Here’s a letter to the New York Times:
Editor:
Sen. Marco Rubio asks Americans to trust him and other government officials with the increased power necessary to carry out U.S. industrial policy (“We Need a More Resilient American Economy,” April 21). But the senator proves himself unworthy of this trust by building his case on several tropes that have repeatedly been exposed as false.
A core fallacy peddled by Sen. Rubio is that American corporations focus on short-term results at the expense of long-term growth. The rise in the real value of the Dow Jones Industrial Index over the past 40 years should alone be enough to disprove these claims of short-term focus: how could the real value of corporations rise over such a long time span if managers and shareholders consistently sacrifice long-run growth for short-term gains?
But if more evidence is wanted against Sen. Rubio’s lazy repetition of a popular fallacy, see the research of University of Chicago business-school professor Steven Kaplan who, after asking “are U.S. companies too short-term oriented?,” found “little long-term evidence that is consistent with the predictions of the short-term critics.” Prof. Kaplan’s finding is consistent with facts with which Sen. Rubio’s claim is not – for example, business R&D spending as a share of U.S. GDP has risen steadily over the post-WWII era, and even accelerated a bit starting in the early 1980s, and U.S. manufacturing capacity was, immediately prior to the onset of the covid-19 crisis, just shy of the all-time high that it hit in 2008 and nearly 150 percent higher than it was in 1980.
If Sen. Rubio must build his case on fallacies, we must conclude that his case is rickety beyond repair.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
