Toro
Diamond Member
America’s malfunctioning political system has become the biggest menace to its future economic competitiveness, according to a Harvard Business School report.
Average annual growth rates of 1.6 per cent in the current recovery lag behind those of any previous rebound since the 1940s, the study found, arguing that the country’s economic performance peaked in the 1990s and has been eroding ever since.
While many studies have focused on the legacy of the financial crash in explaining the country’s muted economic performance, the report found that the challenges were of a longer-term, structural nature. Key barriers identified by businesses were in the ambit of federal government policy, among them reform of the tax code, regulation and US infrastructure. ...
“Political dysfunction is the single largest barrier to US competitiveness,” said Jan Rivkin, a professor at the strategy unit of Harvard Business School.
He said this conclusion was not intended to take the heat off business for having responsibilities, or state and local government, but added: “When you look at the things that are holding us back, many of them fall at the feet of the federal government.”
The breakdown of political co-operation in Congress has made progress in key policy areas elusive in recent years, as evidenced by repeated showdowns over the government debt ceiling and difficulties agreeing long called-for reforms of the country’s haphazard corporate tax code. “The existing political parties have done a pretty good job of locking in the paralysis,” said Mr Rivkin.
Several policy changes that would have clear competitiveness benefits were achievable given the right political will, the study argued. Among them was a boost to infrastructure spending — something both Donald Trump, the Republican candidate, and Hillary Clinton of the Democrats are advocating, and which received the highest backing of business leaders according to the survey.
In addition, politicians should focus on reforming corporate taxation, including a reduction in the headline rate, and easing immigration barriers for highly skilled individuals. The silver lining identified in the report was that many of the hurdles to improved competitiveness could be addressed relatively easily. ...
Average annual growth rates of 1.6 per cent in the current recovery lag behind those of any previous rebound since the 1940s, the study found, arguing that the country’s economic performance peaked in the 1990s and has been eroding ever since.
While many studies have focused on the legacy of the financial crash in explaining the country’s muted economic performance, the report found that the challenges were of a longer-term, structural nature. Key barriers identified by businesses were in the ambit of federal government policy, among them reform of the tax code, regulation and US infrastructure. ...
“Political dysfunction is the single largest barrier to US competitiveness,” said Jan Rivkin, a professor at the strategy unit of Harvard Business School.
He said this conclusion was not intended to take the heat off business for having responsibilities, or state and local government, but added: “When you look at the things that are holding us back, many of them fall at the feet of the federal government.”
The breakdown of political co-operation in Congress has made progress in key policy areas elusive in recent years, as evidenced by repeated showdowns over the government debt ceiling and difficulties agreeing long called-for reforms of the country’s haphazard corporate tax code. “The existing political parties have done a pretty good job of locking in the paralysis,” said Mr Rivkin.
Several policy changes that would have clear competitiveness benefits were achievable given the right political will, the study argued. Among them was a boost to infrastructure spending — something both Donald Trump, the Republican candidate, and Hillary Clinton of the Democrats are advocating, and which received the highest backing of business leaders according to the survey.
In addition, politicians should focus on reforming corporate taxation, including a reduction in the headline rate, and easing immigration barriers for highly skilled individuals. The silver lining identified in the report was that many of the hurdles to improved competitiveness could be addressed relatively easily. ...
https://www.ft.com/content/3e3d9776-7ac3-11e6-ae24-f193b105145e
Here is the study.
http://www.hbs.edu/competitiveness/Documents/problems-unsolved-and-a-nation-divided.pdf
Congressional paralysis is the primary cause of competitive erosion on the US economy. That falls on both parties.
Unfortunately, I don't see it getting any better.
