GE CEO explains practical realities to free marketeers
The Wall Street Journal‘s ECO:nomics conference is taking place at the Bacara Resort, a gorgeous old Spanish-style complex perched on the edge of the Pacific Ocean. Just outside, the cherry-red sun is setting as a warm breeze blows and waves quietly lap at the sand. Inside, however, things have gotten a little stormy.
"I came because I was invited,” says the man on stage heatedly, squaring off his shoulders to the packed crowd. “I don’t need to be lectured by anybody in this room about how to compete!"
From another speaker it might sound defensive, but in this case it is the CEO of GE, the second largest company in the world. Jeff Immelt knows whereof he speaks.
Immelt’s outburst came toward the end of a Q&A session that saw him repeatedly assailed by ideological conservatives angry over his involvement in the U.S. Climate Action Partnership, a coalition of large businesses lobbying for a carbon cap-and-trade system, and his leadership role in pushing the business world to embrace clean energy and sustainability.
First it was Kimberly Strassel, conference co-host and member of WSJ‘s notoriously hard-right editorial board. He answered her patiently, explaining that it’s better for businesses to get out in front of what’s coming than wait on the sidelines. Then it was Fred Smith Jr., president of the Competitive Enterprise Institute, who lamented the capitulation of business leaders before the onslaught of Big Government. Immelt smiled tightly, paused, and said, "it’s a great country — we can disagree about this."
What put him over the top was Terry Anderson of the Property and Environment Research Center, a right-wing think tank. Anderson asked what real entrepreneurs — the ones who don’t have the resources to lobby for favorable treatment from government — are supposed to do when a carbon cap cripples the economy.
Real entrepreneurs. That set Immelt off. "We compete our asses off," he snapped. "We’re No. 1 at what we do!"
At points, Immelt seemed keen to let his antagonists know that he was one of them. "We read all the same books!" he said plaintively to Strassel. "I’m not an environmentalist," he insisted later. At the end of one exchange, he protested, "I’ve never voted for a Democrat!" adding with a mutter, "until tonight, maybe …"
Conservative in good standing he may be, but Immelt has practical considerations to attend to. The day after this law is passed, he said, "you can write about something else. But I’ve got to go to work that day." He returned to several points repeatedly:
- The ideologues "worship false idols." There are no completely free markets. The government has its hand in every industry: Housing has mortgage tax credits; GE got into commercial aviation because the DOD helped fund it; in healthcare there’s Medicare and Medicaid and the NIH, researching and funding new drugs. Only in energy, for some reason, "we’ve decided that the only regulation will be the price of a barrel of oil. That’s crazy!"
- Businesses always forecast doom, but regulations can often work to spur competition. The SOX trading program worked. OSHA 1910 worked. CAFE standards worked. The production tax credits work. About the PTC, Strassel asked, "how many wind turbines would you have sold this year without government subsidies?" Immelt: "The same number. Just outside the U.S."
- Rising energy costs are not some theoretical worry; they’re happening. Costs are rising. Better to get out ahead and take control than wait for it to be thrust on you. By the time a law is written, it will be five years too late.
- If business doesn’t take a seat at the table, regs will be determined by politicians and activists (some of which, he said with evident horror, want to do away with coal entirely!). USCAP may not be perfect, but it replaced a vacuum.
Interestingly, criticism from the right came only from pundits and think tankers. Every CEO that addressed Immelt was supportive. Duke Energy CEO Jim Rogers shared an old saying: "The pioneers get the arrows and the settlers get the land." Patricia Woertz of ADM talked about how mission-driven business can attract great employees. H. Lee Scott Jr. of Wal-Mart talked about how odd it is that conservatives oppose programs that are, in effect, reducing waste.
Ultimately, Immelt’s most powerful argument came in the form of a simple question. At the end of another defense of carbon caps, he paused for a moment and then asked, "What’s your favorite part of our current energy policy?"
"Make a list!"
Then scattered laughter. Then waves of laughter. And finally, applause.