I find the whole premise of this article strange and upsetting. Why is it a job of the government even to have a "technology policy"? The government should simply get out of the way. The best thing the government can do is implement a flat tax rate or a sales tax and get out of business. The market will do the rest.
There are technology-related things that either can't provide a fast enough return on investment or simply can't be sold on the general market, like military and space research. The government has to get involved in things like that. But there are very few such things. For the rest - let's leave the technology to high tech companies.
Sorry, but reality does not come from sifting through the arguments and counterarguments of economists, but to go and ask the execs of the multinational companies. Why do they offshore? The answer is always the same. Much lower labor costs, INCLUDING much lower benefits demands, and favorable taxation.
Ask business owners why they are sitting on so much cash. Many reply that the uncertainty in the next few years is one big problem. Uncertainty as to what payroll taxes they will incur. Sure, SOME of them talk about demand. It depends on what business they're in. Not everyone is in the restaurant business. You can't generalize that way.
You might want to look up Steve Keen. He's an Aussie economists who disagrees totally with Keynesian economics, and who instead says that the 2008 recession was predictable. Why? Because of the accumulating public debt. So his thesis is, you won't get out of this recession until you pay down that public debt. Look him up. Oh, and just as an aside, Christine Lagarde said the same thing. Public debt is what's killing the economic recovery in most of the developed world.
So, take this all together, and then check out what our political parties are pushing as "solution." Tax policy alone isn't the problem. I never said it was. But nor is mounting up public debt, to favor questionable enterprises that actually build wigits, as if just because a politician claims that pouring public funds into certain companies that make certain wigits, that must be a good policy. The economy doesn't give a hoot about the slogans of politicians.
Bert, despite the efforts of thousands of economists, no one has ever founding a convincing and meaningful relationship between (reasonable) tax policy and medium or long-term economic growth. In fact, in the US at least, growth has been better when marginal and overall tax rates were higher, not lower.
You can hand-wave your Econ 101 Chapter 1 theories, but what matters is reality - where substitution and income effects largely cancel, where Ricardian equivalence dampens effects, and people simply don't change their behavior much based on incremental changes to tax rates.
Corporations are slightly trickier because thier money is so fungible, making gimmicks like Double Irish Dutch sandwiches possible. However, the key to this type of tax dodging is to isolate and pressure the tax havens, not to try to race them to the bottom. That's an unwinnable game.
That only addresses the demand side. It works for restaurants and dry cleaners.
For industry in general, customers come after an initial outlay of capital. You know, like IBM deciding to invest in single-chip computers, which launched the PC age. Or Apple deciding to invest in fashionable personal gadgets, when they were going under a few years ago.
For that to happen, you can't punish business.
Customers are the key to jobs. Without more customers, an employer won't hire. He'll just sit on his money until he sees more customers.
Any employer who hires on speculation before he has customers will quickly find his stockholders and board of directors firing him.
If there are more customers, then there will be more jobs, whether there are tax breaks to the job creators or not.
"US broadband penetration ranks well below that of South Korea and several Nordic countries."
South Korea is a little more than 1/2 the size of Nebraska. Rolling out broadband across 1/2 of Nebraska is not the same as providing coverage across the entire USA. As for the Nordic countries, they can keep their high tax rates and continuous broadband.
Technology and Jobs is a chicken-and-egg situation. The Jobs are needed NOW! So the jobs that need to be created must be for the skills that people have NOW. Boosting the technology sector will yeild more jobs and better jobs three to five years from now. That isn't soon enough. Nobody is going to vote for a policy that releives an immediate problem in five years.
We can only hope that President Obama will boost technology also.
americans need to give up the illusion of a 'perfect' president.
why? cause you don't deserve one.
while americans are getting more selfish, greedy and crazy, all the nature will bless you is a midocre sth which won't bring you too far.
I think both of the candidates are for the most part tech illiterates. Knowing how to browse the web does not make one tech savvy, IMO. Nor does the knee-jerk subsidizing of companies that "do green energy."
It seems odd to me that tech companies contributed so lopsidedly to the Obama camp, but much less surprising that the executives leaned the other way. After all, it is these very executives whose incomes Obama wants to redistribute most, right?
I think of politicians as being primarily lawyers. Lawyers "understand" technology strictly as laymen users of technology. And the policies they push hardest are whatever policies they figure "sound good" to their base. It's not essential that they be in fact "sound policies." We've seen a lot of examples of questionable policies and questionable expoense of taxpayers' money in recent years. Policies that might have had voter appeal, but turned out to be counterproductive, or at best neutral.
Tam, great piece! Sadly, there appears to little substantive discussion of ANY of the issues, much less technology. There's just a lot of "binders full of women" and "you didn't build that" blather.
Fortunately, the tech industry is always one step ahead of governmental policy and maybe that's as it should be. And the bigger companies have enough lobbying power to weigh in and influence big issues such as tax reform and immigration.
Small- and mid-sized companies are a different deal, but often don't have those problems until they get bigger. Theirs are more local issues (taxes, schools, zoning). In driving around the country for a year interviewing companies, I rarely heard many complaints about technology policy, and I think that's because those companies are setting technology policy every day.