Rethinking American Investment in an Intangible Age
At The Wall Street Journal’s 2017 CEO Council meeting, Gary Cohn—then the director of the White House National Economic Council—spoke to the Trump administration’s tax reform efforts. “We want companies to invest back in the economy,” he said, “not give money back, or sit on money because they don’t think there’s anything to do with it.”
Moments later, the Journal’s John Bussey turned to the audience and asked for a show of hands: “If the tax reform bill goes through, do you plan to increase investment, your companies’ investment, capital investment?” In the crowd of over 100 top corporate executives, only two or three hands could be seen rising on the C-Span recording.
“Why aren’t the other hands up?” Cohn asked through nervous laughter, before the moderator deftly changed the topic.
Opening with the transcript of this exchange, a new report from Senator Marco Rubio, “American Investment in the 21st Century,” suggests it knows the answer to that question. But in a compelling shift from the usual Republican focus on taxes and regulation, it points the finger squarely at over-financialization and the notion that corporations exist to maximize returns to their shareholders.
Shareholder primacy, the report argues, “tilts business decision-making towards returning money quickly and predictably to investors rather than building long-term corporate capabilities, reduces investment in research and innovation, and undervalues American workers’ contribution to production.”