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Jack Welch was one of many voices in the 1980s and 1990s that oversaw the deindustrialization of the USA. The USA lost almost 2 million manufacturing jobs in th

Jack Welch was one of many voices in the 1980s and 1990s that oversaw the deindustrialization of the USA. The USA lost almost 2 million manufacturing jobs in the 1980s. We shouldn't blame Jack Welch for much of that deindustrialization, as there were other, larger forces at work. At least in the early part of the 1980s, President Reagan sought a "strong dollar" which made the dollar so strong that USA manufacturers had no hope of competing on international markets, and so in that sense, Jack Welch was only responding to the circumstances he was dealt. But his focus on "shareholder value" also meant that he signaled, and was in favor of, the end of the era when big USA corporations were making long-term bets in speculative technologies. And allowing the rise of GE Capital meant he was very much part of the movement that saw the USA retreat from manufacturing and focus instead on finance. So to the extent that he was simply reacting to circumstance, we can admire his flexibility, but his focus on short-term results, and his retreat from long-term results, we can blame him for his part in the deindustrialization of the USA. More about that deindustrialization here: https://demodexio.substack.com/p/why-did-the-west-deindustrialize https://demodexio.substack.com/p/why-did-the-west-deindustri...

jasonlotito 4y ago
FYI: Not sure if you know, but that article works to block you from reading it and asks you to sign up for something. I don't know, I just back out of any user hostile BS like that point. Maybe you have a better article from a source that isn't clearly hostile to visitors?
- bumby 4y ago
  There’s a “let me read it first” option that grants you unmolested access to the article
  - nottorp 4y ago
    Why bother? If they don't want me to read it i won't read it. There should be a way to mark this crap on the front page so I don't waste my time clicking on it...
  - jasonlotito 4y ago
    Oh, I didn't see it. It's hidden. "Unmolested' would be me not needing to interact with that.
    - neweroldguy 4y ago
      This is literally what they sell though. It’s like going to a restaurant and complaining that they ask you to pay for your meal.
      - jasonlotito 4y ago
        I know when I got to a restaurant what I'm getting myself into. I guess I just need to equate substack URLs with deceit, hostile reading patterns, and substandard content. Though, someone sharing out substack links that apparently they wrote should be seen as advertising and treated as such.
        bumby 4y ago
        Or, alternatively, we need to stop constantly expecting content for free. (I'm saying as a society, not you personally)
    - deleted 4y ago
      [deleted]
- sanarothe 4y ago
  Substack does have all these sketchy patterns but there is a 'Let me read it first' text link on the popup that lets you continue, seemingly without tracking how many times you've done that. BUT I made the mistake of actually signing up for one blog I liked and got smacked by a barrage of more 'sign up for this!!!' immediately after. So I agree that it's user-hostile but... it seems like most of the web is moving that way, outside of our digital gardens.
  - bambataa 4y ago
    What’s really weird about Substack is that you seemingly can’t subscribe to a newsletter and read it in the app without getting every post emailed too. I just want to read in the app.
    - kodah 4y ago
      fwiw, part of their schtick was newsletters and that you, effectively, never had to open their app. Seems like they designed for one and not the other. That said, during launch day they took a lot of feedback from here so they might hear you if you reach out.
  - jasonlotito 4y ago
    > ...'Let me read it first' text link Yep, I didn't notice that until someone commented that. Seems purposely hidden. > it seems like most of the web is moving that way, Yeah, I really don't care at this point. I'm not going to jump through hoops anymore. If someone wants to block me from reading something using trickery, than clearly it's worthless and neither the site nor the author respect me. Why should I respect them?
onlycoffee 4y ago
So, the country is better off with 1) a weak president, 2) a weak dollar and 3) poor shareholder value?
- RC_ITR 4y ago
  I know you’re being snarky, but a dictatorship with limited export opportunities and extreme inequality isn’t exactly the paradise you think it is.
- woodruffw 4y ago
  The country is better off when we improve it directly, rather than optimizing for weak proxies like shareholder value. It’s also best to discharge any gut feelings you might have about a “weak” versus “strong” dollar. They’re economic qualities, not moral ones.
- pjc50 4y ago
  I think you could make strong arguments for all of those: - fairly sure the Federalist society wrote a lot of words on why strong king-like presidents were bad; a strong individual post is a license for arbitrary whims of power - weak currency improves exports; the Chinese strategy for decades was a weak RMB to the extent that the US complained about it endlessly - "shareholder value" tends to be a horribly short termist metric that encourages hollowing out the business, reducing investment, and pinching the employees until they start leaving
- deleted 4y ago
  [deleted]
ch4s3 4y ago
Deindustrialization was mostly done in the 1970s, with factory employment as a share of the labor force peaking in the 1950s. Moreover a strong dollar lowers the cost of imported inputs, say iron ore, so it isn’t all bad news for manufacturing. Exports also aren’t the only markets for finished goods. I’d also point out that the US manufacturers more cars than ever, and makes basically as much steel as it ever has. Sure, no one sees t-shirts anymore.
Majromax 4y ago
> The USA lost almost 2 million manufacturing jobs in the 1980s. That's misleading. Via FRED, manufacturing employment in the USA had a long peak lasting from roughly 1970 to about 1990. The largest peak-to-trough drop was in fact about 3 million, from mid-1979 to early 1983, but that had more to do with the Volker recession than any change in corporate culture. Manufacturing employment rebounded (partially) from the post-recession low, remaining steady until about 2000. The sea change in employment came after 2000, plausibly due to opening trade relations with China. However, at the same time manufacturing production did not decrease much if any. For example, production of durable consumer goods (https://fred.stlouisfed.org/series/IPDCONGD https://fred.stlouisfed.org/series/IPDCONGD) increased from 1982 to 2005 or so. That being said, "steady manufacturing employment" does mean that manufacturing employment as a share of all employment fell, thanks to growth in the labour force. That by itself can explain some of the qualitative observations re: the rust belt and such.
- Spooky23 4y ago
  It’s not misleading. If you’re not growing, you’re dying. A lot of things happened in that era, including massive productivity improvements. But at the end of the day, fiscal policy and tax policy drove even state of the art manufacturing to first push to the South, then to Mexico and then to China. So we exported wealth for cheap goods. As predicted in the 80s, the result is a country that is poorer and facing increasing social unrest.
  - humble_dude_1 4y ago
    > As predicted in the 80s, the result is a country that is poorer and facing increasing social unrest. There might be greater wealth inequality. And some things might be getting measured better than they ever were, more accurately and truthfully. But today's America is not poorer.
    - throwawaaarrgh 4y ago
      Having cheap goods is not in any way the same as having wealth. Personal savings for Americans today are at the same level as during The Great Depression. Any significant financial crisis right now could be devastating.
fuzzfactor 4y ago
Back then it was plain to see in real-time that upon GE's acquisition of Cooper Tools, Welch immediately set about destroying what made Cooper uniquely outstanding. And that was just one company. Other victim companies had been given the same treatment by then, the de-industrialization was well underway and picking up steam as upcoming American executives "across-the-board" tried to emulate the famous Welch by extracting long-term hard-earned intangibles and posting it as short-term profits in place of the real sustainable thing.
curiousllama 4y ago
> the end of the era when big USA corporations were making long-term bets in speculative technologies Please pick up the phone. Meta is calling.
- mywittyname 4y ago
  And look what it is doing to their stock price. I'd argue the breakup of AT&T was the coup de grace for mega-corp investment in pie in the sky tech, but even AT&T only invested in such things due to legal mandates.
  - HWR_14 4y ago
    AT&T only invested in tech because of a legal mandate? Can you provide more information about that claim?
29athrowaway 4y ago
And the invention of mass layoffs via stacked ranking.
WeylandYutani 4y ago
For the last century we have glorified greed and individuality and now we get upset about it when it overrides nationalism and sense of community? Capitalism and globalisation has freed the elites and charged us headlong into a cyberpunk world. The Chinese actually noticed this and they are trying to get the genie back into the bottle. They'll probably fail.
- largbae 4y ago
  This assertion is the Chinese(is this referring to the government?) are trying to stop globalisation and fight greed. With which techniques are those improvements being attempted?
  - WeylandYutani 4y ago
    Literally jailing billionaires that get out of line instead of giving them a platform. Social unrest is the only thing that keeps Xi awake at night.
deleted 4y ago
[deleted]
cryptonector 4y ago
Whether the reserve currency is strong or weak makes no difference -- having one's currency be the world's reserve currency necessarily leads to large trade deficits (e.g., otherwise there is no way to supply that currency to the rest of the world), and therefore deindustrialization.
SkyMarshal 4y ago
Good blog article. I think if you combine Reagan's strong dollar policy and political deregulation of banking, you get both deindustrialization and consolidation of the banking/investment banking/insurance, and some of the extreme wealth concentration correlated with it. That concentrated wealth is then used to influence (and potentially capture) the political process from cradle-to-grave - from campaign finance, to lobbying, to cushy board seats and the like upon leaving office. Making it politically difficult or impossible to fix or mitigate various problems like Too Big To Fail, deindustrialization, etc. It seems the only way out is either via technological innovation like additive manufacturing, or via another big banking crisis that doesn't get bailed out, but rather resolved like the S&L crisis.

jasonlotito 4y ago

FYI: Not sure if you know, but that article works to block you from reading it and asks you to sign up for something. I don't know, I just back out of any user hostile BS like that point. Maybe you have a better article from a source that isn't clearly hostile to visitors?

bumby 4y ago
There’s a “let me read it first” option that grants you unmolested access to the article
- nottorp 4y ago
  Why bother? If they don't want me to read it i won't read it. There should be a way to mark this crap on the front page so I don't waste my time clicking on it...
- jasonlotito 4y ago
  Oh, I didn't see it. It's hidden. "Unmolested' would be me not needing to interact with that.
  - neweroldguy 4y ago
    This is literally what they sell though. It’s like going to a restaurant and complaining that they ask you to pay for your meal.
    - jasonlotito 4y ago
      I know when I got to a restaurant what I'm getting myself into. I guess I just need to equate substack URLs with deceit, hostile reading patterns, and substandard content. Though, someone sharing out substack links that apparently they wrote should be seen as advertising and treated as such.
      - bumby 4y ago
        Or, alternatively, we need to stop constantly expecting content for free. (I'm saying as a society, not you personally)
  - deleted 4y ago
    [deleted]
sanarothe 4y ago
Substack does have all these sketchy patterns but there is a 'Let me read it first' text link on the popup that lets you continue, seemingly without tracking how many times you've done that. BUT I made the mistake of actually signing up for one blog I liked and got smacked by a barrage of more 'sign up for this!!!' immediately after. So I agree that it's user-hostile but... it seems like most of the web is moving that way, outside of our digital gardens.
- bambataa 4y ago
  What’s really weird about Substack is that you seemingly can’t subscribe to a newsletter and read it in the app without getting every post emailed too. I just want to read in the app.
  - kodah 4y ago
    fwiw, part of their schtick was newsletters and that you, effectively, never had to open their app. Seems like they designed for one and not the other. That said, during launch day they took a lot of feedback from here so they might hear you if you reach out.
- jasonlotito 4y ago
  > ...'Let me read it first' text link Yep, I didn't notice that until someone commented that. Seems purposely hidden. > it seems like most of the web is moving that way, Yeah, I really don't care at this point. I'm not going to jump through hoops anymore. If someone wants to block me from reading something using trickery, than clearly it's worthless and neither the site nor the author respect me. Why should I respect them?

onlycoffee 4y ago

So, the country is better off with 1) a weak president, 2) a weak dollar and 3) poor shareholder value?

RC_ITR 4y ago
I know you’re being snarky, but a dictatorship with limited export opportunities and extreme inequality isn’t exactly the paradise you think it is.
woodruffw 4y ago
The country is better off when we improve it directly, rather than optimizing for weak proxies like shareholder value. It’s also best to discharge any gut feelings you might have about a “weak” versus “strong” dollar. They’re economic qualities, not moral ones.
pjc50 4y ago
I think you could make strong arguments for all of those: - fairly sure the Federalist society wrote a lot of words on why strong king-like presidents were bad; a strong individual post is a license for arbitrary whims of power - weak currency improves exports; the Chinese strategy for decades was a weak RMB to the extent that the US complained about it endlessly - "shareholder value" tends to be a horribly short termist metric that encourages hollowing out the business, reducing investment, and pinching the employees until they start leaving
deleted 4y ago
[deleted]

ch4s3 4y ago

Deindustrialization was mostly done in the 1970s, with factory employment as a share of the labor force peaking in the 1950s. Moreover a strong dollar lowers the cost of imported inputs, say iron ore, so it isn’t all bad news for manufacturing. Exports also aren’t the only markets for finished goods. I’d also point out that the US manufacturers more cars than ever, and makes basically as much steel as it ever has. Sure, no one sees t-shirts anymore.

Majromax 4y ago

> The USA lost almost 2 million manufacturing jobs in the 1980s. That's misleading. Via FRED, manufacturing employment in the USA had a long peak lasting from roughly 1970 to about 1990. The largest peak-to-trough drop was in fact about 3 million, from mid-1979 to early 1983, but that had more to do with the Volker recession than any change in corporate culture. Manufacturing employment rebounded (partially) from the post-recession low, remaining steady until about 2000. The sea change in employment came after 2000, plausibly due to opening trade relations with China. However, at the same time manufacturing production did not decrease much if any. For example, production of durable consumer goods (https://fred.stlouisfed.org/series/IPDCONGD https://fred.stlouisfed.org/series/IPDCONGD) increased from 1982 to 2005 or so. That being said, "steady manufacturing employment" does mean that manufacturing employment as a share of all employment fell, thanks to growth in the labour force. That by itself can explain some of the qualitative observations re: the rust belt and such.

Spooky23 4y ago
It’s not misleading. If you’re not growing, you’re dying. A lot of things happened in that era, including massive productivity improvements. But at the end of the day, fiscal policy and tax policy drove even state of the art manufacturing to first push to the South, then to Mexico and then to China. So we exported wealth for cheap goods. As predicted in the 80s, the result is a country that is poorer and facing increasing social unrest.
- humble_dude_1 4y ago
  > As predicted in the 80s, the result is a country that is poorer and facing increasing social unrest. There might be greater wealth inequality. And some things might be getting measured better than they ever were, more accurately and truthfully. But today's America is not poorer.
  - throwawaaarrgh 4y ago
    Having cheap goods is not in any way the same as having wealth. Personal savings for Americans today are at the same level as during The Great Depression. Any significant financial crisis right now could be devastating.

fuzzfactor 4y ago

Back then it was plain to see in real-time that upon GE's acquisition of Cooper Tools, Welch immediately set about destroying what made Cooper uniquely outstanding. And that was just one company. Other victim companies had been given the same treatment by then, the de-industrialization was well underway and picking up steam as upcoming American executives "across-the-board" tried to emulate the famous Welch by extracting long-term hard-earned intangibles and posting it as short-term profits in place of the real sustainable thing.

curiousllama 4y ago

> the end of the era when big USA corporations were making long-term bets in speculative technologies Please pick up the phone. Meta is calling.

mywittyname 4y ago
And look what it is doing to their stock price. I'd argue the breakup of AT&T was the coup de grace for mega-corp investment in pie in the sky tech, but even AT&T only invested in such things due to legal mandates.
- HWR_14 4y ago
  AT&T only invested in tech because of a legal mandate? Can you provide more information about that claim?

29athrowaway 4y ago

And the invention of mass layoffs via stacked ranking.

WeylandYutani 4y ago

For the last century we have glorified greed and individuality and now we get upset about it when it overrides nationalism and sense of community? Capitalism and globalisation has freed the elites and charged us headlong into a cyberpunk world. The Chinese actually noticed this and they are trying to get the genie back into the bottle. They'll probably fail.

largbae 4y ago
This assertion is the Chinese(is this referring to the government?) are trying to stop globalisation and fight greed. With which techniques are those improvements being attempted?
- WeylandYutani 4y ago
  Literally jailing billionaires that get out of line instead of giving them a platform. Social unrest is the only thing that keeps Xi awake at night.

deleted 4y ago

[deleted]

cryptonector 4y ago

Whether the reserve currency is strong or weak makes no difference -- having one's currency be the world's reserve currency necessarily leads to large trade deficits (e.g., otherwise there is no way to supply that currency to the rest of the world), and therefore deindustrialization.

SkyMarshal 4y ago

Good blog article. I think if you combine Reagan's strong dollar policy and political deregulation of banking, you get both deindustrialization and consolidation of the banking/investment banking/insurance, and some of the extreme wealth concentration correlated with it. That concentrated wealth is then used to influence (and potentially capture) the political process from cradle-to-grave - from campaign finance, to lobbying, to cushy board seats and the like upon leaving office. Making it politically difficult or impossible to fix or mitigate various problems like Too Big To Fail, deindustrialization, etc. It seems the only way out is either via technological innovation like additive manufacturing, or via another big banking crisis that doesn't get bailed out, but rather resolved like the S&L crisis.