General Electric appears across four episodes of The Bob Zadek Show as the program’s standing example of a large corporation whose fortunes are bound up with government rather than with the free market. The treatment spans two eras of the show: a 2011 pair of episodes on crony capitalism and the debt ceiling, and a 2019 episode with historian Amity Shlaes on her book Great Society: A New History, which adds an internal history of the company and its role in the political education of Ronald Reagan.
”A government agent disguised as a business”
In the July 30, 2011 episode, Bob Zadek introduced General Electric while distinguishing business from free markets. He named Jeffrey Immelt at General Electric and said the company is a government agent disguised as a business, so in-bed with the political process and so dependent on it for its profitability and survival that it and others like it would fear the free market The Second American Revolution – NOW (2011). Guest Don Boudreaux agreed, placing General Electric at the head of a long list of so-called businesses that suckle at the teat of government, a list he said also includes Archer Daniels Midland, Martin Marietta and Boeing. Boudreaux argued that the leaders of such firms are naturally pro-government, and that tariffs, regulations and in many cases high taxes are means of protecting powerful businesses from the competition of smaller ones. He called General Electric a monument to cronyism.
Zadek returned to the company later in the same episode, saying General Electric might as well be the TVA, some government entity. He described a sickening, incestuous relationship between government, tax breaks and loopholes, with GE as the most ugly example, and said most large businesses are simply instrumentalities of the federal government. In the same passage he cited the announcement that Obama was doubling the CAFE standards, the fuel mileage standards for cars, and described three automobile CEOs nodding and saying they loved it, which he attributed to their dependence on a government that owned one of them or was a creditor of another. He said they did not dare protest a policy he called bad for the automobile buying public and bad for the manufacturers. Boudreaux framed the underlying problem as wanting to take the crony out of crony capitalism, since crony capitalism is not capitalism at all but cronyism.
”Obama Nationalizes General Electric”
The August 6, 2011 episode, titled “Obama Nationalizes General Electric,” opened with Zadek’s distinction between business and free markets. He said many presidents, including Obama, have surrounded themselves with business executives to build business credibility with the public, but that business and free markets are not co-extensive terms. He said many American businesses would prefer there not be a free market, and would be content to eliminate competition through government tools or other tools. For Zadek, the home of laissez-faire capitalism resides for the most part in small business, while businesses such as GE would be perfectly content to have a totally unfree market so long as they prospered Obama Nationalizes General Electric (2011). He said he and Luigi Zingales would discuss Jeffrey Immelt and GE later in the morning.
Zadek also read from a recent Obama quote to the U.S. Chamber of Commerce, which he identified as the trade association of American mostly big business: “Ask yourself what you can do for America. Ask yourself what you can do to hire American workers, to support the American economy, and invest in this nation.” Zadek objected that this is not the job of business, which he said is to create jobs, create wealth and use capital effectively, not to carry on lofty social goals. Zingales said he agreed completely, arguing that the larger the role for government and the more scope for business to direct government resources in its favor, the worse the situation is. Zadek then observed that the power of big businesses such as Xerox, IBM and Microsoft proved transitory, as the railroads had before them once planes and trucks arrived, whereas the power of government seems far more permanent.
The Boulware “propaganda mill” and Ronald Reagan
The December 29, 2019 episode with Amity Shlaes treated General Electric historically. Shlaes said she profiles three companies in Great Society: A New History: what became Intel, Toyota, and General Electric Close Enough to Socialism: Amity Schlaes on The Great Society (2019). She said companies have souls and GE’s soul was divided: on one hand a group of Mad Men who were cynical about marketing in the early 60s and wanted to work with government, and on the other the old GE of Thomas Edison, a man alone in a lab. She noted that GE sold turbines to the Tennessee Valley Authority, which she described as government from the New Deal.
Shlaes described Lemuel Boulware, a GE executive she called a kind of guru, who created what she called a little propaganda mill at GE to teach its more than 100,000 workers about the benefits of capitalism. Boulware, she said, mimeographed pamphlets about Hayek and about the work of Henry Hazlitt, who popularized Bastiat and Hayek. One of the things Boulware did was hire an aging actor who was not very popular and was at that time a rock-ribbed Democrat, Ronald Reagan, to be the spokesman for these capitalist ideas. Reagan, who needed a job, went around on the rubber chicken circuit giving lectures to workers and in town halls about the merits of capitalism and the problems of unions, and gradually became convinced of the ideas; Shlaes said he followed GE stock and bought some for his son so the son could see how markets worked.
Shlaes then described the collapse of that arrangement. GE executives, she said, had been colluding illegally in violation of American antitrust law with Westinghouse and other companies to fix prices and charge too much to the TVA. There was a bloody court case, actual GE executives went to jail, which she called unusual in antitrust; the unions crowed, the stock went in the toilet, Boulware’s department fell apart, Boulware retired, and Reagan was fired and his television show, GE Theater, was canceled. Reagan remembered all of it, Shlaes said, and began to give speeches about markets and about what was wrong with the socialization of medicine. She said Boulware and GE’s investment in Reagan and free-market ideas paid off exponentially for those investors over a long period, and that Reagan corresponded with Boulware when he ran for governor of California.
Zadek’s framing of the same material emphasized that during the Johnson, Kennedy and Nixon administrations, a B-grade actor who became President Reagan was in the background, and he asked Shlaes how General Electric, which he called a Fortune 500 company and one of the most trusted companies in America if not the world, was connected to delivering Reagan to the country. He noted that Reagan began as a rock-ribbed Democrat in the Franklin Delano Roosevelt mold and was later guided by Friedrich Hayek.
Across episodes
The 2011 episodes and the 2019 episode treat General Electric from opposite directions rather than developing one line of argument. In 2011, Zadek and his guests use GE as the present-tense emblem of crony capitalism — a company dependent on the political process, with Zadek calling it a government agent disguised as a business and Boudreaux calling it a monument to cronyism. In 2019, Shlaes supplies the company’s internal history, in which GE simultaneously sold to the TVA, colluded with Westinghouse in violation of antitrust law, and housed Boulware’s free-market education effort that helped make Reagan. The later episode does not revise the earlier charge; it adds the Boulware and Reagan material and the antitrust case, which the 2011 episodes do not mention.
What the sources do not cover
The excerpts do not state when General Electric was founded, where it was headquartered, or what became of it after the periods discussed. They do not give the outcome of the antitrust case beyond the fact that executives went to jail, nor the name of any statute or case involved. Jeffrey Immelt is named but his title and tenure are not stated, and the excerpts do not say what position, if any, GE holds in the present.