Ed Wallace

Charlie Wilson’s Wars

The May 28 Wall Street Journal reported that U.S. Transportation Secretary Elaine Chao still owned stock she had pledged to divest over a potential conflict of interest once confirmed to her cabinet post. More to the point, Chao apparently earned $40,000 from that stock in the previous year, after telling the Office of Government Ethics she would divest.

Within a year after playing a key role in the landmark Medicare Act of 2003, which gave us Medicare Part D for prescriptions, former Congressman Billy Tauzin announced that he would be leaving Congress to become the head lobbyist for the pharmaceutical industry. Once there, he made sure Obamacare didn’t put caps on drug prices — thereby ensuring that his new clients could maximize their earnings as health care coverage expanded. To be fair, according to the New Orleans Times Picayune, “at least 15 members of Congress, congressional staffers and administration officials who had played a role in the bill’s [Medicare Part D] passage left office and joined the pharmaceutical industry.” As Bloomberg reported on November 28, 2011, Tauzin earned $11.6 million the year he brokered that deal with President Obama on America’s health care overhaul. And we’ve been paying for that ever since.

If you’re starting to get the sense that many in government are simply there to find their next big score, you may be onto something. In fact, books have been written about just that, and too many examples of corruption and personal enrichment, resulting from either government service or connections with our elected officials, abound in American history. So you may be surprised to learn that there were shining moments, too: Some people actually saw service to our country as a way to pay a debt of gratitude for the opportunities for accomplishment that America had given them.

A Socialist and Republican

Charlie Wilson was born just outside of Cleveland in 1890, the son of a toolmaker, union activist and diehard socialist. (Some sources claim Wilson’s father was a school principal.) His family moved to Pittsburgh in 1904, and Charlie would receive his degree in electrical engineering at age 18 from the Carnegie Institute of Technology. Like father, like son; Charlie grew up believing fervently in the socialist party. He took work at a local patternmaker and became an agent for the union hall in the city.

As the Great War unfolded Wilson moved to Westinghouse, where he would work on creating new radio generators, then the company’s first starter motor; before the war was over, Charlie Wilson was in charge of Westinghouse’s automotive electrical products. He moved upward fast; the only thing that prevented Wilson from making a long and prosperous career there was his passion for socialist causes. Seems some at Westinghouse were not comfortable with that mindset.

He jumped ship to Remy Electrical, at the time a General Motors subsidiary, and in short order became that company’s general manager. When Remy merged with Delco in 1926, it was Wilson who found $5 million in cost savings; but refused to dismiss the 5,000 Delco workers in Dayton, keeping them on until new product for their plant could be found. And somewhere during this period, Charlie Wilson became a card-carrying Republican. Like so many socialists who have brains, ambition, and talent, he quickly found that there’s more money on the other side of that ideology.

Within two years Charlie Wilson was GM’s youngest vice president and now a protégé of Big Bill Knudsen, who was on his way to becoming president of GM. Wilson would be responsible for GM’s acquisition of Electro-Motive in 1930 — making General Motors the largest manufacturer of rail locomotives — then of Allison Engineering and a minority position in Bendix Aviation.

As the Second World War was ramping up, though, Big Bill Knudsen was asked by President Roosevelt to take over preparations for production of war materiel for the nation, leaving Charlie Wilson president of General Motors at only 50 years of age. And for the next two years, owing to the strong and constant demand for the war materiel, Wilson never took a day off from work. Often he simply slept in his office for a few hours so he could begin work again before the sun rose. These habits cost him; Charlie Wilson suffered a stroke and was told to take six months off work for recovery. But it wasn’t about Charlie; there was a war, and he was needed to make sure our kids overseas were supplied. Only three months later, Charlie Wilson was back to his seven-day work week.

But it was during those three months of convalescence and recovery that Wilson started thinking about the future of corporate America and our obligations to each other.

Corporate Citizenry

Peter Drucker had already written his book about General Motors, The Concept of the Corporation, so Wilson asked him to come to Detroit to discuss what was next. There Wilson told Drucker that the great achievement of the last generation, including the founders of GM and other modern corporate giants, was to design the structure and principles of large enterprises. Then, according to John Steele Gordon in American Heritage magazine, Wilson said, “the job of the next generation of business leaders should be to expand on the corporation to develop a real sense of citizenship and community.”

In 1949 Charlie fell and broke his hip while ice skating. In keeping with his policy of thinking about the welfare of others while he couldn’t work, he changed things once again.

It was Charlie Wilson who gave us the modern employee pension plan, although Drucker told him that if he did that and invested the monies in the stock market, one day the workers would come to own the corporation. To which Wilson replied, “As they should.” Ah, voting Republican and still carrying socialist thoughts. Wilson expanded medical coverage and came up with Cost of Living Allocations for the UAW’s members. Not only did industry copy the COLA, but so did our government for its pensions and Social Security payments.

As the head of the world’s largest corporation at the time, Wilson also became well acquainted with the power structure in Washington. And from his war years, top military officials liked and respected Wilson for his commitment to the cause. So when Dwight Eisenhower became president, he asked Charlie Wilson to give up his $600,000 a year job running General Motors and become our Secretary of Defense — at $22,000 a year.

There were many reasons Eisenhower needed real help. At the time the Pentagon budget accounted for 60 percent of all government spending and a whopping 12.5 percent of our entire Gross Domestic Production. That was fine during a time of war, but you can’t grow a healthy economy when federal expenditures are so lopsided.

So Charlie Wilson not only took a $578,000 cut in pay, but he also had to divest himself of 40,000 shares in General Motors because GM was a major producer for the military. It cost him millions of dollars in capital gains taxes alone to accept that government job.

When asked later about why he would possibly do such a thing, Wilson replied that this country had been incredibly good to him and it was everyone’s obligation to repay the largess that comes from being an American. Compare that kind of passion for being an American and what responsibilities citizenship brings to what we currently accept in many of our government officials.

After four years of trying to corral military officials, who were as addicted to government spending as others are even to this day; of fighting Congress, which was always willing to supply the funds to the financially addicted; and of feeling he was getting nowhere, Charlie Wilson stepped down as Secretary of Defense to retire to his Michigan home and 4,000-acre plantation in Louisiana. Just four years later he passed away at 71 years of age.

Charlie Wilson always kept his first union card framed and hung on the wall at General Motors and at the Pentagon.

Heroic Non-Combatant

Charlie Wilson fought many wars in his life. First, defending socialism; second, losing his personal health just as he needed it most; and third, taking on most of Washington. Charlie Wilson’s war against the DC machine is one of the key reasons why Eisenhower warned the nation in his farewell speech about the “military-industrial complex.” Ike originally wanted to call it the “Congressional Military Industrial Complex.”

Wilson had a lifetime full of accomplishments that benefitted the nation, certainly in a time of two world wars. Then he gave us the concept of corporate responsibility in the building our communities; taking care of employees was bettering all of the country. Of course, that’s all out of style now. Seems quaint, doesn’t it? Today the mindset is, “it ain’t about all of you, it’s all about me.”

When government came calling Charlie Wilson gave up millions and millions of dollars to repay the country that had been so good to him and his family. That’s our bright shining moment.

Now it’s time to go back and reread this column’s first two paragraphs.

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: edwallace570@gmail.com