How Jack Welch’s Success Wrecked the Idea of the American Company
The recently deceased business icon pioneered mergers and acquisitions, stock buybacks, and offshoring
In early February of 1981, President Ronald Reagan picked his antitrust chief, William Baxter, whose arrival signified the reconstitution of monopoly power in America. Baxter restructured antitrust and merger law to prioritize economic efficiency and supercharged a merger trend already underway.
Low stock prices and high inflation meant that the new rule in corporate America was not to build products or services — it was to buy or be bought. Business goliaths restructured in the 1980s to take advantage of this new merger wave. The leader was a young and aggressive new CEO at one of the oldest and biggest conglomerates in America, General Electric.
Under Welch, the company began a policy of firing 10% of its employees every year, as well as spending billions of dollars to buy back stock.
Jack Welch — who died on Sunday at age 84 — was trained as an engineer and had made it to the top at GE by selling a new type of plastic. Citibank chief executive Walter Wriston was on the board of GE and had helped…
