When Charles Erwin Wilson, President Eisenhower’s nominee for defense secretary, faced the Senate Armed Services Committee in 1953, the General Motors CEO reluctantly agreed to sell his GM stockholdings to avoid a conflict of interest. The folksy, outspoken executive explained that he honestly hadn’t foreseen any problem “because for years I thought what was good for our country was good for General Motors, and vice versa.”
Wilson’s famous line has since been relentlessly misquoted as a boast, “What’s good for GM is good for America,” to illustrate the presumably patronizing attitudes of wealthy businessmen. That’s unfortunate, because the president of the then-largest U.S. corporation — like his predecessor William S. Knudsen, who left GM in 1941 to spearhead FDR’s war-production board — embodied the robust public-spiritedness and patriotism that helped define corporate America in the mid 20th century.
Sixty years later, where did the “America” in corporate America go? No longer committed to a particular place, people, country, or culture, our largest public companies have turned globalist while abdicating the responsibility they once assumed to America and its workers.
According to demographer Joel Kotkin, the worst offenders are Apple, Facebook, and Google, the high-tech firms secluded in Silicon Valley, a dreamland where the information-age glitterati make Gilded Age plutocrats look bourgeois. Kotkin notes that while Americans adore these hip companies and their cool products and eccentric moguls, the tech oligarchy invests precious little at home, whether in income taxes, philanthropy, or even dividend payouts. Most revealing: Its cash-rich firms employ few Americans relative to their size and their monopoly-like market dominance. For example, Google, with a market capitalization five times larger than GM’s, employs only one-fourth as many U.S. workers.
Moreover, the tech sector, disingenuously claiming a shortage of computer geeks, lobbies Capitol Hill for more H-1B guest-worker visas. That way, companies such as Facebook (which paid no federal income tax last year on profits of more than $1 billion) and Google can inflate the U.S. labor supply by importing foreign engineers to avoid paying the going wage for American computer-science graduates.
The old industrial giants aren’t much better. Following General Electric’s path under Jack Welch, they’re shedding employees, gutting domestic manufacturing operations, and betting on financial services. Even GM, bailed out for $50 billion by taxpayers in 2009, no longer sees America as the Promised Land. According to auto-industry consultant Edward Niedermeyer, the resurrected manufacturer is investing $11 billion in new production facilities and creating 6,000 new jobs in China. In comparison, GM — “General Tso’s Motors,” he dubs it — has invested only $8.5 billion at home since the bailout, while shedding 76,000 American workers. “America’s subprime auto maker” is banking on the Federal Reserve’s cheap-money policies to finance its outsourcing strategy.
This is not your grandfather’s — nor Knudsen and Wilson’s — GM, that corporate citizen that sat down with the United Auto Workers in 1950 to hammer out the “Treaty of Detroit,” the landmark agreement that established high wages and good benefits for auto workers, ushering in the widely shared prosperity of postwar America.
To be fair, neither Detroit nor Silicon Valley is entirely to blame for selling out. For decades, the national leadership of both parties has supported a host of policies — from the adoption of free-trade agreements to the repeal of New Deal–era regulations, including Glass-Steagall banking rules, that protected workers and certain industries — that have weaned management away from earning money the hard, old-fashioned way and toward quick-and-easy profiteering from globalization and financialization.
GM’s Charles Erwin Wilson has been succeeded by Google’s Eric Schmidt as the icon of America’s business class. It would be a tall order for corporate America to recover its former patriotism. But the political leader that can, in TR fashion, tame and tone Big Business to once again serve American interests and purposes will not only win the loyalty of the American people but also fix what’s been ailing the economy for a generation.
— Robert W. Patterson served in the administrations of President George W. Bush and Pennsylvania governor Tom Corbett.