Conspiracy Jack

By Felix Salmon
October 10, 2012

Why has Jack Welch doubled down on the false, inflammatory, and slanderous tweet that he sent out five minutes after the jobs report came out on Friday?


I was one of thousands who called Welch out on this at the time, both in terms of its substance and in terms of its hypocrisy — coming, as it does, from a particularly notorious earnings massager. Others took his side, or at least suggested that there might be something to what he was saying. And undoubtedly the fact that we’re in the final month of a presidential election campaign served to make everything rather more feverish than it might normally be.

But surely that was only to be expected. When someone of Welch’s stature accuses a sitting president of deliberately manipulating economic statistics for political purposes, just a month before an election, you have to live in a pretty astonishing bubble of flattery and denial not to know exactly what’s going to come next.

The thing about Twitter is that it has a way of piercing such bubbles. Welch is active on Twitter: he has tweeted 1,717 times since he joined Twitter on April 28, 2009. That’s an average of 1.4 tweets per day — and all of them were written by Welch personally, rather than coming automatically from some robot. He particularly likes bashing the Obama administration and supporting Republicans like Herman Cain; what’s more, he has even attacked the unemployment rate, in the past, as being the “most political number out there”.

Such activity, along with his quasi celebrity status, means that he has accumulated more than 1.3 million followers, many of whom are quite vocal. So when he tweets like the grumpy Republican partisan he is, he will immediately see a pretty angry stream of at-replies. Those replies will come from Democrats, of course; but they will also come from people who think that it’s a good idea to have some evidence before accusing the president of a felony that could result in a jail term and/or impeachment; and generally from technocrats on both sides of the aisle who have great respect for the excellent job that the Bureau of Labor Statistics does every month in an enormous and highly complex economy. On TV, Welch is treated with a modicum of respect; on Twitter, he sees real people’s real feelings about him. That’s likely a new experience for him.

A humble man, in such a situation, might have backtracked, realizing that he had gone way too far. But Jack Welch is not a humble man, and so instead he decided to bluster his way through. Hence the bizarre references to Soviet Russia and Communist China, and the way in which he describes his critics as “mobs of administration sympathizers”. (In fact, of course, only in highly autocratic societies could a business leader expect respectful agreement at all times, no matter how stupid his statements.) Hence the brazen — and clearly false — declaration that the reference to “these Chicago guys” in his tweet was in no way about the Obama administration or the White House. And hence his decision to depart the reality-based outlets of Fortune and Reuters, and move instead to the editorial page of the Wall Street Journal, where he can offer up his opinions to the right-wing echo chamber rather than to the public at large. Welch’s choice to appear on the WSJ editorial page — underscored by a declaration that he’ll get better “traction” that way — is a demonstration that Welch is embarking on a new career as a mascot of the right, rather than trying to stretch out his fading post-retirement career as would-be management guru. Welch has chosen the WSJ editorial page much in the way that he hand-picked the Office of Thrift Supervision to supervise GE Capital back in the day: it’s the place where he’ll get maximum  adulation and minimum pushback.

Welch devotes much of his WSJ op-ed explaining why he considers America’s 7.8% unemployment rate to be “implausible”. That’s fine — economic statistics are always inexact, and Welch might well have some insight as to why the real unemployment rate is higher than that. Except, as it turns out, Welch’s unique insight here is wonderfully self-centered and incoherent:

I sat through business reviews of a dozen companies last week as part of my work in the private sector, and not one reported better results in the third quarter compared with the second quarter. Several stayed about the same, the rest were down slightly.

Is there any reason to believe that the dozen companies Welch looked at are representative of the US economy as a whole? Is Welch really saying that looking at these 12 companies gives a better insight into the economy than the official establishment survey, which looks at 141,000 businesses covering 486,000 different worksites? And that aside, if businesses were indeed hiring again, and using their cashflow to employ people rather than just sending it into an ever-growing bank account, you’d expect their profits to go down rather than up. Welch didn’t say that the companies he looked at weren’t hiring; he just said they were making less money in net profit. Which could well be a positive sign.

Welch has statistical-methodology quibbles, too; these are nothing new. Indeed, as he points out in his column, as long ago as 2003 Austan Goolsbee was explaining in the NYT how Democrats and Republicans both have swelled the rolls of the disabled, with the effect that millions of people don’t turn up any more in the official unemployment rate. If you’re collecting disability, you don’t count as unemployed — and the number of people collecting disability today is much greater than it was 30 years ago. As a result, it’s difficult to compare today’s unemployment rate with 1982′s.

But that kind of stats geekery will never set off the kind of Twitter firestorm that greeted Welch on Friday. The slanderous part of Welch’s tweet was his assertion that the White House both could and did “change the numbers” for political gain. Not change the methodology, in some kind of public manner which statisticians could argue about — but instead pull some kind of shady Chicago political move, and release headline unemployment rate just under 8% in much the same way that Welch would regularly release earnings a penny above expectations.

And on that front, Welch is not apologizing in the slightest. Instead, he’s just grudgingly diluting the suggestion a tiny bit:

If I could write that tweet again, I would have added a few question marks at the end, as with my earlier tweet, to make it clear I was raising a question.

Does he have any evidence that the Chicago guys might be manipulating data? No. Does he think it’s even possible for the Chicago guys to be manipulating the data? Evidently, he does. What makes him say that? He won’t say. But is it a legitimate question to raise? In Welch’s eyes, absolutely, yes. If you’re Jack Welch, it seems, any time there’s US data which makes the government look good, the question can and probably should be raised: might the data be wrong? Or, might the government be manipulating it?

The paranoid style in American Politics is nothing new: it was famously diagnosed by Richard Hofstadter in 1964. It has a storied and ignoble history, and Welch is merely the latest in a very long line of American conspiracists. (And yes, of course, you can count Donald Trump in as a bedfellow.) Sometimes the paranoiacs are mostly on the left; these days, they’re mostly on the right. But as with all conspiracy theories, nothing they say can ever be constructive: these are people who will attack empirical evidence long before they use it to help shape their view of the world.

And so, with one unretracted tweet, Welch has effectively rendered himself irrelevant in the so-called thought-leadership world he has dominated for so long. It’s fine to have unusual or minority opinions. What’s not fine is to base those opinions on nothing but ideology, and admit of nothing which could make you change your mind. At that point, you’re not a thinker any more; you’re a theologian. Welch has clearly decided that he would much rather be a pastor, preaching to a like-minded flock of WSJ op-ed page dogmatists, than a participant in substantive debate. The sad thing is that he received much more attention for his outbreak of crazy than he received in response to any of his less-bonkers pronouncements. Which is probably only going to encourage him, going forwards.

12 comments

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Would that your conclusion ’bout basing one’s opinion on ideology alone were backed by some evidence. It appears to me to be a lucrative and growing field, if one’s ideology matches that of the money boys.

Beyond that, though, what a spectacle: to watch a revered and iconic psychopath devolve into paranoid senility.

Pass the popcorn!

Posted by Eericsonjr | Report as abusive

Welch is a guy in his dotage, and has been for a while. He embarrasses himself in this episode and others – you’d kind of expect his loving (trophy) wife to rein that in, but maybe not. Sad all around. Kinda feel the same about dwelling on it so. I mean, even if he richly deserves to be whipped when he’s down, actually doing it with such enthusiasm ….

Must admit I can be an excessively vindictive type in the right circumstances, but I got gotta say too – I got nothin’ on you, FS.

Posted by MrRFox | Report as abusive

Welch has an obvious axe to grind. He is a hack.

But one has to question government numbers… Consider inflation calculation — people switch from steak to hamburger and what next, cat food? Rent was counted but not mortgage payments. They always strip out food and energy for core inflation, but if 20% of your income goes to these things, what does it mean?

re. the BLS household survey, it collects data from 55,000 households; over a period of a year, that is probably 1% of all households. In 40 years of being a “household”, I have never been surveyed and do not know of anyone that has received such a survey. Who are they sampling? I have neighbors that long ago gave up looking for work and they simply don’t count anymore.

John Williams Shadow Stats might be a bit off the wall sometimes, but he does call attention to suspect numbers.

Posted by upstater | Report as abusive

Welch and his wife have been on a downward slide into caricatures of themselves for a while:

“Suzy Welch, former editor in chief of the Harvard Business Review, and wife of Jack Welch, former CEO of General Electric[, in]. . . an appearance on CNN with her husband . . . suggested that Mr Obama’s personal style and choice of musical material define him as a member of a ‘different America’. I would imagine this is why Mr Romney’s campaign included the snippet of Mr Obama singing ‘Let’s Stay Together’ at the Apollo Theater in Harlem. They hoped it would convey his otherness.

“‘It’s the difference between the songs that they’re singing,’ Mrs Welch said. ‘Mitt Romney didn’t exactly do a beautiful job on that song, but think about what he’s singing, OK? I mean it’s that patriotic song and he goes all the way through it. Then you’ve got the very cool Barack Obama singing Al Green. That is the two different Americas. Isn’t it?’”

Oh yes, two different Americas, but not the ones she’s thinking of.

Posted by rb6 | Report as abusive

It’s a long-standing mystery why Jack Welch was turned into such an icon of management excellence. Even in his heyday, the manipulation of earnings was evident. The dependence on GE Capital should have been clear. He wasn’t a bad steward of GE, but it was always absurd to elevate him to such heights.

Posted by lknobel | Report as abusive

” and Welch might well have some insight as to why the real unemployment rate is higher than that.”

No, he doesn’t. He might know a lot about corporate earnings (and manipulation thereof), but is there any evidence that he knows anything about the unemployment rate? Or at least any better than somebody who’s put in even a few years at the BLS?

“But one has to question government numbers… Consider inflation calculation — people switch from steak to hamburger and what next, cat food? Rent was counted but not mortgage payments. They always strip out food and energy for core inflation, but if 20% of your income goes to these things, what does it mean? ”

In terms of food and energy, this has been covered by Krugman. Search his blog for ‘core inflation’, and you’ll find explanations and analyses.

Posted by Barry_D | Report as abusive

Hmmm. Is a defamatory tweet slander or libel?

Posted by Christofurio | Report as abusive

Libel, same as a defamatory post. But both Obama and Welch are ‘public figures’. Fortunately for Felix and Welch (and me), actual fraud must then be proven for the action to lie.

Posted by MrRFox | Report as abusive

For “Jack Welch, it seems, any time there’s US data which makes the government look good…”
The big irony here is that these new numbers were a chance for corporate America, which ain’t exactly been liked these past few years, could have looked good.
Look at the hiring in the private sector? people like Welch could have said. Plenty of American companies aren’t ofshoring or right-sizing!
But no, rather than take the credit, he blew the message to smithereens.
These people cannot be happy for workers, corporate America, if there’s the slightest chance it could rub off on Obama.
That seems nearly sociopathic, to be basically rooting for more worker & family suffering so that the era of Mitt can arrive.

Posted by RalfW | Report as abusive

@RalfW –

Yeah, that’s been the game-plan all along. Sad and scary at the same time – it just might work.

Posted by MrRFox | Report as abusive

Hilarious. Make fun of idiot conservatives for suggesting BLS data was fudged. These people are loony! Update: Oops, the BLS data was fudged. Never mind. Move along: these aren’t the droids you’re looking for.

Posted by solotar | Report as abusive

This article was link to make conservative look like conspiracy theorist…..except they were proven right….HA!

Posted by c2183rdcav | Report as abusive