The Meaning of Jack Welch's Cave-In

On Sept. 14 the Wall Street Journal carried an article by Jack Welch, former CEO of General Electric, concerning the public furor over his post-retirement benefits package. In it he explained that he was offered the benefits in lieu of a large bonus that the company wanted to pay him in return for not retiring early. In a tortured article Welch revealed that he finally decided to renounce these benefits in deference to public perception, which means: he did it to appease the public regardless of the facts of the case.

This surrender, from the man who is arguably one of the greatest CEOs in American history, the man who increased GE stockholder value by over $400 billion in two decades, has significance far greater than the relatively paltry $2 million to $2.5 million that the annual benefits are worth. The real meaning of his cave-in is symbolic: it means that he is not willing to keep money that he earned by long, hard, competent, honest work because the public disapproves of it. This means that public approval is more important than objective fact, than justice, than one's right to the profits from one's efforts.

The cave-in is especially damaging because of the great esteem in which he is held by the business community and the public. Unlike the executives from various companies who have recently been cited for fraud, the money Welch made for himself and GE was earned honestly, through productive effort and voluntary trade. What are other executives to think when they see a man of Welch's stature give back money that is both modest in amount and rightfully his--just because he fears disapproval?

For more than a century the conservatives have lost every battle with the "progressives" or liberals concerning business regulation, because none of them would stand up for the moral right of the businessman to make a profit. They would not say what needed to be said, that businessmen, like their employees, work for their own, rational, selfish interest and that they have an absolute right to run their business as they see fit, to make the biggest profit they can earn honestly, and to be justly rewarded for their efforts.

Instead, the conservatives accepted the basic, altruistic morality of the left and acknowledged that the only justification of the businessman's right to exist was selfless service to the public. At the deepest level Welch's cave-in reaffirms, in the most humiliating way possible, that he too views himself as a selfless servant of the public. This is the chickens coming home to roost--as a result of accepting the premises of his enemies, even America's greatest executive dare not assert his moral right to what he has earned.

The attack on Welch is only the tip of the iceberg. Also under attack today are the size of CEO salaries, the use of stock options, the right of a company to choose its own board of directors, the right to save on taxes through offshore subsidiaries, and the right to attain market dominance by producing better or cheaper products than rivals. How long until businessmen have no rights at all and are no more than government bureaucrats (as they are under fascism)? And how many businessmen have stood up and protested these encroachments on their rights? Almost none.

What chance does the rest of the business community have when the best one of them lacks the moral courage to stand up for what is right? Capitalism cannot survive without a moral base, as Ayn Rand observed decades ago. The only proper moral basis of capitalism is: man's right to exist for his own happiness, neither sacrificing himself to others nor others to himself. Man has a right to his own life, which includes the right to trade freely with others without government interference (other than to prevent fraud).

It is time that businessmen stand up for themselves in the name of morality. To quote Ayn Rand's hero, John Galt in Atlas Shrugged who is urging businessmen to go on strike against self-immolation: "I have called on strike the kind of martyrs [the businessmen] who had never deserted you before. I have given them the weapon they had lacked: the knowledge of their own moral value. I have taught them that the world is ours, whenever we choose to claim it, by virtue and grace of the fact that ours is the Morality of Life. They, the great victims who had produced all the wonders of humanity's brief summer, they, the industrialists, the conquerors of matter, had not discovered the nature of their right. They had known that theirs was the power, I taught them that theirs was the glory."

Welch's proper answer to his critics should have been this: "I earned the benefits through decades of hard and successful work. I am proud of what I earned, and I intend to keep it."