US President Barack Obama has latched on to a campaign to renew America as the cornerstone of the second half of his current term in office — and perhaps it represents the springboard for his reelection campaign.
But will businesses, including those in the high-tech sector, agree with his clarion call for increased hiring and investment in the country? US companies, according to Obama, are sitting on about $2 trillion in cash and short-term investments, which they could be pouring into the economy through capital expenditure, R&D, and other product innovation and manufacturing initiatives.
“Now is the time to invest in America,” the president said in a speech to the US Chamber of Commerce in Washington on Tuesday. “Many of you have told me that you are waiting for demand to rise before you get off the sidelines and expand, and that with millions of Americans out of work, demand has risen more slowly than any of us would like. But many of your own economists and salespeople are now forecasting a healthy increase in demand. So I want to encourage you to get in the game.”
Will companies “get in the game” and increase hiring? I think they'll do what they believe is in the best interests of their shareholders, and this may not necessarily be what Obama is looking for. Perhaps the more relevant question is: What will it take for American companies to spend some of the money they have on their balance sheet on new jobs? Please let me know.
Economists generally agree that the US economy needs a lot more than the fiscal boost and regulatory easing it received in the dying days of the George Bush administration and in Obama's first year in office. The unemployment rate remains stubbornly high at more than 9 percent, and the economic growth rate is still anemic and well below the job creation and replacement level needed to pull more people into gainful employment.
So, Obama has been doing a lot of talking to parties he believes can help energize the economy. After a rocky start to his relationship with the business community, he has been courting employers and their representative associations. He has also been insisting that America focus on certain industries to distinguish itself in the global economy. It's pointless, it seems, to try to compete against China — why bother producing toothpicks when we can be more productive in selling it aircraft engines?
I agree that American and Western companies should identify and focus on areas where they can add value in the global economy. However, I also believe that several fundamental issues have forever changed the dynamics of global commerce to the point where it has become too simplistic to talk about national rivalry. Today, it's one business versus another, one supply chain versus another, and one product versus another.
Many of the biggest companies we track in the electronics industry, for instance, may have headquarters in the West but generate a substantial portion of their sales and income in the same countries Obama sees as the US's economic rival. For these companies, including big-name businesses such as Apple, Cisco Systems, GE, Intel, and Vishay Intertechnology, the idea of a national border has long faded. Executives scour the globe for not only sales but also ideas, skilled employees, and competitive differentiation. The concept of a “home” base for most of these companies is as archaic as when almost every nation had to have a “national airline.”
This doesn't mean national and business leaders do not need to champion the economic causes of their nations. After all, Obama was elected to head the United States, not the United Nations. In his speech, the president told corporate executives: “Even as we make America the best place on earth to do business, businesses also have a responsibility to America.”
We'll find out soon enough whether the national and business interests have a clear meeting point and how well Obama has made his case.