How we got here...Jack Welch and the End of Stakeholder Capitalisme

[Ike Bana]

Dondi says it's "Obama Offshoring", well that's just bullshit. Here's the whole story of the history of offshoring, and we have Rondald Reagan and Congressional Republicans to thank for it. It's a long read but worth it...

Jack Welch and the End of Stakeholder Capitalism

In standard microeconomics, the costs to workers and communities abandoned by profit-maximizing corporations are termed “externalities” — social costs lying outside the deals struck between corporate managers and investors. But why should these costs not be included in assessing whether the deals are good?

Over the last four decades, these “externalities” have grown so large as to swamp internal efficiencies. Entire regions of the country have been denuded of good jobs. Legions of (mostly) men without college degrees have become stranded. The bottom half of the American workforce has been left with stagnant pay and decreasing job security.

The results: rising rates of drug addiction, family violence, child abuse, deaths of despair, and an increasingly angry working class susceptible to demagogues like Trump.

And this massive move toward ending stakeholder capitalism began during the Reagan Presidency and Republican control of the Congress...

Before Welch became CEO of GE, most GE employees had spent their entire careers with the company, typically at one of its facilities in upstate New York. But between 1981 and 1985, a quarter of these GE workers — 100,000 in all — lost their jobs, earning Welch the moniker “Neutron Jack,” along with the glowing admiration of the business community.

[finnbow]

Originally Posted by Ike Bana

Dondi says it's "Obama Offshoring", well that's just bullshit. Here's the whole story of the history of offshoring, and we have Rondald Reagan and Congressional Republicans to thank for it. It's a long read but worth it...

Jack Welch and the End of Stakeholder Capitalism

And this massive move toward ending stakeholder capitalism began during the Reagan Presidency and Republican control of the Congress...

I got my MBA in the late 1980's at which time Jack Welch was considered an absolute god in the business community and was praised in any number of the courses I took. And then he (and his successor Jeff Immelt) drove GE into the ground mostly on the back of GE Capital.

[Oerets]

All I need say is Six Sigma!

He pushed that disaster changing our country forever. The use of Six Sigma caused the current state of our industries and management practices.

[finnbow]

Originally Posted by Oerets

All I need say is Six Sigma!

He pushed that disaster changing our country forever. The use of Six Sigma caused the current state of our industries and management practices.

What's interesting is that Six Sigma was just a gussied up, colorized version of the field known as engineering reliability (using statistical approaches to improve product quality). It really wasn't something new (just as Total Quality Management wasn't).

The trouble with such initiatives is that they're often top-down programs driven by outside consultants and generally only successful when applied on a small scale to existing projects/processes. Applying them enterprise-wide on all processes isn't at all helpful and often dispiriting. For example, they don't do a thing to help product development or innovation. Indeed, they may hinder it.

[Ike Bana]

The "ready, fire, aim" school of corporate management.

And...we have the day traders, hedge funders, and trading algorithm developers like drooling hyenas at at wildebeest carcass, who have turned investing into a casino.

[Ike Bana]

Originally Posted by finnbow

I got my MBA in the late 1980's at which time Jack Welch was considered an absolute god in the business community and was praised in any number of the courses I took. And then he (and his successor Jeff Immelt) drove GE into the ground mostly on the back of GE Capital.

A guy I knew in social work school who got out of GE in the late 80's told me about these GE staff conferences where Welch would stand in front of an auditorium full of managers screaming obscenities and assuring the attendees therein that "next yesr at this time a quarter of you will be fucking gone."

I thought the guy was exaggerating, but perhaps I was wrong.

[Ike Bana]

Originally Posted by finnbow

I got my MBA in the late 1980's at which time Jack Welch was considered an absolute god in the business community and was praised in any number of the courses I took. And then he (and his successor Jeff Immelt) drove GE into the ground mostly on the back of GE Capital.

A guy I knew in social work school who got out of GE in the late 80's told me about these GE staff conferences where Welch would stand in front of an auditorium full of managers, launch a profanity laden tirade that and assured the attendees therein that "next yesr at this time a quarter of you will be fucking gone."

I thought the guy was exaggerating, but perhaps I was wrong.

[Ike Bana]

There's so much more to Reich's article than Welch, who is just one of the people who killed American stakeholder capitalism. But one more thing about Welch. What Welch did at GE was really no different from what "the smartest guys in the room" did at Enron.

Welch was just smarter than Skilling, Lay, Fastow and the rest of them. And down the road GE Financial had to pay for its apparently slightly less than criminal cooking of the books.