David Gelles

"New York Times" reporter David Gelles is the author of the best-selling book about Jack Welch entitled "The Man Who Broke Capitalism." In addition to going deep into the Chairman and CEO of General Electric, we discuss Boeing and the climate, Gelles's beats too.

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Episode Transcript

Speaker 1 (00:08):
Welcome, Welcome, Welcome back to the Bob Left Steps podcast.
My guest today is David Gillis, author of the new
book The Man Who Broke Capitalism, all about Jack Welch
and how he ruined the economy and more so. David,
good to have you on the podcast. Why did you
decide to write the book. I've been a business reporter

(00:31):
for more than ten years now, and I'm always looking
for those big stories that can sort of help explain
and synthesize how we got here in the world we
live in. And I'll tell you the details of how
I arrived on Jack as a subject. But when I
arrived there, when I really realized, when it sort of
clicked for me about two years ago, that this was

(00:53):
an individual. This was a story that was one of
those meta narratives that Christopher iised some of these big
transformative forces at work in the economy. It was sort
of a lay up for me to go after it
as a real target for the book. Okay, how come
the rest of the business press missed this for decades?

(01:17):
Oh man, that's one of the big questions, and I
tried to address some of that in the book. I
think it's important to remember that at first, they didn't
necessarily miss it. In those first couple of years after
Welch took over in the early nineteen eighties we're now
talking about, he was dubbed neutron Jack. People saw the
mass layoffs, people saw the factory closures, and they realized

(01:41):
that this was a man who was unleashing a destabilizing
force on the American economy, and they called him out
for it rightly, and he got very unflattering press on
sixty Minutes Newsweek dubbed him neutron Jack, and it was
a pretty rough news cycle for him, if you will.

(02:01):
But then here's what happened, and we got to acknowledge
this because it's part of the complex and difficult conversation.
All of the stuff he did started to work, and
it all worked in delivering g E record short term profits,
record short relatively short term and we should have a

(02:23):
discussion about how we measure time horizons here. But for
most of his twenty years as CEO of g E,
the stock kept going up, and as long as the
stock kept going up, sort of irregardless of the human
cost on the ground, people were cheering along because that
was the world that we all had decided, more or less,

(02:44):
we wanted to live in one in which we were
going to measure success and the health of the American
economy by the market capitalization of America's biggest companies. And
what he did was find a formula towards keep g
IS stock moving up. It's sort of inexorably for twenty years.

(03:04):
And so during that time it became very hard for
the business press to sort of see through and look
past all that and really evaluate the consequences of what
was going on. I don't want to say that I'm brilliant,
but certainly by time we hit the end of the nineties,
it was clear to me that he was cooking the books.
I mean cooking the books. Would say there's illegality, I

(03:28):
want to go that far, that he was manipulating the books,
but that was not in the business press. There was
very little of it. And I'm reminded here of the
financial crisis in two thousand and eight, when everyone said, like, wait,
these sub prime mortgages were a bad thing after all,
Like where was the scrutiny right that that, like hyper

(03:49):
uh financialization and like collaterized that obligations might be a
problem uh, that there was very little recognition of uh
of of some of those issues by the business press
in the immediate months preceding the absolute implosion. And similarly
that you're absolutely right to say that there was inadequate

(04:10):
scrutiny of ges earnings. I think in the ES in particular.
Now things were different. Then, the whole culture of Wall
Street and corporate America was focused on much less transparency.
This was before the Sarbanes Oxley Act, before the big
scandals of the early two thousands, when Enron, World, Calm

(04:32):
and Tycho collapse, leading to a much greater degree of
oversight by the federal government. That said, Uh, you're entirely
correct to say that for something like almost eighty quarters
in a row, g e meet or beat analysts, expectations

(04:56):
and anyone. You don't have to be a genius to
understand that something is going on for that to happen.
Something fishy is going on for a company to meet
or beat for eighty quarters in a row, because that
just doesn't happen, right that that's like against the laws
of nature. So you talk about the change in regulations,

(05:16):
this is your beat, and we know we had regulations.
And then Trump undercut regulations. So to what degree, uh,
do these corporations have to report now? To what degree
it is different from the nineties I'm talking about presently? Yeah,
that I would say, on balance, there is more granular

(05:41):
level of reporting happening by major corporations today. There is
certainly more accountability when it comes to the boards, and
that was a big part of those early regulations. Um.
If you know, if boards are signing off on truly
cooked books, it doesn't get easy for for them to
escape accountability. It's also the case that there are very

(06:04):
few companies that are employing the same kinds of financial
shenanigans that g E was up to. And there are
very few companies that have anything close to UH an
entity as complex as ge Capital was in the ninet
nineties and early two thousand's um not to mention something

(06:26):
like that paired alongside a massive, sprawling industrial business. So
the comps get a little tricky right now. And it's
also the case that when companies do engage in some
of these shenanigans, the SEC has gotten better I think
at calling them out and dinging them, you know, they
and they ultimately caught up with in two thousand nine,

(06:48):
the then CEO, Jeff M. L. Jack, Welch's chosen successor,
settled these sweeping accounting fraud charges with the SEC that
mostly covered the period from roughly I think two thousand
three to two thousand five or so, just after Whils retired.
But in the settlement and in the news release and
all the remarks that the SEC made at the time

(07:11):
of that settlement, they pointed to what sure looked like
decades of impropriety. And we won't know right because we
we there isn't the forensic accounting from the eighties and nineties,
but they made the point that it sure looked like
GE had been up to this sort of stuff, which
they ultimately, you know, settled with the SEC for for

(07:31):
years and years and years. In the newspaper today, there's
a story about how the institutions, the professionals really didn't
lose money on crypto. It was the retail investor. Anybody
who's been exposed to one of these public companies know
the knows that the CFO plays a huge role. And

(07:53):
I can give specific examples from my own exposure of
people who are literally shipping product changing to make the
numbers look good. Okay, so that whatever they are, there
is some fudge space. I'm not saying you can take
a company to lose a hundred million and now makes
a hundred million. But the public doesn't seem to understand this.

(08:16):
So to what degree have you encountered this in your reporting?
Listen on the crypto front, I think what we're seeing
is the popping of a speculative bubble, and it's very
hard to know when you know, when people stop buying
two lips, just how how far the bottom is going
to fall out from under people. I think the critical

(08:36):
first point you made is one that is a through
line of the reporting in this book as well, which
is that the people in charge rarely face consequences, and
and that the men, and they're almost always men who
have the most power in this economy and the most
money in this economy are usually going to do just fine.

(08:56):
There is very very little accountability for corporate mouthfeasance in
this country, and there is a grand tradition in America
of true impunity, even for the worst offenders and even
for those who unleashed the most damage on society at large.
So it doesn't surprise me at all that we're starting
to see the same patterns play out in crypto and

(09:20):
and F. T. S Um and my book, frankly is
a recitation of like hundreds and hundreds examples of how
Jack Welch and his cronies played the same game at
major public companies for the better part of four decades.

(09:41):
Let's go to the present day. So within the last
six months, stock market has gone down, but let's focus
on Netflix. Netflix reports essentially a flat quarter, loses seventy
of the stock value. Let's be very clear, almost all
of that decline is based on scuttle button analysts, this

(10:04):
and that, very little to do with the underlying business.
There might be question the underlying business, but you know,
a drop of seventy and then of course a lot
of other things have dropped simultane you know, later than that, etcetera.
So to what degree is the street disconnected from businesses?

(10:25):
And as long as they're making money, they don't really
care what the hell you're doing? Uh? Well, who who
is the day? And that last part of the question,
the street or the business? I would say Wall Street
meaning investors. I'll just make it a general investment community. Yeah,
I mean, there's this is the subject of many you know, dissertations, Bob.

(10:50):
I think when we talk about a story like Netflix, right,
like that stock was obviously inflated because it was one
of these pandemic stocks. And when the world moved online
and everyone started spending twelve hours a day on their computers,
um netfolks, shoure looked like a goodbye. And so, to
answer one of the parts of that question more directly, like,

(11:12):
there's of course a huge disconnect between the stock market
and the fundamentals of any business. Um. You know that
the stock is sort of a proxy for people's confidence
in future earnings, Like we know this um in terms
of the street and what they believe. I think that's it.
That's a harder question for me to answer. I'm not
an analyst, and you know, many analysts are gonna pour

(11:36):
money into companies that are you know, are are going
to invest heavily in companies that aren't making money. We
see that all the time with big, unprofitable tech companies.
And it's also the case conversely that there are plenty
of companies that have um you know, very respectable, reliable,

(11:56):
maybe even growing, though perhaps not terribly quickly, profits that
one could say are are tremendously undervalued. I think to
to sort of comment on anyone's stock is is difficult,
especially at the moment we're seeing a major market correction,
and there's so many other global forces at work from
the supply chain at Ukraine. Um So I would just

(12:19):
say that in any few months, sort of reading too
much into the movement of a particular stock is sort
of an exercise and potential folly. But if you look
at the long chart of g E, I think you
really do see the story that I tell in my
book played out quite quite viscerally, which is that for

(12:40):
twenty years Jack Welch essentially used this combination of downsize
and deal making and financialization to inflate the valuation of
GEES stock, and that as soon as those games stopped
working for some combination of reasons that we can get into,
the stock fell apart and never recovered. And it was
just last year, of course, at the curren CEO Larry

(13:01):
Colp said that they were going to split the company
up forever. Okay, let's go back to the narrative. Paint
the picture of what's happening with g E and how
Jack gets the gig and what are the financial conditions, compensation,
show us what's going on when he comes on as CEO. Yeah.
Jack took over g E in n and before that. Uh,

(13:26):
it's really hard to overstate what an integral company General
Electric was to the American economy. This was the company
that was founded by Thomas Edison that you know, introduced
or popularized everything from the radio to the dishwasher, to
the refrigerator, to the jet engine, to the laser to

(13:47):
the damn plastic the guys who landed on the moon
were we're in other visors. Um GE was essentially deeply
integrated and someone would say synonymous with the American economy
for all for much of the twenties entry and that
was the company that he inherited in nineteen. Now for
those years, for that ten years or so before he

(14:09):
took over, the stock had mostly been flat. You know,
the economy as a whole was experiencing stag inflation sort
of combination of stagnant uh stagnant growth and inflation that
was making for a really rough run for investors. And
Welch comes to the job with this real single minded

(14:29):
focus towards reversing that trend and making g E not
only engine of profits, but really, in his mind it
had the potential to be the most valuable company in
the world, and he set about doing that um But
the CEO he took over from could not have been

(14:50):
more different the guy who preceded him, Regg Jones. He
was this sort of genteel Englishman. He lived quite modestly
relative to certainly the way Jack would one day run
run the company. As a CEO, he made you know,
a respectable sum a million dollars or so, maybe more
a couple million dollars by the end of his tenure,

(15:12):
but not tens or hundreds of millions of dollars. And
so Jack comes in and is about the opposite in
every way. He is brash, impulsive, He is argumentative, whereas
Regg Jones had been cerebrill and deliberative and from you know, cordial.
Welch is completely unafraid to throw tradition out the window.

(15:39):
Whereas Jones had been very respectful of gees legacy, and
whereas Regg Jones really focused on making ge UH an
excellent version of the company it already was when he
took over in the early seventies or eight sixties, Welch
comes to the job with almost like an a completely

(16:03):
um immoral is not the right word. What's the word um?
With no real allegiance to gees traditional businesses of lighting
and power systems and transportation. You know, he'll make the
most of those businesses, but at the end of the day,
he's much more interested in things like media and finance

(16:23):
and all sorts of finance UM too, and sees those
new industries as the real future for General Electric. And
he identifies all that all everything I just described is
pretty clear within the first year or so that Welch
takes over, and then he makes good on it. He
spent the next twenty years sort of executing on that plan.

(16:46):
Let's go back a chapter. Who is this guy? You
read the book and it's reference that he has short
man syndrome. The other thing is when you work in
a giant corporation, yes you have to deliver, but relationships
and getting along but one of the key elements. So

(17:06):
let's start out with who is this guy and how
does he end up? G Yeah, we'll tell that to
Jack Wellips that you need to be nice to your colleagues.
I think he would have disagreed with you. At the
top it's a different game. He was. He was an
argument at of s ob from the get go. All right,
So who was this guy? Jack Bats was the only
son of a poor family who grew up in the

(17:28):
suburbs of Boston. His mom was a homemaker, his father
was a unionized rail conductor on the local UH commuter
train system. Welch was as you said, short, uh, muscular, feisty, argumentative.
He grew up he had a chip on his soldier

(17:50):
from an early age. He said, I grew up with
my nose pressed up against the glass. He was poor
and he knew it, and he did not like it.
His parents were Irish, hathlic His mother made him an
ultra boy, but also instilled in him a real competitive street.
Made him learned how to play poker as a kid
by using his own allowance money, so right away at
this visceral sense of winning and losing. Um, he was

(18:13):
incredibly smart. And I always mentioned that because there's no
there's no way that he could have done all the
things he did without having an absolutely, absolutely um you know,
keen sense not only in strategy and intuition, but he
was also just you know, brilliant ability to hold and

(18:35):
synthesize great deals of information. He was smarter than a
lot of the people he worked with, and he knew it,
and even early in his career when he hadn't proved anything, uh,
that pisted him off as well. He went to college
and then was the youngest person ever to graduate with
a PhD from University of Champagne in Illinois. Graduated with

(18:55):
a PhD in chemical engineering I believe it was, and
his first job was a g e um. First year
in he threatens to quit because he gets a one
thou dollar raise, just like the other people in his group,
but he thinks he deserves more, so he almost he
threatens to quit. He finally talks his boss's boss into
giving him a little more money, uh, and he agrees
to stay. And then it's sort of off to the races.

(19:16):
They start moving him up pretty swiftly, and he rises
through the ranks at GE for you know, better part
of twenty odd years, twenty five years before he's ultimately
made CEO. Why does he get moved up the ranks

(19:38):
and it's just despite his edgy personality or somehow does
that help him? And how does he get chosen at CEO? Yeah?
It certainly seemed to help him. You know, ge was
a deferential culture. It was in line with much of
corporate America where there weren't a lot of very hard

(19:59):
edge is um. But the fact that he was so
different and that he was willing to essentially fire people
to improve the profitability of a group, that he was
willing to push his executives and his team members to
go harder, to work faster, to take chances with volatile processes,

(20:21):
and which in one case resulted in the of blowing
up of a factory that he was very proud of
in in his own way, this set him apart. And
so at that moment, after a decorative stagflation, just just
just just slow down for one second. Define for those
who were not as sophisticated and informed as you, what
do you mean by him blowing up a factory. Yeah,

(20:43):
this is a relatively well well documented incident. Somewhat earlier
in his career. He's running a factory in Massachusetts. They're
trying to come up with a new product. There's a
real pressure from the folks up to op or down
in Fairfield as it were, at headquarters, to get this

(21:04):
right and to make a profitable new plastic A S
A P and get it to market. They were having
trouble doing it, but Welch, you know, had his team
pushing as hard as they possibly could, and in the
end that meant experimenting with some very highly volatile processes
and solutions that probably hadn't been fully vetted from a

(21:27):
safety perspective. And one day he's sitting there in his
office overlooking Plastics Avenue in Massachusetts and boom, the whole
plant blows up and there's a massive explosion the building,
the roof of the building is blown off. Miraculously, no
one has hurt, no one is seriously injured, no one
has killed uh. And yet it was sort of one

(21:51):
of these early anecdotes that that demonstrated just how potentially
volatile this man was, how how explosive he could be
as a manager. He's called to Fairfield to headquarters the
next day as to drive a hundred miles or so
and explain himself to the to the higher ups at headquarters,
and essentially they gave him a pass. And that, to me,

(22:13):
I think, really was one of those moments where he
suddenly realized that he could get away with it, and
even if he pushed people. Even if he was taking chances,
even if he caused some real destruction, there weren't immediate consequences,
and that I have to believe embolded him. Going forward.

(22:36):
How do you actually get the Giga CEO? There was
a process, as there always is. Regg Jones himself requested
that Jack b included in the in the vetting process,
and then um, they made they made the the potential
candidates to succeed Red Shans write a series of memos

(22:59):
to a series of interviews. Uh. And in one of
those memos, Welch outlines this vision for a much more aggressive,
much more competitive, much more ruthless, frankly version of g E,
one that would compete in a different way in the
nineteen eighties. And uh, you know Jones and the board

(23:21):
they bought into that vision, and he got the gig
and he was he was young, he was a shock candidate.
And uh, I think I'm quote, I think I'm gonna
get this quote right when when when it was announced
the Wall Street Journal said that g E had replaced
a legend with a live wire. So we know, via
ge capital and so many other things, that Jack was

(23:45):
really into financialization. The average person was not aware of
the extreme depth of financialization on Wall Street until the
two thousand and eight crash, But even for years before that,
people had commented that Wall Street no longer build things,
It was the business of money that was their business.

(24:08):
To what degree was Jack responsible for that and how
did he get into that vertical of capital. I would
hesitate to put the whole transformation of Wall Street on
Welch's feet. I lay a lot of blame at his
feet for a lot of different issues. I think Wall

(24:29):
Street was going to be changing during the nineteen eighties
almost no matter what. Where I think welch Is influence
really connected Wall Street with corporate America. Was the degree
to which he made Ge adopt a lot of the
worst aspects of banks and other global financial institutions. And

(24:51):
we then saw many other companies following suit and doing
some of the same things. In terms of how exact
he did it, it all started with this little unit
called GE Capital um. GE had a finance arm for
decades and decades during the nineteenth century and excuse me,
during the twentieth century, and it was mainly used as

(25:15):
a way to help corporations and even individuals finance their
purchase of ge products and services. If you couldn't pay
for uh, you know, your refrigerator outright, it was basic
lending arm. They could they pay, charge a little interest
and you could pay it in installments. Welch saw the
potential of taking that arm and turning it into what

(25:39):
was essentially an unregulated bank and ran with it. And
he saw it from the get go. He's in one
of those memos I mentioned that he wrote to Red Jones.
He said there was no where at the company where
quantum change, I believe was the phrase he used, was
needed more than in finance, because he understood in this

(26:00):
kernel of a little business unit, there was the potential
to create what would ultimately be a six hundred billion
dollar pool of capital that stretched from everything from least
satellites to tie auto loans to commercial real estate debt. Okay,
so tell my audience how we ended up using the

(26:24):
capital to ensure that he met his quarterly targets. G
E by the time he was done, had an army
of financial analysts and experts who literally at the end
of every quarter. So you're after report earnings to Wall
Street on call it March one. By mid February. You've

(26:49):
got hundreds of not thousands, of people running the numbers
and saying, we told them we were gonna make I'm
gonna make it up here million dollars in profit for
the quarter. It looks like we're going to be coming
in closer to three eighteen million dollars. We need that
seven million dollars. Well, then, with such an enormous operation

(27:10):
like ge capital at your disposal, you've got any number
of ways to find that extra seven million dollars in profit.
You could do anything from sell of division or sell
a portfolio of credit card pones. You could perhaps even
lay people off and take a tax right off. You know,

(27:31):
there were absolutely infinite ways that g E found to
essentially use this enormous financial harm to UH, as you said,
massage the numbers quarter after quarter. And it was that
sort of creative accounting, if you will, that allowed g
E to hit meter beat for eighty quarters some odd

(27:51):
in a row. Okay, was there any way this could
have worked? Or was it always a time bone? There
was always going to be a reckoning at some level,
because it wasn't just about the degree to which ge
stock might have been overinflated. Because of the prominence of

(28:14):
G Capital. The other thing that was happening during the
eighties and nineties was that g was under investing in
research and development, They were fundamentally transforming their relationship with
their employees, they were buying and merging their way into

(28:35):
dozens of other industries, and so a reckoning was going
to take place without a doubt. The question that animates me,
and which you know it's it's a counter factual, so
we're not going to have a clear answer to is
what would have happened if somewhere along the way, be
it the nineties or the early two thous even after
Jack left and Jeff Emmott had a couple of chances

(28:58):
to reset the company, It would have happened if there
was a serious effort made to wind down GE Capital,
to double down on American manufacturing, to make kick ass
products and services, and do it in a way that
would have positioned g E to become the number one manufacturer,
the number one industrial company for the twenty one century.

(29:23):
They did it right. They had done it for the
twentieth century, and there's nothing to say that they couldn't
have done it for the twenty first century, except they
chose not to write. They chose to go and buy portfolios,
some pride mortgages. In two thousand five, they chose to
under invest in R and D. For the longest time,
the culture ossified and people and I talked about this

(29:44):
in the book. You know, people were afraid to take chances.
There was no willingness to spend and really invest in
sort of blue sky initiatives that might have positioned g
E to become a leader and say autonomous vehicles or
three D printing or any number of other things that
are gonna be a big part of the economy going forward,
and that they weren't in yet. But they had the resources,

(30:06):
and they had the smart They still have tons of
smart engineers at that company, but they weren't willing to
do it. Okay, GEE ultimately buys INNBC. Everybody is aware
of it because David Letterman is making jokes all the time.
Was this purely an ego play to get into media
and have that power and rub shoulders with the stars

(30:27):
or at one point was this scene as a good
business Well. G E acquired NBC through its acquisition of
r c A, which was another diversified conglomerate in the
nineteen eighties, and there's no doubt about it. Ge uh
debt and Jack, Well, it's definitely liked being a media mogul. Um.
He relished in his ability to sort of rub shoulders

(30:49):
with movie stars and even at times, you know, do
his small part to try and influence coverage of the press. Um.
But what to the ear of your question, was it
seen as a good business move? Sure? Right, if we
accept that Jack Welch's mandate was to make GE the

(31:10):
biggest company in the world, Um, the acquisition of r
C a fulfill help fulfill that mandate. You know, he
also wanted to be number one and number two in
every industry. And I believe the combination of the r
C A business with the g E t V set business, uh,
you know made the g E t V business sort
of number one or number two in the world. So

(31:32):
in those sort of rudimentary ways in which he evaluated
his strategy and focused on trying to figure out how
to make g E bigger and more profitable at the time, Yeah,
that was actually a relative I would say that was
one of the sounder moves. Yeah, it did take them
into the media business where they hadn't been, but there
were some underlying fundamental industrial plays as part of that big,

(31:56):
mega deal in I think it was that that certainly
made some sense. Okay. Parallel to this story is the
term or actually two terms of Ronald Reagani is president,
needless to say, took over from Jimmy Carter after the
Iran hostage crisis and incredible inflation. But that's when income

(32:19):
inequality started, That's when corporate taxes started to fall. To
what degree was Jack Welch ge helped by this Reaganism
or to what degree are they really separate? Jack would
have done this no matter what, gotten away with it. Oh,
I think they are deeply in mesh. These are symbiotic stories,

(32:42):
and I allude to Reaganism and Reagan several times throughout
the book because you're absolutely right that it was some
of the deregulation during the Reagan administration that enabled some
of gees or most outrageous shenanigans. For example, even that
um that was it. Even the r c A deal

(33:05):
I think was enabled by a rough boxing of antitrust
statutes by the Reagan administration. There was some weird cause
from earlier in the twenty century that expressly prohibited g
E and r c A from linking up, but that was,
you know, very communiently removed just before the deal. And

(33:27):
then you look at things like stock buy backs, which
GE and Welch became absolute pioneers in um. For decades,
stock buybacks had essentially been illegal because it's effectively a
company manipulated in its own stock price. Under Reagan and
his you know, absolute army of financial representatives who took

(33:49):
over major regulatory posts in the government, that statute was
essentially eliminated, and all of a sudden, it was okay
for companies to start buying back their own stock. And
you mentioned inequality and corporate taxes. We can talk about those,
but it's important to note that another one of those

(34:09):
trend lines that sort of starts right around the time
Watch takes over and has continued innobated to today is
the use of corporate profits for stock buybacks and dividends.
And and the money used to be going two employees,
the money used to be going to R and D
and CAPEX, the money is now going back to investors
in the form of buy backs. Well, there's a lot

(34:31):
of blowback about that. We can debate whether we're gonna
get any change, I'm not optimistic. But something you referenced
earlier was the purchase and sale of assets. Now you know,
this really becomes bad under Immelt in your book, but
it seemed like they were buying stuff just to make

(34:52):
the numbers look good without a doubt. I mean, that
was some of that, um you know, those sort of
lab sminute adjustments the GE capital would make every quarter.
And and I have quotes in the book from people
who worked at GE happening They're like, yeah, you know,
sometimes we needed a little more earnings by the end
of the year, and so we would go buy a

(35:13):
company that had some earnings and then they were our earnings, right,
And so that was a part of this absolute infatuation
with deal making that well Chad In in his twenty
years as CEO, he conducted something like one thousand mergers
and acquisitions. It was this unbelievably torrid pace of deal making,

(35:39):
which here's another one began during the whild chair and
has really never abated, and it's led to the consolidation
of American industries. It's less to more market concentration, and
plenty of academics who have done the work more so
than I have have pointed out that that market concentration,
that consolidation has led to an enormous amount of pain

(36:03):
for consumers in the form of higher prices and reduced
competition and ultimately reduced innovation for our country. Okay, let's
talk about a little closer with our feet on the ground. There.
He's worth. He owns his companies, and he's constantly laying
people off and closing companies. And there's a social cost

(36:29):
with people. Also, if they need people, they hire contractors.
Is this something that he pioneers or is he the
first one who blows it up? It's just this evidence
of what everybody was doing. No, he was one of
the first, and and time and again. And this is, Bob,
one of the things that struck me and gave me
the conviction to really keep going when I started looking

(36:50):
into this. He was the first time and dime and
dime again. He was the guy that essentially was the
progenitor of so many of these absolutely deletarious trends that
now seem like as fundamental to us as the weather
and the rising and setting of the sun, but are
actually just choices that rich executives made in the nineteen

(37:12):
eighties that we're all still living with. So when it
comes to outsourcing and offshore in ye, had there been
a little outsourcing and offshoreing in the years before that,
sure was well the first one to get on top
of a mountain and screen that this was the way
to do business. And was he the first to take
a major American employer and absolutely reshape it and make

(37:38):
it dependent not on what was essentially lifetime employees who
grew up inside that company and could expect to retire them,
but bring in this new, more transactional relationship with its
employees and state publicly that if he could, he would
put every factory on a barge so it would float
around the world and inner national waters, changing favorable exchange

(38:03):
rates and good anti you know, regulatory policies, and that
if he could, he wanted to make every job that
he could get to be done outside ge done outside ge.
If you could hire people at printing presses to print
his stuff printed, if you can fire food service workers

(38:25):
to work in his cafeteria, do it. And that's why
even today is an employee of the New York Times Company.
When I walk into the New York Times building, the
first person I see every morning does not work for
The New York Times. They are security guards who are
hired by a contractor, and I can only hope that
they enjoy fair wages and good benefits. But I don't
think it's a stretch to believe that it's not what

(38:49):
The New York Times offers his journalists and other people
on the payroll. Okay. The other thing Jack is famous
for is the ten percent firing, the ten percent at
the bottom. This was lauded unbelievably. Okay, and you wrote

(39:11):
a book about mindfulness, not that I'm exactly sure what
that means. But was this good for business? Was there
an ultimate cost in dissatisfaction and competition amongst the employees?
And how does mindfulness fit into the whole corporate structure?
M hm, Well, you're referring to stack ranking, which is

(39:35):
the process that Welch innovated pioneered of telling managers to
sort their employees into the top A, B and C players.
A players of your workforce, they're the best. The B
players are the mediocre, middle those you know in the middle,
and the bottom is the ten percent the C players.

(39:57):
And what said your ten players? Your ten percent those
c players every year they gotta go um. That was
one of these sort of cold hearted management techniques that
Welch pioneered and became popular at GE. But because GE
was so influential, everyone else started to do it, and

(40:18):
it really caught hold in corporate America and it continues
to this day. It was popular under Steve Balmer at
Microsoft for the longest time, and companies like we Work
and Uber have been using stack ranking even recently. So
yet again, here we have this sort of signature, weird,

(40:39):
sort of ruthless innovation by Welch about firing temper cent
of his workforce every year, something he started doing in
the nineteen eighties, still around with us forty years later.
This is the guy that broke capitalism. That's why I
called it that. Okay, just throw in the mindful news part.
How should people be operating? Because another point you make

(41:02):
in the book is this, you know, UH, as a
result of the stack ranking, it reduces UH cooperative working.
They're all sorts of costs that people don't see right
on the surface. So how should these companies be run? Listen,
I I'm not a management expert and I've never been

(41:23):
a CEO. And I'm the first to admit that. So
I can't tell a company exactly how to run. What
I can say is that when I look at CEOs
who are able to steward their companies in the long
term and create real value not only for their top investors,

(41:43):
the hedge funds that might own twelve of the stock
or whatever, but for all the different constituents that they serve,
from their employees, to their communities, to the you know,
people down their supply chain, and yes, of course their investors. Uh.
I see CEOs that operate in a fundamentally different way.
They are not mercenaries looking to cut costs wherever they can.

(42:08):
They are not you know, sort of these cold eyed
um you know being counters who simply focus on the
numbers to the exclusion of all other considerations. They are
men and women who take a much more holistic view
of their responsibilities as business leaders and bring to mind

(42:29):
the nuances of all of that complex set of responsibilities
that they have when making decisions about hiring and firing,
about investment, about strategy, and what companies they what kind
of companies they want to run, and what company is
they want to buy and sell. So I can't sit

(42:51):
here and give you a short answer to how to
run a company. What I can say is, in the
long run, the Jack Walsh playbook usually leads to ruin. Okay,
just because I'm interested. You know, they would have these
retreats at their campus, not the Fairfield campus, but a
separate campus, and other companies have replicated this is this

(43:13):
just basically an old boys network? What really goes on there?
Is there any benefit? I think a lot of people
who went there would say there's lots of benefit. Um,
this was you're referring to a place colloquially known as Crotonville,
which was the g E Management Development Center. I think
I got that right in Croton on Hudson, a small

(43:35):
village just north of New York City, and it was
one of the first of its kind sort of offsite
retreat centers executive learning centers. Uh. And as you said,
it was replicated by many other big American companies, including me.
I'm going to forget them all, but had Hotchi, IBM, Bowie, etcetera.
All sort of saw what che did and made it

(43:57):
and over the years it served many different purposes. Welch
wasn't the one who who pioneered it. He sort of
revived it and brought it back when he took over,
but it was it was extant for much of the
twentieth century and served as a place where GE leaders
would go and essentially go to in house business school.
This is where they could go brush up on strategy

(44:20):
learned from their colleagues, take classes on this, that or
the other. You know, how to dodge taxes? Um. I
don't know exactly what the curriculum was under Welch, but
it was clear that this was an effort by him
and his executive team to create a system where they

(44:41):
could drive their values, drive their vision, drive their tactics
deep down into the organization. And by all accounts, it
was very successful. Um so was it old boys club? Yeah?
I'm sure there were elements of that. You put enough
well paid executives at an off site and inevitably there's

(45:01):
gonna be some uh, some antics, and I document some
of those in the book. But but I think the
more interesting thing to me is the degree to which
they really formalized the um. The teaching formalized the training
of the Jackbosh worldview for so many thousands of g

(45:23):
E employees who worked there. Okay, let's talk about the
big one from the street level executive compensation. I did
not grow up in a poor environment, but you were
rich if you drove a Cadillac. Okay, maybe I grew
up next to Westport, Connecticut. I think I saw Ferrari
once in my whole life until I moved to Los Angeles.

(45:46):
So you have these incredible paid packages which go on
to today. Now, one of the things these companies or
these boards say, if we don't pay this amount of money,
somebody else will to what the we? Is Jack responsible
for this incredible run up in executive compensation? Yeah, here's

(46:08):
another one where I think I'll put a little of
the blame in his feet, but certainly not all of it. UM,
no doubt about it. He was one of the first
CEOs in the nineteen eighties and nineteen nineties to start
getting these gargantuan pay packages. And it's important to remember
that he was not an inventor, he was not a founder.
He is a people manager. Um. He was. He was

(46:28):
paid to run this company, uh, and he was rewarded
as if he were a king for it. He made
first tens of millions of dollars and hundreds of millions
of dollars. By the end of his career, his net
worth was approaching a billion dollars. He was on the
Ford four hundred list of the richest Americans arrive at
the time. Uh, and so was he emblematic of it? Absolutely?

(46:52):
Was his board complicit? And do they deserve a ton
of the blame? Absolutely? Was it probably gonna happen in
any case? I think, so this is this is one
where the there were enough other people who saw the opportunity.
My sense is that, um, it's hard for me to

(47:12):
see sort of a an alternate history where we don't
have executive compensation that's just wildly out of control in
the way that it is today. Um, because you know,
that's and it's like the American story to me, this
is where just the nature of who we are as
a country and our you know, the absence of guardrails

(47:34):
on on the economy and on capitalism that we seem
to love so much, it takes us to these truly
unhealthy extremes and and basically people say, you know, we're
not going to do anything about it, and and so
what Yeah, So that that's sort of how I think
about Welch in the executive compensation. Was he a main driver? Yes?

(47:55):
Was he solely responsible? I want to be careful there.
Oh okay. One big element of the book is how
his disciples go on to blow up these companies across America.
So he's so successful, other boards want some of this magic.
These employees that are now CEOs replicate the paradigm, and

(48:20):
the companies do incredibly poorly. Tell us about that. Even
before Jack was born, GE was seen as the training
ground for other executives around corporate America. It had this
long and distinguished history throughout the twentieth century of being

(48:41):
the place where other CEOs were taught how to do
their business, which is to say that when another company
wanted to hire their next CEO, they looked to GE.
The thinking was that g E executives were just head
and shoulders above the rest of the competition. And for

(49:02):
that reason, people already before Jack wanted to hire from
g when they needed a new boss. Under Welch, that
was taken to a wild extreme. And that is because
in part Jack Welch was so successful during his run
in generating stock value, and so when other CEOs and

(49:24):
boards said we need a new CEO. They thought that
people who worked for Welch might have the Midas touch,
that if they were able to be a part of
Welch's machine making so much money for GE shareholders, maybe
they could do it at all these other companies. And
as a result, I don't I don't have a specific count,

(49:47):
and I don't know that anyone does, because there were, frankly,
so many over so many years. But there are dozens
and dozens and dozens, probably more than sixty individuals who
worked directly for Welch and then went on to run
other US public companies. And while I don't have a
completely exhaustive list because I don't know again that one

(50:08):
is available, what I can say with certainty is that
almost in every case, the same story repeated itself, ad infinitum.
The CEO was hired by a new company from a
position at g E. They were giving a multimillion dollar
pay package that ensured them a gilded retirement no matter

(50:30):
what happened to that company. They put to work the
Jackwelt style of management, downsizing deal making, often diving into
finance in many cases, and then within months, sometimes it
was sometimes it was quarters, maybe it was a year
or two in a few cases, but relatively quickly. All

(50:54):
these bad decisions would catch up with them and with
the company, and the CEOs almost always left the company's
worse off than they inherited them. The CEOs did get
their pay package, but many were forced to resign or
step down early, and then the companies had to reset
because it was proven that well, yeah, Jack was able

(51:17):
to do it for twenty years at g E. The
strategy just simply does not work, not only in the
long term, but but oftentimes in the short term too. Okay,
let's talk specifically about Boeing. So Boeing is a legendary
American company. They hire a new g disciple, which I

(51:38):
was not aware of the time, and move the headquarters
to Chicago. That's like the Dodgers having their front office
in New York. It just makes no sense. So walk
us through what happened there, how that guy got the job,
and why the board was so complicit. Yeah, besides Ge itself,

(51:58):
there's no company that was more directly shaped by Welch
than Bowing. It began in n when Bowing merged with
McDonald Douglas, another fading American aircraft manufacturer and As part
of that deal, they got this guy named Harry stone
Cipher who had worked with Jack under uh at Ge

(52:20):
and then was running McDonald douglas and then joins Bowing
as part of the merger as a president, not CEO
at the time, but as president. But because he had
so much stock in McDonald douglas, all of a sudden
he's the biggest stock owner at the company. And this
guy who's just the president of the company was the

(52:41):
CEO of a subsidiary now that was merged into Bowing.
He has the most stock, and all of a sudden
he starts throwing his weight around inside Bowing, and over
the next several years he becomes CEO and makes, as
you said, this fateful decision to move Bowing headquarters from Seattle,
birthplace of commercial aviation in the country, to Chicago. And

(53:04):
why do they do it? For tax breaks? You know,
as you said, I love them, I love the Dodgers
metaphor uh and and it was it had nothing to
do with running a good business and everything to do
with making a profit. And in fact, Stonesife for himself
said this in two thousand four, he gave an interview
where he said, and some people say I'm not running

(53:25):
Bowing like an engineering company, and that's right. I'm trying
to run up like a business people expect to make money.
It's not an engineering firm. Something to that effect. And
it was this admission that the Bowing that everyone knew
and respected, which is a company that was defined by
quality aeronautical engineering, was not long for this world. But

(53:49):
he was just the first. Harry Stonesifer was the first
of three CEOs who worked directly for Welch who have
run Bowing over the last twenty years, and I've really
overseen its declined as a great American company. After stone
Cipher was fired in two thousand five for having an
affair with the subordinate. The guy that they tapped to
replace him as Jim McNerney, another Welsh disciple who was

(54:11):
actually one of the runner ups after Jeff mmel to
take over Welch's job. Jim McNerney takes over Bowing after
running three M for a few years and keeps on
with this sort of implementation of the Jack Welch playbook.
He looks at what they do uh and how they're
going to build their next plane, the seven, and he

(54:32):
makes two absolutely pivotal decisions. He says, we don't want
to build it in Seattle because there's too much union
labor there. So they open up a new manufacturing facility
in Charleston, where there's not as much unionized labor and
where there's no history of aviation manufacturing. And so, guess what,
there's all these problems on those planes, something I documented
on the front page of the paper. And the other

(54:53):
thing he does is start to embrace outsourcing. Is Jack
Welch love outsourcing? And so where is Boeing historically manufactured
something like two thirds of the parts on any given
airplane and outsource the other third. The ratio has flipped
under McNerney, and all of a sudden, they're outsourcing two
thirds of the parts on their own plane and only

(55:14):
building a third of it themselves. And they lose control
of quality, that lose control of timing. And then McNerney
makes the what I think is the most fateful decision
in two thousand and eleven, he's about to lose a
big order of seven thirty seven's to America to air Bus,
his chief rival, two American airlines, and he tells American Airlines,

(55:34):
you know what, give us another week. We got a
decision to make. They decide to redesign the seven thirty
seven one more time, rather than create a new airplane
which would have taken them longer, which would have made
would have which would have meant that they would have
lost out this critical order to air Bus. And he says,
we will redesign the seven thirty seven one more time,

(55:55):
and that point becomes the seven thirty seven packs, which
of course crashed twice in five months, killing three sex people,
something I spent a year of my life reporting on.
McNerney is finally replaced by a man named Dennis Muhlenberg.
Muhlenberg oversees the two crashes, the period around the two crashes,
and when Muhlllemberg is finally fired because it's completely inept

(56:19):
in managing Bowing through a crisis, he's replaced by Dave Calhoun,
yet another Welch disciple, a guy who, at the age
of forty two was considered a potential successor to Welch
because he was such a likeness of the young Welch himself,
and who to this day is the CEO of the
Boeing Company. Okay, how did you end up on the

(56:42):
Bowing beat? I walked into the newsroom one morning in
I guess it was March of two thousand nineteen, having
never written about the airline industry before, but sitting next
to the woman who had been covering airlines for US,
but who happened to be on vacation that day. And

(57:03):
when the business editor of the New York Times wandered
over to our desk, she said, Julie's gone, David, what
are you doing right now? And I said the only
right answer, which is I don't know what am I
doing right now? You tell me, boss, And she said,
called Bowing because another plane had just crashed. And that
was how I began covering it. Um one of the
things we can do as reporters, um is learned pretty quickly.

(57:26):
And so the next year of my life was a
UM I was going to use a poor metaphor there,
but but but an accelerated learning period of trying to
understand the airline industry and UM getting, you know, ultimately
pretty deeply sourced inside the Bowing company, you know, Boeing
obfuscated and denied responsibility. Trump seemed to be on their

(57:51):
team to what did we were you in the press
responsible for opening this story and shining light on the facts.
And what was it like being right? You know, they're
on the point of a story. Well, I mean, we
broke a ton of important critical stories in the Bowing coverage.
So did the Wall Street Journal, so did the Seattle Times. Uh,

(58:15):
there was a huge amount of media interest, and there's
no doubt that some of the revelations that the Times,
the Journal in the Seattle Times were responsible in helping
uncover tremendously helped shape the narrative and um ultimately exposed
what had actually happened. It's also true that the House

(58:38):
Transportation and Infrastructure Committee took this very seriously and devoted
a huge amount of federal legislative investigative muscle to this story.
And as a result, we're able to obtain I gotta
believe millions and millions of pages of Bowing documents, of
which many hundreds or maybe a few thousand were ultimately

(58:59):
made public and earns about the crashes. Um, So there
were there were a lot of eyes on Bowing after
the second crash, of course. Uh. And I want to
respect the work we did and our competitors did, but
but I don't think it's fair to say that the
press alone was responsible for uncovering, you know, the true
and full story of what happened inside Boeing. Now is

(59:29):
your role, in your role as a reporter for The
New York's Times on this beat? To what degree was
reporting based on accumulating and reading these documents as opposed
to getting on the phone sending emails asking people questions.
Is this for Bowing or for the book for Boeing? Oh,

(59:50):
it was a mix. I mean, we we had a
spreadsheet and I think I can talk about this publicly,
but there was a team of reporters working on It
wasn't just me, and we as a team had a
shared Google doc that, by the end of our year
on this story had the names of more than a
thousand people who we had contacted. And so there was

(01:00:12):
a lot of cold calling. There was knocking on doors,
There were handwritten letters that were sent. Uh, there were
you know, innumerable LinkedIn messages and Twitter dems. We we
worked real hard to talk to as many people as
we could, and we ultimately got you know, many many
important voices on the record. Um who who for? You know,

(01:00:34):
A variety of reasons initially didn't want to go on
the record, and and that was pivotal reporting that did shape,
um beyond, sort of the arc of the investigation itself. Definitely,
I think I can say with confidence affected personnel decisions
at Boeing. It was, you know, just the day after
I published a story on the front page of The
New York Times with the CEO of Southwest Airlines essentially

(01:01:00):
bad mouthing bowing and its leadership, that Dennis Muhgenberg was fired. Uh.
And those kind of things matter. Um Uh, those kind
of stories definitely, as you know, get noticed inside a
big company. Um. So we talked again. You know, I
personally talked to hundreds of people. With my colleagues, we

(01:01:22):
talked to more than a thousand people, and we read
I don't know how many, you know, thousands of pages
of airline manuals and documents along the way. Okay, I
want to drill down really to where the rubber meets
the road. People are more sophisticated now than they used
to be. Something happened such that you're at the center
of a news item. Reporters come out of the woodwork.

(01:01:44):
They want to be your best friend. Whatever happens, they
move on to the next story when they're done with
you and people are more sophisticated than that. To what
degree are you anxious about asking people questions? And and
a lot of people are not withcoming? How do you
convince them to be forthcoming? Yeah, I don't have a

(01:02:07):
lot of anxiety about asking people questions. Um, I'm I
put my cards on the table when I'm talking to someone,
I tell them what I want to talk about, So
that doesn't. Um, that's not a big inhibitor in my
own work in terms of convincing people to talk to
us or to go on the record about things they

(01:02:29):
might be uncomfortable with. That's one of the hardest things
and I'm I'm frankly not an expert at it. That's
I've done some of that in my career, but it's
not my bread and butter. Um. I think that you know,
people like my friend Emily Steele, who helped break the
Bill O'Riley story, our colleagues Jodi Canter and Megan Tooey

(01:02:52):
who broke the Harvey Weinstein story for us, they are
way more seasoned than I in convincing people to talk,
especially on the record, about really difficult and challenging things.
H But I think at the end of the day.
What they would say, if I could summarize for them,
and what I would say is, you gotta appeal to

(01:03:14):
the greater good. And you've got to convince people that,
even if they don't want to do this, and they
believe that there might be some personal repercussions for them
in the form of blowback or embarrassment or making them
a public figure in a way they're not ready for,
that there is a greater social good at work here,
and that they have the opportunity to, you know, help

(01:03:37):
make things better for other people, to prevent some suffering
for other people down the line, uh, and to make
the world a better place. And I think if you
can make that argument convincing on you, you got a shot.
Do you personally have any anxiety about flying on a
seven seven back? No, because a variety of reasons. I mean,

(01:03:58):
I like, uh, tens of thousands of commercial planes take
off on land every day and almost none of them
ever crashed. So just by the law of numbers, uh,
I just like my chances. Um. It's also true that
the seven even Max has undergone a series of changes

(01:04:22):
and revisions and updates that have addressed the problem that
was responsible for those two crashes. So there's there's no
that you know, I shouldn't be speaking total declarative, but
there's almost a zero chance that that seem problem whatever encounter,

(01:04:43):
be encountered again. But more more broadly than that, I
just the law of big numbers suggest that you're very
very very very very unlikely to die in a commercial
erwle plane crash. Okay. Recently the New York Times had
a change in editorship. What has changed, uh, not a
lot um. You know, Joe con who's our new executive editor,

(01:05:06):
was an instrumental part of guiding the daily report for
years now. He's a known quantity in the newsroom. I
think his priorities are very avigned with those of Dean mackay.
So I would not be the first to note that
this is a pretty drama free succession at the New

(01:05:26):
York Times, and I think that's a good thing for
the paper. Well, many people have commented, and I've noticed
myself as an avid Times reader, that certainly on the
political front, there's I don't want to say a few
or false equivalence us there's more reporting on the right
and things that are troubling than they're used to be before.

(01:05:50):
Is that something you feel at all? I guess I
would dispute that conclusion. But I would also note that
Joe has been executive editor for a matter of weeks,
and that kind of reporting takes months and months to
plan and deliver. So whatever changes people might have noticed

(01:06:12):
on a particular way that we're covering something in the
past couple of weeks is probably reflective of decisions that
were made. Uh you know many months prior. How do
you end up working in the New York Times? Uh?
So someone just had a good quote about you know,
luck is what is it? Luck is where opportunity meets

(01:06:33):
hard work or something like that. So I feel lucky. UM.
I also had good opportunities. But I also busted my
butt for a long time. I was late to the
journalism game. I was not part of my high school newspaper,
my college newspaper. It was really in my early twenties
when I got the journalism bug, and I was designing
museum exhibitions at the time, doing nothing like reporting at all. Um,

(01:06:59):
but I got the bug, and I went back to
journalism school at Berkeley, and UM, I think a couple
of things I had a really great professor, a couple
of really great professors. I got a really great story
early on that gave me a huge amount of confidence,
um that I could really do this and and and
make a go of it. And then I decided to

(01:07:21):
focus on business reporting pretty early on, which was a
strategic moved and one that that really has worked to
in my advantage over the years. So why business reporting.
I realized no one else was interested in it and
I was, and that you know, that delta there was
very compelling to me because I understood right away not

(01:07:41):
only that there were huge stories in business right, businesses everything,
they're huge stories here. It was super fascinating to me.
It was where there was power. I could see that
there was power there and and it was a way
into reporting on powerful people. And the fact that I
basically had it to myself among my ass at the
business at the journalism school meant that it was pretty

(01:08:03):
wide open. Uh. And then I also realized that there
were jobs in it, and I didn't want to be like,
you know, making sixteen thousand dollars a year right in
features about street poets for the rest of my life.
I wanted, like I was gonna do this, I wanted
to have a real career. Okay. One of the criticisms
of the New York Times is there's groupthink, and it's

(01:08:26):
really like its own sports team, and you don't really
want to be too much of a star, go too
far out, maybe hurt the team. To what degree do
you feel pressure to fall in line with the team
in general or be fearful that you raise your head
and do something might piss people off. I don't even

(01:08:47):
know what you're talking about. Give me an example. Okay, Well,
you know there was the whole Taylor Wren's thing that
people were blowing back. There was the very wise thing
that people were blowing back. You know what people don't
realize is these newspapers. This tends to be people who
see this as a lifelong career, and their employers are
these giant institutions, writing books individually, etcetera. Something completely different.

(01:09:13):
So such that people end up becoming even though they're individuals,
they're part of the group, and then therefore they can
react to another person in the group maybe having too
much success or doing something that pisces them off. We
had a certain thing to happen at the Washington Post.
You're in the belly of the beast. Is it just

(01:09:35):
calm or can you feel these things? All? Right? I'm
gonna back up. Uh, I'm an employee of a for
profit corporation. They pay me to do a job. My
responsibility is to do my job really well as well
as I can for my organization. So that's how I like.

(01:09:57):
That's the fundamental level that which I understand my relationship
with The New York Times. I get paid to do
a job. You said, like I you know, a lot
of people see it as a life on career. I don't.
I won't necessarily accept that as a as uh as
the way I think about my time at the times,
I'm super grateful I've been here for nine years. I'm

(01:10:18):
in no rush to leave. I have no plans to leave.
But I also don't necessarily think it's the only job
I'll ever have in my life. I think as some
people might feel that way, sure, but it's not necessarily
how I think about it. In terms of interpersonal dynamics,
I don't think it's different than any other organization. If
you and I'm not speaking about any specific incident or
any of the ones you just mentioned, but if you

(01:10:40):
work at PepsiCo and you publicly are talking shit about
your colleagues or probably be repercussions if you're on a
sports team and you go to the press conference after
a loss and say, you know, like you know, if
you're Katie and Katie is like Kyrie was a piece

(01:11:00):
of ship, like he's you know, such and such and
such and such and goes off on your teammate, there
might be consequences. So the do It's no doubt about it.
Institutions like the New York Times get a huge amount
of scrutiny, But I don't necessarily believe that there is
a you know something some like weird magic sauce about

(01:11:22):
the a newspapers culture um in terms of can I
feel like, of course, you know, like when when big
things royal and organization, the individuals of that organization, whether
there or not, they're directly a part of it, They
notice it, they feel it. And so again I what

(01:11:43):
I alluded to earlier when we talked about the new
executive editor Pertains here too write like things are pretty
calm at the New York Times right now, internally, at
least for me at least what I'm seeing and for
the most part, that's good, and I think it's reflective
of a healthy culture where reporters by and large are
focused on doing the work, which is what they pay

(01:12:04):
us for. Okay, you beat recently changed to the climate.
How did that happen? I won't borroy you with the
whole way it happened, but what I'll say is that
I have been on the business desk for the better
part of nine years at the paper, and I've done
all sorts of different things than the business desk. And
I was at a place and the paper was at

(01:12:26):
a place where we realized there was the opportunity for
me to do uh, sort of refocus my energies, and
the way to do that while capitalizing on all my
experience reporting on business, all my connections in the business
world and get me focused on the topic I'm really

(01:12:46):
excited about, was to essentially move me from the business
desk to the climate desk. But I'm still I'm still
writing about business, so my focus is on the intersection
of the business world and public see and that's a
that's a big overlap. But I'm still very much reporting
on the business world, um, though very much through the

(01:13:07):
lions of climate change and particularly the energy transition. Okay,
so what's going on? Give us a snapshot. Well, the
humanity has been burning fossil fuels relentlessly for the past
fifty years, depending when you start counting it, and it's

(01:13:27):
dramatically changed the climate of the Earth in ways that
are creating exponentially more destructive and severe weather events, and
that are starting to affect and endanger and jeopardize not
only you know, many millions of humans, um, but many

(01:13:49):
other parts of the ecosystem as well. And while there
has been decades of scientific consensus UH making clear the
impair wative to stop burning fossil fuels, we as a
human society have not done a very good job following
the advice of our scientists, and on balance, we are
still headed in the wrong direction. Needles say, there's two

(01:14:12):
sides here. There's climate deniers their corporations that have an
investment in burning UH fossil fuels. So to what degree
do you feel you're preaching to the converted? How do
you penetrate the minds of people who could make better decisions,
whether to be corporations or people who believe otherwise? Yeah,

(01:14:34):
I don't, I don't, Again, Bob, I don't see that
as my job, right, Like, my mandate isn't to convert people. Um.
My mandate is to report on what's happening and be
as accurate as possible and try to find stories that
help explain how we got here and where we're going.
So I'm not in the business of of converting people. Um.

(01:14:58):
You know, if that happens along the way, and and
people who previously didn't believe in science believe in science
as a result of my reporting, great, but that's that's
not my remit. Okay, we're just getting a little deeper
into the fact. We have the Supreme Court decision that
ultimately neuter the e p A to a great degree.

(01:15:18):
What's the landscape going forward? Well, I would, I would,
I would dispute your characterization of that ruling of West Virginia. Uh.
By all accounts it was it was not great for
the power of the e p A to regulate the
emissions of power plants in general, but it was not

(01:15:40):
nearly as expansive of a ruling as some climate advocates feared. Um,
So the e p A still does the have the
ability to in to regulate the emissions of individual power plants.
But but it makes it more complicated to regulate them
as a group. All that is a roundabout way of

(01:16:02):
saying that the Supreme Court is uh, well, the Supreme
Court is and this decision is one of the ways
in which the Biden administration has been essentially losing the
tools it has as its disposal to reduce overall emissions
in the United States, and the inability to pass Build

(01:16:24):
Back Better was one of those. There are other issues
going on that my my colleague Coral Davenport has reported
on in depth. But the upshot is we as a
nation and it's largely a result of the hyperpartisanship and
as you said, a pretty clear partisan rift between how

(01:16:45):
the different parties are approaching climate and energy issues. UM
are not moving very quickly to reduce the United States
is greenhouse gas emissions. And if one wanted to reduce those,
we're the opportunities, well, there are many and I want
to be careful here because I am not an expert, UM,

(01:17:06):
but the Buildback Better plan and the reconciliation package that
was on the table and that was essentially killed by
Senator Mansion, who of course is from West Virginia and
has business interests tied to the coal industry. Uh. That bill,
that that package would have uh advocated huge sums of

(01:17:27):
money towards essentially transitioning power generation in the United States
to renewable energy. And that's that. That is not necessarily
the number one way to reduce emissions, but it's one
of the biggest, right, Like, let's stop using We don't
use a whole lot of coal in this country anymore, um,
but let's stop using natural gas. Uh. Let's for power generation.

(01:17:52):
Let's stop using coal wherever it is still used. Uh.
And let's start using more oil. Excuse me, more solar,
more wind, uh, and more hydro electricity. These are renewable
sources of energy that do not create new emissions. Okay,
just on a very practical matter. You know, we've had COVID.

(01:18:12):
Everything's a little bit crazy. Maybe we should go before that,
to what degree do you go into the office every day?
To what degree do you choose your own topics? Are
they assigned? Do you write stuff specifically be printed? Do
you write stuff? And they rejected? What's the whole process

(01:18:33):
of the mechanics there? Well, I've been in the office
more than most for the last year and a half
or so I like the office, I like my desk,
I like seeing people and talking to people. Um. But
it's also the case that not I'm one of I'm
in the minority still And so have you had COVID? Yes,
I've had COVID twice as a matter of fact. Um uh.

(01:18:58):
And I'm fortunate to still be said in here and
and to not have any severe lasting impacts at least
that I'm aware of right now, maybe in my brain. Um.
But listen. As for the reporting process, um, it's a
mix of writing stories that the editors have asked for
and then working with them to identify targets that again

(01:19:21):
sort of help us continue our mission of trying to
write fact based stories that that helped explain where the climate,
the situation is and what's what's to come. So I
would say, on balance, you know, since I joined the
Climate desk, most of my sort of biggest marquee pieces,

(01:19:43):
you know, big investigative features those kind of things, have
been ones I've come up with myself. I've got a
good line of reporting I'm excited about, which was uh,
you know, probably myself and another reporter sort of stumbled
across some stuff, and I'm I'm picking it up and
running with it. But it's all is the case. I
wrote a news analysis story on Friday after the West

(01:20:04):
Virginia ruling that was very much something the editors wanted
to see and it was their idea. And I'm like,
that's a good idea. I can turn that around in
a day or so. And there wasn't the paper. Let's
go back to the book. There was a review in

(01:20:24):
the New York Times book review by Curdie Anderson which
was more than relatively negative. Now the caveat here is
he wrote a book which I would not call identical,
but many people feel covered a similar subject. How do
you feel about all that. I didn't write my book

(01:20:46):
for book reviewers. Uh, And so I'll just leave it there.
Let me put it in in a different way. The nature
of being in the public eye is you get a
lot of feedback. There are people who attack you just
to attack you. So now that your level has been raised,
your profile has been raised, what's that been like for you.

(01:21:08):
I've been surprised how few people have really come at
me and tried to argue with the premise of the book. Right,
I make a make a pretty clear Uh, rhetorical argument
in this book, which is that Jack o Elch bears
singular responsibility for a lot of the problems we have
in our society. Um. I have yet to see someone

(01:21:30):
sort of take the other side of that debate in
a really forceful way. Um ah. And that to me
has been surprising. Even when Jeff you know, Jack's successor,
came after me on LinkedIn, it was in this sort
of limp way of saying, like Jack was actually a
good manager, all right, Like no effort to to dispute

(01:21:52):
the actual merits of my argument, okay, And that to me, Um,
you know, I'm not saying I'm entirely right. I mean,
I believe in my thesis. But but this is a
book that was meant to start a conversation. And what
I've been really gratified by is the fact that people
want to have this conversation. And certainly not everyone agrees

(01:22:12):
with me. Um. But what you said, honestly about what
you said in in your newsletter is one of my
favorite things. And it's a quote I'm using and I'm
telling my marketing people to use. You said if everyone
in America read this book, there would be a revolution.
And I was God, God, damn, that's right, right, that's
actually that was the intent. That was the spirit I

(01:22:33):
was trying to provoke with this book. And the fact
that you and others have responded to it to me,
UM suggests that at least you know, that effort to
spark a conversation, to get us talking about these big
issues and how we can live in a in a
society that works for more people. Um, was was at
least somewhat successful. And commercially is the book met your expectations?

(01:22:58):
Exceeded them? Disappoint did you? Yeah? Exceeded? Uh? It was
a hit, um. And I I was a nervous author
right the the in the days and months and weeks
before we knew how this book was doing, and I
was haveing, I was deeply nervous. But listen. It debuted
on the New York Times bestseller List, It was on

(01:23:19):
the Wall Street Journal best seller list. It hit number
twenty eight in all books on Amazon. Uh. It's gotten
a huge amount of press coverage. UM. I will note
almost all of it favorable, with a few notable exceptions
which I can take my lumps on and keep keep
marching forward. And uh and yeah, and like people are

(01:23:42):
talking about this, and that that to me was like,
if people want to talk about this, and if it
gets if it fires people up, you know, whether they
get piste off about it or not, I'm fine, Um,
as long as they're sort of having the argument in
good faith. Uh, that's gravy to me. I hope people
just agree with it, right, Like, if if it's not Jack,

(01:24:03):
tell me who it is, Tell me how we got here?
Tell me what's wrong with our society that this? You know,
CEO has makes six times with the medium employee works
makes and and then it takes like three jobs for
a low income family to keep food on the table, right, Like,
how did we get here in the world today? There's

(01:24:24):
so many messages. You've had a successful book, What is
the key to getting the message out? I had a
great team. I'm not I'm not b S and you.
I have good marketing people at Simon and Schuster who
who did humans work? Um? And I was very engaged
in it as well. I tried real hard to get

(01:24:45):
people to buy this book. I didn't just write it. UM.
So there's some hustle involved, for sure, But I think
at the end of the day, you have to have
a really crystalline idea that people want to talk about,
and and I was I did know if this was
going to be one of those, but but clearly it
has been, and it's it's helped me, you know, if

(01:25:06):
I if I ever write another book, I think I've
learned things through this process that have really made me
realize what what what some of these successful elements of
a book launch would be. And I think number one
is like, can you can you stay in a sentence
what your idea is and does that sentence want to
make people keep talking? Okay? In the actual process of

(01:25:27):
writing the book, did you take time off from the
times you write in your spirit time? How did you
do it? I didn't take time off. I did in
my spare time. It was incredibly incredibly quick process. UM.
I had the idea for the book in April of so,
just over two years ago. I wrote the proposal UM
in August of so, less than two years ago. I

(01:25:51):
didn't sign a contract until October November, so now we're
talking like eighteen months ago. And then I crashed this
thing in a in a year or so, which is
an absurd timeline for a book. Uh So, I my
wife gets lots of thanks for bearing with mean and
helping take care of our kids. Well, I spent time

(01:26:15):
writing this book. Well, thanks for taking the time to
talk to us here, David. Really fascinating. I'm sure everybody
will be stimulated. I've already gotten a ton of email
people bought and read the book. I'm sure now even
more people will. So thanks for writing the book. Because
someone had to write the truth. That's why I had
to get it immediately said, someone is speaking the truth

(01:26:36):
about Jack Welch, which was sitting there in plain sight.
So in any event, thanks so much for taking the time.
Thank you so much, Bob, and you you literally gave
me my favorite quote, my favorite blurb of this whole cycle,
and I'll never forget it. Wow, that's great. Until next time.
This is Bob Lefts