President Obama today named GE Chairman Jeffrey Immelt to head the White House Council he has served on over the past two years under the leadership of former Fed Chairman Paul A. Volcker. This advisory body, originally named the Economic Recovery Advisory Board, lacked traction with the White House and, as a consequence, declined in political significance even as the stature of Mr. Volcker soared among those in the country who value sound and independent thinking over political calculation and sail-trimming.
As author of the major element in the Financial Reform legislation enacted last year that would directly address, in part, the huge risks to our financial system caused by proprietary activities of large banks -- the eponymously named "Volcker Rule" -- Mr. Volcker might easily have been seen by Wall Street as a formidable foe. At the outset of President Obama's term, the White House surely would have known him to be seen that way, for his record of putting national welfare ahead of private interest is a long and distinguished one.
Somehow, in one of the most remarkable PR tricks in this writer's memory, Republican leadership convinced the press, and through it, a large share of our nation's citizens, that the President had been deliberately, and effectively, anti-business. Many business leaders joined in this libel, including Jeffrey Immelt, in a speech last summer in Rome. In fact, this claim is patently false. However, in the nation's Capitol, where mirrors enlarge clever fallacies until they appear to be true, the President has chosen to respond by seeking to endear himself to business. To that end, he has undertaken a number ofsteps that carry him into an ever-tighter embrace of all to which the U.S. Chamber of Commerce, that lowest common denominator of the business community, aspires.
And so, rising like a Phoenix, the defunct Economic Recovery Advisory Board is reconstituted with Big Business at its helm, new membership in support and a new name to capture the President's emerging affection for job creation. It could work. It might work under Jeffrey Immelt's leadership, although he is better known for creating jobs off-shore than onshore. Since 2005 GE has shed 27,000 jobs, shrinking from 161,000 to 134,000 in 2009. And, of course, Big Business is not the place that economists would naturally think of first as the most promising place to generate jobs.
When Franklin D. Roosevelt entered the White House in 1933,there were some 18 million destitute Americans needing help. To address this problem, and the growing number of those out of work, he was quick to bring to Washington not a leader of big business but Harry Hopkins, a social worker whose mission in New York State had been to provide relief for the unemployed. The principal vehicle for addressing these problems was the Works Progress Administration, or WPA as it became known, an agency that under Hopkins' leadership and FDR's vigorous support, achieved lasting monuments to its success in meeting human suffering with the offer of work.
It is hard to imagine a WPA II becoming a priority of Mr. Immelt's Council, although that is precisely what, as a matter of first and highest priority, it should do. Alas, any examination of the history of our Government's handling of the unemployment problem under President Herbert Hoover between the Great Crash and FDR's inauguration, reveals parallels to what President Obama did today that are unnerving to the extent they predict how the phoenix-like Council on Jobs and Competitiveness will behave under the leadership of Big Business.
In 1930, President Hoover appointed Colonel Arthur Woods to head a committee on unemployment known as the "President's Emergency Committee for Employment." Woods was a distinguished public servant, not of the size of Paul Volcker but formed from the same mold of personal integrity. He had served with distinction as Police Commissioner for New York City. His Committee functioned from October, 1930 to August 1931. During that time it investigated the plight of the unemployed and the degree to which states and municipalities could cope. It recommended Federal relief in a highly textured report to the President. Hoover spoke to Congress soon after receiving that report, on December 2, 1930, rejecting its findings and blaming foreigners for the depression. "The fundamental strength of the Nation's economic life is unimpaired," he announced.
Economic conditions worsened. Unemployment grew. On August 19, 1931, President Hoover appointed Walter S. Gifford, President of the American Telephone and Telegraph Company, to head a new advisory committee titled the "President's Organization on Unemployment Relief". At the time, ATT was of equal or greater stature than GE is today, and Mr. Gifford was a model representative of Big Business. Mr. Gifford proved as steadfast as President Hoover was to the principle that the problems of unemployment were to be solved, if at all, by states and municipalities. These men feared national responsibility more than they feared national unemployment. Only time will tell whether this past is the tragic prologue to our future.