Jeff Immelt takes on Bernie Sanders in this morning’s Washington Post for saying GE is “destroying the moral fabric of America.”
“We’ve never been a big hit with socialists,” the GE CEO writes, but “we create wealth and jobs, instead of just calling for them in speeches.” He says Sanders has never visited GE’s plant in Rutland, which has been “turning out some of the finest jet engine components in Vermont since the 1950s.” And he rejects Sanders’ criticism of GE operations abroad – “as though a company that has customers in more than 180 countries should have no presence in any of them.”
Also this morning, the Committee for Economic Development, a business group founded at the end of World War II, releases a thoughtful report on the problem of rising inequality in the U.S. The issue is one of many that has been perverted by polarized politics, with Sanders’ fans on the left championing a soak-the-rich approach, while purists on the right say even the mention of “inequality” incites class warfare.
In an essay written for Fortune, the co-chairs of the CED study group acknowledge the gap between rich and poor in the U.S. is approaching levels of the 1930s – the highest on record. Some of that “stems from healthy byproducts of free enterprise,” and shouldn’t be a source for concern. But “what merits serious concern is the vast inequality and lack of opportunity that comes from the lagging growth in real incomes of working people.” The group calls for, among other things, expanding the Earned Income Tax Credit, funding pre-school education, increasing health care competition, and reforming taxes to encourage greater “equality of opportunity” while avoiding a counterproductive focus on “equality of outcomes.” It also calls on companies to “restore the U.S. business social contract” by reevaluating relationships with employees and the communities in which they operate. You can read the full report here.
A few CEO Daily readers have chided me recently for devoting too much of this newsletter to politics. I share their concern. Every morning I wake up hoping something else will strike me as more important. But truth is, the political story is the most important business story out there right now. Elections matter. And business leaders can’t afford to keep their heads in the sand. Kudos to Immelt and the CED for attempting to counter the bombast.
• Halliburton to fight DoJ suit
Halliburton is planning to “vigorously contest” an anti-trust lawsuit by Department of Justice trying to stop the company’s oilfield mega-merger with rival Baker Hughes. The lawsuit, which comes after months of talks on divestitures of some overlapping businesses, significantly cuts the chances of the deal going through. The Justice Department said the merger, valued at $35 billion when it was first announced in November 2014, would leave only two dominant suppliers in 20 business lines in the global well drilling and oil construction services industry, with Schlumberger being one of the two. The Justice Department said Halliburton's planned divestitures aimed to save the deal were inadequate. Reuters
• McDonald's chairman to step down
McDonald's said its long-time chairman Andrew McKenna will step down from the fast-food chain's board after next month's annual shareholder meeting. McKenna has been on McDonald's board as a director for 25 years, and as chairman for the past 12. He is also one of the most powerful people in Chicago, having been called "the power behind the throne" by the hometown press. McKenna – who had been faulted in some circles for not reacting quickly enough to a lengthy poor performance earlier this decade – will have the title of Chairman Emeritus after his retirement. Fortune
• Nokia planning thousands of job cuts
After Nokia closed on the company's acquisition of Alcatel-Lucent, the company on Wednesday outlined plans to cut thousands of jobs in several markets to help it achieve $1 billion in operating costs. It reportedly intends to cut 1,300 of the company's 6,850 employees in Finland, as well as 1,400 jobs in Germany. Jobs in France were also on the chopping block, where it is shedding employment by 400, though the company will also hire 500 in research and development as part of a deal with the French government to keep 4,200 jobs in the country for two years after the takeover closes. Fortune
• Ex-coal CEO gets jail time in mine safety case
Donald Blankenship, the former chief executive of Massey Energy, was sentenced on Wednesday to a year in prison for conspiring to violate federal mine safety standards. The prison term, the maximum allowed by law, came six years after an explosion ripped through Massey's Upper Big Branch mine, killing 29 men. Though Blankenship wasn't accused of direct responsibility for the accident, the disaster prompted the inquiry that ultimately led to his conviction. The 66-year-old was also ordered to pay a fine of $250,000. New York Times (subscription required)
Around the Water Cooler
• DEA will soon make big marijuana decision
The Drug Enforcement Administration says it will make a decision in the coming months that could prove to be a watershed moment for the burgeoning legal marijuana industry. In a memo to lawmakers this week, the DEA announced plans to decide “in the first half of 2016” whether or not it will reschedule marijuana. Cannabis is now listed under the Controlled Substances Act as a Schedule 1 drug, a categorization it shares with other drugs, such as heroin and LSD, which the U.S. government defines as “the most dangerous drugs.” But advocates argue it is far safer when compared to drugs like heroin. If marijuana was to be rescheduled, the move would likely open the door for expanded research of cannabis' potential for medical applications. Fortune
• Ackman says Valeant may name CEO soon
Valeant Pharmaceuticals International’s search for a new CEO could be done sooner rather than later, said board member and billionaire investor Bill Ackman, whose Pershing Square Capital Management LP is one of the drugmaker’s biggest holders. Ackman says there are probably only "a handful of top candidates." He added that because of mergers and acquisitions in the pharmaceutical space recently, there are a lot of candidates available. The new CEO will certainly have a fixer-upper on their hands. Valeant's shares lost more than 90% of their value from their peak in August amid a slew of woes, including questions over drug prices and a probe by Congress. Bloomberg
• Volvo expands self-driving experiment
Volvo is expanding its landmark self-driving car project in 2010, with plans to give local drivers in China access to 100 self-driving cars to test them in everyday driving conditions. The Chinese-owned auto maker says it is beginning negotiations with interested cities to see which one will allow it to test out the experiment. Volvo is also on the verge of debuting a similar pilot in Sweden. More broadly, automakers are in a race to develop self-driving automobiles that can turn drivers into passengers – a new frontier that has also allured tech companies like Google. Fortune