Economists and politicians who favor tax cuts as growth-promoting measures have some explaining to do if one considers recent investment numbers as a percentage of GDP in the United States. They are low, probably lower than 15% of GDP. And aren't low taxes supposed to spur GDP growth through higher investment, among other things ? So why is the investment sentiment so anemic and why is the investment climate so negative ? American financial institutions have been investing funds abroad in hopes of high returns. They got burned in France and in other European countries recently and they got burned in East Asia about 15 years ago. But do you see what I am getting at here ? American business and financial entities aren't really enthused about investing at home ! And this ten years after a big, elitist tax cut. I mean there seems to be a serious lack of scholarship and awareness about the tax-growth question. How has investment as a percentage of GDP been so low during a prolonged low-tax period ? Have rich Americans run out of good options ? I mean, come on, rich Americans ! We are counting on you to pull us through this morass, through this troubled climate. I mean, the CEOs are earning their millions, right ? And corporate profits aren't really all that low, are they ? Where are the new investment ideas and why aren't American business and financial entities investing more at home ?
Is it just due to business sentiment and investment sentiment or is it due to a strong global pull on available money or is it due to structural factors ? So, the housing market collapsed and isn't a good investment option for some time. And a lot of low-end manufacturing is shipped overseas. And automation is becoming more prevalent in manufacturing ( this has implications for the employment generation capability of investment and employment generation is crucial for the US right now ). So, is it all up to the service sector in the United States and has the business community in the United States run out of ideas when it comes to new investment in the service sector ? How does the US economy improve investment prospects in the service sector in a way that creates a lot of jobs, which America needs right now ? Should the Congress seriously start considering taxing large investments made abroad by US businesses and US financial institutions ? Or pass legislation that mandates a portion of such investments made abroad to be contributed to workers training and retraining programs in the US ? And who will come up with the training and retraining programs that ensure that the employment market does not get into frequent or prolonged traffic snarls in the US ? These are all questions that need careful consideration if the economic challenges facing the United States are to be solved in a way that leads to sustainable economic recovery.
by C. Jayant Praharaj ( send comments to [email protected] )
Is it just due to business sentiment and investment sentiment or is it due to a strong global pull on available money or is it due to structural factors ? So, the housing market collapsed and isn't a good investment option for some time. And a lot of low-end manufacturing is shipped overseas. And automation is becoming more prevalent in manufacturing ( this has implications for the employment generation capability of investment and employment generation is crucial for the US right now ). So, is it all up to the service sector in the United States and has the business community in the United States run out of ideas when it comes to new investment in the service sector ? How does the US economy improve investment prospects in the service sector in a way that creates a lot of jobs, which America needs right now ? Should the Congress seriously start considering taxing large investments made abroad by US businesses and US financial institutions ? Or pass legislation that mandates a portion of such investments made abroad to be contributed to workers training and retraining programs in the US ? And who will come up with the training and retraining programs that ensure that the employment market does not get into frequent or prolonged traffic snarls in the US ? These are all questions that need careful consideration if the economic challenges facing the United States are to be solved in a way that leads to sustainable economic recovery.
by C. Jayant Praharaj ( send comments to [email protected] )