because, "The companies roam as a pack. They stick together. And the government supports the companies to be exporters."
The next year, Immelt told America on 60 Minutes, "I want you to root for me…. Everybody in Germany roots for Siemens. Everybody in Japan roots for Toshiba. Everybody in China roots for China South Rail. I want you to say: Win, GE."
This was the Obama administration's mindset.
"So those who talk about this is big government," Joe Biden said of GE's plant in Louisville, Ky., in June 2010, "this is big government."
The factory, you see, was benefiting from $25 million in federal subsidies from the stimulus package that had passed a few months earlier. GE has since sold the plant and the whole GE Appliances business to a Chinese Company. In November, the CEO of the Louisville plant explained that the company needed to slash wages because the plant was losing "hundreds of millions of dollars" every year.
So did all that lobbying and subsidy-suckling pay off? It didn't pay off for the workers in Winchester or for GE's shareholders. It hasn't paid off for the saps who bought Biden's beloved Appliance Park. But maybe that's the wrong question.
Immelt has made hundreds of millions of dollars as CEO, gotten to rub elbows with Obama in the White House and earned elite plaudits. The policy-makers-turned-lobbyists also profited from GE's generous lobbying spending. The lesson may be that corporatism works only for the insiders.
Timothy P. Carney, the Washington Examiner's senior political columnist, can be contacted at firstname.lastname@example.org. His column appears Tuesday and Thursday nights on washingtonexaminer.com.