Monday, February 7, 2011

GE: Crony Capitalism Made Easy

It’s good to be the king. It’s equally good to be a friend of the king (“FOK”), as GE can attest. Indeed, you may recall GE CEO Jeffrey Immelt, was recently appointed to lead Obama’s President's Council on Jobs and Competitiveness. You may also recall that Immelt spent the last two years trying to foist cap and trade rules on the rest of us so we would be forced to buy his company’s products. Well, it gets better.

It was reported the other day that GE received a waiver from the EPA’s new greenhouse gas emissions rules for a power plant GE is building in California. Yes, the same greenhouse gas rules GE has been lobbying Congress to force upon the rest of us. That’s how you do it when you’re a FOKer.

Of course, GE wants to distance itself from the bad press this generates, so GE issued a press release, in which it claims that it did not request a waiver, nor was it given one. In fact, it says, it’s not even building the project! GE has only offered to provide turbines to the project but its offer hasn't even been accepted yet. So there, nothing to see here. Moreover, the project manager, not GE, requested the waiver.

So who is right? Well, let me say that I have no doubt that everything GE says in its press release is absolutely, technically true. But there’s a problem with GE’s claim. I spent years involved in government contracts, including construction contracts just like this one. And what GE says here is misleading.

When a company submits a bid on such a project, it already has its subcontractors lined up. Indeed, these bids are essentially the work of teams of contractors, whose efforts are coordinated by a single general contractor, who assembles and submits the final bid. Each contractor participating in the team will submit their own bid to the general contractor, usually on the condition that the bid is binding on both parties but only if the team is chosen to handle the contract. What this does is it allows the general contractor to know their costs and what capabilities they can offer, but doesn't require anyone to agree to anything unless they end up winning the overall contract, at which point everything automatically falls into place.

This is how it's always done. Indeed, it’s inconceivable that anyone would submit a bid to build a power station without having an agreement in place for GE (or some competitor) to supply the turbines at a certain price. Thus, while I don't doubt for a moment that GE is being legally correct when it claims that its offer has not been accepted, I have little doubt this is also highly misleading. The technical acceptance is a formality.

What’s more, it's also inconceivable that a project manager would request such a waiver without the full knowledge, support and participation of GE. Indeed, they would have needed GE to identify the issue for them and to guide them through the process. Thus, while it is probably technically correct that the general contractor made the request rather than GE, the general contractor would only make the request at GE’s direction.

Why would GE try to mislead the public on this? Because this is crony capitalism. GE spent $32,050,000 lobbying in 2010 and now it’s calling in those markers to get its politicians to put harmful anti-competitive regulations in place, and then to get exemptions from those regulations for itself. Keep this in mind, along with the 25,000 jobs GE shipped overseas during the last two years the next time you see a GE ad telling you about all of the good things they are doing for America and the world. And even more importantly, keep this in mind the next time some politician (Republican or Democrat) tries to tell you why we should be doing something GE wants. . . because they're FOKers.


Tennessee Jed said...

This is a great, if disturbing post. GE and Imelt have been bad actors for a long while. What is sad, is this story will NOT be told in the main stream media unless some of the "big" conservative players such as FOX, WSJ and Breitbart pressure them to do so Well done, Andrew.

AndrewPrice said...

Thanks Jed. This should be a big story, but of course, it won't be. The media doesn't want to expose what lobbying can really get you because then people might demand a change in the cozy relationship between big business/big media and big government.

And if they're forced to report it, they'll be happy just to accept GE's denial, which (as I say) is technically accurate but entirely misleading.

rlaWTX said...

I haven't read this article yet, but since I am going off topic, I don't think it is a technical rule violation... ;)

YAY, Packers!!!!!
I liked the Coke/House commercial.
I liked the beetle/black betty commecial.
Missed most of the rest of them by only watching the last quarter of the game (YAY, GB!!)
And I am gladd that my not having decent internet at home did not actually endanger the life of a Panda!!

I have to go to class now, so I will read this stuff tomorrow!!!!

Joel Farnham said...


This reminds me of the story of a lawyer/businessman who argued before the town council first that the township already had enough liquor bars and that another one would cause more problems than the tax-revenue from it was worth. Then argued six-months later that a new liquor bar was just the thing to help the community and increase the tax revenue. Both times the council sided with him.

When his son asked him about hypocrisy and arguing both sides, his reply, "What hypocrisy? I always argued my side for my benefit!"

GE is starting to smell like a month old fish rotting in the sun. Plausible deniability. The media won't cover it because it would cut into the free golf junkets and benefits.

Disgusting. I hope it blows up in their faces like Enron did.

T_Rav said...

Andrew, of course the media won't cover this. Why should they? GE is fighting the good environmentally-friendly fight, and if this one enlightened corporation takes a hit, polar bears will die. And you don't want polar bears to die...DO you?

Anonymous said...

Andrew: Well, if you're going to exercise monumental hypocrisy, tell everyone else how to live their lives, and pollute the air with a waiver that your lesser-contributing competitors can't get, I can't think of a better place to do it than California. I just wish GE would find a way to make renewable energy out of ground-up Delta smelt. We have yet to find any other use for them.

AndrewPrice said...

rlaWTX, Rules? We don't need no stinking rules! :-)

I don't remember the coke/house commercial. I did like the one with the two border guards.

I'm happy with the Packers win. I'm just glad the game was pretty decent by Super Bowl standards.

Feel free to read the article any time and let me know what you think!

Yeah, it was touch and go with the panda, but it all worked out because Algore has no follow through!

AndrewPrice said...

Joel, That sounds like most lawyers I know! :-(

Yeah, GE is really pushing the limits. BUT, they aren't any different than the other big businesses that thrive on lobbying. Lobbying, sadly, provides a great return on investment if you don't mind messing up America.

I hope this story does catch on, but I doubt it. I'd also like to see more stories exposing all the instances like this -- giving out waivers is a real money maker for politicians.

AndrewPrice said...

T_Rav, I do not want polar bears to die, no, so I will happily put all logic aside and blindly do what the media tells me to do so that those lovable trash-eating, murderous creatures who have survived much worse that "global warming" for hundreds of thousands of years can continue to survive another couple decades. . . as long as I personally don't have to feel any of the burden. And then I'll feel extremely smug at what I've done with other people's money and the full force of law!

.... I've been practicing being a liberal so I can infiltrate Huffpo like Bev has done! ;-)

As for GE, you're right, they've managed to get the kind of PR that keeps the left from attacking them, they've pandered to liberal causes (even as they haven't actually done anything to live up to the rhetoric).

AndrewPrice said...

Lawhawk, If they could find a way to harness the power of liberal hypocrisy, now that would be something. In fact, the only thing that puts out more power an liberal hypocrisy is the sun. . . especially when you infuse the hypocrisy with patented liberal smugness.

CrispyRice said...

I think their FOKers every time I turn on the light in my kitchen and have to put up with its hideous tones until it decides it wants to warm up enough to be bright. //hurl

This whole thing is disgusting. Thanks for the article.

AndrewPrice said...

You're welcome Crispy. I think this is one of those stories that needs to be told. People should know what these companies are up to so that they know who they can (and more importantly) cannot trust when it comes to politics. It's time that Americans stopped letting companies get away with hiding behind the words of capitalism and free markets, but then trash those concepts by using lobbying power in ways that harm our economy and our country.

And you're right about the lightbulbs, GE was one of the companies who not only pushed for the change, but opposes a change back because it would cost them money to retool the factories. . . and thereby takeaway their ill gotten gains.

StanH said...

Good read Andrew, and important to keep the bright light shining on this corruption. Christopher Horner also has written some great articles about this very subject. He as an attorney representing a concerned party, claims to have been in the room at the Whitehouse in ’98, when Ken Lay (Enron), Bob Rubin, Bill Clinton, and the CEO of BP (?) came up with the term and theory of “carbon offsets” and the trading thereof. You can bet your sweet-bippy that GE was listening from afar, off coarse Jack Welch was CEO of GE at the time perhaps that delayed participation in the scam. Jeffery Immelt that FOKer, has driven that great company willingly into the arms of Barry and big government.

AndrewPrice said...

Stan, Thanks! I've heard of Horner, but haven't read his stuff.

I think you're absolutely right that GE paid careful attention to the carbon offsets scheme and set about profiting from the use of government force to push through environmentalism. In fact, GE jumped out ahead of the curve on all of this, and everyone in the business world was surprised. But what they didn't realize at the time was that GE wasn't planning to convince the consumer of the benefits of what they were doing, they were planning to use the government to force everyone else to buy GE products. From a purely business strategy, it was brilliant. But from the perspective of right and wrong, it's about as evil as you can get. They might as well have asked the government to go steal money directly from their competitors and the public and hand it to GE.

DUQ said...

This is the type of thing that disgusts me when either side does it. The government should be of the people, not of the lobbyists.

AndrewPrice said...

DUQ, I agree. This is bad no matter which side does it. This is the kind of thing our media should be sniffing out and exposing. . . if only they did their jobs.

Ed said...

I agree with Jed, this is a great article but very disturbing. Thanks for sharing your insights.

AndrewPrice said...

Thanks Ed, You're welcome. I thought it was a good idea to sort out what GE said in their press release since you probably wouldn't hear that anywhere else in the media.

Ed said...

I'll keep an eye out for someone else covering this, but I doubt they will for the reasons you say. They'll probably buy right into the claim GE didn't ask for the waiver, even though what you say makes total sense and even though you would think a reporter would check with experts to verify what GE is saying. Of course, I know better than that, but that's what would happen in an ideal world.

AndrewPrice said...

Thanks Ed! Let me know if you see any articles on this, I will be very curious to see if this gets picked up anywhere.

rlaWTX said...

finally got this one read - cronyism is annoying at BEST. wasn't that part of the reason all those checks ans balances were written into that old document on display in DC... the consti--- consti--- something??

(we saved the panda, do you think that we should get on the polar bears express somehow?)

AndrewPrice said...

rlaWTX, Very true, the idea behind the structure of the Constitution is that because people will act in their own interests, if we can put enough checks and balances in place, then no one can abuse the system because it will be in the interests of everyone else to stop them. Unfortunately, modern politicians have turned this around and realized that they can all get what they want if they just agree not to stand in each other's ways. In other words, if we all agree to ignore the checks and balanced, then each of us gets what they want.

The only people getting hurt in that scenario are the public.

Forget the polar bears, they're mean! ;-)

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