Thursday, August 8, 2013

The speechwriter Romney needed

We wonder how much worse it could have been in 2012 for the Republicans, if their candidate had had the nerve to say this to the American electorate (from Daniel J. Ikenson);
Nonresidential fixed investment fell off a cliff in 2009, and has yet to recover even in nominal terms. As a share of GDP and relative to the trend in investment growth prior to the 2008 recession, the picture is more troubling still. If tomorrow’s wealth and living standards are functions of today’s investment – and they are – reversing the decline in investment should be the economic priority of U.S. policymakers. 
Instead, the administration has been cavalier about the problem and aloof to real solutions, choosing to view investment as a casualty of partisan politics, as though business is intentionally holding back to sully the economy on this president’s watch. Such narcissism has obscured the White House’s capacity to grasp the power of incentives.
It’s not just domestic investment that is lagging. Foreign direct investment in real U.S. assets is also on the decline. The United States is part of a global economy, which means that U.S. and foreign based businesses can invest, hire, develop, produce, assemble and service almost anywhere they choose. And that means the United States is competing with the rest of the world to attract and retain investment. Of course, the implication of this – whether policymakers know it or not and whether they like it or not – is that globalization is serving to discipline bad public policy. Policies that are hostile to wealth creators chase them away, while smart policies attract them and harvest their fruits.
It's the incentives, stupid.

1 comment:

  1. Other socialist governments have had 50 years to settle down into a predictable kleptocracy. A businessman knows who to pay and how much as a cost of doing business.

    The emergence of US socialist rule is still chaotic. Short term projects can proceed with the help of this or that former bureaucrat, but longer term projects must wait for a well-regulated kleptocracy to form. With no rule of law, we need a regulatory pecking order.