The slow economic growth in the U.S. over the past decade has resulted not from what the world has done to America but what America has done to itself, according to a Council on Foreign Relations study “How America Stacks Up.” It says that the U.S. “depends far more on the global economy than it did two decades ago, and international trade and foreign investment are increasingly vital to U.S.” It also finds that while the U.S. national economy remains by far the world’s dominant one, it has grown less so over that period.
One big reason is that “though the United States once had among the lowest corporate tax rates in the industrialized world it now has the highest.” As the study confirms and Republican tax reformers in Congress understand, those high rates are not big revenue producers because multinationals choose not to bring home their overseas earnings for the IRS to grab.
The CFR report cites two other reasons why capital investment in the U.S., both domestic and foreign, has suffered: the explosion of business regulation, and soaring national debt and entitlement obligations. These burdens cast doubt on the U.S. capacity for further growth. The U.S. continues to “underperform” in exports relative to other advanced economies, the study says.
Rational men and women don’t punish individuals who do them a kindness. So why should we retaliate against a nation that does so? Suppose Canada, as a gesture of admiration for the people of the United States, decided to send us $5 billion worth of softwood lumber each year — for free. Would Trump, or any president, blast the Canadians for their perfidy? Of course not. The benefit to Americans of such a windfall would be obvious to everyone. Thanks to the Canadians’ gift, our nation would be wealthier.