The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America―and How to Undo His Legacy

Picture this: I'm a little kid in my living room in West LA, watching an episode of "60 Minutes." A group of distraught factory workers have their factory closed and their jobs destroyed for no discernible reason. By who? "Neutron Jack" Welch, the CEO of General Electric. Wasn't the factory making useful things? (It was.) To compete with Japan, didn't we need *more* manufacturing? (We did.) How would these highly-specialized workers survive? (Who cares!) The firings seemed senseless, capricious, and cruel. Why was Welch being such a jerk? That's when I understood where the "Neutron Jack" moniker came from: like a neutron bomb, Jack Welch left buildings standing while annihilating the people inside them.That negative impression of Jack Welch persisted for some time. But then, over the years, I kept seeing articles and magazine covers praising him for his managerial acumen. The chorus of commendation was so loud that I had to pause to reconsider. After all, he met quarterly earnings estimates umpteen times in a row! He made GE the most valuable company on Earth! He was Fortune's "Manager of the Century"! I must have been missing something; clearly these business folks understood what was *really* going on.Except that they did not. This little kid grew up, got his business degree, and realized that Jack Welch was one of the *worst* CEOs of all time. He destroyed GE, brainchild of Thomas Edison and *the* iconic American company—the maker of everything from light bulbs and washing machines, to jet engines and giant 10-story hydroelectric turbines.So I was thrilled to see a new book finally endeavor to dismantle the cult of Jack Welch, exposing his managerially toxic and morally bereft ways. Comeuppance at last!Turns out I *was* missing something after all. Welch was far, far more destructive than I had ever imagined.Gelles makes the case that Jack Welch's damage reverberated far beyond the confines of GE into the world economy and society at large. Can one man really do that much damage, though? If the guy was super smart, blindly ambitious, greedy as hell, sociopathic, unwise, with legions of well-placed protégés, he could.According to Gelles, "Welch employed three main tools in his crusade: downsizing, dealmaking, and financialization."• Downsizing: Welch "was the first CEO to take a healthy company and treat it like a turnaround job, preemptively laying off tens of thousands of workers." He popularized mass firings, moving jobs offshore, and outsourcing. I didn't realize 250,000 GE workers lost their jobs during Welch's tenure — that's the population of Madison, Wisconsin! So much for "Generous Electric."• Dealmaking: When he couldn't sell more toasters and jet engines, Welch artificially boosted the bottom line by making nearly 1000 acquisitions for $130B, most having nothing to do with GE's core business.• Financialization: First, he got rid of GE's manufacturing businesses and instead beefed up GE Capital, its investment and insurance arm, so GE could make money without having to make things. Second, he used share buybacks and accounting fraud to meet Wall St forecasts quarter after quarter.Welch's protégés then went off to deploy these tactics, making them part of the modern corporate playbook, wrecking dozens of decent companies in the process: John Trani at Honeywell and Stanley Works; Larry Stonecipher at Boeing; Jim McNerney at 3M and Boeing; Bob Nardelli at Home Depot and Chrysler. They not only laid off thousands of workers, but also killed innovation.These Welch Weenies and their Welchist tactics are still affecting us today. You can draw a straight line between the obsessive cost-cutting tactics of GE acolytes and the failures of the Boeing 737MAX. Turns out when you cut corners and rush production schedules of passenger jets, planes go down and people die.That's what makes Welchism so damning: its disregard for basic human welfare in favor of maximizing share price. When did people go from being the main show to becoming overhead? 1981, apparently—when Welch took over GE: "There is capitalism in America before Jack Welch, and after him. His career serves as a line of demarcation, a split between the past and the present. Look at the trend lines for any number of key economic indicators—wages, mergers and acquisitions, manufacturing jobs, union representation, executive compensation, corporate tax rates—and it’s clear that right around 1981, the year Welch took over, things started to go off the rails."One more thing started to go off the rails right around then that's beyond the scope of the book: the well-being of Americans. That's when the "deaths of despair" from hopelessness, addiction and suicide started ticking up, culminating in a *decline* in US life expectancy starting 2017—the only such decline in rich countries. Coincidence? Don't think so.Gelles closes with some sensible ideas for reversing the damages of Welchism: better pay; employee profit- and equity-sharing; putting workers on boards; capping executive compensation. Principles of "stakeholder capitalism" can mitigate some of the toxic, short-termist effects of Milton Friedman's frankly sociopathic doctrine of maximizing shareholder value, while bringing us closer to the "Golden Age of Capitalism" when the prosperity of employers and employees were intertwined. Capitalism isn't the enemy. Greedy, short-sighted jerks with bad ideas are.Gelles's fluent prose and seamless storytelling turn what could be a somber subject into a fast, stimulating read. Mainly, though, we all need to read this because Welchism and greed have arguably become the operating system of American society. That ain't sustainable. "The Man Who Broke Capitalism" depicts a gigantic train wreck unfolding in slow motion—but we have the pause button. We're here on Earth to take care of one another. We can move towards that today by giving less power to rich jerks, and electing wiser, kinder people with our long-term interest in mind. Jack Welch is dead. Let's make sure his toxic ideas die, too.-- Ali Binazir, M.D., M.Phil., Happiness Engineer and author of  The Tao of Dating: The Smart Woman's Guide to Being Absolutely Irresistible , the highest-rated dating book on Amazon, and  Should I Go to Medical School?: An Irreverent Guide to the Pros and Cons of a Career in Medicine