One of the basic principles of capitalism is that companies are allowed and encouraged to act in the best interests of their shareholders.  In fact, officers in a public company can be held liable in court for failure to act in such manner.  To that end, GE has decided that it is in the best interest of the company to move it's X-ray manufacturing division from Wisconsin to Beijing.  On the surface, that's a non-story really.  A company made a decision and acted upon it.  Done.

Let's get a little deeper into this story because it really has 4 nuances that are worth understanding.

1. GE has received so many subsidies from the US government that in 2010 they paid no income tax on $5.1 billion in earnings.  With our corporate tax rate at 35%, GE should have paid $1.5 billion in taxes but instead paid nothing.  You're welcome for that handout, GE.
2. Jeffrey Immelt is the CEO of GE is the chair of President Obama's Council on Jobs and Competitiveness.  His task is to assist the administration in creating jobs in the US.  Anyone notice a disconnect?
3. GE claims that no jobs will be lost in Wisconsin, which nobody believes, but that they will invest $2 billion in building 5 research centers and training 65 engineers in China.  Ouch.  That really hurts.  What we need in the US is the creation of those good engineering jobs and here they are being created in China.
4. Moving R&D to China is in many ways more terrifying than moving production.  We are going to make no attempt to retain innovation and new products in the USA.  GE has sold out that technology lock, stock and barrel.

When we talk about the loss of jobs, one of the arguments that is often made is that they are only low wage, low value jobs and we are better off without them.  That might be true in some cases but it most certainly is NOT true when you are talking about R&D and manufacturing of medical devices.  Those are the type of high value jobs in innovation that are supposed to be the backbone of the future of our economy.  

I'm a cynic when it comes to the motivation and actions of global multinational corporations.  Never forget that GE might be an American company but they have no loyalty to the US.  We have created a culture where these large companies have no moral compass.  So I wonder what happened under the table to make this happen?  GE has announced openly that their sales in China are well below expectation and plan.  So maybe the Chinese government offered GE greater access to markets that are controlled BY the government in exchange for moving R&D and production to China?  You think that would work?  Maybe the Chinese government offered tax abatements, free land and low cost loans if GE would make this move.  You think that would work?  Do you realize that both of these possibilities are in violation of WTO regulations and in some cases US law?  Do you think GE cares?  I don't.