JACK WELCH IS NO DOUBT THROWING UP!
Last week you may have seen that the Business Roundtable, an influential group of approximately 200 CEOs from our country's largest corporations, rewrote their Statement on the Purpose of a Corporation to proclaim that it is no more based solely on yielding the highest profits for its shareholders. Rather, the purpose now is to consider the rights and needs of all "stakeholders" - employees, customers, and society at large [insert "Government'].
We are not at the edge of the slippery slope. We are screaming down the hill in our Freedom Flyer unaware of that huge snow ramp that creates the three-week tail bone bruise. Of course, all successful corporations know that the employees, customers, and a healthy community are vitally important to long-term success, yet it has been the pure and clean capitalism model of Adam Smith and Milton Friedman, ensuring the self-interests of shareholders remain the preeminent purpose of companies, which has protected the onward and upward march of the United States of America. The embarrassingly-low GDPs of Germany, France, England and the rest, all "in business" for hundreds and thousand of years longer than us, show us the antithesis, the socialism, the concerns for society which in turn hurt society. Congratulations to Elizabeth Warren who has successfully scared the common sense out of 200 CEOs.
In 1970, economist Milton Friedman wrote in the New York Times (of all places) that profitable businesses serve the common good so much better than executives who spend money on social responsibility. Also, he explained how CEOs who put social responsibility over shareholders feed the public belief that free markets and business are "wicked and immoral" and must be curbed by "external forces," which "will be the iron fist of Government bureaucrats." So prescient of today's Roundtable, he concluded that "businessmen seem to me to reveal a suicidal impulse." Or, as we state today, "Where have all the real leaders gone?"
Ayn Rand would say that now is the time they have all withdrawn from leading our great nation and retreated to "Gault's Gulch." These leaders will finally be joined by Dagny Taggart, her heroine of "Atlas Shrugged," who will be the last to give in to the technocrats destroying our free markets and success.
J.P. Morgan's Chief, Jamie Dimon, is currently leading the Roundtable charge with support from his buddy, Warren Buffet. These two exemplify the textbook change in uber-wealthy business leaders, normally in their 60's, when they suddenly feel great guilt for their outsized wealth. They begin promoting higher taxes on the rest of us, along with renouncing the very same corporate governance, tax planning, and concerns for self interests which created the incredible wealth for so many individuals and communities in the first place. Textbook.
The Roundtable voted 181-7 in favor of the change in their mission statement with one very interesting dissenter, Larry Culp, the new CEO of General Electric. On multiple occasions JAM VIEWS has highlighted GE's fall from grace, but now I might have great hope for their rise from the ashes! Where is Jack when we need him?
In our Building Special Companies course, Jack Welch, the tremendously successful CEO of General Electric from 1981-2001, is prominently featured in lessons teaching our students how to hire and grow "A-Players," as well as in building substantial net worth. During Jack's tenure at GE, the stock price rose 4,000% as annual profits (not revenue) surpassed $15 billion. Jack taught the world to hire A's, train B's to become A's, and fire the C's. In his two seminal management books, "Straight From the Gut" and "Winning," Jack built upon Adam Smith and Milton Friedman to teach us that the most important mission of a corporation was to be highly profitable. This profitability brought employee security, new opportunities, more jobs, hope, college funds, retirement funds, good health, and the opportunity to truly provide charity for our fellow man. Who does the socialist need? They need rich business leaders who actually create the money, of course.
Jack professed differentiation and meritocracy, and despised equality and redistribution. He raged against the fake cause of social responsibility. Unfortunately, once Jack's time passed, Jeffrey Immelt took the reins at GE, and to Jack's horror drove it into the ground while focusing on "stakeholders." The Wall Street Journal has called Immelt "the model of the stakeholder executive, posing in Vanity Fair as a spokesman against climate change, issuing pronouncements after the 2008 panic about the failures of capitalism." Immelt forgot what his job was and destroyed the golden goose, therefore harming all of the stakeholders to which he professed to be helping.
Remember the JAM VIEWS constant theme; those who preach to help others do not, while those scorned as taking advantage of others are the ones truly taking care of them. Truth since the beginning of time.
Hopefully, the CEOs will lighten up on their lunch cocktails at the Oak Room (maybe better yet reinstitute lunch cocktails) and also remember another JAM VIEWS truism for dealing with Elizabeth Warren and her Gang; never appease an oppressor. The only successful strategy throughout history has been to oppress the oppressor.
"When I say 'capitalism,' I mean a full, pure, uncontrolled unregulated laissez-faire capitalism with a separation of state and economics, in the same way and for the same reasons as the separation of state and church." - Ayn Rand
**Many thanks to the WSJ, Forbes and Fortune for the above quotes and statistics.
** For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.
** To access JAM Views directly please visit jeffreyamartinovich.blogspot.com
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