[Congressional Record (Bound Edition), Volume 149 (2003), Part 19]
[Extensions of Remarks]
[Pages 26782-26783]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   THE ARTICLE ``THE `BUT' ECONOMY''

                                 ______
                                 

                         HON. MICHAEL G. OXLEY

                                of ohio

                    in the house of representatives

                       Thursday, October 30, 2003

  Mr. OXLEY. Mr. Speaker, I commend to the attention of my colleagues 
the following article by former General Electric Chairman and CEO Jack 
Welch.
  Jack Welch provides an important lesson in corporate management to 
those who don't understand what makes an economy grow. Growth comes 
from businesses that are constantly striving to make themselves more 
competitive in a global marketplace.
  As the article points out, many in the media believe a story isn't 
complete unless there is

[[Page 26783]]

some bad news. Sometimes I think if the modern media had existed in 
biblical times, it would have written, ``Moses laid down the Ten 
Commandments today, Five of which were immediately denounced by civil 
rights and environmental activists.''
  Jack Welch's article makes for instructive reading about why our 
economy just posted one of its strongest performances in recent memory.

                           The `But' Economy

                            (By Jack Welch)

       Guess what? There is an economic recovery under way, but 
     you never would have known it last week when earnings reports 
     came out. Even though many companies from battered sectors--
     including some companies left for dead just two or three 
     years ago--recorded positive results, their successes were 
     almost universally reported with the word ``BUT'' prominently 
     featured. The stories in the papers and on TV went something 
     like this:
       Sales were up--but analysts warned that cost cutting 
     explained most of the gains.
       Earnings were up--but the mood of optimism was tempered by 
     concerns about global competitiveness.
       Cash flow was up--but the company still faces harsh tests 
     in coming months.
       Now, I am not claiming that the economy is fixed. It's not. 
     And there are, obviously, challenges ahead if a full recovery 
     is going to occur. It's undeniable, however, that most 
     companies are posting significantly improved results. Not 
     only can millions of hard-working people celebrate--they 
     should. They've earned the right. That's why we can't rain 
     all over the their efforts--their motivation and innovative 
     spirit and can-do attitudes. Those good feelings, as any 
     economist will tell you, are key drivers of company 
     productivity and consumer confidence. The fact is a recovery 
     will be a lot harder if we keep saying ``but'' about damn 
     good news.
       Two particularly glaring ``but'' stories from last week 
     come to mind--Xerox and Lucent.
       Xerox has been through the ringer. It's had accounting 
     difficulties. It's paid millions of dollars in fines. It has 
     experienced market-share erosion from product misses and 
     noncompetitive costs, and its employees and shareholders have 
     suffered. Two grueling years later, however, Anne Mulcahy and 
     her team appear to be turning the ship around. The company 
     reported that its earnings grew 18% in the third quarter. 
     From the reporting on it, though, you would have thought the 
     company was still taking on water. The good results, it was 
     reported, mainly came from cost cutting. Of course they did! 
     While innovation is the lifeblood of business, cost 
     competitiveness is a given if you want to win in the global 
     economy.
       Lucent is an even more dramatic case. For the first time 
     since March 2000--that's 10 quarters--the company actually 
     posted a profit, thanks to the persistence and creativity of 
     Pat Russo, her top team, and tens of thousands of employees. 
     It was time for a party. But Lucent's turnaround was spray-
     painted with ``but'' this and ``but'' that. The company's 
     good results were subjected to the usual harangue about 
     telecom industry spending and attributed mainly to cost-
     cutting. Oh no--not that again.
       The good news out of other sectors got much the same 
     treatment. Time Warner, which has angered its shareholders 
     for a couple of years now, reported increased revenues and 
     operating income in the third quarter. That news was pretty 
     much lost in commentaries about the continuing saga of the 
     company's Internet activities. Meanwhile, Citicorp and a slew 
     of other banking industry giants were showing sensational 
     results. What did you hear? Reserve provisions for bad loans 
     were down. This ``but'' could have actually been cast as 
     ``because.'' For instance, ``Earnings were sensational 
     because, among other factors, reserve provisions are down as 
     a result of improved risk management and a stronger 
     economy.''
       Of course, you have to wonder--why all the grumpiness? Why 
     has every cloud got a dingy gray lining? There are probably 
     many reasons but two come right to my mind.
       Go back to 1999, the last year that positive results were 
     routinely reported. There was no ``but'' economy grousing 
     then. And that's exactly the problem. The media (and pretty 
     much everyone else) believed that trees did indeed grow to 
     the sky. Very few asked, ``How solid are these results? How 
     long can they last? Will these markets grow forever?''
       When the bubble burst, a lot of people got burned--and not 
     just shareholders. Many people in the media had hyped 
     companies that flamed out because they were based on 
     unrealistic business models or turned out to be rotten to the 
     core. They felt burned too. Today, when the media reports 
     good news, it feels safer to stick ``but'' in every sentence.
       The other reason is political. Back in the days of Clinton-
     bashing, the ideological divide in the country seemed like it 
     couldn't get wider. Well, it has. Bush-hating has pushed it 
     to new levels. Never before have Democrats and Republicans 
     been more vitriolic in their disdain for each other; it feels 
     like war. And frankly, what would be worse for the Democrats 
     right now than an economic recovery? That's an awful big 
     battle to lose as the election approaches.
       Now, I'm not suggesting ``irrational exuberance'' again. 
     First of all, it's not warranted (yet) and giddiness about 
     the economy didn't really help last time. And I'm also not 
     asking that people forget what happened during the boom. Some 
     companies and executives absolutely earned the right to get 
     nothing but disrespect and doubt.
       If we are ever to get competitive again, though, we can't 
     indiscriminately put a negative spin on what is legitimately 
     good news. We live in a global economy; India and China get 
     stronger and better every single day. To have a fighting 
     chance, companies need to get every employee, with every idea 
     in their heads and every morsel of energy in their bodies, 
     into the game.
       The facts are, companies are not bricks and mortar, but 
     people, with blood and sweat and tears. People are the reason 
     for the recent recovery, and people are the reason it will 
     continue--if it does. That's why we need to tell the people 
     who have earned it not ``but,'' but ``Bravo.''

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