2. The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America
There was a time when General Electric was the most admired company in America. It was one of the original 12 companies listed on the Dow Jones Industrial Average. It actually invented things. In the 1950s, to a degree that would stun today’s workers, GE shared the wealth, offering job protection, generous benefits and retirement security. Then Jack Welch came along as GE’s eighth chief executive officer and single-handedly embarked on a slash-and-burn program to cut costs and remake the company in his own image. Welch’s practice of ranking employees against each other smashed GE’s culture. His fetish for financialization led to many missteps. In 1986, Welch directed GE Capital to acquire the investment bank Kidder Peabody. Soon after, Kidder was implicated in a series of scandals—remember Ivan Boesky?—that saw its chief arbitrageur led away in handcuffs. Readers will meet a young, impressive Jack Welch and then watch with revulsion as he becomes a monster. Post retirement, his personal PR machine secured him a perch as a widely read “thought leader” on business and politics, where he was not above engaging in disinformation: In 2012, Welch, who presided over a company where fiddling with the numbers was commonplace, accused President Obama of fiddling with a strong monthly jobs report. The book traces Welch’s toxic legacy through the travails of companies—Home Depot, 3M, Boeing—led by his protégés. With Boeing, Gelles connects the dots between Welch’s management style and the Boeing culture that led to the fatal 737 Max crashes in 2018 and 2019.
“More than anyone else, it was Welch himself who created the schism between the Golden Age of capitalism and the unequal, unsustainable era of shareholder primacy in which we now live. He was the first CEO to take a healthy company and treat it like a turnaround job, preemptively laying off tens of thousands of workers and kickstarting the era of mass downsizing, outsourcing, and offshoring. He was the first who brought to his job a singular focus on quarterly earnings, and employed financialization, earnings smoothing, buybacks, and everything else in his power to see that GE stock price continued to rise.”