So Phil Mickelson told the truth about the new Saudi golf league.
“They’re scary mother——- to get involved with,” Mickelson told the Fire Pit Collective website. “We know they killed [Washington Post reporter and U.S. resident Jamal] Khashoggi and have a horrible record on human rights. They execute people over there for being gay.”
Yet many respected players are going to align themselves with them for the cash. Dustin Johnson, with a net worth of $50 million, is going to trade his integrity for cash. Hopefully, and I realize lawsuits will fly, the PGA Tour; The European Tour, the USGA and the R&A ban these players for life.
Economists and politicians are debating whether monopolistic companies are fueling inflation in ways that confound longstanding theory.
There are few good things about living through a period with the highest inflation in four decades, but here’s one: It’s a chance to re-examine what happens in an economy that’s gone haywire.
Since prices started to escalate a year ago, politicians and economists have seized on inflation to tell their preferred story about what went wrong, and what policies would bring it back into line. Some say it’s very straightforward: Supply and demand, Economics 101.
“There’s simply a lot of cash out there,” said Joe Brusuelas, chief economist for the accounting firm RSM US, referring to the several trillion dollars in pandemic stimulus that’s filtered into the economy since early 2020. “The competition for those goods is up and that’s sending prices up, whether we’re talking about getting a Nissan Sentra or a seat on an American Airlines flight.”
The White House and progressive organizations, however, say wait a minute: This time is different. In a time of extraordinary disruption, they contend, increasingly dominant corporations are taking the opportunity to jack up prices more than they otherwise could, which is squeezing consumers and supercharging inflation. Or “greedflation,” as the hypothesis has come to be known. …
The argument comports with the Biden administration’s focus on the ills of economic concentration. Congressional Democrats have run with the idea, introducing bills that would impose a temporary “excess profits tax” on companies that charge prices they deem unreasonably high, or simply ban those high prices altogether. Critics, including the nation’s largest business lobby, deride these efforts as based on a “conspiracy theory” and a “flimsy argument.”
So what’s really going on?
It’s hard to tease out. A pandemic, a trade war, a land war, huge government spending, and a global economy that’s become vastly more integrated might be too complex for traditional macroeconomic theory to explain. Josh Bivens, research director at the left-leaning Economic Policy Institute, thinks that’s a good reason to revisit what the discipline thought it had figured out.
“When I hear stories about an overheating labor market, I don’t think about falling real wages, and yet we have falling real wages,” Dr. Bivens said. Nor is the rise in profits typical when unemployment is so low. “The idea that ‘there’s nothing to see here’ — there’s everything to see here! It’s totally different.”
When thinking about greedflation, it’s helpful to break it down into three questions: Are companies charging more than necessary to cover their rising costs? If so, is that enough to meaningfully accelerate inflation? And is all this happening because large companies have market power they didn’t decades ago?
Productive Profits, or Gouging?
There is not much disagreement that many companies have marked up goods in excess of their own rising costs. This is especially evident in industries like shipping, which had record profits as soaring demand for goods filled up boats, driving up costs for all traded goods. Across the economy, profit margins surged during the pandemic and remained elevated. …
NYT: The argument comports with the Biden administration’s focus on the ills of economic concentration. Congressional Democrats have run with the idea, introducing bills that would impose a temporary “excess profits tax” on companies that charge prices they deem unreasonably high, or simply ban those high prices altogether. Critics, including the nation’s largest business lobby, deride these efforts as based on a “conspiracy theory” and a “flimsy argument.”
So what’s really going on?
It’s hard to tease out. A pandemic, a trade war, a land war, huge government spending, and a global economy that’s become vastly more integrated might be too complex for traditional macroeconomic theory to explain. Josh Bivens, research director at the left-leaning Economic Policy Institute, thinks that’s a good reason to revisit what the discipline thought it had figured out.
“When I hear stories about an overheating labor market, I don’t think about falling real wages, and yet we have falling real wages,” Dr. Bivens said. Nor is the rise in profits typical when unemployment is so low. “The idea that ‘there’s nothing to see here’ — there’s everything to see here! It’s totally different.” …
When thinking about greedflation, it’s helpful to break it down into three questions: Are companies charging more than necessary to cover their rising costs? If so, is that enough to meaningfully accelerate inflation? And is all this happening because large companies have market power they didn’t decades ago?
Productive Profits, or Gouging?
There is not much disagreement that many companies have marked up goods in excess of their own rising costs. This is especially evident in industries like shipping, which had record profits as soaring demand for goods filled up boats, driving up costs for all traded goods. Across the economy, profit margins surged during the pandemic and remained elevated. …
i wonder. that stimulus money replaced money lost to unemployment. should be close to a net zero for the economy.
what may have happened is a lot of people did not spend during the covid recession because they did not know when they might need the money more. now that the recession is behind us, people feel more confident about spending the money they had saved.
Republican Representative Greg Steube of Florida on Thursday brandished several guns during a heated House Judiciary Committee hearing on legislation aimed at preventing gun violence, drawing criticism for his actions.
The panel convened amid pressure on lawmakers to pass gun control legislation in the wake of several recent mass shootings. Partisan divides on the subject were made abundantly clear during the session, which lasted more than nine hours.
Although Steube was not physically present, he voiced opposition to the wide-ranging package, called the “Protecting Our Kids Act,” alongside other members of his party while making a virtual appearance from his home. …
Job growth slowed a bit in May. In normal times, that might be a troubling sign, prompting fears that the economy is losing steam or, worse, headed into a recession.
But these are not normal times. With nearly twice as many open jobs as available workers and inflation running at its fastest pace in four decades, many economists and policymakers say a slowdown is just what the economy needs right now.
But a cooling economy carries its own risks. Despite inflation, the recovery from the pandemic recession has been among the strongest on record, with unemployment falling rapidly and incomes rebounding fastest for those at the bottom. If the recovery slows too much, it could undo much of that progress.
That delicate balance makes interpreting monthly jobs reports trickier than usual because the number that usually gets the most attention — the 390,000 jobs added in May — doesn’t reveal whether the mismatch between supply and demand is easing. …
NYT: To answer that question, many economists are watching the labor force participation rate, the share of the population either working or looking for work. That figure ticked up in May to 62.3 percent, as the labor force grew by 330,000 people. That, in conjunction with slightly slower job growth, is an encouraging sign that the labor market is coming back into balance as demand cools and supply improves.
Economists are also closely watching wage growth, which many say needs to slow in order to bring inflation under control. Average hourly earnings rose 0.3 percent in May, and are up 5.2 percent over the past year. The pace of wage growth has slowed a bit in recent months, although it remains simultaneously slower than inflation and faster than many economists consider sustainable. …
For workers, a cooling labor market could feel like a step backward, at least in the short term. Wage growth will be slower. Job opportunities will be fewer. Workers will have less leverage to demand flexible schedules or other perks.
But the Biden administration argues that a cooling economy is a necessary transition that will be better for workers in the longer run.
“Where we are going to is a period of more stable growth, more resilient growth, that should look different than that historically fast recovery,” Brian Deese, a top economic adviser to Mr. Biden, said in an interview. The administration’s goal, he added, is a more sustainable recovery “that generates more economic opportunities and more economic security for middle-class families than the prepandemic economy did.”
The number of people working or looking for work rose, while wage gains eased slightly. Both are encouraging signs but the Federal Reserve’s fight against stubbornly high inflation is far from over. …
On Monday, Eurostat, the European statistical agency, released a preliminary estimate of euro area inflation for May, and it was a shocker: 8.1 percent over the preceding year, 0.8 percent — about 10 percent at an annual rate — for the month.
Europe’s preferred measure of inflation doesn’t correspond exactly to America’s Consumer Price Index, and when you use a comparable measure, U.S. inflation has generally been running even higher. But the bad European inflation news comes in the wake of modestly good or at least better U.S. news, so at this point it’s arguable that Europe has an inflation problem as bad as or worse than ours.
True, some economists argue that the U.S. inflation problem is more fundamental than Europe’s. I’ll get to that in a minute. But here’s the thing: Voters don’t care about economists’ estimates of underlying inflation; they care about the prices they pay, especially the prices of highly salient goods they buy on a regular basis. That is, voters aren’t saying, “Trimmed mean P.C.E. inflation is too high because fiscal policy was too expansionary.” They’re saying, “Gas and food were cheap, and now they’re expensive.”
And there’s truth to that complaint. But the lesson from Europe’s bad inflation report is that these are precisely the prices over which President Biden, or actually any president, has almost no control. …
PK: Take the case of prices at the pump. Gas prices in the United States have more than doubled under Biden; as of last week, they were about $2.40 a gallon higher than they were in the last week of December 2020. But gas prices in Europe have risen by almost exactly the same amount; actually, after converting from liters to gallons and euros to dollars, I estimate that pump prices in Germany rose $2.80 a gallon over the same period.
This common rise in prices is no accident: Oil is traded on global markets, so its price has risen by roughly the same amount everywhere. The same is true of major foodstuffs.
So when people say — as they do — that gas and food were cheaper when Donald Trump was president, what do they imagine he could or would be doing to keep them low if he were still in office? OK, he probably wouldn’t have supported Ukraine, might even have tacitly supported Vladimir Putin’s invasion, and if the Russian flag were currently flying over Kyiv, world fuel and food prices would be a bit lower than they are. But I don’t think buying lower inflation at the expense of Ukraine’s freedom is what Trump supporters have in mind.
Does this mean that Biden and U.S. policymakers bear no responsibility for inflation? No. While much inflation reflects global shocks to energy and food, plus special pandemic-related disruptions — who imagined that used car prices could play such an important role? — America probably has an underlying annualized inflation rate of 3.5 to 4 percent, up from the 2 percent norm. This underlying inflation probably reflects an economy that’s running unsustainably hot, which in turn partly reflects an overlarge fiscal package at the start of Biden’s presidency and the Fed’s failure (which I shared) to recognize the problem early enough. …
PK: On the other hand, overheating isn’t unique to the United States. While some economists believe that European inflation is almost entirely due to transitory disruptions — something many people, myself included, wrongly believed about the United States a year ago — my read of recent European data suggests that it has also seen a rise in underlying inflation, despite not having pursued U.S.-type fiscal expansion. Notably, even European prices excluding energy and food rose 3.8 percent over the past year.
In any case, as I already suggested, voters aren’t poised to punish Democrats for underlying inflation; they’re angry about gasoline and food prices, which no rational analysis would say are Biden’s fault.
So what can Biden do? From an economic point of view, the most important thing is his pledge not to lean on the Federal Reserve, to allow the Fed to do what it must to cool off the economy.
What about going after corporate price gouging? I’m much more sympathetic than most economists to the view — widely held by the public — that some companies are taking advantage of widespread price increases to further exploit their monopoly power. And I don’t think things like holding hearings on price gouging do any harm, as long as the Fed is allowed to do its job; that might even help a bit. But gouging is probably a small factor in overall inflation.
So should Biden officials be out there pointing out that the price rises bothering consumers most are global phenomena, not the results of U.S. policy? Yes, of course, not least because it’s the truth. And I hope media reporting will make the same point.
But the old line “If you’re explaining, you’re losing” surely applies. Democrats may be able to blunt the damage from inflation, but realistically they won’t be able to win the kitchen-table argument by November. For now, Democrats need to run on social issues — and against the threat the modern G.O.P. poses to democracy and basic American values.
Humans pumped 36 billion tons of the planet-warming gas into the atmosphere in 2021, more than in any previous year. It comes from burning oil, gas and coal.
The amount of planet-warming carbon dioxide in the atmosphere broke a record in May, continuing its relentless climb, scientists said Friday. It is now 50 percent higher than the preindustrial average, before humans began the widespread burning of oil, gas and coal in the late 19th century.
There is more carbon dioxide in the atmosphere now than at any time in at least 4 million years, National Oceanic and Atmospheric Administration officials said.
The concentration of the gas reached nearly 421 parts per million in May, the peak for the year, as power plants, vehicles, farms and other sources around the world continued to pump huge amounts of carbon dioxide into the atmosphere. Emissions totaled 36.3 billion tons in 2021, the highest level in history.
As the amount of carbon dioxide increases, the planet keeps warming, with effects like increased flooding, more extreme heat, drought and worsening wildfires that are already being experienced by millions of people worldwide. Average global temperatures are now about 1.1 degrees Celsius, or 2 degrees Fahrenheit, higher than in preindustrial times. …
During the 1976 presidential campaign, Democratic nominee Jimmy Carter capitalized on the economic pain voters were feeling under Republican President Gerald Ford by seizing on an obscure metric with a dreary name: the misery index.
And misery was in plentiful supply in the 1970s — unlike gasoline. An oil embargo by Arab nations sent gas prices skyrocketing, causing shortages and long lines at the pump. Soaring gas prices fueled high inflation at a time when the economy was stagnant, creating a troubling and counterintuitive new phenomenon called stagflation.
The misery index was a rough way to measure the nation’s slide into stagflation andadds together two major indicators that speak to the country’s economic strength: the monthly consumer price index and the unemployment rate. At the time, Carter noted the 16 percent figure under Ford was the highest average for any president in more than 50 years. It was a potent political attack that helped propel him to victory. But in 1980, Republican Ronald Reagan turned the same metric against Carter and stagflation felled another president.
Now, the misery index is rising again amid warnings of another bout with stagflation, raising the prospect that the economy could be turning into “That ‘70s Show” — a disheartening rerun that would deliver another blow to pandemic-battered Americans and spell deep political trouble for President Biden and the Democrats. …
Former Federal Reserve chairman Ben Bernanke said he sees stagflation ahead as the central bank aggressively hikes its benchmark interest rate to try to tamp down inflation by slowing economic growth. Prominent economist Mohamed El-Erian recently declared stagflation is “unavoidable.” And more than three-quarters of investment fund managers — 77 percent — expect stagflation to hit the US economy in the next year, the highest level since 2008, according to a survey last month by Bank of America Global Research.
“Certainly the economic outlook globally is challenging, and uncertain, and higher food and energy prices are having stagflationary effects,” Treasury Secretary Janet Yellen said during an economic summit in Europe last month.
(graph at link)
… The pandemic and the Ukraine war have produced similar jolts that might already have pushed the United States into stagflation, said Princeton economist Alan Blinder, a former Fed vice chair.
“Food prices are rising a lot. Energy prices are rising a lot. That’s the classic supply shock in stagflation,” said Blinder, who has studied what’s known as “the Great Stagflation” of the 1970s. “Growth is slowing to the point that we could be in it right now.”
The economy has cooled significantly from last year’s roaring 5.7 percent growth, which was the strongest since 1984. The economy actually shrank at a 1.5 percent annual rate in the first three months of this year, although the contraction appears to have been caused by statistical oddities. Forecasters believe the economy continues to grow, but say that 2022′s pace will only be about 3 percent. They warn there’s a high risk of a recession — defined as two consecutive quarters of contraction — hitting in the next two years. …
The misery index is elevated because of high inflation and will rise higher if the unemployment rate goes up before the consumer price index moves down. And concerns about stagflation have been a factor in the recent stock market declines.
“The drumbeat is certainly getting louder and it’s more and more a discussion we’re having with clients in terms of how would you position yourself if this plays out,” said Frank Panayotou, managing director at UBS Private Wealth Management, an investment advisory firm in Boston.
“Our sense is this economy is on the way to slowing down, and the question is: is there a crash landing at the end of it or can we find some place to land this thing?” he said. “I think it’s going to be difficult, but we don’t think it will end up in a stagflation-type scenario.”
One difference between now and the 1970s is inflation has only been elevated for about a year and consumer confidence measures indicate Americans don’t think it will last for years. By contrast, high inflation had become entrenched by the late 1970s, creating a self-fulfilling prophecy known as a wage-price spiral: workers push for higher wages to keep up with the cost of living, which forces businesses to raise prices,sending inflation spinningever-upward. …
it is easier for businesses to raise prices than it is for workers to push for raises. neither will cause inflation unless there is a source of new money.
FWIW, I posted the portion of the Globe article above that includes comments by economists. One person on that list who is NOT one Is Fed chairman Powell, oddly enuf.
I don’t take “some economists say..” very seriously, except that politicians listen to some economists and are likely to do things that cause the economists to be “right.”
which we (the people) mostly can’t do anything about.
but i wonder (can’t call these thought experiments, because there is no thought and no experiment) what would happen if all the people said, “hey, we can stop inflation in its tracks if we just stopped buying things we can do without for a month or so.” now that might provoke a recession as surely as a rise in interest rates. but it might also be a shot across the bow of price gougers and hopefully some economists and politicians.
(I often do some ‘light editing’ of articles I post.)
Former Federal Reserve chairman Ben Bernanke said he sees stagflation ahead as the central bank aggressively hikes its benchmark interest rate to try to tamp down inflation by slowing economic growth. Prominent economist Mohamed El-Erian recently declared stagflation is “unavoidable.” …
… The pandemic and the Ukraine war have produced similar jolts that might already have pushed the United States into stagflation, said Princeton economist Alan Blinder, a former Fed vice chair.
“Food prices are rising a lot. Energy prices are rising a lot. That’s the classic supply shock in stagflation,” said Blinder, who has studied what’s known as “the Great Stagflation” of the 1970s. “Growth is slowing to the point that we could be in it right now.” …
… “Most people are not talking about an elevated probability that we’re going to see the terrible economic conditions that we saw in the late ‘70s and early ‘80s,” said Karen Dynan, a Harvard professor and former Treasury Department chief economist during the Obama administration. “We wouldn’t have had to have the terrible recessions we had in the early 1980s if [the Fed] had gotten on inflation sooner.” …
… “It’s essential to understand the inflation of the 1970s amounted to a 15-year process of . . . inflation becoming more and more out of control and ineffective attempts to control it,” said David Wilcox, a senior economist at the Peterson Institute for International Economics and at Bloomberg Economics.
Recent promises by Powell and other Fed officials to fight inflation help people see a light at the end of the tunnel, said Dana Peterson, chief economist at the Conference Board, a private research group. She doesn’t think the country is experiencing stagflation right now, but said it could arrive next year if there are continued economic shocks from the Ukraine war and supply chain disruptions from pandemic shutdowns in China.
But Peterson said she expects stagflation would only last for about six months if it happens — unlike the long slogof the 1970s.
“A recession is bad. Stagflation can be just as awful if it’s protracted,” she said. “But a couple of quarters of numbers that are low [economic growth] and high inflation, that’s not the ‘70s.”
For those of us that are adverse to debt, then living within their means has already been learned. OTOH, for those of us that think building a legacy of debt is just good use of other people’s money then nothing will be learned. Teaching is impossible while learning is just rare.
Student loans thread has no comments allowed. Let me just say one thing, all of the forgiven debt so far has been done with power the Congress gave to the President. Obama, Trump and now Biden. There has to be legislation to do all of the rest. End of story.
you are not the only one who thinks “End of Story” means “I know everything I need to know.”
This is a tragedy. I understand trolling after being a victim of it right here on AB for years…no one here now is guilty of that. And I understand bad manners, after unintentionally being guilty of it myself, and being the target of far worse manners from people who most definitely meant it. But what is happening to AB is that some people cannot stand to be disagreed with or even questioned. I like to think I can tell the difference, and I bet these people could too if they made the effort.
One thing for sure, closing comments is not going to get anyone closer to understanding anything. Not a problem of course for those who already understand everything. But still a hell of a way to run a blog.
“all of the forgiven debt so far has been done with power the Congress gave to the President. Obama, Trump and now Biden. There has to be legislation to do all of the rest.”
Easy to look up the legislation that allowed these, and other student loans, to be dealt with by the President. I’ll listen to Nancy Pelosi on the subject.
“The president can’t do it — so that’s not even a discussion,” she said. “Not everybody realizes that, but the president can only postpone, delay but not forgive” student loans. It would take an act of Congress, not an executive order, to cancel student loan debt, she said.”
i never denied that. but it is not the end of story.
Though probably you only meant the story about the president needing an act of congress, and i was thinking of the story about how to get the forgiveness of debt …that is how to get the act of congress.
today i note from your note that you said in your first comment that ” all of the forgiven debt so far has been done with power the Congress gave to the President. Obama, Trump and now Biden. ” and in your second comment “the president can only postpone, delay but not forgive”
this looks like a contradiction, but may be one that can be easily resolved with a little more explanation.
more than that, I was thinking about all of the “end of story” thinking that goes on in the world…which prevents thinking long and hard enough to actually solve the problem.
The Corinthian Debt Deal is practically ‘cherry picking’, with a reasonably large number of debtors (to a defunct profit-making college no less) with an average debt of about $10k each.
You point to an average which I had not looked at till you mentioned it. It appears to be too low. “Tuition for a two-year degree tops out at $40,000 (commercial). On average, the cost at community college is $6,528. Corinthian’s least expensive certificate for healthcare was $17,000. Only 10% of all for-profit college students nationally graduate without debt; 70% of certificate-holding community college students do the same, according to College Board.”
Blame me if you like for coming down too hard in the Student Loan thread.
It was not mentioned in that thread (or I didn’t see it) that many lives have been devastated by extreme wage garnishment to gain repayment for looong-standing student loans that may have been modest to begin with but have grown from fees & penalties that have been added on. Bankruptcy protection has been denied for most of these loans. The logic seems to be that you cannot repossess an education the way you can a car. This needs to be fixed, even though the debt hole is very large.
“We have a responsibility to act to prevent more tragedies,” Prime Minister Trudeau said as he proposed tightening the country’s already stringent control of firearms.
Most owners of what Canada calls “military-style assault weapons” would be required to turn over their firearms to a government buyback program under legislation introduced on Monday, which would tighten the country’s already stringent control of firearms.
The Canadian government also announced new regulations that will ban the sale, purchase, importation or transfer of handguns. “We are capping the number of handguns in this country,” Prime Minister Justin Trudeau said on Monday. …
—-
Unlike the U.S. Constitution, the Canadian Constitution does not contain any protection for gun owners. Unlike the United States, where firearms are primarily regulated by the state, in Canada firearms are federally regulated. The current Canadian gun-control law was enacted as the Criminal Law Amendment Act, 1977. …
According to the Department of Justice, it is estimated that 26 per cent of Canadian households own some sort of firearm. Put another way, more than one in four households has a firearm located in it. Ninety-five per cent of firearm-owning households in Canada possess long guns.
THE MAN WHO BROKE CAPITALISM: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America — and How to Undo His Legacy, by David Gelles
… a book by a longtime business reporter now at The New York Times, focusing on Jack Welch, “revered as the greatest C.E.O. of all time,” and General Electric, the company he ran from 1981 to 2001, “two decades that shaped the world we inhabit today.”
David Gelles describes unbroken capitalism’s exemplary big companies in the 20th century that treated employees fairly and focused on long-term growth — such as G.E. After the New Deal and the enormous unionization it enabled, economic fairness increased significantly along with prosperity in the United States, as “corporations, workers and the government enjoyed a relatively harmonious equilibrium,” and “worker pay grew in tandem with worker productivity.” With a “steady rise in earnings” through 1980, G.E. was “more profitable than all but nine other companies in the Fortune 500.” And its chief executive immediately preceding Welch earned the equivalent of $743,000 a year, just “12 or 13 times what new management recruits to the company took home” and a mere 5 percent of what the median big-company C.E.O. is paid these days.
In the 1980s, as American culture and politics were suddenly celebrating money and robber-baronism with a new go-go giddiness, “Welch was tapping into profound changes in the zeitgeist,” Gelles writes. “An intellectual revolution had been coursing through academic, economic, legal and political circles,” but “no one had truly put this philosophy to work … until Welch.” By means of all-out “downsizing, deal making and financialization,” he became “the personification of American, alpha-male capitalism.”
As he explained to The Harvard Business Review back then, “G.E. has had an implicit psychological contract based on perceived lifetime employment,” which produced a “fuzzy kind of loyalty” — sentimental humbug to Welch. He “instituted a series of mass layoffs,” and enthusiastically industrialized even this process by rating every employee and then each year firing the lowest-rated 10 percent. …
As a maniacal deal maker, Welch oversaw the acquisition, on average, of one $130 million company every week for 20 years, and sold off a business every two weeks. And, man, did he financialize, instead of inventing or producing better products pleasing Wall Street and increasing G.E.’s stock price, period. This was the one area in which he made sure G.E. continued innovating — by reducing costs with his “rank-and-yank” regime, and turning G.E. into “essentially a giant, unregulated bank” that used more and more of its profits to buy up its own stock.
Welch (who died in 2020) was “quick-witted, and coiled with energy,” “a cursing, kinetic tornado of a man” who “wore jeans and rolled-up shirt sleeves whenever he could get away with it.” And also, no surprise, a jerk — “heavy on yelling and short on empathy.”
But while Gelles’s basic takes are all correct, they’re also relentlessly basic, in the new, pejorative sense: unsurprising, unoriginal, conventional wisdom conventionally expressed, passable in thousand-word pieces of journalism but not at book length. All his clichéd and colorful prose bits — “empires of yore,” “risible assertion,” “gilded lifestyle,” “helicopter pilot with supermodel looks,” “pinstriped conquistador with the spoils to prove it” — might be forgivable if accompanied by fresh ideas or by deep, revelatory reporting.
Welch himself comes across as a stick figure. For instance, exactly how does the son of a union railroad conductor who “preferred chatting up machinists to sitting in a boardroom and deliberating with directors” become such an enthusiastic generalissimo in the class war? No explanation. Likewise, Gelles mentions Welch’s 2012 tweet alleging that a decline in the unemployment rate was a fiction constructed by Barack Obama’s Labor Department to help him win re-election, which Fox News and The New York Post and Donald Trump instantly repeated. But again, no explanation of how and why this reality-based engineering Ph.D. and C.E.O. had suddenly become an alternative-facts conspiracy nut.
Gelles’s portrait of Welch is derived from previously published biographies, which he credits. Being derivative is no crime, but while he acknowledges “Evil Geniuses” once (as his source for a 1968 survey), other unsourced passages struck me as uncomfortably familiar, such as his discussion of Milton Friedman and Lewis Powell’s role in the hypercapitalist paradigm shift. For instance, Gelles writes that a 1970 Times Magazine essay by Friedman “was a capitalist cri de coeur” that “would endure as the most influential piece of economic writing for generations.” In “Evil Geniuses,” I call Friedman’s essay “a cri de coeur” that “became the modern founding text … of corporate management.” …
… (However, while) Jack Welch was unquestionably an important and emblematic figure in America’s paradigm shift, but Gelles takes his book title too literally, pushes it too strenuously. “Capitalism in America,” he writes “was working well right up until 1981, when Jack Welch broke it.” Whenever he refers to the post-1980 economic regime — “profits for shareholders above all else,” “a Darwinian attitude toward the labor market,” “downsizing, deal making and financialization,” and “executives … entitled to enormous wealth” — he uses his own word, “Welchism,” instead of libertarianism or neoliberalism or any of the other familiar terms. Presidents from Ronald Reagan on bought into libertarian economics, but Donald Trump was Welch’s buddy, so Gelles suggests it really got entrenched in 2017: “With his friend in the White House, his values were impacting all of American life as well.”
After 200 pages of a lot of ham-handed critique, Gelles devotes most of his last 30 to a fairly ham-handed celebration of the chief executives of Unilever and Paypal and the other “lonely voices in the business world” — in particular the founder of the billionaire-convening World Economic Forum in Davos — who “call for a more holistic approach to capitalism.” He finishes with boilerplate progressive prescriptions: “renounce the toxic myths that allowed our current system to become so horribly imbalanced,” improve pay and benefits, “make a habit of distributing profits” to workers, enact higher taxes on big business and “a wealth tax on the very richest” individuals. Yes, absolutely, great — but Gelles doesn’t begin to suggest how or if any of those reforms might come to pass, because nowhere has he closely examined the entrenched and powerful political foundations of the system his book is about.
When Jack Welch died on March 1, 2020, tributes poured in for the longtime chief executive of General Electric, whom many revered as the greatest chief executive of all time.
David Zaslav, the C.E.O. of Warner Bros. Discovery and a Welch disciple, remembered him as an almost godlike figure. “Jack set the path. He saw the whole world. He was above the whole world,” Mr. Zaslav said. “What he created at G.E. became the way companies now operate.”
Mr. Zaslav’s words were meant as unequivocal praise. …
Yet a closer examination of the Welch legacy reveals that he was not simply the “Manager of the Century,” as Fortune magazine crowned him upon his retirement.
Rather, he exerted a powerful and lasting influence on American business, informing how workers are treated, how shareholders are rewarded and how C.E.O.s comport themselves in an increasingly divisive age. When Donald J. Trump is elected president, when Jeff Bezos argues about inflation with the White House, when Elon Musk negotiates his $44 billion deal to buy Twitter by using the poop emoji — this is the world that Jack Welch helped create. …
… As economies boomed worldwide and U.S. stock indexes soared, GE has collapsed in a meltdown that has destroyed well over $100 billion of shareholder wealth. Pounded by a nonstop barrage of bad news, investors are traumatized and disoriented. “They just can’t figure it out and don’t want to invest,” says analyst Nicholas Heymann of William Blair & Co. “This isn’t like surveying the landscape. It’s spelunking with no lights and no manual.” Analyst Scott Davis of Melius Research says some investors have become permanently disillusioned: “Many have told us they will never own GE again.” …
Ron (RC) Weakley (A.K.A., Darryl For A While At EV) says:
After the 2008 Financial Crisis, then Welch had a moment of contrition, but I do not believe he gave back any of his loot. OTOH, Peter Drucker (Welch’s consulting side kick early on) spent the remainder of his life attempting to make amends.
(Jack Welch) was Chairman and CEO of General Electric between 1981 and 2001. When Welch retired from GE, he received a severance payment of $417 million, the largest such payment in business history up to that point… (Wikipedia)
GE intends to execute a tax-free spin-off of the Healthcare business in early 2023, creating a pure-play company at the center of precision health…
This will be followed by combining GE Renewable Energy, GE Power, and GE Digital into one business and then pursuing a tax-free spin-off in early 2024.
Following these transactions, GE would operate as a leading aviation-focused company.
GE was a hugely dominant presence when I was a student at RPI.
They were headquartered in nearby Schenectady NY, provided many scholarships and hired many, many RPI grads. (I was not one.)
Founder Thomas Edison had moved his lab there in 1900.
Later uprooted for Connecticut but leaving many facilities still functioning in the area. And even later, moved their (shrunken) HQ to Boston, where it is today, on a wharf down near the seaport.
‘March 24 2016 – GE announced today that its headquarters will be located in the Seaport District of Boston along Necco Street.’
Ron (RC) Weakley (A.K.A., Darryl For A While At EV) says:
Note: Peter Drucker died in 2005. His come to Jesus moment over financialization and shareholder value was about two decades earlier. It was never Drucker’s intent for his management philosophy to be applied purely for the purpose of extracting wealth from firms, but rather to invest in the new innovations from liquidating that which was past its prime. So, he never rewrote his philosophy of management, but rather augmented it with clarity and emphasis on determining the new before throwing out the old.
Russian airstrikes hit Ukraine’s capital early Sunday, injuring at least one person, officials said, and piercing a sense of relative security that had settled over the city as the country’s forces slow Russia’s grinding onslaught in the east.
At least five missiles hit the capital, Kyiv, about 5 a.m. near a railway station and other targets, the first shelling reported in the city in more than a month. The strikes, which Russia said destroyed tanks and armored vehicles supplied by Eastern European allies, came as President Vladimir V. Putin warned that Moscow would hit targets it had so far avoided if Western nations began delivering longer-range missiles to Ukraine.
In an interview with the state-run Rossiya TV network, excerpts of which were published on Sunday. Mr. Putin was asked about the U.S. announcement that it would supply Ukraine with a more sophisticated rocket system that can strike targets some 50 miles away. He sought to downplay the deliveries, suggesting that Western nations were just replenishing stocks of similar weapons that Ukraine had depleted.
The British military announced on Monday that it would send its most sophisticated multiple-launch rocket system to Ukraine, joining the United States in providing critically-needed long-range artillery at a moment when Russia is using its vast armaments to pummel Ukrainian positions across the eastern front.
The announcement came days after the Biden administration said that it would provide Ukraine with its most advanced multiple-launch rocket system and munitions in the hope of giving the country an edge over Russia.
“As Russia’s tactics change, so must our support to Ukraine,” said Britain’s defense secretary, Ben Wallace. …
… The multiple-rocket launch systems being supplied by the United States and Britain offer Ukraine the opportunity to strike Russian targets from a far greater distance, and with greater precision.
The American High Mobility Artillery Rocket System, or HIMARS, can hit targets nearly 50 miles away and is capable of firing satellite-guided rockets that carry roughly the same explosive power as a 500-pound bomb dropped from the air. .
The British M270 multiple-launch rocket system offers similar capabilities, Mr. Wallace said, adding that they “will enable our Ukrainian friends to better protect themselves against the brutal use of long-range artillery, which Putin’s forces have used indiscriminately to flatten cities.”
Before supplying the weapons, the United States was promised by the Ukrainians that they would not use the long-range rockets to go after targets inside Russia. The BBC reported that the British government received similar assurances. …
Russia’s foreign minister, Sergei Lavrov, questioned whether the Ukrainian government could restrain itself as promised from using advanced artillery rocket systems, supplied by the United States, to strike targets inside Russia. He told a news conference that the longer the range of weapons provided to Ukraine by its Western allies, the further Russia will push Ukraine’s army back. …
So Phil Mickelson told the truth about the new Saudi golf league.
“They’re scary mother——- to get involved with,” Mickelson told the
Fire Pit Collective website. “We know they killed [Washington Post
reporter and U.S. resident Jamal] Khashoggi and have a horrible record
on human rights. They execute people over there for being gay.”
Yet many respected players are going to align themselves with them for the cash. Dustin Johnson, with a net worth of $50 million, is going to trade his integrity for cash. Hopefully, and I realize lawsuits will fly, the PGA Tour; The European Tour, the USGA and the R&A ban these players for life.
Beyond disgusting to shill for the Saudis.
Is ‘Greedflation’ Rewriting Economics, or Do Old Rules Still Apply?
NY Times – June 3
NYT: The argument comports with the Biden administration’s focus on the ills of economic concentration. Congressional Democrats have run with the idea, introducing bills that would impose a temporary “excess profits tax” on companies that charge prices they deem unreasonably high, or simply ban those high prices altogether. Critics, including the nation’s largest business lobby, deride these efforts as based on a “conspiracy theory” and a “flimsy argument.”
So what’s really going on?
It’s hard to tease out. A pandemic, a trade war, a land war, huge government spending, and a global economy that’s become vastly more integrated might be too complex for traditional macroeconomic theory to explain. Josh Bivens, research director at the left-leaning Economic Policy Institute, thinks that’s a good reason to revisit what the discipline thought it had figured out.
“When I hear stories about an overheating labor market, I don’t think about falling real wages, and yet we have falling real wages,” Dr. Bivens said. Nor is the rise in profits typical when unemployment is so low. “The idea that ‘there’s nothing to see here’ — there’s everything to see here! It’s totally different.” …
When thinking about greedflation, it’s helpful to break it down into three questions: Are companies charging more than necessary to cover their rising costs? If so, is that enough to meaningfully accelerate inflation? And is all this happening because large companies have market power they didn’t decades ago?
Productive Profits, or Gouging?
There is not much disagreement that many companies have marked up goods in excess of their own rising costs. This is especially evident in industries like shipping, which had record profits as soaring demand for goods filled up boats, driving up costs for all traded goods. Across the economy, profit margins surged during the pandemic and remained elevated. …
i wonder. that stimulus money replaced money lost to unemployment. should be close to a net zero for the economy.
what may have happened is a lot of people did not spend during the covid recession because they did not know when they might need the money more. now that the recession is behind us, people feel more confident about spending the money they had saved.
(New Rule: It is now totally okay to brandish firearms at Congressional hearings if you are not physically present in the chamber.)
GOP lawmaker pulls out firearms during hearing on gun control legislation
Boston Globe – June 3
The key numbers in the jobs report and how to interpret them
NY Times – June 3
Job growth slowed a bit in May. In normal times, that might be a troubling sign, prompting fears that the economy is losing steam or, worse, headed into a recession.
But these are not normal times. With nearly twice as many open jobs as available workers and inflation running at its fastest pace in four decades, many economists and policymakers say a slowdown is just what the economy needs right now.
But a cooling economy carries its own risks. Despite inflation, the recovery from the pandemic recession has been among the strongest on record, with unemployment falling rapidly and incomes rebounding fastest for those at the bottom. If the recovery slows too much, it could undo much of that progress.
That delicate balance makes interpreting monthly jobs reports trickier than usual because the number that usually gets the most attention — the 390,000 jobs added in May — doesn’t reveal whether the mismatch between supply and demand is easing. …
NYT: To answer that question, many economists are watching the labor force participation rate, the share of the population either working or looking for work. That figure ticked up in May to 62.3 percent, as the labor force grew by 330,000 people. That, in conjunction with slightly slower job growth, is an encouraging sign that the labor market is coming back into balance as demand cools and supply improves.
Economists are also closely watching wage growth, which many say needs to slow in order to bring inflation under control. Average hourly earnings rose 0.3 percent in May, and are up 5.2 percent over the past year. The pace of wage growth has slowed a bit in recent months, although it remains simultaneously slower than inflation and faster than many economists consider sustainable. …
For workers, a cooling labor market could feel like a step backward, at least in the short term. Wage growth will be slower. Job opportunities will be fewer. Workers will have less leverage to demand flexible schedules or other perks.
But the Biden administration argues that a cooling economy is a necessary transition that will be better for workers in the longer run.
“Where we are going to is a period of more stable growth, more resilient growth, that should look different than that historically fast recovery,” Brian Deese, a top economic adviser to Mr. Biden, said in an interview. The administration’s goal, he added, is a more sustainable recovery “that generates more economic opportunities and more economic security for middle-class families than the prepandemic economy did.”
US Job Growth Remains Strong in May
The Perverse Politics of Inflation
NY Times – Paul Krugman – June 2
PK: Take the case of prices at the pump. Gas prices in the United States have more than doubled under Biden; as of last week, they were about $2.40 a gallon higher than they were in the last week of December 2020. But gas prices in Europe have risen by almost exactly the same amount; actually, after converting from liters to gallons and euros to dollars, I estimate that pump prices in Germany rose $2.80 a gallon over the same period.
This common rise in prices is no accident: Oil is traded on global markets, so its price has risen by roughly the same amount everywhere. The same is true of major foodstuffs.
So when people say — as they do — that gas and food were cheaper when Donald Trump was president, what do they imagine he could or would be doing to keep them low if he were still in office? OK, he probably wouldn’t have supported Ukraine, might even have tacitly supported Vladimir Putin’s invasion, and if the Russian flag were currently flying over Kyiv, world fuel and food prices would be a bit lower than they are. But I don’t think buying lower inflation at the expense of Ukraine’s freedom is what Trump supporters have in mind.
Does this mean that Biden and U.S. policymakers bear no responsibility for inflation? No. While much inflation reflects global shocks to energy and food, plus special pandemic-related disruptions — who imagined that used car prices could play such an important role? — America probably has an underlying annualized inflation rate of 3.5 to 4 percent, up from the 2 percent norm. This underlying inflation probably reflects an economy that’s running unsustainably hot, which in turn partly reflects an overlarge fiscal package at the start of Biden’s presidency and the Fed’s failure (which I shared) to recognize the problem early enough. …
PK: On the other hand, overheating isn’t unique to the United States. While some economists believe that European inflation is almost entirely due to transitory disruptions — something many people, myself included, wrongly believed about the United States a year ago — my read of recent European data suggests that it has also seen a rise in underlying inflation, despite not having pursued U.S.-type fiscal expansion. Notably, even European prices excluding energy and food rose 3.8 percent over the past year.
In any case, as I already suggested, voters aren’t poised to punish Democrats for underlying inflation; they’re angry about gasoline and food prices, which no rational analysis would say are Biden’s fault.
So what can Biden do? From an economic point of view, the most important thing is his pledge not to lean on the Federal Reserve, to allow the Fed to do what it must to cool off the economy.
What about going after corporate price gouging? I’m much more sympathetic than most economists to the view — widely held by the public — that some companies are taking advantage of widespread price increases to further exploit their monopoly power. And I don’t think things like holding hearings on price gouging do any harm, as long as the Fed is allowed to do its job; that might even help a bit. But gouging is probably a small factor in overall inflation.
So should Biden officials be out there pointing out that the price rises bothering consumers most are global phenomena, not the results of U.S. policy? Yes, of course, not least because it’s the truth. And I hope media reporting will make the same point.
But the old line “If you’re explaining, you’re losing” surely applies. Democrats may be able to blunt the damage from inflation, but realistically they won’t be able to win the kitchen-table argument by November. For now, Democrats need to run on social issues — and against the threat the modern G.O.P. poses to democracy and basic American values.
Carbon Dioxide Levels Are Highest in Human History
NY Times – June 3
From stagflation to the ‘misery index,’ some economists fear a 1970s redux
Boston Globe – June 3
it is easier for businesses to raise prices than it is for workers to push for raises. neither will cause inflation unless there is a source of new money.
FWIW, I posted the portion of the Globe article above that includes comments by economists. One person on that list who is NOT one Is Fed chairman Powell, oddly enuf.
‘Powell has repeatedly predicted that the Fed can bring down inflation without triggering a recession. ‘
I don’t take “some economists say..” very seriously, except that politicians listen to some economists and are likely to do things that cause the economists to be “right.”
which we (the people) mostly can’t do anything about.
but i wonder (can’t call these thought experiments, because there is no thought and no experiment) what would happen if all the people said, “hey, we can stop inflation in its tracks if we just stopped buying things we can do without for a month or so.” now that might provoke a recession as surely as a rise in interest rates. but it might also be a shot across the bow of price gougers and hopefully some economists and politicians.
(I often do some ‘light editing’ of articles I post.)
oh, well
i was thinking it would be a good start to teaching ourselves to live on less money and less gas.
Coberly,
For those of us that are adverse to debt, then living within their means has already been learned. OTOH, for those of us that think building a legacy of debt is just good use of other people’s money then nothing will be learned. Teaching is impossible while learning is just rare.
Ron
as this may be my last comment before being banned, if it is not deleted itself, I agree with you of course. That’s the problem.
Such behavior is one of the causes of recessions, y’know.
Dobbs
“such behavior causes recessions”
i believe i mentioned that possibility. another cause of recessions is raising the interest rate.
Student loans thread has no comments allowed. Let me just say one thing, all of the forgiven debt so far has been done with power the Congress gave to the President. Obama, Trump and now Biden. There has to be legislation to do all of the rest. End of story.
EMichael
you are not the only one who thinks “End of Story” means “I know everything I need to know.”
This is a tragedy. I understand trolling after being a victim of it right here on AB for years…no one here now is guilty of that. And I understand bad manners, after unintentionally being guilty of it myself, and being the target of far worse manners from people who most definitely meant it. But what is happening to AB is that some people cannot stand to be disagreed with or even questioned. I like to think I can tell the difference, and I bet these people could too if they made the effort.
One thing for sure, closing comments is not going to get anyone closer to understanding anything. Not a problem of course for those who already understand everything. But still a hell of a way to run a blog.
Cob,
Yeah, no. This is not rocket science.
“all of the forgiven debt so far has been done with power the Congress gave to the President. Obama, Trump and now Biden. There has to be legislation to do all of the rest.”
Easy to look up the legislation that allowed these, and other student loans, to be dealt with by the President. I’ll listen to Nancy Pelosi on the subject.
“The president can’t do it — so that’s not even a discussion,” she said. “Not everybody realizes that, but the president can only postpone, delay but not forgive” student loans. It would take an act of Congress, not an executive order, to cancel student loan debt, she said.”
https://www.politico.com/news/2021/07/29/pelosi-schume-student-debt-501521
EMichael
i never denied that. but it is not the end of story.
Though probably you only meant the story about the president needing an act of congress, and i was thinking of the story about how to get the forgiveness of debt …that is how to get the act of congress.
today i note from your note that you said in your first comment that ” all of the forgiven debt so far has been done with power the Congress gave to the President. Obama, Trump and now Biden. ” and in your second comment “the president can only postpone, delay but not forgive”
this looks like a contradiction, but may be one that can be easily resolved with a little more explanation.
more than that, I was thinking about all of the “end of story” thinking that goes on in the world…which prevents thinking long and hard enough to actually solve the problem.
Or, if you actually use your brain, the message is it will take legislation to accomplish the goal.
There’s $1.7 Trillion of Student Debt out there.
Too much, it seems, to erase with the stroke of a presidential pen.
The Corinthian College dept is a tiny fraction of this.
‘Five hundred-thousand borrowers stand to benefit from a debt cancellation of approximately $5.8 billion.’
The Corinthian Debt Deal is practically ‘cherry picking’, with a reasonably large number of debtors (to a defunct profit-making college no less) with an average debt of about $10k each.
Fred:
You point to an average which I had not looked at till you mentioned it. It appears to be too low. “Tuition for a two-year degree tops out at $40,000 (commercial). On average, the cost at community college is $6,528. Corinthian’s least expensive certificate for healthcare was $17,000. Only 10% of all for-profit college students nationally graduate without debt; 70% of certificate-holding community college students do the same, according to College Board.”
Now I am curious.
Dobbs
“cherry picking”?
perhaps, but it shows the government was paying attention to the fraud. and it is a beginning. maybe a matter of eating the apple one bite at a time?
the key might be “graduates.”
Blame me if you like for coming down too hard in the Student Loan thread.
It was not mentioned in that thread (or I didn’t see it) that many lives have been devastated by extreme wage garnishment to gain repayment for looong-standing student loans that may have been modest to begin with but have grown from fees & penalties that have been added on. Bankruptcy protection has been denied for most of these loans. The logic seems to be that you cannot repossess an education the way you can a car. This needs to be fixed, even though the debt hole is very large.
Dobbs
exactly.
but i have been threatened with being banned for trying to say the same thing, be careful out there.
Canada Plans to Ban Handgun Sales and Possession of Assault Weapons
NY Times – May 30
—-
According to the Department of Justice, it is estimated that 26 per cent of Canadian households own some sort of firearm. Put another way, more than one in four households has a firearm located in it. Ninety-five per cent of firearm-owning households in Canada possess long guns.
Candian Firearms Facts
Gallup: 32% of U.S. adults say they personally own a gun, while a larger percentage, 44%, report living in a gun household.
Popularly known as ‘Neutron Jack’, after neutron bombs that destroy populations but leave infrastructure more or less intact…
Review: How Jack Welch Revolutionized the American Economy
NY Times – June 5
… (However, while) Jack Welch was unquestionably an important and emblematic figure in America’s paradigm shift, but Gelles takes his book title too literally, pushes it too strenuously. “Capitalism in America,” he writes “was working well right up until 1981, when Jack Welch broke it.” Whenever he refers to the post-1980 economic regime — “profits for shareholders above all else,” “a Darwinian attitude toward the labor market,” “downsizing, deal making and financialization,” and “executives … entitled to enormous wealth” — he uses his own word, “Welchism,” instead of libertarianism or neoliberalism or any of the other familiar terms. Presidents from Ronald Reagan on bought into libertarian economics, but Donald Trump was Welch’s buddy, so Gelles suggests it really got entrenched in 2017: “With his friend in the White House, his values were impacting all of American life as well.”
After 200 pages of a lot of ham-handed critique, Gelles devotes most of his last 30 to a fairly ham-handed celebration of the chief executives of Unilever and Paypal and the other “lonely voices in the business world” — in particular the founder of the billionaire-convening World Economic Forum in Davos — who “call for a more holistic approach to capitalism.” He finishes with boilerplate progressive prescriptions: “renounce the toxic myths that allowed our current system to become so horribly imbalanced,” improve pay and benefits, “make a habit of distributing profits” to workers, enact higher taxes on big business and “a wealth tax on the very richest” individuals. Yes, absolutely, great — but Gelles doesn’t begin to suggest how or if any of those reforms might come to pass, because nowhere has he closely examined the entrenched and powerful political foundations of the system his book is about.
Jack Welch’s Reign at GE Gave Us Elon Musk’s Twitter Feed
NY Times – May 21
What the hell happened at GE?
Fortune – June 1, 2018
… As economies boomed worldwide and U.S. stock indexes soared, GE has collapsed in a meltdown that has destroyed well over $100 billion of shareholder wealth. Pounded by a nonstop barrage of bad news, investors are traumatized and disoriented. “They just can’t figure it out and don’t want to invest,” says analyst Nicholas Heymann of William Blair & Co. “This isn’t like surveying the landscape. It’s spelunking with no lights and no manual.” Analyst Scott Davis of Melius Research says some investors have become permanently disillusioned: “Many have told us they will never own GE again.” …
Fred,
Excellent. Thanks.
After the 2008 Financial Crisis, then Welch had a moment of contrition, but I do not believe he gave back any of his loot. OTOH, Peter Drucker (Welch’s consulting side kick early on) spent the remainder of his life attempting to make amends.
Welch retired from GE in 2001.
(Jack Welch) was Chairman and CEO of General Electric between 1981 and 2001. When Welch retired from GE, he received a severance payment of $417 million, the largest such payment in business history up to that point… (Wikipedia)
yes, and now GE is bankrupt? or just off the Dow?
General Electric CEO Larry Culp announces the company’s plan to split into three companies that will focus on aviation, energy, and healthcare.
GE announces plan to split tinto 3 separate companies
Forbes – Dec 2021
(Bankruptcy is not planned, it appears. Not yet anyway.)
GE intends to execute a tax-free spin-off of the Healthcare business in early 2023, creating a pure-play company at the center of precision health…
This will be followed by combining GE Renewable Energy, GE Power, and GE Digital into one business and then pursuing a tax-free spin-off in early 2024.
Following these transactions, GE would operate as a leading aviation-focused company.
As you might have guessed, GE does not pay a lot of federal taxes.
General Electric Annual Income Taxes (Millions of US $)
2021 $-286
2020 $-487
2019 $552
2018 $93
GE was a hugely dominant presence when I was a student at RPI.
They were headquartered in nearby Schenectady NY, provided many scholarships and hired many, many RPI grads. (I was not one.)
Founder Thomas Edison had moved his lab there in 1900.
Later uprooted for Connecticut but leaving many facilities still functioning in the area. And even later, moved their (shrunken) HQ to Boston, where it is today, on a wharf down near the seaport.
‘March 24 2016 – GE announced today that its headquarters will be located in the Seaport District of Boston along Necco Street.’
Note: Peter Drucker died in 2005. His come to Jesus moment over financialization and shareholder value was about two decades earlier. It was never Drucker’s intent for his management philosophy to be applied purely for the purpose of extracting wealth from firms, but rather to invest in the new innovations from liquidating that which was past its prime. So, he never rewrote his philosophy of management, but rather augmented it with clarity and emphasis on determining the new before throwing out the old.
(Meanwhile, in Ukraine…)
NY Times – Latest developments
Russian airstrikes hit Ukraine’s capital early Sunday, injuring at least one person, officials said, and piercing a sense of relative security that had settled over the city as the country’s forces slow Russia’s grinding onslaught in the east.
At least five missiles hit the capital, Kyiv, about 5 a.m. near a railway station and other targets, the first shelling reported in the city in more than a month. The strikes, which Russia said destroyed tanks and armored vehicles supplied by Eastern European allies, came as President Vladimir V. Putin warned that Moscow would hit targets it had so far avoided if Western nations began delivering longer-range missiles to Ukraine.
Early, Putin pooh-poohed
Britain joins the US in providing Ukraine with long-range rocket artillery
NY Times – June 6
Perhaps an odd question to ask when one’s country is engaged in an unprovoked ‘special military operation’ in a neighboring country.
But let’s hope Ukraine follows the rules.
Aww, it’s just Putin’s little way: “Just do what I say and nobody gets hurt, see.”
The deal for the US rocket launchers is that they must not be used by Ukraine to fire on Russian territory.