There’s no need for me to reiterate what others like Dean Baker, Yves Smith, and Andrew Leonard have already written about Andrew Ross Sorkin’s column today on why Wall Street has turned on Obama (which is hardly a mystery, no?).
But I don’t think anyone’s touched on this bit:
Mr. Loeb’s views, irrespective of their validity, point to a bigger problem for the economy: If business leaders have a such a distrust of government, they won’t invest in the country. And perception is becoming reality.
Just last week, Paul S. Otellini, chief executive of Intel, said at a dinner at the Aspen Forum of the Technology Policy Institute that “the next big thing will not be invented here. Jobs will not be created here.”
Mr. Otellini has overseen two big acquisitions in the last two weeks — the $7.7 billion takeover of the security software maker McAfee and the $1.4 billion deal for the wireless chip unit of Infineon Technologies. If he is true to his word, those deals will most likely lead to job cuts in the United States, not job creation.
First of all, since when do deals result in job creation? Cutting costs—finding efficiencies or synergies in Wall Street-speak— is one of the main points of doing them. Intel is not going to pay $7.7 billion for McAfee and go on some hiring spree. If anybody wants to take the other side of that bet, email me. I’ll even give you some points.
But also: Otellini is the same guy who inspired this awful Tom Friedman column (but I repeat myself!) in March, which was one long rationalization for why Intel won’t hire Americans.
Here’s a list of excuse Otellini had just in that column: Not enough corporate welfare (R&D tax credits), corporate taxes too high, American education system sucks, construction costs are higher, skilled labor is everywhere, IT infrastructure is weak, he doesn’t get free money like South Korean firms, etc.
Sorkin doesn’t mention any of that, or the gigantic elephant-in-the-room fact that our trade policies encourage Otellini not to make stuff here. Go read Andy Grove’s (the dude who actually created Intel and all those American jobs) BusinessWeek cover story from several weeks ago on that.
As I said then:
Free trade for the modern “American” multinational is about arbitrage: Environmental arbitrage. Labor arbitrage. Regulatory arbitrage. Tax arbitrage. Hell, press arbitrage.
In other words, Otellini just doesn’t want to invest here. And why should he when he can, without penalty, take advantage of looser regulations and cheaper labor in third-world countries—and then blame it on Wall Street-bashing or whatever?
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.