You think an additional $1.4 trillion in non-residential business investment over 2008-2011 might have helped the economy during that period?
Well, that’s how much additional business investment there would have been had investment continued to grow at the same average annual rate — 4.8% — as in the ten years before the Great Recession, according to a new study by the Progressive Policy Institute. As economist Michael Mandel, a co-author of the study, notes, “That extra investment could have gone a long way toward creating jobs, boosting productivity, and enhancing U.S. competitiveness.”
Mandel points to several possible reasons for the “decline and lackluster recovery”:
1. Many companies are investing overseas rather than in the United States.
2. Multiple layers of regulation, even if well-intentioned, have the impact of discouraging capital investment and innovation.
3. And the continued weakness in demand at home makes it difficult to justify building new factories. But no matter what the reason, this weakness is having an adverse effect on economic growth and is one of the main reasons behind the job drought.
Let’s see, we have the highest corporate tax rate among advanced economies, there has been a slew of new regulations the past three years, and real incomes have fallen over the past two years.
Clearly, these are problems to be solved by raising taxes on a) double-income families making over $250,000, b) small business owners, and c) U.S. multinationals who make profits overseas.