I had breakfast this week with Jeffrey Immelt, chief executive officer of General Electric, and the main dish on the menu was tough love. In an interview later before a packed hall in Times Square, the boss of the more than a century-old $177-billion (U.S.) global behemoth told me that Americans can still win in the global economy – but that they need to fight harder.
“We haven’t really tried as hard as we can to compete, educate and sell our products around the world and I think we can do better,” he said. “Whether it is on exports or whether it is on foreign direct investment, the rest of the world plays for keeps. And we just don’t have a similar philosophy.”
German Chancellor Angela Merkel has her own reasons for feeling grim, but she can take some comfort from the fact that Mr. Immelt pointed to Germany, whose version of capitalism Americans are accustomed to dismissing as plodding and inflexible, as one country that is outselling the Yanks.
“Chancellor Merkel flies from Berlin to Beijing, there’s 25 German CEOs that get off the plane right behind her. And they connect the dots. They play hard, they play to win, they play for exports,” he said. “We’re not all-in the same way that the Germans are all-in.”
Those are harsh words to hear from one of the foremost business leaders of the country that likes to think of itself as the world’s top capitalist dog. But Mr. Immelt’s must-try-harder message is becoming the conventional wisdom in the United States, and not just among the angry 99 per cent of the Tea Party and Occupy Wall Street movements. The 1 per cent think so, too.
“We have to get better at playing offence,” Secretary of State Hillary Clinton said in a recent speech. “Other countries are much more on the same team between business and government, and we need to be back on the same American team.”
When populists on both the left and the right are angry enough to take to the streets, and when both a Democratic stateswoman and a Republican industrialist use almost identical language to describe the poor U.S. performance in the global contest for business, you can safely conclude this is a country suffering from serious self-doubt.
That inner-directed gloom fits uneasily in a national culture that still tilts toward a faith in self-improvement, second chances and, most importantly, a first-place finish. Which is probably why Mr. Immelt’s certainty that, if the United States does try harder, “I’m completely convinced that we can compete and we can win.”
“Our competitiveness in this country today is the greatest it’s been in 25 years,” he said. “I have never seen our competitiveness as solid versus India and China as I do today.”
The competition Mr. Immelt and Ms. Clinton want U.S. companies to win is the battle for dominance in the global marketplace and for the chequebook of the growing global middle class.
“There are going to be one billion consumers joining the middle class in Asia. I think for us to reduce unemployment, exports are going to be a key way to do it,” Mr. Immelt said. “It’s this country’s only destiny just because most of the consumers are some place other than here.”
As a cautionary counterexample, he cited Japan. “When I was a young guy, when I first started with GE, Jack Welch sent us all to Japan because in those days Japan was gonna crush us,” he said. “And we learned a lot about Japan when we were there. But over the subsequent 30 years, the Japanese companies all fell behind. And the reason why they fell behind is because they didn’t globalize. They didn’t have to go out and sing for their dinner in every corner of the world. That’s not the case with GE. It’s not the case with other American multinationals.”
An open global economy in which everyone is getting richer, and in which a reinvigorated United States has the confidence to win, appeals both to American patriots and to American internationalists.
As with all dream scenarios, though, there is a catch or two. The first is that export-led growth is a terrific strategy – there’s a reason everyone is looking these days to Germany and China – but it only works if some countries are taking the opposite tack of building their economies around consumption. The whole world can’t be German or Chinese; you also need some Americans and Greeks, and the long-term fate of those consumer countries isn’t so pretty.
The second, related catch is that, for all the talk of Team Germany and Team USA, that’s only partly how the world economy works. Mr. Immelt is proudly and emphatically American, but he told me that his successor might well come from the emerging markets. That’s no surprise: Smart businesses have figured out how to globalize. We don’t yet know if countries can do the same.