COLUMN: Obama’s new economist falls short

Last Friday, President Obama announced that he was dissolving the President’s Economic Recovery Advisory Board (PERAB). It will be replaced by the Council on Jobs and Competitiveness. From the White House’s statement on the council, it seems to be little more than renaming the former board to sound like one that will actively seek out economic improvement, rather than simply respond and react to the recession. However, there is one essential change: the new organization will be chaired by Jeffrey Immelt, who is essentially replacing Paul Volcker.

    In response to the recession he experienced as President, Obama created the first board, PERAB. This organization ostensibly existed in order to gain insight into the economy from those who were not a part of the government. I do applaud the president’s apparent recognition that what Washington desperately needs is to look outside its borders when making policies that affect the entire nation. In particular, it is sensible that those who understand the economy best are its chief players and those who spend their lives studying it. Certainly these are the ones the government should look to for advice.

    A further comfort for conservatives is that Obama appointed Paul Volcker as chairman. Volcker was the chairman of the Federal Reserve during Reagan’s presidency. His policies effectively ended the 1970s reign of stagflation. To do so, he was forced to enact policies that were unpopular, such as raising the federal funds rate to 20 percent. By appointing Volcker, Obama was making a statement that he was willing to do the right thing to restore the economy, though it may not be the popular or easy policy. This assurance offered some comfort to those who were concerned that his administration could potentially be one of unprecedented rampant government spending.

    Clearly, Volcker’s appointment was a toothless statement.

    So Volcker, who has expressed disappointment over the board being used for little more than a public relations vehicle for the White House, is out, and Immelt is in.

    So, who is Jeffry Immelt?

    Immelt has been the CEO of General Electric since Sept. 7, 2001. In that time, he has pushed for General Electric to expand into alternative energy. Few industries are as reliant on government subsidies and regulations (of traditional energy sources) as alternative energy. Already we should be concerned. How unbiased should we expect the advice of the CEO of the second largest corporation in the world, one that is very interested in making a lot of money? Immelt is ultimately beholden to his stockholders, who are looking to make money off of their investment. Why should Obama, or we, the constituents, expect his advice to be for the good of America, rather than for GE?

    Perhaps, if Immelt were changing careers, deciding it was time to move into the public sphere, we might be less concerned. However, Immelt is not quitting his job as CEO. He will continue to receive his base salary of $3.3 million from GE. And that is not to mention additional forms of compensation he might receive. In 2007 his total compensation amounted to $14 million. This additional compensation is largely based on how well GE does in the year that Immelt is being paid for. So, he has an immediate economic interest to get GE as much money as possible. Doing so will also get as much money as possible into his own pocket. If GE is able to secure government contracts, that is more business, more income and more money for Immelt.

    If that isn’t enough, Immelt has repeatedly pushed for the government to establish standards and subsidies for the energy industry. Part of GE’s official strategy under Immelt’s leadership is pushing for additional government subsidies – and ensuring that GE is the recipient.

    Obama’s appointment of Immelt is a slap in the face to America. It is a sign that he has little concern for the individual American.

    Democrats have established a false dichotomy where their party is pro- “big government,” as opposed to Republicans favoring “big business.” Any attempt at keeping this pretense alive is quickly dropping away. Big business and big government are pairs, not opposites.

    It is only when there is big government that a business has the incentive to spend money to lobby for subsidies and regulations. And a large monopoly can protect its status only through the legal force of the government.

    Obama shows us that the aisle in the Capitol is not the only one he wants to reach across. What unifiers (in both parties) fail to realize is that our differences are not our weaknesses, but our strengths. Through peaceful competition, Americans bring out the best in ourselves. Through conflict between business and government, both will excel in their field. By “healing the divide,” we eliminate what makes us great. An alliance between Obama and Immelt will lead to both becoming worse. And who will pay the price? The American people.

Charles Major is a graduate studying business. He can be reached at charlesrmajor@gmail.com.