Image: Jack Welch
Former General Electric Co. chairman and chief executive Jack Welch.
updated 11/12/2002 5:09:58 AM ET 2002-11-12T10:09:58

During his 21-year tenure as chairman and chief executive of General Electric, Jack Welch redefined business culture in America and across the globe. Today, Welch epigrams like “Fix, sell, or close” are part of our everyday vocabulary. He joined us for the ‘Hardball’ College Tour at the University of Chicago Graduate School of Business.

BUSINESS WEEK calls Jack Welch “the most impressive CEO of his time.”

As CEO of General Electric for 21 years, he built its market cap by more than $450 billion and established himself as the most admired business leader in the world. His championing of initiatives like globalization, and e-business have helped define the modern corporation.

He started in GE in 1960 as an engineer earning $10,500. He learned the need for “getting out of the pile” when his first raise was the same as everyone else’s. He stayed out of the corporate bureaucracy while running a $2 billion collection of GE businesses— in a sweater and blue jeans—out of a Hilton in Pittsfield, Massachusetts. Jack was eventually summoned by then Chairman Reg Jones, who was planning his succession. Jack was the company’s youngest Vice President in 1972, and was the eighth Chairman and CEO in the Company’s 121-year history.

Mr. Welch now serves as a consultant to a small group of Fortune 500 business CEOs.

He joins Chris Matthews to talk about issues surrounding our economy and corporate America. Corporate accounting scandals have rocked investor confidence, but will proposed reforms repair the damage? What would be the economic impact of a war against Iraq? Which way is the stock market headed?

Hardball with Chris Matthews and Jack Welch aired live at 9 p.m. ET/8 CT from University of Chicago Graduate School of Business on Wednesday, Dec. 4. Open only to the University Community. First come, first served. Seating is limited and no seats are reserved. Doors open at 6:30 p.m. CT. Show starts at 8:00 p.m. CT.

LINKSJack Welch’s official bio

“Jack, Straight From The Gut.”Click here to find out more about his book.

The official MSNBC press release

To get news on the Hardball College tour delivered straight to your inbox, subscribe to The Hardball Briefing. Click here to subscribe.

READ THE TRANSCRIPT OF THE SHOW

CHRIS MATTHEWS, HOST: Live from the University of Chicago’s Graduate School of Business, tonight for a full hour, the most successful American business leader of his generation, the man who turned General Electric into the most powerful corporation in the world, an icon of American capitalism, Jack Welch.

(APPLAUSE)

JACK WELCH, FMR. GE CHAIRMAN: Great to see you.

(APPLAUSE)

WELCH: We ought to come back here all the time.

(APPLAUSE)

WELCH: Thank you. Thank you very much.

MATTHEWS: OK it’s time to-let’s play HARDBALL. Thanks Jack. It’s great to have you here.

WELCH: Wonderful to be here back in Chicago.

MATTHEWS: Let me talk-I want to say right now (UNINTELLIGIBLE) rarely did this, but since you’re my former boss, I’ve got to lay out the facts. I’m going to ask you about the big picture stuff, how this country is being managed at this time in terrorism and economic uncertainty. I want to ask you about corporate America and the problems it’s facing with ethics, bad publicity and a dropping stock market or certainly an unstable stock market and ask about you, too, as well, OK?

WELCH: Deal.

MATTHEWS: Deal, OK.

WELCH: I guess I don’t have much choice.

MATTHEWS: Well, we could talk about hockey, but-how do you rate President Bush? Not as a sort of a syntagmatic or charismatic leader, but as an actual manager of people?

WELCH: I think he’s done a remarkable job. I think he’s shown himself to have all kinds of leadership characteristics. I read last week, Bob Woodward’s book, “Bush at War”, it’s the epitome of getting great talent and staff, not having all the answers yourself and listening to everybody else, building a team, and if you read - I don’t think Bob Woodward would come out as a right wing conservative and he certainly gave Bush high marks for the leadership characteristics he showed in pulling together the answers.

MATTHEWS: What do you think about having an administration, which is driven in half basically by those who are more diplomatic led by Colin Powell and those who are more hawkish led my Cheney and Rumsfeld? How do you deal with an almost relentless civil war that goes on within your leadership?

WELCH: Well I think you’ve overstated the case, first of all. I think that there’s a lot more harmony there than that, but you probably know more of inside the Beltway than I do.

MATTHEWS: Let’s posit the fact that there’s a civil war going on his administration and one guy wants to deal with Iraq and the other guy wants - other guys want to go bomb the hell out of it and that seems to be what’s going on here.

WELCH: And I think you got a president that’s taken cautious steps by going to Congress and then to the U.N., and then is waiting to see how things develop now. I think you’ve got a guy that’s taking inputs from both sides, which is the best thing a CEO can get, fresh input, both sides, everyone’s opinion and making the call.

That’s what you want. You don’t want a bunch of yes men. You don’t want everybody at the same table. As you folks go out and lead businesses, you’re going to want conflict among staff. You’re going to want every bit of input you can get.

MATTHEWS: So, if you’re running a big corporation, as you’ve done so successfully, do you think it’s smart - didn’t they-the old rule if somebody gets passed over, it’s better to get him out of the way and not leave somebody-there’s a personal rivalry at stake within the corporation?

WELCH: Well, that’s clear, but we don’t have anybody trying - going to be president tomorrow morning. He doesn’t have that problem.

MATTHEWS: Yes.

WELCH: I-you know, in GE, we had the wildest liberal Democrat you can find in our General Counsel...

MATTHEWS: Right.

WELCH: ... and we had people on the other side, but most of the time, we were down the middle.

MATTHEWS: Really?

WELCH: Absolutely.

MATTHEWS: OK, let’s go...

WELCH: We were a hell of a lot more down the middle than you are.

MATTHEWS: I’m pretty down the middle. I’m pretty hard to read there, boss. Let’s talk about this war, just as a business situation. These people are pretty young and they’re going off into business after they graduate. What’s this going to do to business if we go in there and break up that country, take it over, regime change, whatever the jargon is and it’s basically American-occupied Iraq for a couple of years. What’s that do to oil prices? What’s it do to trade, all kinds of things?

WELCH: Well, in the past-let’s hope that - let’s hope there’s a resolution that doesn’t lead to that, OK, first of all. Let’s hope somehow we resolve this case, but we’re not going to resolve it-by the way, with, I saw again tonight before I came over here, television cameras going into Saddam Hussein’s castle and saying, oh my God, there’s nothing here. What do you expect to find? I mean it’s the most ridiculous TV coverage in the world as they parade in with the minister bringing them in, showing them empty rooms. I mean, come on.

MATTHEWS: But what is going on?

WELCH: I don’t know...

MATTHEWS: What’s the straight skinny here?

WELCH: I don’t know what the straight skinny, but it sure as heck isn’t walking into a room with a minister guiding you with a camera and saying just anything.

MATTHEWS: Right. Right. You don’t expect to walk in a room and see a big pile of anthrax and have the guy say screw you. You don’t expect...

WELCH: No...

MATTHEWS: ... you don’t expect that to happen?

WELCH: ... I don’t expect - no, I don’t...

MATTHEWS: Well, you’re moving fast here. You said on this show when it didn’t have such a live audience about a year ago, right after 9/11, that you thought as a business manager, as an expert in executive talent, that you would have put one person if charge of the homeland operation — you know FBI, CIA, if we find out something about a guy named Mohamed Atta and he’s coming through Portland, Maine airport, we’re going to nab him because we’re all working together and one guy’s calling the shots.

We’re going to stop that guy from getting on the plane. They’re not doing it that way. They gave Ridge a part of it, then they took the FBI, it’s still out there. You’ve got Tenet still running the CIA. Is that the right way to do it?

WELCH: Chris, they had to fight like hell to get that.

MATTHEWS: Yes.

WELCH: Look how long it took. The election was over that in many ways. I mean, Tom Ridge probably has the toughest job in America. There’s no question. He’s got 20 plus — 22, 26 agencies...

MATTHEWS: Right.

WELCH: I mean, trying to merge-you read about AOL Time Warner, you read about this, you read about other merger. You-I’ve seen merger after merger, DaimlerChrysler. You see all that stuff. Now this guy’s got 22 agencies, all bureaucratic, he’s got no bullets in his gun. He can’t get rid of anybody...

MATTHEWS: Right.

WELCH: ... basically.

MATTHEWS: But what’s he do if the FBI says we’re not telling you or the CIA says we’ll tell you next week what’s going on. Isn’t that the problem they all face? Right now there’s no boss.

WELCH: It’s brutal.

MATTHEWS: Yes.

WELCH: It’s - I...

MATTHEWS: Do you think Bush made a mistake not putting one guy and say you’re in...

WELCH: No...

MATTHEWS: ... charge of the CIA and FBI and homeland security, period.

WELCH: I think Bush got as much as he could get out of this Congress that he could get, and 1 think we’re better off having what we have than we had before.

MATTHEWS: Let’s go to first question.

UNIDENTIFIED MALE: Hi (UNINTELLIGIBLE) with the talks of war looming on the horizon, as well as with all the scandals in the economy, Jack, what’s your take on when this economy is going to turn around?

WELCH: Well, I don’t think this economy in general is so bad. I think that you have a telecom shut down, you have a high tech slowdown, you have a lot of capacity. So you got weak pricing power.

For example, the GDP in the third quarter was up four percent. That normally would be considered pretty good. The normal GDP was only up five. That means you got one percent price. You’ve got globalization. You’ve got global capacity everywhere.

I mean, we get these silly statistics. The U.S. capacity is now 76.2, and we wait until 10:00 in the morning to get it on a certain day and they announce it because two people built two more things in Peoria. I mean, it means nothing.

There are plants all over China that just built 20 million things that are coming in to this or that, so pricing pressure is what we’re facing. The reason why jobs are tough is not volume. The reason why jobs are tough is there’s no profitability.

MATTHEWS: Well is that what happened in the ’30s when you had that sort of liquidity trap? You couldn’t move anything because you couldn’t move anything above cost.

WELCH: Well that’s one of the problems we’re facing now. We’ve got real tough-as globalization captures...

MATTHEWS: Right.

WELCH: ... the world, you get benefits and you get competitiveness.

And out of competitiveness, companies are losing pricing power. And...

MATTHEWS: Who’s next? Go ahead, sir, next question. Thank you.

WELCH: But I don’t think the economy is as bad as people make it out to be.

UNIDENTIFIED MALE: Yes. First, Mr. Welch, thank you for being here today. Secondly, my question is, with the events that have conspired in Washington concerning homeland security and our war on terrorism, what do you believe is the role of large businesses such as General Electric in this war on terrorism and in homeland security?

WELCH: Well, I think we have to provide the goods and services that a government demands to have. I mean, if you look at the jet engines that are made today, they’re made by General Electric. If you look at some of the ejection systems that are made that are needed, they’re made by either Boeing, Rayfield (ph) or somebody. I don’t think we play much of a role in finding people. I think we do play a role in providing the tools that those in charge of doing that use to stop this.

MATTHEWS: OK, we’re going to be right back with Jack Welch to talk to the former GE chairman about what to do when a private matter becomes a public matter and how to deal with it.

More with Jack Welch, the HARDBALL “College Tour” continues...

(APPLAUSE)

(COMMERCIAL BREAK)

MATTHEWS: We’re back with Jack Welch, former chairman of General Electric. You played a lot of golf with Bill Clinton, haven’t you?

WELCH: Once.

MATTHEWS: Was it a square game where you actually kept count of the strokes?

WELCH: Absolutely.

MATTHEWS: How many mulligans did you give him?

WELCH: Well, he was my partner.

MATTHEWS: OK, so he just took them. OK, you know in your book here, which has really done well. Jack, it doesn’t need any promotion from me, and it won’t get any-here we go, and you talk about how Roger Ailes did such a good job over at Fox the last couple of years, the head of Fox TV and you said he created an instinctive look for CNBC, plotted its primetime programming and (UNINTELLIGIBLE) personalities like Chris Matthews.

Chris brings energy - personality is (UNINTELLIGIBLE). Here it comes. Chris brings energy to the coverage of Washington mishaps. Is that the best you could do? Well, since you’ve crowned me the man who’s in charge of covering mishaps, case study for the students. A high profile executive has a marriage that breaks up, it’s on the front page of “The Wall Street Journal”. How do you handle something like that? How do you handle something that gets out public like that?

WELCH: Well first of all, you hate it. You hate the fact that you have a divorce. Divorce is no fun, and divorce is not good for anybody, and you’d like to get it over with as fast as you can. One of the risks of the territory is that if you put your mug out there long enough, it’s news when something like that happens.

MATTHEWS: Right.

WELCH: And you got to take the bad with the good. And I certainly have not enjoyed it in any way, shape, or form, and I’m looking forward to getting it over with and getting on with my life.

MATTHEWS: Do you have any advice on how to do that?

WELCH: If I did, I...

MATTHEWS: Let me ask you a generic question. This goes for all partnerships. The role of the corporate spouse, is it an important role in the corporate ladder?

WELCH: Look, I don’t want to offend corporate spouses in any way, shape, or form, and this is a who-when did you beat your mother last or something, but...

MATTHEWS: That’s how I shaped it. But generally, isn’t that-I’ve always heard from guys like you that there’s good networking there, you get a lot of help with keeping an eye on your back, looking out for other people. They play a real financial role in your career, that a spouse can be really helpful.

WELCH: I think early in a career, a spouse is critical because you’re, as you reach the top of the game, I don’t mean to be in any way demeaning to any spouses out in the corporate world, but as you get to the top of the game, the spouse becomes, of course, an important part of the family, and she keeps the family going, and she does a lot of things herself, but she is not the driving force.

It’s when you’re in school, when you’re-all of you who are married here know how much sacrifice your partner takes on...

MATTHEWS: Right.

WELCH: ... in getting you through that, in getting you started in a company, and the first year you come home and you hate your boss and you hate the environment, and your boss is a bum and you’re smarter than your boss and all those things you do...

MATTHEWS: You bring it all home.

WELCH: ... he or she has to listen to it...

MATTHEWS: Yes.

WELCH: ... and I think it’s a very valuable partnership.

MATTHEWS: When you think about the publicity you got about the perks, the apartment, things like that, the tennis tickets and things like that (UNINTELLIGIBLE) more detail. I’ll just shorthand it. Do you think back - and this isn’t a sugar plum question - do you think back about what you gave and didn’t get? I mean, as a young-how much-what did you sacrifice to get to the top?

WELCH: No, I didn’t sacrifice...

MATTHEWS: You didn’t?

WELCH: ... much of anything. I-you know, could I design my life more perfectly...

MATTHEWS: Did you-what did you give up? Let me make it more dramatic. What did you give up to get to be head of GE as a person?

WELCH: In my view?

MATTHEWS: These kids are all making these decisions right now...

(CROSSTALK)

MATTHEWS: ... on what they’re willing to give up.

WELCH: I’ve got great kids. I started out from Salem, Mass without two nickels to rub together, and I loved every day of work. I loved building an organization. I love seeing people thrive. There’s nothing like building an organization and watching people reach their dreams, give them their chances, let them flow, and man, if you can get that chance, it’s like in the veins every minute.

MATTHEWS: Yes.

WELCH: It’s as good as it gets.

MATTHEWS: Get in here. Come on. You’re next.

UNIDENTIFIED MALE: You’ve been a vocal proponent of corporate ethics, and conflicts of interests have a lot to do with that, so I was wondering how you felt the decision process of whether or not the Hudson River should be dredged and GE’s involvement in that decision-making process is a conflict of interest and therefore all of the money that GE spends to go against the dredging of the Hudson is unethical.

WELCH: Could you just help me with one aspect of that...

(CROSSTALK)

WELCH: ... and then I’ll come back to you. What is the conflict of interest?

UNIDENTIFIED MALE: Well, clearly, GE stands to not have to spend a lot of money if the Hudson doesn’t have to be dredged.

WELCH: Right. I don’t see a conflict there.

UNIDENTIFIED MALE: Well, then by pouring a lot of money into getting the opinion out there that it doesn’t have to be dredged and have the decision being made that it doesn’t have to be dredged come as a result of the expense of that money, that’s...

WELCH: You mean telling our story? You mean telling our story to the public is bad, but the government telling their story to the public is good with my taxpayer money?

UNIDENTIFIED MALE: No, in...

WELCH: Is that what you think?

(APPLAUSE)

UNIDENTIFIED MALE: There’s a difference between telling a story and having independent research be done, whether it’s right for the Hudson to be dredged or not, whether or not an environmental benefit will come from dredging the Hudson. That’s something scientific, not public relations.

WELCH: Let me just leave you with one fact. Everything we said was based on independent scientific research, not any way some-and no one-in my book, I talk in detail about the Hudson and the decision there. I didn’t get one single letter. I got letters on a lot of things in the book, but none arguing with the science that I put forth and what I laid out, and the case I laid out. This was clear as a bell.

MATTHEWS: More with Jack Welch. By the way, next week on the HARDBALL “College Tour”, a week from tonight, Al Gore, former Vice President Al Gore is going to be our guest on the HARDBALL “College Tour” somewhere in New York City.

We’ll be back right in a moment with more questions about corporate ethics and some of the hanky panky that’s been going on in the boardroom.

(COMMERCIAL BREAK)

MATTHEWS: We’re back in Chicago. Let’s take the next question.

UNIDENTIFIED MALE: Hello. Good evening. Before the Enron, WorldCom, and Tyco debacles, we’ve heard Warren Buffett especially state his support for stock option expenses. Now everyone is saying that he’s right, and last month, Secretary O’Neill was here saying that he clearly opposes that. What’s your opinion of stock options in terms of its advantages and disadvantages?

WELCH: I would say that putting a number on the balance sheet that you know is wrong the second day is certainly a suspect move, but I think in the time of this environment, and a feeding frenzy around some bad behavior, that a number of things that we do and we had to do, we’re smart to do and there was a demand-I mean, when General Electric expensed its stock options, it was on the front page of “The New York Times”.

Now for expensing stock options on accounting-to be on the front page shows you the times. I didn’t mean “The New York Times” at that time. I meant the times we’re living in, so I think the public confidence being restored is absolutely critical. Now what I would say to each one of...

MATTHEWS: You say tax stock options.

WELCH: What?

MATTHEWS: Tax them?

WELCH: No, I - no I didn’t say that. It’s expensive.

MATTHEWS: OK, we’re back. More coming back with Jack Welch, more questions about corporate ethics. Stay with us.

(COMMERCIAL BREAK)

MATTHEWS: This half-hour on HARDBALL, Jack Welch on corporate culture. Have corporate leaders become too greedy? What’s happened to corporate ethics? More on that as the HARDBALL college tour continues at the University of Chicago. But first the news.

(NEWS BREAK)

MATTHEWS: Let’s go to a whole question. We’re here with Jack Welch, former chairman of GE And everybody here I guess wants to make money. Did I ask you that before?

AUDIENCE: Yes.

MATTHEWS: In 1980, the average C.E.O. in this country made 42 times as much as the average blue collar worker, that’s 42 times, top guy, average guy. In 1990, it was 85 times as much. In 2000, just two years ago, the average C.E.O. in America made 531 times as much as the average worker in the corporation. Is that a good thing for capitalism and for America?

WELCH: Look, in a period of time like this, excesses occur. The-

but we have a system called the free market system and whether it’s a short

stop for the Texas Rangers and a ticket taker for the Texas Rangers, those

are two folks with a wide -

MATTHEWS: So it’s really a free agent thing where the person earns that salary because they’re worth that much on the market. They left (ph) the company.

WELCH: Well, let’s just say this. Let’s take the WorldComs of the

world, the Enrons of the world -

MATTHEWS: I don’t think people want to take them anymore.

WELCH: No, I want to make a point. These companies now have billions of dollars tied up in debt. Bond holders and people that have invested billions of dollars want to see that recovery. U.A.L. is in some trouble here in Chicago. They’re going to want to have a recovery. There’s billions at stake.

They’ve got to go get a C.E.O. It’s a competitive market. They went around and they have to pay-because as you said, I don’t want to take that? Well, they-they have to go out and do that. You have to go pay to get somebody to go to Tyco and fix Tyco. Ed Green left a great company, Motorola in Chicago, left and went there. He wouldn’t have gone there for $7. He wouldn’t have gone there without a lot of options and Ed Green is a great executive. They got him.

So the market has its excesses. They correct themselves. They fix themselves, but what’s a better system? Every time you get mad at the free market, go look at other markets. Go look at anybody who’s tried to run controlled markets. They don’t work. So if we end up putting a cap on salaries. We did this in 1992. We put a cap on C.E.O.’s salaries, so what happened? They said, let’s give them more options. And that’s in line with (ph) C.E.O.’s.

MATTHEWS: What would happen if you have a real walking, talking disaster like the Disney Company? When you had Michael Eisner making all that money and everything is going wrong at Disney and he still has all that money?

WELCH: Well, he’s trying to make a recovery. He’s working like heck

to try and get that company back on track. Got hit with a lot of bad

programming stuff. He got hit with 9/11 and the theme park business is a

brutal business today with travel. Now, you know -

MATTHEWS: When things break your way, but when things break your way, just for the same kind of acts of God that you described that you can’t control, exogenous variables, the guys get all the money. They say he did a great job. Maybe he didn’t do a great job. Maybe that’s just the way the markets are moving and he reaps all the benefits.

WELCH: No, that’s not true. Michael, if you go back to ’84 when he

took over at Disney when it was in trouble, he did fix Disney and bring,

get Disney along. Now he hasn’t cashed any options lately. He hasn’t

gotten rewarded for his performance. He suffered because his company -

MATTHEWS: Is there a macho thing that goes on among you guys at the top, where to a lot of people 4 or $500 million, $800 million, that doesn’t mean much, but at the top, you guys are saying, now this other guy cut a deal, I’ve got to beat that? Does that go on at the top?

WELCH: What about you and Brokaw? Let me ask that question.

(APPLAUSE)

MATTHEWS: Yes, I predicted you’d ask that. Let’s go to the next person here.

QUESTION: Hi, Jack. I’m just wondering with everything going on in corporate America, what do you think is the biggest lesson we can take away from the last few years?

WELCH: Well, without question, trees don’t grow to the sky. The height that takes place sometimes when we get involved in, for example the new economy. It’s got to be taken with a grain of salt. It was a new technology, but everyone got behind it, analysts, media, and the world, so I think we got to understand and everyone if business has to understand that business hasn’t changed at all.

People sold them a wagon and people bought from the wagon and now we just do it in different ways, but you’ve got to provide a service and a valued service that makes that purchaser want to buy your goods. It’s not some gimmickry. It’s not something else. It’s a value proposition. It’s been a value proposition for 100 years or more. It’s been-and that’s what we have to take out of this.

And companies today have to be designing new products, new services, new values. I mean, Proctor and Gamble comes out with a new toothbrush that works. It shoots to $200 million overnight because it’s a battery powered unit that takes off. It’s an innovative product. People have got to keep innovating.

Our country’s only hope in a globalized world is not to arbitrage labor, because we’ll lose that game every time. It’s to innovate. It’s to be bright. It’s to take risks and one of the things we got to worry about right now is whether or not this country is becoming risk averse and I would challenge Chris and every pundit in Washington that writes down the abuse, the cure in a column beside it and then put a third column in. What are the unintended consequences, because unintended consequences pop up all the time on these knee jerk fixes to problems.

And the biggest paper we could have written is a real thesis from the University of Chicago about the unintended consequences they can see five years down from Sarbanes-Oxley, from the New York Stock Exchange rules, from any of these regulations that were just thrown in. This country lives because we take risks. Everybody has a chance. People can go for their dream and we can’t suck that out of this system.

MATTHEWS: Did that legislation do that, Sarbanes-Oxley which is an attempt, an attempt to clean up the corporate board room this past year? Is it going to hurt?

WELCH: I think we need it, but look what it does. It require, it’s put in penalties of 20 years in jail if the statement isn’t quite perfect. Look, these people...

MATTHEWS: Was it wrong to demand that C.E.O.s and C.F.O.s sign those corporate (UNINTELLIGIBLE)

WELCH: We sign them all our life.

MATTHEWS: Did everybody?

WELCH: Absolutely. You had to sign them. You had to sign 10K. You had to sign the annual report. Now the facts are now Chris. We’re able to prosecute all these wrong doers. Aren’t they being prosecuted? Aren’t you seeing them being dragged out (UNINTELLIGIBLE)

MATTHEWS: When you see those perp walks, do you see a bad guy or do you see a guy fairly accused? Do think that’s a gray area for these guys or do you see a bad guy when he walks in that perp walk like a criminal, a street criminal?

WELCH: I wish I knew the answer to that.

MATTHEWS: You don’t have an initial reaction. That guy got what he deserved. He’s a crook.

WELCH: I have my views on some versus others.

MATTHEWS: But you do see some crooks walking in embarrassment.

WELCH: Oh, of course you see some. There’s some really bad behavior out there.

MATTHEWS: You know, one thing you did that bothered me, back in the beginning of this recession...

WELCH: Wait a minute.

MATTHEWS: It’s totally legal what you did, maybe (ph) ethical. You were quite honest about the coming recession when you were still in office.

WELCH: Right.

MATTHEWS: You said this is going to be bad and yet the American consumer stuck with it. The big guys like you said, you sort of threw in the towel, we’re not going to be investing big because this economy’s going to be weak. Everybody kept buying. This Christmas we still don’t know what (ph) it’s like, but aren’t you amazed at the regular Joe and Jane out there have more confidence in the American economy, in their behavior, in their buying patterns, than the big guys like you?

WELCH: No. I have more. I’m as optimistic as you are.

MATTHEWS: In this cycle.

WELCH: No, I think you’re talking about something else. I’m talking about capacity investment. These people-don’t forget what happened in America. We had refinancings that threw $175 billion into the economy.

When you were having a mortgage that was costing you $600 and

now you’re paying $400 -

MATTHEWS: Why didn’t business jump at that?

WELCH: They have. That’s why the consumer has held this economy together. This is all consumer-driven. This economy isn’t going...

MATTHEWS: Why were you making negative investments? And other people saying, we’ve got to be careful. They’re holding back on that and people are going out there buying cars? They’re buying - it seems to me (UNINTELLIGIBLE) symmetry here.

WELCH: No, no. We weren’t investing in more jet engine capacity

because the airline industry was having an issue. We weren’t investing in

more

power generation capacity because power generation had been oversupplied,

but in consumer goods, we haven’t been short. I mean -

MATTHEWS: How do you explain that optimism to the American person? Is that just America, this sense of we can make it through the weekend, we’re going to keep spending. We’re going to spend our paycheck? It seems like that’s what people are doing, every nickel and going into debt.

WELCH: Chris, no. unemployment is 5.6, 5.5 percent. When I became chairman of G.E, unemployment was 12 percent. The prime rate was 21.5 percent. You guys don’t even think of prime rates of 21 percent. You don’t think of unemployment at 12 percent. That’s what...

MATTHEWS: So you don’t think Jimmy Carter deserves the Nobel peace prize, do you, because that’s who you’re talking about because I worked for him?

WELCH: No, Jimmy Carter called the country in malaise. The Japanese were going to take over America. American manufacturing was done. We’re out of business. What happened? A guy came in and you wrote about it in your book-I’ll pump your book.

MATTHEWS: What’s the name of that book?

WELCH: America. And this guy came in named Ronald Reagan that they

all thought was stupid and he had a pretty simple thesis and you can

disagree with some of his policies or other things, but this guy got

America back on track. And the country thrived and we had 20 years -

MATTHEWS: You like the Bush tax cut too or just the Reagan tax cut or both of them? Do you like all tax cuts?

WELCH: Yes, I think tax cuts though-I’m much more for tax cuts for people who need them than I am for fat cats like myself.

MATTHEWS: So you give it back?

WELCH: No. But I tell you, I really believe that we have to continue this consumer consumption.

MATTHEWS: Should it be repealed, the one we got under Bush or should we go to something like perhaps like Gore is talking about? (UNINTELLIGIBLE) payroll tax relief? (UNINTELLIGIBLE) No payroll tax relief?

WELCH: It’s too expensive. It’s $175 billion for six months. I mean it’s a brutal-when you’re going into a war, you better be careful about how much you’re spending.

MATTHEWS: But the first big tax these people are going to pay with they hit the market is going to be payroll tax for Social Security. They’re not going to pay a big income tax.

WELCH: A one-time, six-month relief is not a fundamental change to the economy. It’s a six month...

MATTHEWS: We’re going to come back and talk to Jack Welch about whether the media is liberal, not the corporate board room, the news divisions of NBC and other news divisions of the country and why there is a Fox if it ain’t true?

And also we’re going to come back and talk about the college tour of course and by the way, I’m really proud about this and don’t forget, sign up to subscribe to our daily HARDBALL briefing, get news, guests, lineups and inside scoop on the show. Let’s see. Thank you very much for that. Our HARDBALL web site, hardball.msnbc.com.

(COMMERCIAL BREAK)

MATTHEWS: We’re back at the University of Chicago’s graduate school of business which according to the “U.S. News & World Report” and other measures of greatness, this is the best business school in the country.

(APPLAUSE)

MATTHEWS: So your parents are not wasting their money, OK? Number one question, would you repeal the tax cut in you were president, the Bush tax cut?

WELCH: No. I might move it forward for the lower income folks.

MATTHEWS: What would you do instead to stimulate this economy and get it rolling?

WELCH: I think there are a couple of things I’d do. With the congressional majority, I would really go after, I hate to say this in the law school place, but I would go after tort reform. This country has to have tort reform. I mean, the plaintiffs bar is sucking productivity right out of this.

MATTHEWS: Do they own the Democratic party?

WELCH: You know that better than I do.

MATTHEWS: Of course they own it. Let me ask you about -

WELCH: No, I’d do that-and I would also do something else. I think double taxation of dividends is the best way to go in terms of getting investment that’s fundamental and long term.

MATTHEWS: End the double taxation.

WELCH: End the double taxation.

MATTHEWS: Let me ask you about - I get two kinds of criticisms of this media I work in, which is television. And one of them is you’re owned by corporate pigs, this is obviously the left wing argument. You’re all working for these guys. You’re all right wing.

You’re all part of save the system, whatever, capitalist bastards or whatever and they all point to guys like you and say you all work for guys like Welch and then and conservatives say you’re all in bed with the liberals on television, Katie Couric and Brokaw and all these people. You’re all part of that and they see this New York and liberal and whatever. You’ve worked with these people. This is a hot seat question. Who’s running the show, the left or the right when it comes to broadcast television?

WELCH: From my view, outside of Fox, the left wing.

MATTHEWS: Why don’t you hire-see, this is the ideological question. Any other industry, people would hire people of like minds to do their work for them. Why do major big businessmen, who are all Republicans, mainly right? Most of you guys in the top level of GE are Republican, right?

WELCH: In GE, pretty split.

MATTHEWS: Pretty split?

WELCH: Yes. Yes.

MATTHEWS: Really? When you walk into a news division at the network and you’re watching for example election returns and you sense the sympathies, what sympathy do you sense?

WELCH: Massive. During the Bush time there, oh, Jesus, I was dying,

and they were-and they were all cheering for -

MATTHEWS: Why do you think it is that news people are liberals and business guys are conservatives? Because it’s true. I think what you say is true. I back it up. I see it too. It’s not exactly Einstein here.

WELCH: You know, I don’t know the answer to that. I really don’t-

WELCH: Could it be the J schools turn out liberals and business schools turn out conservatives or could it be that conservatives go to business school and liberals go to J school?

WELCH: A tongue twister.

MATTHEWS: What would you say to the young people here if they were thinking about going to work for the government like the Homeland Security Department, making a GS salary, not a whole lot of money, starting off being a public servant for the rest of their life. Would you recommend that?

WELCH: No. I think everyone’s got to make their own choice. I have no recommendation for what anyone ought to do. I think whatever you do, you’ve got to care like crazy. You’ve got to have passion for it. It’s got to be a meaningful thing. You have to put yourself into it. It’s not some get a job, get a salary, ride it out, be frustrated. You’ve got to reach, I mean, you’ve got to energize those around you. You’ve got to do all these things and you’ve got to have one big word-passion. You’ve got to be after it.

MATTHEWS: Back with more with Jack Welch. My passion read “American:

Beyond Our Grandest Notions” in your bookstores, great stocking stuffer.

Back with more with Jack Welch.

(COMMERCIAL BREAK)

MATTHEWS: Some questions for Jack Welch. Go ahead.

QUESTION: I wonder what’s next for Jack? When will we see you in the headlines for something other than your personal life?

WELCH: Well, you won’t see me in the headlines but I’ve got a great life. I’m working with a number of companies. I’m working with students. I’m having a ball. I’ve got a great life. I’m looking forward to a whole new rejuvenation.

MATTHEWS: Next person, come on, quick. We’re getting near the end here.

QUESTION: Jack, I recently read your book and really enjoyed it.

WELCH: Thank you.

QUESTION: My question for you is what do you think companies like General Electric can do to help promote America’s image on a global basis?

WELCH: I think we do it every day. I think great global companies are out there creating exciting jobs in countries where people didn’t have a chance. You go to Hungary where we have some 30,000 employees. You should see these bright, smart people enjoying a new life, a new rebirth. We do the same in India, do the same in China. We give the best working conditions, the best competitive jobs. It’s the most exciting thing in the world to see these people flourish in these countries.

MATTHEWS: Could China bury us economically in this century?

WELCH: Potentially?

MATTHEWS: How so?

WELCH: They have just got an awesome awesome intellectual capability and a gene, a gene that says “win.”

MATTHEWS: Have we ever come up against a competitor like that in the world?

WELCH: You know, I think China and its impact on the next - on this century, on the next 10 years, will make what Japan did in the 1970’s and 1980’s look like a water pistol.

MATTHEWS: Why did Japan sputter out? They were our number one competitor. They were beating us in so many places, what happened?

WELCH: They ended up with a currency that got very strong and they ended up not being able to export from there. The Chinese so far have pegged their currency to the dollar, and they are totally tied.

MATTHEWS: Can you keep capitalism with a communist infrastructure politically? Can they keep...

WELCH: In China you can because you’ve got exciting entrepreneurs everywhere you look. Everywhere you look. It’s in the genes. It’s in the blood.

MATTHEWS: They are better than us.

WELCH: No, but they are going to challenge us to innovate and produce great new ideas.

MATTHEWS: Are we too risk averse to beat them?

WELCH: Well, you got to worry about that in the backlash to the boom.

That’s what I’m trying to say. The backlash to the boom is dangerous. We

are all going to become bureaucrats if we are not careful, and sit down

there and be sure -

MATTHEWS: Are businessmen getting to be like congressmen, so scared of getting defeated for reelection that they’ll do anything to keep themselves in office?

WELCH: I don’t think that’s the case. I think there is though this incredible feeling in business about doing something. I mean, and there is an enormous number of opportunities out there for people to go buy things, do things.

MATTHEWS: You have a tremendous reward system. Huge salaries but no guts. How do they put it together? Why is it big? With huge salaries doesn’t a guy get any reward for taking risks anymore?

WELCH: They took tons of risks. Now there is this fear. Look, you

got attorney generals in every state. You got everybody-you got

everybody -

MATTHEWS: Great man, Jack Welch. Thanks for joining us. Great having you. (UNINTELLIGIBLE) University of Chicago’s graduate school of business. Next week, on another stage in New York City, we’re not sure which college, Al Gore, the comeback kid will address us on the HARDBALL college tour and that will be quite a night and there’s his picture. Jack Welch, thanks a lot. Thank you very much.

END

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