Media outlets across the nation readily accepted the claim this week by General Electric that 500 U.S. jobs, including many from Greenville, would be moved overseas because the Republican-led Congress rejected reauthorization the Export-Import Bank. All of which is nonsense. The real story is that GE, along with Boeing and other top beneficiaries of the government bank, are trying to scare Americans into further subsidizing their hugely successful multinational operations.
Contrary to the hyper headlines, the 400 jobs that Greenville supposedly will “lose” don’t even exist. What GE actually said Tuesday was that some jobs might be created in France if project bids by the industrial giant beat out the competition.
Whether new jobs would have otherwise been created in Greenville if yet more Ex-Im subsidies were available is mere speculation—especially considering that GE just won approval from the European Union for its $14 billion acquisition of the power and grid business of Alstom, a leading French conglomerate.
GE and its fellow Ex-Im cronies do us all a disservice by perpetuating the idea that the nation is somehow harmed when U.S. companies create jobs overseas. In fact, the U.S. economy—and American workers by extension—benefit when corporations establish operations in other countries.
As for the 100 jobs that GE supposedly will move from Houston to Hungary and China in 2016, that’s business as usual. The company is a multinational with operations in both countries as well as about a hundred more, including Brazil, Germany, India, Israel, Mexico, and Saudi Arabia. With such a global presence, GE is constantly moving jobs around. To blame routine personnel shuffling on the expiration of Ex-Im is disingenuous at best.
What many people outside of Washington may not know is that GE, Boeing and other Ex-Im proponents have spent tens of millions of dollars in the past 18 months attempting to convince Congress that Ex-Im is a lifeline for American jobs. Earlier this summer, for example, GE Chairman and CEO Jeff Immelt claimed that allowing the Ex-Im charter to expire would be “economic catastrophe.”
In fact, export subsidies do not “create” or “support” jobs—they redistribute them from unsubsidized firms to subsidized ones. And the job numbers touted by Ex–Im advocates are, shall we say, dubious. The Government Accountability Office, among others, has roundly criticized them as misleading. In reality, export subsidies carry considerable costs to American businesses that are left to compete against foreign firms subsidized by the U.S. government.
GE certainly has benefitted from billions of dollars of taxpayer largess. However, that does not mean that affordable export financing is not otherwise readily available—even from within GE itself. General Electric Capital Corporation holds assets of $499 billion, posted net income of $7 billion last year, and employs 47,000 people.
As noted in its 2014 annual report, “We see a significant advantage in our ability to bring financial solutions to industries like aviation, energy and healthcare.”
Private financing is also readily available, as reflected in the record levels of U.S. exports in recent years—98 percent of which do not receive Ex-Im support. Indeed, lending to GE is a pretty safe bet considering that the company has a market cap of $255 billion and annual revenues of $149 billion.
GE and its fellow Ex-Im cronies do us all a disservice by perpetuating the idea that the nation is somehow harmed when U.S. companies create jobs overseas. In fact, the U.S. economy—and American workers by extension—benefit when corporations establish operations in other countries. Success in a global economy demands market share around the world, and companies with overseas operations are better able to serve and grow global market share. In so doing, U.S. corporations become stronger, and that’s good for us all.
For example, GE’s acquisition of Alstom’s power and grid businesses will bring 65,000 employees in more than 100 countries to GE, along with $20 billion in revenue. GE will also gain a whopping 50 percent increase (1,500 GW) in its electricity generating capacity worldwide.
For 18 months, now, Ex-Im officials have hyped their magical job-creating powers and their corporate cronies have hyped their inability to get by without Ex-Im subsidies. But GE’s latest bit of fear-mongering takes overstatement to a whole new level. Perhaps the mega-corporation should change its slogan to “We bring good things to hype.”
A regulatory policy expert, Diane Katz is a research fellow in The Heritage Foundation's Roe Institute for Economic Policy.