Jack Welch said, in the 1990′s, that he ideally wanted to have "every plant you own on a barge."  But his GE successor Jeffrey Immelt has seen the fallacy of this view, now saying that the U.S. is important and the trade deficit must be reduced.  This was circulated last week, but deserves a re-examination.

Thomas Palley on Welch in 2007:

Several years ago Jack Welch, former CEO of General Electric, captured the new reality when he talked of ideally having “every plant you own on a barge”. The economic logic was that factories should float between countries to take advantage of lowest costs, be they due to under-valued exchange rates, low taxes, subsidies, or a surfeit of cheap labor. Globalization has made Welch’s barge a reality. However, in doing so it has made capital mobility rather than country comparative advantage the engine of trade. And with that change, “free trade” increasingly trades jobs and promotes downward wage equalization.

We know that U.S. based multinationals have lost their loyalty to our country.  Loyalty does not create shareholder value, in their view.  Gutting the U.S. was good for their company,  according to Welch.

Now Jeffrey Immelt has seen the shareholder value results of massive offshoring from the U.S.  In his recent shareholder letter…

I have also learned something about my country. I run a global company, but I am a citizen of the U.S. I believe that a popular, thirty-year notion that the U.S. can evolve from being a technology and manufacturing leader to a service leader is just wrong. In the end, this philosophy transformed the financial services industry from one that supported commerce to a complex trading market that operated outside the economy. Real engineering was traded for financial engineering. In the end, our businesses, our government, and many local leaders lost sight of what makes a nation great: a passion for innovation.

To this end, we need an educational system that inspires hard work, discipline, and creative thinking. The ability to innovate must be valued again. We must discover new technologies and develop a productive manufacturing base. Our trade deficit is a sign of real weakness and we must reduce our debt to the world. GE will always invest to win globally, but this should include a preeminent position in a strong U.S.

The too-often quoted phrased was "What is good for GM is good for the country."  But the reverse is true.  In this case, "What is good for the country is good for GE… not to mention the rest of us."