Intel CEO Otellini: U.S. faces looming tech decline, says Obama’s ‘Keynesian economics not working’

Apple Online Store“Intel chief executive Paul Otellini offered a depressing set of observations about the economy and the Obama administration Monday evening, coupled with a dark commentary on the future of the technology industry if nothing changes,” Declan McCullagh reports for CNET. “Otellini’s remarks during dinner at the Technology Policy Institute’s Aspen Forum here amounted to a warning to the administration officials and assorted Capitol Hill aides in the audience: Unless government policies are altered, he predicted, ‘the next big thing will not be invented here. Jobs will not be created here.'”

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McCullagh reports, “The U.S. legal environment has become so hostile to business, Otellini said, that there is likely to be ‘an inevitable erosion and shift of wealth, much like we’re seeing today in Europe–this is the bitter truth.’ …Otellini singled out the political state of affairs in Democrat-dominated Washington, saying: “I think this group does not understand what it takes to create jobs. And I think they’re flummoxed by their experiment in Keynesian economics not working.”

“Since an unusually sharp downturn accelerated in late 2008, the Obama administration and its allies in the U.S. Congress have enacted trillions in deficit spending they say will create an economic stimulus — but have not extended the Bush tax cuts and have pushed to levy extensive new health care and carbon regulations on businesses,” McCullagh reports. “‘They’re in a ‘Do’ loop right now trying to figure out what the answer is,’ Otellini said. As a result, he said, ‘every business in America has a list of more variables than I’ve ever seen in my career.’ If variables like capital gains taxes and the R&D tax credit are resolved correctly, jobs will stay here, but if politicians make decisions ‘the wrong way, people will not invest in the United States. They’ll invest elsewhere.'”

McCullagh reports, “Take factories. ‘I can tell you definitively that it costs $1 billion more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States,’ Otellini said.”

“The rub: Ninety percent of that additional cost of a $4 billion factory is not labor but the cost to comply with taxes and regulations that other nations don’t impose,” McCullagh reports. “(Cypress Semiconductor CEO T.J. Rodgers elaborated on this in an interview with CNET, saying the problem is not higher U.S. wages but anti-business laws: ‘The killer factor in California for a manufacturer to create, say, a thousand blue-collar jobs is a hostile government that doesn’t want you there and demonstrates it in thousands of ways.’) ‘If our tax rate approached that of the rest of the world, corporations would have an incentive to invest here,’ Otellini said. But instead, it’s the second highest in the industrialized world, making the United States a less attractive place to invest–and create jobs–than places in Europe and Asia that are ‘clamoring’ for Intel’s business.”

Full article here.

[Thanks to MacDailyNews Readers too numerous to mention individually for the heads up.]

130 Comments

  1. The only intel product I bought in the last 3 years is in my MBP. If it wasn’t inside an Apple product I wouldn’t have bought it. If the Apple laptop cost $100 more because it was made in California, would I have bought it? Yes.

    Build a good product Make it known, and enough people will support you. How hard is that to understand?

    We will see how long the boom in China lasts.

  2. Yet these guys give money to these poticians and then complain. Support the progressive agenda but don’t give a you know what about the conditions for workers creating these magical and revolutionary products. You made your bed guys, now lie in it.

  3. Even the used-to-be-funny-a-long-time-ago-on-another-network David Letterman seems to have finally figured it out:

    </i>Obama has faced criticism for his latest vacation, his sixth since taking office. At a time when painful unemployment numbers continue to bear down on the tattered economy, many are frustrated that the nation’s leader is enjoying another luxurious trip. On CBS’ “The Late Show” Tuesday night, David Letterman took a jab at the president, saying: “He’ll have plenty of time for vacations after his one term is up.”</i>

    http://newyork.cbslocal.com/2010/08/25/letterman-knocks-obama-for-latest-vacation/

  4. Keynes espoused increased government spending to stimulate an economy, and decreased government spending to combat inflation. Keynes said it is impossible to have inflation and recession at the same time, but that’s exactly what we had during the Carter Administration.

    Keynes’ theories required government budgets to return to balanced once the desired effect was accomplished. Since Lyndon Johnson’s “War on Poverty”our government, led by Progressives and Liberals, has adopted an attitude that deficit spending is good, and ignored all evidence to the contrary.

    Democrats still hold to Keynesian theory because, as socialists/communists, they feel a government controlled economy is better that free capitalism (where market forces correct excesses in demand and/or supply).

    The experiment (spearheaded by Frank, Dodd, Waters, Pelosi, Reid, Shurmer et al) to let anyone that applied get a real estate loan (whether they qualified or not) has failed, and now no amount of stimulation is going to overcome the market forces correcting the excess.

  5. @ acid:

    Your MBP would cost far more than an extra $100 if it were made in California. That’s Otellini’s point – taxes, regulations, etc. are making it too expensive for companies to even build factories and other facilities (other than office space) in the U.S., so they are forced to go overseas.

    You don’t see Chinese companies wanting to build products here, do you? Or anyone else for that matter. That’s because it’s cheaper to build elsewhere and ship it here than to build it here (cars being an exception due to their size and thus high shipping costs), even though we have some of the best workers in the world.

  6. Economic strategy is like pruning roses. There are various successful yet contradictory methods of pruning, but you must stick to one. If you keep switching methods too much the results are undesirable.

    There are two sides to Keynesianism: higher taxes and budget surpluses in times of expansion, then lower taxes and more government spending in recessionary periods. The Reagan and Bush administrations turned Keynesianism on its head by flooding an already affluent economy with cash from unfunded tax cuts and unfunded government spending, a very un-Conservative strategy. (This was similar to what the French did in the late 18th century, including the enrichment of the already wealthy.) Ironically, the most sensible budgets in recent years were under the Democrat Bill Clinton.

    The excesses of debt-fueled liquidity was a phony sort of prosperity that had to crash eventually. The idea that yet more debt-funded stimulus is the right response is naive. We must start to live within our means, both individually and in government. This is what the Germans are doing now and it is working very well for them.

  7. m159,

    Wrong. Your “most sensible budgets in recent years” were due precisely to a Republican congress that was swept into office in reaction to Clinton’s leftward tilt. The same thing, but even bigger, hopefully, will happen this November.

    Congress controls the purse strings, not the President. Giving Clinton credit for presiding over huge Democrat midterm losses and then adopting Republican economic beliefs for political expediency is disingenuous.

    Luckily for the US, Clinton is a vain man who held his re-election above all else, so we got Republican leadership on the economy. That’s why the budgets were “most sensible in recent years.”

    Things began to go downhill when Democrats gained control of Congress and idiots like male prostitute-lover Barney Frank (D, MA) decided, among other crackpot ideas, to force banks to loan to those who were obviously incapable of repaying loans.

    Can’t wait for November 2nd!!!

  8. ” Ironically, the most sensible budgets in recent years were under the Democrat Bill Clinton.”

    Yeah right. Two factors made Clinton’s latter budgets look good. The first was the opposition’s willingness to shutdown government (refusing to pass Clinton’s budget). The second was an unexpected tax revenue boom caused by tech spending in advance of Y2K fears and IPOs stemming from a plethora of internet startups. This period was known as the tech bubble.

  9. The US has not had an industrial policy for decades. Except if you consider breaking unions (Reagan) and making it easy to move manufacturing out of the country (Clinton) an industrial policy. Of course regulations need to be cleaned up. What is really needed is a new trade policy that, yes, PROTECTS our manufacturing base and American jobs. Ross Perot was right. That means scrapping our disastrous trade agreements and bringing back meaningful tariffs on imports. Unfortunately, Obama/Summers/Geithner don’t seem to be close to this realization, and most conservatives are way over the horizon (Pat Buchanan excepted).

  10. Riddle me this h8triots: If consumers are not spending during a recession, and businesses aren’t spending b/c consumers are not buying their products, and banks aren’t lending…. just what is it that prevents the economy from slipping into a global depression?

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