In his annual letter, General Electric CEO Jeffrey Immelt told his shareholders that he no longer believes the myth that the United States economy is shifting from manufacturing to service. Here is the key paragraph from what he wrote:
I have also learned something about my country. I run a global company, but I am a citizen of the U.S. I believe that a popular, thirty-year notion that the U.S. can evolve from being a technology and manufacturing leader to a service leader is just wrong. In the end, this philosophy transformed the financial services industry from one that supported commerce to a complex trading market that operated outside the economy. Real engineering was traded for financial engineering. In the end, our businesses, our government, and many local leaders lost sight of what makes a nation great: a passion for innovation.
Immelt is no longer the victim of one of the rationalizations given by American economists in order to justify not doing anything to balance trade. The ink was not even dry on Catherine L. Mann's 1999 book, Is the U.S. Trade Deficit Sustainable?, which argued that our trade surplus in services would compensate for our growing trade deficit in goods, when America's trade surplus in services began to shrink as a percentage of our GDP.
Jeffrey Immelt apparently believed this rationalization when he made his disastrous foray into the financial services business. He didn't realize that the financial boom was not sustainable. It was the result of our financial industry being middlemen for the foreign loans pushed on the United States by mercantilist governments in order to keep the dollar strong, so that they could take market share from American producers in world markets.
Jeffrey Immelt is only the most recent of our business leaders to think for himself on this issue. He was preceded by Warren Buffett, Talahassee businessman Devoe L. Moore, Milwaukee businessman John Torinus, Buffalo businessman Jack Davis, Texas businessman Dick Alexander, and former Chrysler CEO Lee Iacocca.
Our business leaders can no longer afford to let ivory tower economists let foreign mercantilist governments steal our remaining industries. It's time that they joined together to demand balanced trade.