Intel CEO Paul Otellini's politico-economic critique
By Justin Fox
Intel CEO Paul Otellini's dinner remarks Monday in Aspen have been making the rounds. Not having witnessed them, I can't say for sure, but they seem to have been a mix of the same things that Intel CEOs have been saying about U.S. competitiveness for the past few decades plus a bit of the Obama-bashing currently fashionable in business circles. Naturally, it's the latter that's getting all the attention, which is somewhat unfortunate given that Otellini's take on current events was partisan and off-the-cuff, but his views on U.S. competitiveness seem well-informed (if of course self-interested) and probably right.
"I think they're flummoxed by their experiment in Keynesian economics not working," Otellini said of Washington Democrats. Um, really? The experiment in Keynesian economics undertaken in the U.S. over the past couple of years -- and it was well under way in 2008, before Obama was elected -- has almost certainly worked in the sense of preventing even bigger job losses, as Dylan Matthews explained earlier today. It just hasn't worked miracles.
Otellini also launched into a favorite complaint of businesspeople lately: that it's uncertainty, much of it the fault of Washington, that's keeping corporations from doing anything productive with their big cash stashes. I don't doubt that there's lots of uncertainty, but blaming the current occupants of the White House or Capitol Hill for it strikes me as a little weird, given that the biggest government-related uncertainty right now has to do with the November elections. The real complaint here seems to be with the occasional direction changes inherent in a democracy. Which is one reason why businesspeople like China so much. And why they liked the Washington gridlock of the mid- to late 1990s.
But some of Otellini's other, less of-the-moment arguments made sense. The U.S. corporate income tax rate -- at 39 percent, it's the second highest in the developed world after Japan's, and Japan's may be about to drop -- is counterproductively high. It's probably the only tax in the U.S. these days that's conceivably on the wrong side of the Laffer curve; if we lowered the rate, we might take in more money. Our immigration laws are ridiculously unfriendly to talented workers from overseas (actually, that was Carly Fiorina's argument at the same event, but I'm sure Otellini would agree). As a nation, we sometimes seem to be actively discouraging R&D and locating manufacturing facilities here. But none of that's new to the Obama presidency, or even to the 2000s. I think it's been going on since at least the 1980s, when Washington policymakers and corporate chieftains began to fall under the thrall of financial markets and the financial sector (book recommendation of the day: Gerald Davis's “Managed by Markets: How Finance Re-Shaped America).” Got a plan for what to do about that, Mr. Otellini?
Justin Fox is editorial director of the Harvard Business Review Group and author of “The Myth of the Rational Market.”
August 25, 2010; 4:25 PM ET
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