Decatur GE is a stimulus success

In May 2008, General Electric announced the bad news.
The company was going to try to auction off its 35-year-old Decatur facility.
That was bad enough, but the news got progressively worse in the weeks that followed. There were no interested buyers. With the recession suppressing demand for GE’s refrigerators and a global credit freeze making even good investments impossible, the 1,390 GE employees faced likely unemployment. With the loss of its second largest employer, Decatur faced a disastrous drop in tax revenue. The many businesses that relied on GE contracts or on business from its employees had a bleak future.
It was part of a downward economic spiral that gripped the nation. While everyone knew that consumers would eventually purchase refrigerators again, the private sector was unwilling to invest or sustain continued losses while waiting for demand to return.
The federal government’s response was the one prescribed by economists: increase spending. That was the best way to avoid a repeat of the Great Depression.
Some of that stimulus money went to GE. The prudent catch was that GE could only use that money for investment in new technologies that reduced greenhouse emissions. The main goal was just to get GE to invest in something. By requiring that it use tax dollars for a technology that benefited the environment, the stimulus program accomplished two things. One, it gave taxpayers an environmental return on their dollars. Two, it helped GE enter a growing market.
While many Americans dismiss the warning of scientists on climate change, the people of most developed nations take the threat seriously. By reducing greenhouse emissions, GE was able to increase the global acceptance of its products.
With some prodding and $6.5 million in financial assistance from taxpayers, GE not only kept its Decatur plant open, it invested almost $60 million into high-tech production.
The first refrigerators built with the new process came off the line last week. Because the federal government listened to the economists, consumer demand has increased from those bleak days of 2008. It will sell those refrigerators to other people who would not have jobs if the recession of 2008 had turned into a depression.
It may be ideologically painful to acknowledge that the government has an appropriate role in spending money to reverse a severe recession, but GE’s Decatur plant is evidence that the economists were right.

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Filed under Environment, Recession, stimulus, Subsidies

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