This post is actually about 45's proposed tax code changes. I'll explain the title in a little bit.
I started this morning listening to Michael Krasny and his guests on KQED Forum discussing the "largest tax overhaul in decades." I listened for several minutes to Chris Edwards of the Cato Institute spouting every Republican talking point I've been listening to since the early 1980s about the way tax cuts will free up capital and spur growth and lots of American jobs.
This is bullshit. Living through the last 4 decades, I've seen the country grow when taxes were up and slump when taxes were down. Over my lifetime, the most prosperous period in our history was the late 50s and early 60s, when the top individual tax rate was 90%. Mr. Bruce Bartlett, who worked on the Reagan tax code reform with Jack Kemp in the early 80s, has just written a thorough and detailed explanation, in the Washington Post, of why the Republican "line" is ridiculous, doesn't work, and never has worked. I recommend the article to the interested.
Based on my own life experience, though, I believe there are other reasons lowering taxes will not lead to investment, new jobs, and growth. Here's where the title comes in. I heard that comment, from a senior executive of Bank of America, in the early oughts, shortly after the merger with Nationsbank. The executive was from Charlotte, part of "new management." I don't recall his name.
He was in California, addressing a roomful of (in my humble opinion) some of the best computer technicians and programmers in the world. And he was explaining to the room why all the first level tech support jobs were about to move from the U.S. to India. He claimed it was because there were no Americans qualifying for those jobs by studying computer science in the U.S. I stood up in the meeting and asked him why an American student would
study computer science if all the entry-level jobs were in India. I got
the hairy eyeball from my department head, and no answer. I was also
congratulated by about 5 people after the meeting. I retired a few years later.
You still hear that comment from time to time. It's baloney. There are brilliant computer techs in the U.S. They are older, experienced, and they want to be paid "way too much." This is why most of the programmers working in the tech giants are under 30.
In short, by the 2000s, U.S. businesses were no longer interested in hiring Americans. Partly this is because of automation - factories that used hundreds of Americans to build cars, create textiles, make steel, etc. now have dozens of Americans managing dozens of robots. And these are no longer entry-level jobs. The factories that didn't automate have moved overseas, largely to Southeast Asia; the programming jobs moved to India. I understand some of them are beginning to come back; it won't be enough to replace the losses.
On the issue of "investment", I remember at least one "tax amnesty" in the last couple of decades (sorry, can't recall the date and can't find a cite). There was great flap in the financial news about all the corporate money which would lead to more investment in U.S. industry. What actually happened? Stock buybacks. Increased dividends to shareholders. Investment in new factories? Crickets.
I repeat my belief: large American businesses are no longer interested in investing in America. If you want investment in America, and jobs, you have to look at what the Germans call the mittelstand - small and medium sized businesses with local and specific focus.