Jeffrey Immelt is identified in The Bob Zadek Show as the head of General Electric. He appears in two 2011 episodes as the program’s central example of what host Bob Zadek calls crony capitalism — the intermarriage of business and government that both episodes treat as a distortion of the free market.
The Volt purchase and the tax break
In the July 30, 2011 episode, Bob Zadek describes what he calls a little-known fact: when General Motors needed to sell the Volt, Immelt at GE bought half of the production of what Zadek calls Obama’s auto company. Zadek adds that Immelt then gets a tax break from the owner of General Motors, which is the government, for doing so. Zadek summarizes the arrangement as the government, which owns General Motors, paying Immelt through GE to buy government-manufactured cars and then paying for them by a tax break, concluding that you cannot get any more incestuous than that The Second American Revolution – NOW (2011).
Guest Don Boudreaux responds by asking whether GE had actually received a lot of government subsidies, and suggests that if so, GE probably spent some of the cash it got from Uncle Sam to buy the Volt and then got a tax credit on top of it. Boudreaux’s contribution is framed as a question and a supposition rather than an assertion of fact.
Business versus free markets
Later in the same episode, Zadek uses Immelt to draw a distinction between business and free markets. He says that business and free markets are basically unrelated concepts, and offers Immelt at General Electric as his example: General Electric, in Zadek’s words, is a government agent disguised as a business, so in-bed with the political process and so dependent on it for profitability and survival that GE and others like it would fear the free market and do not benefit from it The Second American Revolution – NOW (2011).
Boudreaux agrees and extends the point, naming General Electric alongside Archer Daniels Midland, Martin Marietta and Boeing as so-called businesses that suckle at the teat of government. He argues that the leaders of such firms are naturally pro-government, and that free markets are not about protecting businesses from competition. Zadek then cites the announcement doubling the CAFE fuel mileage standards, describing automobile CEOs as puppets nodding in agreement, and says that most large businesses, GE being the most ugly example, are simply instrumentalities of the federal government. Boudreaux closes the exchange by saying he wants to take the crony out of crony capitalism, and calls General Electric a monument to cronyism.
The August 6 episode
The August 6, 2011 episode, titled Obama Nationalizes General Electric, returns to the same theme with guest Luigi Zingales. In a monologue, Zadek says that business and free markets are not co-extensive terms, and that many American businesses would prefer there not be a free market — they just want to make lots of money, and if the way to do that is eliminating competition through government tools or other tools, they are perfectly content. He names GE as an example and says he and Zingales will discuss Jeffrey Immelt and GE perhaps a little bit later on the program Obama Nationalizes General Electric (2011).
Zadek locates the home of laissez-faire capitalism for the most part in small business, which competes in the crucible of the free market, and says that businesses — GE being an example — would be perfectly content to have a totally unfree market so long as they prospered. He also argues that the lines between the job of government and the job of business get blurred, and that when they do, Americans suffer, because the cost of a product should be the cost of production and the profit in selling it, not the cost of saving lives in rural India or saving the whales.
Zingales agrees, saying 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 asks what happened to big powerful Xerox, IBM and Microsoft when each controlled its industry, and observes that a business’s power in a marketplace tends to be transitory — the railroads were all powerful until there were planes and trucks — whereas the power of government seems far more permanent. He closes the hour by describing the subject as crony capitalism, the distortion of the markets by the intermarriage of business and government.
Across episodes
Both episodes treat Immelt and GE as the leading illustration of the same argument, and the excerpts show no development between them: the July 30 episode supplies the specific Volt purchase and tax-break allegation through Bob Zadek and Don Boudreaux, while the August 6 episode has Bob Zadek announce Immelt and GE as a topic and place them within the same business-versus-free-markets distinction, with Luigi Zingales adding that the larger the role for government, the worse the situation. The later episode does not revisit the Volt transaction, and the earlier episode does not mention Zingales.
What the sources do not cover
The excerpts do not state Immelt’s title at General Electric, the dates of his tenure, or any response by Immelt or GE to the allegations. They do not give the name of the tax break, the amount of the subsidy, the number of Volts involved, or any citation for the claim that GE bought half of the Volt’s production. The August 6 excerpt breaks off before any promised discussion of Immelt and GE takes place, so the sources contain no extended treatment of Immelt himself beyond the two exchanges above.