I worked for GE, back in the 1980s. It was the “Neutron Jack” era.
The subunit I worked for, was almost supernaturally dysfunctional.
I was there for 18 months, and they had 3 reorgs, in that time.
Once, the VP of our division, called an “all-hands” meeting, to tell us that he was a lawyer that didn’t have a computer, didn’t like software (we were a software company), basically, didn’t like us, and that we’d better get on the stick, and make number go up.
Are you talking about the management team that moved to DC, because why does management need to bother itself with the widgets or be tied to, you know, their product, they need be focused on the grift?
People who don't come from a hardcore engineering background, often fail to understand what goes behind making good engineering deliverables.
This problem has complicated since MBA types people have taken over. Everything is a cost center, and goes into some model in a spreadsheet. The 'What If' feature gives you all kinds of fairly tale cost savings and optimisation options, as you turn the dials and knobs.
There is also a failure to understand that some amount of extra investments in people, quality and training is needed to keep the profits going. It might appear like they are not contributing to profits directly, but as it often happens eliminating them causes loss.
You are basically trying to modify a highly complicated and delicate process, optimised over years of lessons, changes and far sightedness. Trying to optimising entirely from a cost perspective leads to all kinds of counter intuitive results.
Interesting to hear another story how software was devalued at GE.
During that time my software company was brought in to bid on a project for GE. Cool project, making a repository for technical drawings going back a century; turns out they still maintain power plants that old! Anyway, it seemed to be going great until GE presented a term sheet, which included a maximum pay for SWEs under $30/hr, requirement to submit all data on hours worked and pay issued, maximum profit margin of 6%, etc. It was instantly obvious they considered software the same as sweatshop labor and wanted nothing to do with engineering real solutions. A big "Nevermind" and walked away.
Still shaking my head on how disconnected from reality the GE mgt was. Decided to never invest in the stock, but watched it continue to climb for years before it finally collapsed for good. Always surprising how long large orgs can survive on sheer inertia.
That "GE" is the former GE Aviation, and a small remnant of the multinational conglomerate it once was. It was split in three at the end of its long collapse.
It's never gotten above around half that valuation since.
Most key divisions were sold off. You can get "GE" label appliances, but it is a Chinese company. Plastics, which invented Lexan, was sold to Sabic. On and on. It is simply not the company it was and will take decades, if ever for it to become that again.
30-July-2020 = $53.13 billion
Since then, the remaining aerospace division has recovered to $257B, but it is a different business.
> didn’t like us, and that we’d better get on the stick, and make number go up
Unfathomably based. I'd much prefer these honest types who are upfront about it, that I don't like you, we don't like you either, it's all transactional here, work in exchange for money till we find a better job, than the sociopath corporate assassins who try to gaslight workers telling everyone how we're all family and we're all in this tough period together, meanwhile doing layoffs, cutting things like break room coffee while buying another Porsche and building an executive gym.
On the contrary, if someone says they like you but they haven't even met you, they're dishonest.
Employment is not a romantic relationship where mutual feelings are required, it's a transactional one. You don't need to like your CEO and the CEO doesn't need to like you.
You need to provide value for the company and the company has to pay you money in exchange, that's how it works. Two parties can monetarily prosper together while simultaneously disliking each other. Nations do it all the time, see China and the US, and business partners do it all the time, see the MythBusters and many more. The most successful business people are also the ones who are best at putting feelings and emotions aside of financial interest.
Gaslighting workers that a private company will have feelings or emotional attachment towards them will only result in disappointment for you, but it's a lesson many learn the hard way. They won't be by your deathbed, only your family will.
Do you want the harsh truth or the sweet lie? Because that GE exec at least told it to you straight like to an adult, hence my chapeau, even if it shatters your rosy belief. The world could use more like them, instead of the sociopaths who manipulate you to stick around while they're already planning for the group's crash in a year which is coincidently when their golden parachute stocks vest.
Honesty doesn’t mean much when leadership doesn’t understand or respect the business.
I can say “I don’t know how to do brain surgery and furthermore I have no interest to learn.” You may correctly determine I am being honest but this in no way qualifies me to do brain surgery.
Knowledge and experience matters. Welchian leadership aggressively and deliberately dismisses all knowledge as a cost to be minimized. The idea is you can make up for any organizational shortcoming if you just abuse people enough. It’s a very leaded pipe era way of thinking.
The disastrous results of this philosophy speak for themselves.
It eventually did, but it took a few years, after I left. GE had a lot of money to burn, back then. I remember going to a corporate party, at this mega-fancy catering campus, in Chantilly, VA. Green serpentine walls, grecian columns, reflecting pools, etc. Pretty crazy.
I think that Welch spawned a whole bunch of "Mini-Jacks," that worked to be what they thought he wanted.
The division was doing badly, and this guy was sent in to "clean it up."
I suspect that he ended up "cleaning it out," which was probably a win, in his book.
I worked with some top-shelf engineers, back then. GE could hire the best. If they had been managed well, they could have been awesome.
The management, however, was terrible, especially at the higher levels. Lots of nice suits and cufflinks, but very little smarts.
>>I think that Welch spawned a whole bunch of "Mini-Jacks," that worked to be what they thought he wanted.
>>The management, however, was terrible, especially at the higher levels. Lots of nice suits and cufflinks, but very little smarts.
People being people, eventually corruption takes over all processes. This whole idea that one had to stack rank the bottom 20%, promote the top 20% and let the former eventually fire the middle performers depended on honesty from people running the processes.
>>The management, however, was terrible, especially at the higher levels. Lots of nice suits and cufflinks, but very little smarts.
All the best depending on mediocre people to promote smart people above them, heck even the smart people wouldn't promote people smarter people above them. What this means is the process in most companies that practiced this was fixed. Most managers promoted their lackeys, fired who ever was good(perceived as a threat to their own position), remainder was tolerated as long as they stayed inert. This now achieved the very opposite what the process was to achieve.
This should kill the company, and it often does, but most large companies have products and customers that take a while(years, to even decades) to go away. To that end, this could go on for ages until things reached their natural end.
All companies and organizations are incompetent, just in different ways, whether you see it or not, because they're run by humans and humans are flawed.
Many companies don't implode, because if all workers constantly ran away from all incompetent companies, everyone would have to choose to be unemployed, because there are no perfect companies where everyone is perfect and everything runs like clockwork. But some do implode when it reaches critical mass.
The "5. The Human Wreckage" section is probably the most interesting - on paper, everyone came out much worse (losers identified are workers, pension holders, shareholders, investors and executives which seems superficially comprehensive).
However it is important to recall that the people who actually made all the money extracting the wealth got out years before, retiring and/or selling stock. They're bystanders now and probably happy to run the whole operation again.
Although as an aside who these people are who think corporate pensions are a good idea is beyond me. People really should be in charge of their own savings in preference to their employer, expecting some random corporation to cover the cost was always a bit crazy even when it seemed sort-of possible that the system was stable. It is easy to have some sympathy but, as a practical matter, it was never going to work and it isn't a surprise that it didn't.
In Norway, the companies are required by law to pay the pensions into a special type of investment account where withdrawal are not allowed until you are retired, but you can choose your own investment profile: A mandatory 401k.
The arrangement where the _company_ controls the account seems to me to be more of a allowed delay in salary payout, to the benefit of the company, than a retirement account for the employee.
The savings are managed by bank or insurance companies' subsidiaries who are entirely unrelated to the employer. In other words it has nothing to do with mid century corporate pensions.
Australia has a similar system called Super. On top of base pay, every Australian employer has to contribute another 11.5% of a person's salary into an employee-controlled Super investment fund that the employee can only touch upon retirement or severe illness.
The traditional way pensions were handled in the US was directly by the company and paid from company coffers. In those days, the goal of any company was to stay in business long term. One of the ways that was accomplished was by making a lifetime career with the company as attractive as possible through generous pensions.
In modern times, retirement is pretty much exclusively through private investment accounts (401k and similar) into which your company may directly deposit funds. Nowadays it'd be a crazy risk to pin your retirement 100% on a single company. The company could fail, raid the pension fund, or just decide to not pay anymore. All those things happened and that's why we use private investment accounts now.
There are still some traditional pension plans, notably the US postal service. But they're very rare now.
most companies converted from pensions to self-directed plans because the cost of any benefit is essentially free compared to a defined benefit pension plan.
>However it is important to recall that the people who actually made all the money extracting the wealth got out years before, retiring and/or selling stock. They're bystanders now and probably happy to run the whole operation again.
And therein lies the problem with modern society. Whether you're an MBA wrecking a company or a voter wrecking the local economy there is no mechanism for the people who you've wronged to get at you so there's no incentive not to behave that way.
Be very very careful about what you wish for: your definition of who’s wronged whom and others’ definition of who’s wronged whom are going to vary, and often be in direct opposition.
But then, before you know it, you’re back in the terror phase of the French Revolution—because once the guillotine demands to be fed, “the powerful” quickly becomes “whoever we don’t like.”
After several iterations of this pattern throughout our history (other examples are the Leninist/Stalinist purges or the McCarthy era), perhaps it is time we seek a better path—one that doesn’t end up written in the darker pages of our history books.
Well, one side of the struggle has all the means and time to find this better path. Are they doing that? No. So why should the weaker, poorer side do it ...?
... because if you identify your opponents as making mistakes/behaving poorly it is a mistake to copy them.
If your argument is basically assuming "[these people] managed the situation so stupidly they triggered a social collapse" then it is an excellent strategy to try doing things differently. The aim should be to make things better, not worse with different people in charge.
Using the word "should" acknowledges the proposed as counterfactual and the opposite as a rule that transcends any person's will. Its as harmless a claim as saying gravity has been reversed by redefining up.
The free market is a chaotic system of creative destruction. Expecting a company to still be solvent decades from now is naive. Tying your investments in with the same company that provides you a job is also risky.
Defined contribution is a much less risky retirement scheme.
The 80s were a different time. There were no index funds. No discount brokers. No internet. But from the 1800s up until the 1980s lots of people retired successfully and lived quite well via investing in a single company and receiving dividend returns from that company. But that was back when the stock market wasn't just short term gambling and short term stock manipulation via corporate stock buybacks and you actually invested in strong companies that you planned to hold through retirement.
Funny what incentives get you. We had incentives for long term consistent strength (people holding stocks for dividends) and got it. Today we hold for short term gambling profits so we get gambling style shell games of companies.
The story also included for many years that the collective investment was stronger than the individual investments could be. A hedge fund with a bigger wallet could have more options, could have more bargaining power, could have access to investment deals that are out of reach of one individual's savings. That's a powerful story. We saw so many of the things that can go wrong, especially in 2008, but the raw idea of a larger pension fund is cheaper to run and has more financial leverage is still a good story with some truth behind it.
(As an individual investor, I do often wonder what sort of bargains and better investment options I miss out on that investing together with two or three friends with similar retirement goals could gain me by investing together as a team. I realize that's the point of hedge funds/mutual funds, but today's hedge funds/mutual funds themselves have tiered fee structure pools based in staked investment and it never feels like an even playing field if I'm trying to manage my own investments even with the competition between hedge funds/mutual funds today.)
Oil and Gas ventures. You have to be an accredited investor to buy in and boy oh boy is it a juicy deal. Income tax is capped and ALL invested capital can be written off immediately (you get it all back plus profits) and there are other benefits I'm forgetting.
I do understand the argument that a lot of people won’t really save money left to their own devices. And I’m not unhappy to be receiving a modest pension from a decades ago job I probably didn’t give more than a minute’s thought to at the time. But don’t really disagree that for people who are reasonably disciplined about savings, getting the money as salary is probably the better deal.
Disciplined people will almost always do well (ignoring unfortunate circumstances, mainly) - it's the undisciplined that the system has to be sure to protect.
Of course, the goal should be to turn undisciplined people into disciplined ones over time.
These people are "undisciplined" because they have no idea how profitable investing is. Neither do educators (pensioned) and a lot of people have an ingrained misconception that you are going to lose money "in the stock market."
They hear of possible returns like 10-15% and shrug and look at bear markets as harmful to their wealth.
Really an education issue but it is complicated. Stuffing money in a mutual fund is risky and also not an option if you are behind. A lot of people are behind.
It is difficult to be "disciplined" when you are trying to afford the rising costs of rent, car payments, childcare, and food. A majority of people live pay cheque to pay cheque, and are lucky to save a few thousand dollars.
A lot of people will basically say maybe next year but I'm totally strapped right now. Perhaps after I've paid off my credit card--and in that respect they're likely not even wrong.
In the 1980s there were no index funds. There were no discount brokers. There was no internet. Joe Average factory worker was not capable of picking up a phone during work hours to call his broker and manage his investments. There was not tax deferred IRS blessed retirement vehicle until 401ks were officially blessed in 1986. Before 401ks were CODAs which, again, tied a worker to investing in his employer. Retirement planning was whole life insurance and buying physical bonds down at the local bank branch, maybe investing in a single stock that paid a dividend with the hopes you could live off the dividend.
I read Jack Welch’s autobiography Straight from the Gut. He was quite proud of the stack ranking process he introduced (rate employees every year and fire the bottom 25%). I recently listened to an interview with TSMC founder Morris Chang (arguably a better CEO than Welch, at this point), who said he never agreed with the idea of doing layoffs based on performance appraisals. He pointed out that any such process was hopelessly subjective and so how, as an engineer, could he support it and keep his integrity intact.
Btw, there’s a great interview with the author of Power Failure on the Bloomberg Masters in Business podcast.
Something nobody is saying is that there genuinely are synergies in GE's businesses. Take MRI for an example (albeit one I know a lot about...):
-- the superconducting magnet shell requires the accurate creation of 'nested doll' cryogenic containers, built to withstand magnetostatic forces in a highly regulated environment with defined safety requirements under catastrophic failure modes. Solving the design problem is equivalent to solving a huge set of nasty, coupled PDEs subject to loads of material constraints. This is directly analogous to aspects of jet engine design.
-- inside the bore of the magnet (but not in the cryostat) goes a device called the gradient set, whose job is to generate \partial B_z/ \partial_{xyz} as a function of time (that, very much indirectly, the radiographer specifies). This is a water cooled, resistive set of magnet coils with a defined frequency response curve, linearity requirements, etc. The current into them is generated by a set of three huge amplifiers, which have to actually take a signal delivered on a timebase of microseconds and volts and amplify it with negligible delay and deliver kA into a large inductor centimetres away from a patient. This is a formidable (power) electronic engineering challenge with huge parallels to various aspects of electrical engineering – e.g. managing (preventing) dielectric breakdown, thermal management, inverse solutions to Maxwell's equations in a quasistatic region (people use streamfunctions to do this well), etc.
-- the RF side of the system has to transmit kV and receive microvolts within microseconds into a definitively challenging electrodynamic environment with constraints on harmonics. Everything has to keep to a hard realtime constraint. The ADC must have a huge dynamic range and the problem is conducted massively in parallel. This is directly analogous to problems in telecommunications or RF design, but harder -- intermittent pulsed not continuous wave, and a hard requirement to accurately measure analogue voltages. Designing the RF coil ("probe" in NMR speak or ≈"antenna") is a further horrible (full-wave) EM design problem that even GE often subcontract out to one of about five specialist firms worldwide.
It's not a priori obvious to me that lots of competing companies would be better at creating stuff that requires the interaction of disciplines like this. Rather, I view the split up of GE and all of the woes of the article as evidence of a business mismanaged by MBAs. The defined benefit pensions should have been protected by law and overseen by an independent regulator - like my defined benefit pension that sits above my employer and shares risk among many different universities.
In the '00s triggered by a stock market tumble, GE declared MRI was mature technology, put its MR products into maintenance mode, gutted R&D, laid off their coil lab (which other manufacturers used to contract with), canceled all new product development, sent platform software to India, and got rid of the US development team. After the breakup, GE's been trying really hard to catch up (which is good!). They're leading on the new deep-learning recons due to ties with SV but all their kit is dated and old and built for a different era. Even now it's still just new lipstick on the old tech because it takes so long to get stuff out. The new software platform that doesn't suck has been in an eternal state of "real soon now". Having said that... my sense is that they seem genuinely hungry while their major competitor has become a bit too well-fed in GE's absence. I do really like the things GE has coming, they're... just not here yet.
I agree with you on all of this (and like the fact that GE uses linux as a base, and not, as Siemens and Philips do, Windows + cygwin + a separate box either running linux or vxWorks). I guess my point was I think it's interesting that GE's main competitors in the MRI space are...well, Siemens and Philips, both of whom independently have their historical origins in power engineering (and make gas turbines!). Both have been going for a long, long time from the early days of MRI. And if you look at CT as another example – well, that came out of BASF, another engineering conglomerate. Ultrasound, first proposed for medical use by the physicist Paul Langevin, found practical application much later, again under similar conditions.
I guess what I'm trying to say is: it's almost as if the combination of supporting physics and engineering without particular attention to the ultimate "core competency" or "end market segment" lets creative, interdisciplinary ideas like this flourish.
iirc Siemens developed their own, but Philips MRI came via acquisition of Picker. Ultimately while there are some electronics and power similarities, I think the nature of healthcare products and services don't integrate well with management of the rest. MRI is just one part of the healthcare portfolio. Siemens has also spun off its healthcare business recently.
Those synergies extended way beyond the technological too, which is how GE managed to survive in such a dysfunctional state for so long. Once they figured out that GE Capital could capture the financiers' profit margin on top of all their capital equipment, they unlocked a lot of money that had previous been taken up by banks and other investors. I.e. the total interest on a 10 year loan to buy a $10 million engine at 5% is over $2 million - essentially doubling (or better) their profit margins. Between that extra profit and related financial engineering, they could make a lot of money on the backend and turn that into an even bigger financial empire.
It wasn't until the 2008 GFC crushed GE Capital that it all started to really come apart, many decades after Welch got started.
Was there really at GE much collaboration and sharing of competence between these divisions? Say in the examples you mention of jet engines and medical, or other power electronics and the power electronics of medical, or other RF and the RF of medical, etc?
I ask because at one of the others that I am familiar with, there was also this aura - mystique - of broad field competence but in practice and internally, nobody talked to anybody (and management somehow loved getting their noses into everyone's attempts at communicating with anyone.) It was very difficult to even figure out who was working on what.
We often hear of synergies but there are clear ways to NOT get technical synergies. (While financial synergies did exist - until people fixated on "pure plays".)
This is the problem that patents are supposed to solve. All of that hardcore science should be documented in detail in patents when it was invented. Those patents are valid for some amount of time, and they're released to the public domain, so if GE abandons the technology, another company can take over from where they left off.
"Public domain" is not the same as "published". In practice hardly any of these patents get freed (and at any rate not by placing them in the public domain.) They do expire.
At any rate again, in large groups like this, there is a conflict on patents. Patents are used as weapons against other large groups on one hand (equal to equal) and smaller wannabes on the other (swatting flies). The result is that day to day, there is little incentive to patent or publish anything. It's not a core objective. Now and then a promising product direction is identified and then real effort is put in papering it up. But that's only as a weapon against the others - certainly not for the advancement of mankind. The rest of the knowledge and experience dies with the brains that carry it (although occasionally they find the time to write a book.)
Finally, few "completed" technologies get abandoned outright, first they get spun off or sold to some other business. Even the patent stash - if there is one - is worth some money. What does get abandonned without any publication is mountains of smaller projects in engineering or research or manufacturing groups - which have other day to day concerns and are busy and have no issue with just shelving hundreds of smaller projects and turning attention to the next hundreds of smaller projects.
Do NOT count on patents to solve the problem of engineering and science waste.
The saddest thing to me about this - is the cut of pensions.
My parents view pensions as gold standard. That it cannot be messed with and clearly this article shows that it can. The promise for your years of service can't be paid out.
Now something you believed would allow you to not worry until your passing, perhaps leave a small something to your children, won't be. Instead, you're beginning to worry about how you'll make ends meet in a few years with all the rising prices.
This is a great example of the kinds of problems with "defined benefit" pensions compared to "defined contribution" plans.
Defined benefit plans rely on the firm to correctly manage their pension plan, allocate funds for it, invest them wisely etc. In public sector there is political pressure to reduce forecast costs of a defined benefit pension. In many places it's completely legal to operate an underfunded defined benefit plan. Defined benefit plans are also traditionally fixed to a single employer, they don't fit well for a more mobile labor force.
For defined contribution plans individuals actually have control of the pension funds - they are just locked from access til retirement. They are generally government run, you aren't locked to a single employer. Individuals can set their own risk appetite and make their own decisions regarding fees etc.
Defined benefit plans are really popular because the pension amount is "guaranteed" but this guarantee is just an illusion. You can't magically make risk go away, just move it somewhere else. Many examples of defined benefit plans that blew up/were restructured/cancelled etc. Defined benefit is just a plain bad concept.
Defined benefit plans work best when administered by an authority higher up the chain than a single employer. Like a union, trade organization, or government entity. Defined benefit plans work well when risk is spread, proper actuarial oversight is used, and especially for lower income jobs.
Defined contribution plans in the USA typically have an extremely small contribution by the employer. Works out great for the employer. Doesn’t work out so great for lower wage earners as they struggle to fund the plan.
> a union, trade organization, or government entity. Defined benefit plans work well when risk is spread, proper actuarial oversight is used
Note that all three of those are subject to democratic capture, in which low-information voters enable the pension managers to make poor risk and actuarial decisions. Of course, a defined-contribution plan is also subject to low-information control, but at least the damage is confined to the one making the mistake, not to those unwillingly along for the ride.
I understand that defined-contribution plans must offer similar terms to both executives and regular employees, specifically to help ensure that they are fair to employees.
You mentioned low-income workers twice, but I don’t see any inherent advantage to defined-benefit plans or inherent disadvantage of defined-contribution plans for them. It is arguable that low-income workers are also less educated and less likely to make wise or even reasonable investment decisions when in charge of their own funds. Of course, they are also less likely to make wise decisions in the choice of their pension managers.
Another huge advantage of defined-contribution funds is that one owns them and can pass them on to one’s heirs, unlike defined-benefit plans.
There is an advantage to defined-benefit plans which also come with insurance (e.g. disability), but I suspect it would be more efficient to unbundle them.
Whether the employer or the employee is contributing to a defined contribution or defined benefit plan, ultimately it's all coming out of the same "employee costs" bucket on the employer side.
Maybe they can work well with proper oversight, but the status quo for the majority of defined benefit plans is to be mismanaged and underfunded. See the role (union negotiated) defined benefit plans had in the US auto industry collapse. 60 out of the 100 largest corporate defined benefit plans in the US are underfunded, more than half! Chart in that article shows that 40% being funded is actually unusually high, historical trend is 15-20% of plans meeting funding levels. https://www.wsj.com/articles/companies-u-s-pension-plans-are...
Funding a defined benefit plan for lower wage workers vs paying lower wage workers more and contributing more to a defined contribution plan has exactly the same costs on the employer side. The only way the defined benefit plan appears to work out better for both parties is because we have legalized the employer not funding these plans to the appropriate level and hanging the supposed beneficiaries of the plan out to dry when it goes south.
Even ignoring the rampant underfunding issues defined benefit plans are a classic example of the principle agent problem where the interests/risk appetite of the fund manager and the fund members don't line up perfectly.
You have to have a good rules and governance. As you said, you need an upstream third party who is empowered to make awkward statements about contributions and such.
New York has a well funded pension plan because they have centralized control (it’s governed by a separately elected state official), there’s good governance around it and the law makes it difficult for local government to short their contributions.
Illinois and New Jersey took a more yolo approach and their funds are essentially insolvent.
I fail to see how that solves anything. You'll just wind up with the same mismanagement and "whoops, we're too big to fail, guess the taxpayers have to pay for it" that plague state government pension systems.
Does it? I think employers would be far better off if they didn't have to manage benefits. Having the employer administer everything was the deal we struck to provide socialist-like assurances for the middle classes while keeping the word "socialism" out of politics. The cost is every employer managing a complex system of benefits, workers navigating a bunch of different benefits systems as they change employers, more benefits systems to paper over gaps, and separate systems for a few categories of non-employed people that it would seem too brutal to leave unsupported. It's fantastically complicated, and there's no point to doing it that way except that we can call it capitalism.
Defined contribution is far worse, it's just a way to shift the risk onto the individual who is far less able to manage it, and then tell them it's their own fault they don't get a pension.
Defined benefit pensions work great outside of massive frauds. A better way to address that would be a government guarantee paired with prudential regulation and prosecution of frauds.
I’m not sure I agree but, yes, defined contribution does shift the onus of any savings onto the employee. The employer has basically washed their hands of it outside of possibly setting up a 401-k.
I’m not sure that’s inherently bad. Why should $CORP really be responsible for benefits 30 years hence? And, by the way, you probably need to work there for 10 years or so before the benefits even get interesting.
> Why should $CORP really be responsible for benefits 30 years hence?
Because they're in a better position to pool risk, hire expertise, and generally run a pension well than an individual is. I mean I do think governments should focus more on improving universal pension systems rather than offering tax breaks to get employers to do it for them, but pushing it right down to the individual is even worse.
They’re mostly just paying money into a pension fund someplace. (Though maybe not enough.)
An individual can farm out investments to a target date fund at Fidelity or wherever.
The argument/issue isn’t really that it’s hard for individuals to make investments relative to pensions but that many don’t. So we need to not make it an option and do it for them.
> An individual can farm out investments to a target date fund at Fidelity or wherever.
Sure, but they have no way of knowing that a target date fund is what they should be looking for, or which target date funds are good and which are high-fee scams (or rather, they have no way to know that high-fee is the thing to watch out for). The seemingly logical thing might be e.g. put everything in the fund with the biggest headline return number in the last year.
Honestly, I think people are beginning to see pensions through the lens of the common adage "if something is too good to be true, it probably is". I just think it's a sign of the times where the population isn't expanding as rapidly and the promises made by pensions simply can't be kept.
It was always a fraud of future promises, an actual and literal con job. It is the inherent risk of trusting others, strangers nonetheless, with your own future, let alone “retirement”.
It is another one of those core metrics, even if a lagging one, that should be used to evaluate whether government has failed; the delta between how secure someone would currently be if they had just invested all the pension/social security money that was stolen/defrauded from them.
Most of our governments would be exposed as the failed governments they are.
This goes directly to the question of the PBGC giving bailouts (https://www.pbgc.gov/arp-sfa) rather than windups and dissolution.
These bailouts -- and the decisions if a pension fund should be forcibly closed -- are political in nature. For example, Biden bailing out the Teamsters pension fund (https://bidenwhitehouse.archives.gov/briefing-room/statement...) or the decision by congress to ignore the fact that CalPERS has continuously below the 80% recommended funding for non-governmental pensions putting a 1.7T time bomb in play.
In essence, government is failing to play one of its more essential roles of regulator.
I read that book last year. Very informative read. To my surprise Jack Welch felt lesser villain in book than I have considered him before. My takeaway was things one can get way with being 100 million dollar company in a growing economy is not possible with 100 billion dollar company in stagnating economy.
All that growth in GE credited to its executives was in large part due huge american spending power with massive and growing economy. So all these ways where GE fucked its workers, environment and so on worked because there were others who would balance out. How ever at some point it was no longer the case then gravity brought GE to its rightful place.
'Financial engineering' sounds an awful lot like 'lying to investors'. Without brutal honesty about the performance of your subdivisions you're never going to receive healthy pressure to correct your course.
Those were great books, but it doesn't age well when you fawn over Walgreens and a few years later the books have an aged like milk patina.
I worked for GE for a couple of years. They are a conglomerate. They acquired other companies. I worked for a company where GE was the largest customer, and GE acquired it. If a company started to perform poorly, it wouldn't be long before it would either be sold or split apart. The company I was working at probably would have failed anyway due to rapid competition, but since GE used a lot of its products it was sort of a no brainer until an alternative was found.
Acquiring and sunsetting companies is not uncommon now, but back then it wasn't received well and backlash accumulated over time. They had/have a huge part of the jet engine market. Due to their size and executive connections, they were capable of landing large contracts, such as defense and aerospace.
They aren't successful if compared to Meta for example, that nets $70 billion per year.
GE acquired the power grid component of Alstom, a French company in 2014. That company was previously fined by the US DOJ for $772 million for FCPA violations (bribes). (This was back in the US World Police days).
I think most of us can agree that Jack Welch's tenure was one of the worst things ever to happen at GE, and his odious management ideology was one of the worst things to happen to Corporate America. He was a glorified used car salesman.
I recall driving by the GE facility in Syracuse, right next to the Thruway. Over time, the number of cars in the parking lot dwindled to basically none. Now it's a Lockheed-Martin facility for military radar (or at least was).
I imagine those GE workers who were young enough probably moved elsewhere, but the older ones didn't fare so well.
Here's an interesting article on the history of the plant. Sounds like employment peaked in 1966 with 17 thousand employees before dropping to 7500 in 1972 and staying roughly stable until the 90s. Apparently they've been building radar there since 1987, and I can confirm that's still the purpose of the Lockheed-Martin plant.
Thanks for the history! Been driving past that plant for almost 40 years going back and forth across the state.
I was surprised when the article opened with what it said was the worlds first transistor radio, because I always thought that was the TR-1. It looks like GE made a prototype, but never took it to market.
I'm in the same boat. Been living here roughly 30 years, but this article was the first I'm learning about this fascinating bit of history! Glad the parent comment mentioned it!
Personally, I want capital markets that are dynamic enough that some fraction of $n00 billion businesses become $(n-k)00 billion businesses (check out the aggregate market cap today of GE’s progeny).
I’m not even sure there’s a counterfactual world where GE is a $m trillion business: The global economy has largely evolved beyond these massive, diverse conglomerates, and likely all to the good.
What does a “wow, GE really has been managed wonderfully since 1980” story even look like? I imagine they split up much earlier, each spinoff establishes their own brand, and there’s no “GE” to talk about.
I think GE is a tragic story in that they painfully and successfully navigated the transition from legacy giant manufacturer to the global economy, but overdid it.
Growing up in an area with a big presence (one of their division HQ), I did alot of early career business with them. They were shady everything was purchased with weird leasing agreements with themselves, etc.
The business strategy was good, but the demands to return growth powered by financial engineering ultimately killed the company.
A well-run conglomerate from an investor's perspective is more like a broad mutual fund than a single hot stock.
It's not likely to pop 800% tomorrow, but it's more likely to produce reliable long-term value because it's pre-diversified.
For some reason, the Asian kerietsu/chaebol conglomerates seem to be able to handle it well. Nobody would deny Hyundai or Sony being hugely successful as conglomerates.
There's an alternative world where they didn't focus so much on financing and GE Capital. You make a good point that they still would have a diverse set of businesses that would be hard/awkward to build in parallel.
Capital markets do these kinds of spin-offs regularly.
Problem is usually these spin-offs happen because it becomes clear the parent org has been doing something nasty that's going to create tons of legal liability, and the spin-off is really protecting the parent from lawsuits.
DuPont is in the news recently with how they did this with PFAS pollution. Sure, sue the "PFAS company" into oblivion, but thankfully the PFAS polluter is no longer DuPont or DuPont investors. Not DuPont's problem that Teflon pan sales can't make up for the costs of all the associated environmental cleanup.
This happens frequently with pharma companies when internal testing shows there might be some long-term side-effects before it becomes clear in public studies. I think I remember hearing this playbook was used with asbestos back in the day.
Recently read The Man Who Broke Capitalism by David Gelles which is an excellent review of the Welch years, how he worked, and how he sent his minions out across the corporate world to wreak havoc. Wonderful read and really provides perspective on why modern corporate America is what it is.
Light Out by Gryta and Mann follow up by focusing on the Immelt years and how he tried to keep the ball rolling despite the hole that Jack left him in. Also an excellent read.
Sounds like Power Failure covers a lot of the same material as these two earlier books perhaps with some historical material.
As an engineer I always had just blamed nebulous “MBAs” as the reason we can’t have nice things, but the Gelles book makes a very strong case that it was Welch specifically that changed the rules of engagement to what they are now and follows the thread through his career showing the weaknesses he exploited, the benefit that he gained from it and how he spawned the modern cult of the Imperial CEO.
Many people have tried to run the same playbook with some success, but Welch had unique resources that let him continue the game far longer than anyone else.
As an aside, Gelles publisher made him add a hopeful last chapter on the social benefit corporate movement and the few corps that were able to resist welchism just so the book wouldn’t leave the reader feeling hopeless!
> Recently read The Man Who Broke Capitalism by David Gelles which is an excellent review of the Welch years, how he worked, and how he sent his minions out across the corporate world to wreak havoc.
The parts about Boeing in that book are... rough. Not rough as in "poorly-written" but rough as in "holy hell is that ever a brutal way to ruin a good company". Excellent book but lol it's not a feel-good read :)
Maybe a decade ago I read from critics concerned a shift to an aggressively globalized supply chain was certain to wreak havoc on Boeing’s quality control.
e.g. safety-critical nuts and bolts used to be produced down the street, now you get a few nuts from say Thailand and a few bolts from Malaysia… the critics complained it was certain to lead to problems.
Was that a part of what you read about in that book?
Not significantly no, it was much more focused on the McDonnell-Douglas reverse acquisition. To summarize: McDonnell-Douglas was failing and bought Boeing with Boeing’s own stock (technically Boeing bought McDonnell-Douglas with Boeing stock but in practice McDonnell management assumed control). MD’s executives were Jack Welch protégés and did the same thing to Boeing that happened to GE.
The part that story always stays silent is that Boeing then-CEO was big fan of Welch-ism apparently and oversaw major changes that caused long-term issues
... while new people (albeit not execs) from McDonnell-Douglas were publishing internal memos about how MD has experience on why the actions taken by Boeing (not MD!) CEO will cause problems.
Context: "Sir Frank Whittle, an English engineer, is credited with inventing the jet engine. He patented the design for the turbojet engine in 1930, and his work led to the first operational jet engine in 1937. Independently, Hans von Ohain in Germany developed a similar jet engine, with the first flight powered by his design occurring in 1939. Both are recognized for their pioneering contributions, but Whittle's work laid the foundational concepts."
All modern jet engines are based on Ohain's axial flow design, not Whittle's radial flow one. Ohain's engine first ran in 1937. The Heinkel HE178 was the first flying jet airplane, with Ohain's engine.
The Me262 was the first operational jet fighter, again with Ohain's engine.
Axial flow made more demands on metallurgy of the time than centrifugal flow. The Viscount was the first turbine powered civil aircraft using RR Darts with two centrifugal compressor stages.
I enjoyed flying on the Viscount. It offered a much nicer passenger experience than the current crop of sardine cans.
Decades later I got in a lot of time flying the simulator that Air Canada donated to a tech school.
> The Me262 was the first operational jet fighter, again with Ohain's engine.
I think "Ohain's engine concept" would be more correct.
Ohain worked at Heinkel and developed the HeS 011 engine. However, the Me 262 was equipped with the Junkers Jumo 004, which was based on Ohain's design, but developed without him. The first test flights were actually done in 1942 with two BMW Typ P 3302 turbines (later called BMW 003).
"Granted a patent for his turbojet engine in 1936, Ohain joined the Heinkel Company in Rostock, Germany. By 1937 he had built a factory-tested demonstration engine and, by 1939, a fully operational jet aircraft, the He 178. Soon after, Ohain directed the construction of the He S.3B, the first fully operational centrifugal-flow turbojet engine. This engine was installed in the He 178 airplane, which made the world's first jet-powered aircraft flight on August 27, 1939."
Recently read "Lights Out", which was a fun book covering the past couple decades in good amount of details. Basically a hit piece on one of the CEOs, but hey if you're flying around with a "backup" private jet you probably deserve a couple hit pieces.
I am reminded of my time at Xerox: Financialisation, making numbers, frequent reorgs, looking down on software...
But the biggest was coming up with nice new technologies, selling to customers; then not that many years later dropping support and leaving customers without a path forward.
They turned it around by not being GE anymore. The stock trading as "GE" now is just GE aircraft engines, aka "GE Aerospace". The healthcare stuff went to "GE Healthcare" (GEHC) and power systems went to "GE Vernova" (GEV)
They also sold GE's profitable GE biotech division to Danaher where Larry Culp was the previous CEO. The proceeds was then used to shore up the finances of GE.
GE finance was spun off into Ally bank.
The other part of the turnaround though was the pension. Pension funds in a zero interest rate environment is a giant liability. That was a huge part of what drag down GE's finances for a while. Once the interest rate started to go back up again, the pension liability shrunk by a lot.
Overall, GE is in a much better position now then it was in the past two decades. I don't know why the post ends up on such a negative note. GE has been severely humbled but I think it's well positioned to grow again.
I've invested in GE twice, both during its downturns. This time I'm holding onto it because I think it's structurally in a better place than it was before.
GE Finance was spun off into Synchrony Bank. Ally Bank is the former General Motors Acceptance Corp (GMAC) the former finance arm of GM pre-financial crisis bankruptcy
I said that religion does not thrive under capitalism, and of course this was the fate met by the Bell system. The breakup of the Bell system in 1982 occurred primarily in response to their very high rates, which were (accurately) seen as symptomatic of the monopoly they enjoyed.
Nobody is wearing masks, but there is a lot of name-dropping by the field reporter, Robert Frank, and a full obituary in the dooblydoo; don't miss them
Only if you mean """Mask mandates""" that had no enforcement. At one point here in southern Maine, we encouraged people to stay at home if you didn't need medical attention, but at no point were cops legally allowed to pull you over without standard probable cause, and you were committing no crimes by being out and about without masks. Companies who disallowed you inside without a mask were exercising their first amendment right to association to not associate with people who could cost them money by getting their workers sick.
A renowned local pizza company spent that summer loudly crying about mask mandates and loudly not conforming to gentle asks to increase spacing and limit indoor dining. They were documented as the site of several significant outbreaks and now the company is dead. Because people stopped going. Because nobody cares so much about pizza that they want to catch something that is from an inconvenience all the way up to lethal.
There was a link on HN claiming that business books are just entertainment and that you don't learn anything about business. And then listed some self help books.
I read this book. Going into it, in my head, I thought flannery always got the shorter end of the stick and was unsure if welsh or immelt did the company bad.
After reading it, Welsh was great (his creation of GE credit, while merely just a shadow bank, was a bit innovative, not to the point of lionized but certainly worth a merit, but his day-to-day running and operation and cost cutting / discipline, outside of a couple deal heat moments seemed really quite good).
...except for hiring Immelt, Immelt was a ridiculous disaster of a CEO that my god should've been fired nearly immediately, and Flannery got completely shafted, someone threw him out, grabbed his plan, and basked in the credit. Super tragic to see.
I don't think it's entirely AI-generated. The review selects details and explains them logically, e.g. why GE was able to financialize itself. AI slop doesn't have logic, it just treats the text as a bag of words and vaguely gestures at the overall vibe.
On the other hand, the Key Quotes are not really that key, and some of the bullet points don't really work (it's not clear how the LTC insurance time bomb can be considered an accounting trick).
That's my feeling as well. Nowadays it's getting harder to differentiate between LLM "dreck" and genuine bad writing that feels like personal notes of some uninitiated reader.
The CEO demigod worship is woven into the fabric of the company and is still smoldering brightly with middle management. They all think they are Neutron Jack.
I don't think this article was written by AI - at least, I am not sure it is - but the way it is divided up, the bullet lists and "key quotes" and breaking a relatively short article into even shorter sections, makes it feel AI generated.
Sounds like an interesting book but the article says remarkably little.
Thanks for the feedback. I try to keep track of quotes I like when I'm reading. This was an attempt to bundle them up into some useful themes. I'll try to expand into something more opinionated for the next one :)
Just reiterating what cogogo stated in a sibling, but the thing that threw me was the 'review' in the title. I was expecting some critique or comparison but instead saw summary and highlights.
I enjoyed the summary and highlights, and learnt about some details I would likely have never otherwise seen, so I think it's just the framing that seemed 'off'.
Depending on your intent consider reframing or adding critique, but I think the content is good and I appreciate you making it.
[edit] There is some critique and comparison in the opening: "Shakespearean tragedy" and "The result is equal parts invention history, boardroom knife-fight, and forensic accounting thriller." but I think these are the only ones. I would love to know why you think this, and what you like about your "favorite ideas" (and any things you didn't like!)
Did you use AI to write this review, or was it entirely by hand? The structure, emphases, and conclusion directly match the way ChatGPT tends to answer my requests to summarize/analyze/compare.
I came up with the organization and the quotes but I definitely used AI to help improve it. For example, a friend pointed out that a word was overly flowery so I asked Claude for some alternatives (https://imgur.com/a/k3sQ7lR). I believe not using AI is going to be like not using a word processor soon. AI will help people communicate more, sharpen their thoughts, and learn faster.
This does have me thinking more about what causes things to look AI-generated. The uncanny valley effect. It seems like some people don't like the header image but I thought that was a nice touch to have a visual element.
What's ironic is I normally use ChatGPT but they have a bug that caused my account to be downgraded so I didn't have my "normal" AI tool today.
While I'm certainly no stranger to letting an LLM help me streamline some technical documentation, I also think it will eventually grind down everything to a sea of "lowest common denominator" speech.
A friend of mine recently used an LLM to help write a condolence card, and I found that appalling.
Who I am as a person is the sum of my experiences, and I'm not even talking about the great cornerstones but random stuff.
Like that one time I accidentally still had our cordless house phone in my pocket as a kid when I went to play in the woods and lost it there.
There are thousands of these little things, and it's what makes you unique and influences how you talk and think.
I am saddened by the thought of "not using AI will be like not using a word processor soon". It will grind away all the little weirdness, all the little unique aspects.
I would have loved to read "apotheosis". I didn't even know that word!
I love those unique things. The cordless phone is a great example!
I understand that fear of the sea of lowest common denominator. My hope is that it will help us create even better writing, music, etc. and appreciate it even more.
What's also ironic is that your review is for a business book about how deferring costs creatively, obsessing over short-term productivity, and placing faddish CEOs as gods atop an engineering organization lead to an inevitable tragic downfall for one of the USA's greatest companies. What's the GE Credit for contemporary times?
That's interesting. I didn't consider that it was AI at any point while reading it, and I don't use it very much. Going back I see what people are saying but I think it's more cohesive and compelling than what AI would write.
I agree that it's more of a "key takeaways" than a critical review but I appreciated that the author didn't make it about themself.
Based on your attitude I know I’m safe to note something, something potentially all but irrelevant in the coming years: as soon as I saw the artwork I did a reverse image search and concluded it was likely generated.
I am unable to articulate exactly why, but it seemed to take away from the piece. Weird huh? (non sarcastic)
Disagree, the article's lead image is actually better. The Getty image is way too cluttered, and just artistically uninspired in general. If the author got his hero image by feeding the Getty image to AI and asking for a cleaned-up, focused version, then that's doing it right in my book, ethical considerations aside.
There really should be a way to credit the original source image without being compelled to actually use it. The image in the article isn't a "rip off," but it is a derivative work made without permission, and the law doesn't currently make a distinction AFAIK.
Felt like a summary - not sure I even considered AI even if it didn’t read like a critical review. I do really want to read the book. Jack Welch is a case study in hubris. And I worked for a startup that had a relationship with Immelt. We kept trying to use breakfasts and dinners with him as a marketing ploy…
More like 6th graders. Most modern news targets a 6-7 grade level, social media 4-6th.
Government publications target 6-8th grade.
Look for New York Times articles published in the 1960s or 70s and compare them to today… it’s pretty jarring. They targeted a 12th grade reading levels at that time.
Ignoring for the moment the fact that this particular article is a book summary, a task LLMs excel at, it's interesting that the (warranted) comparison to LLM outputs casts doubt on the credibility of the writing, and in some ways maybe even caps its implied utility.
Just like how human beings choose different ways of presenting themselves to the world (e.g. masculine/feminine, gay/straight, goth/punk/preppy) as a form of social signaling, today's LLMs emit a certain "I'm AI" signal that humans pick up on, and human writers will likely have to continue evolving the counter-position(s) to that signal.
If the results of relatively simple, unsophisticated prompts get better at passing for human-written articles/blog posts/forum comments/etc, that'll increase the fraction of human writing that falls into this uncanny valley, and exacerbate the need for stronger counter-positioning over time.
It’s funny how this works. The writing style did not tickle my LLM detectors, but the structure certainly looks like common LLM formatting with the sections and key quotes at the end.
Agreed, but today's GE is quite different from it's former self. The article touches on this:
> But complexity has a cost when multiple things collapse at once. The power business cratered in 2017 and the insurance liabilities exploded and oil prices collapsed. CEO John Flannery launched "Project Eisenhower," a secret plan to break up the company. His successor, Larry Culp, made it official: After 126 years, the conglomerate would split into three.
> The final irony? The same GE labs that created the first US jet engine, the MRI, and LED lighting still exist. In 2024, they're developing hydrogen-powered aircraft engines and 3D-printing technology that would have amazed Edison. But the conglomerate that funded them is gone.
The subunit I worked for, was almost supernaturally dysfunctional.
I was there for 18 months, and they had 3 reorgs, in that time.
Once, the VP of our division, called an “all-hands” meeting, to tell us that he was a lawyer that didn’t have a computer, didn’t like software (we were a software company), basically, didn’t like us, and that we’d better get on the stick, and make number go up.
Ah…fun times…
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