GE Applies The Pressure

How far should American firms go when playing economic hardball with government officials? Is there a point where “tough but fair” corporate behavior crosses the line into inappropriate ethical behavior?

For instance, consider General Electric (GE), which has been rolling up its sleeves and engaging in hard nosed negotiations lately. A few months ago, it announced that it was interested in moving its corporate headquarters out of its long time Connecticut home because of its state tax burden.

State government leaders might have been nonplussed by GE’s position, given that the global goliath only pays Connecticut $250 per year in state income taxes. But Governor Malloy is negotiating with the firm any way, offering additional incentives to keep its headquarters in the Nutmeg State.

Texas, well known for its low tax, light regulation, business friendly tradition, has also entered the fray. The city of Dallas met with GE executives in an attempt to attract their corporate headquarters to the Lone Star State.

But then GE announced that it was no longer interested in moving to Dallas. Its reason? Apparently, Texas’ senators and representatives in the federal Congress oppose the continued existence of the national Export Import (Exim) Bank, a governmental fiscal entity that helps GE structure financing packages for its global customers.

Is it fair to punish Dallas’ municipal government and citizens because its federal representatives oppose what CNBC calls one of hundreds of obscure federal agencies you don’t usually hear much about ? Whether or not you believe so, perhaps we can all agree that GE is politically even-handed in its hardball tactics. After all, Texas is one of the reddest of all red Republican states, while Connecticut is one of the bluest of all blue Democratic states.

And GE hasn’t stopped there. Last month, it announced that it is moving hundreds of jobs out of the United States entirely because of the possible expiration of the Exim Bank. And last week, GE declared that it is ending its clean-up of toxic pollutants in the Hudson River, even though women of childbearing age and children under 15 are still advised to avoid eating fish caught in its waters.

To be sure, no one has accused GE of doing anything illegal regarding these matters. It is simply choosing to play hardball in a manner that benefits the financial position of the firm.

But is it possible that such perfectly legal behavior can simultaneously represent ethically inappropriate activities? If you believe that corporations bear some responsibility to their human neighbors and their natural environments, it is a question well worth pondering.