Welch on Obama’s Fiscal Packages

In good times, there are as many opinions as there are people, about everything including the economy, and in bad times, there are even more opinions than people. The last months of financial and general disaster have been fertile ground for all kinds of prophets, sages, experts, participants in various decision-making processes, or generally a time for the proliferation of human genius regarding the economy.

Something like the World Cup in football – everyone knows who the coach should have picked and what tactics should have been applied. One thing is prevailing although not universal – disagreement with the official choice of the responsible person. The economy is no exception, and in recent months, a whole range of people, more or less connected to the economy, have emerged, who confidently and passionately claim that the fiscal stimulus packages are pointless, that they will achieve nothing, that their practical value is questionable, etc., but all these views have one fundamental flaw – they do not offer a serious alternative, if any, but regularly stick to the assertion that the situation will not succeed. The couple who decided to contribute their thoughts to the discussions on fiscal stimuli are Suzy and Jack Welch, owners of a column in BusinessWeek. In its latest issue, the former industry leader, head of General Electric, and his wife reflected on recent events focusing on fiscal packages, specifically that of U.S. President Obama.

Suzy and Jack identify three facts that are crucial for assessing the quality of this approach and possible outcomes. First, they believe, placing emphasis on the details of the package before consolidating the banking system is backward. ‘Healthy banks are to the economy what a healthy heart is to a person: they keep it alive with the blood flow of credit,’ they say, continuing that currently, the patient is having a heart attack, while decision-makers are contemplating how much to spend on his next pair of shoes. Figuratively, there is nothing to it. In short, the couple does not get bogged down with details and answers; they, like everyone else, merely point out some things that seem illogical to them.

In their second remark on the package of measures, the Welches hit the gas and state that the package is turning into an ugly mess with questionable results regarding job creation, explaining that decision-makers must concentrate on three ‘baskets’ of proposals that would relate to: employment measures, where there would be a clear calculation of investment and return; assistance to those affected by the economic crisis, and finally, everything that is in the package in terms of political mathematics, or the need to do something at all costs and restore trust.

The third point of reflection is, understandably but no less shamelessly, the promotion of the idea of general forgiveness and patting the poor directors on the back who have led the system to ruin, but, say the Welches, revenge does not pay off, and all of us, thinking of taxpayers, must understand that we are now investors and that there are rules of the game that must be respected in any case. Paying hefty fees to managers and spending on various ‘marketing’ moves is what they mean. Simply put, business as usual, as if nothing has happened. By that logic, perhaps some cruel murderers and rapists should also be left alone because they weave tapestries or plaster walls like true artists. The column is a valuable contribution that can be archived alongside all other observations without clear alternatives, expressed in recent months.  (prepared by: Vanja Figenwald, photo: Lider)