The United States is strangling its businesses with excessive regulation and poor policies and needs radical changes to fix its ‘broken’ public education system, infrastructure funding, immigration and the tax code, the chief of a leading heavy construction equipment manufacturer says.
In an address to the Economic Club of Indiana, Caterpillar chairman and CEO Doug Oberhelman called for his country to adopt an ‘economic offense,’ and for the federal government to do their part to help American companies compete in a global environment.
“We’re seeing that many countries have figured out how the US built our amazing economic engine during the 20th Century, and they’re replicating our success as fast as they can,” Oberhelman said, acknowledging that the economy was recovering but adding that the country’s outlook would be better still “if Washington was focused on pulling the right productivity levers.”
“However, while they’re moving forward — we are stuck,” he said. “Washington’s failure to act on key economic issues is significantly threatening future productivity and prosperity. While I do my job to keep Caterpillar competitive, and many states do their job to support business – we’re still waiting for the feds to do theirs.”
High on Oberhelman’s list of gripes is an ‘incoherent’ approach to infrastructure funding, in which multi-million dollar, multi-year projects are funded for only six to 12 months at a time.
He said no one would build a house if the bank assured funding for only part of it such as the foundation and the framing on the basis of trust that the rest of the money would come next spring, and that it was ridiculous to fund infrastructure on such a basis.
Another important area to address, Oberhelman said, was immigration reform. He said America was losing bright international students who came to the US to study but were forced to return home and ‘work for our competitors’ by overly restrictive policies and requirements.
He also believes the four million word long tax code needs dramatic simplification in order to liberate companies and individuals from needing to spend ‘hours and hours’ dealing with compliance.
He said none of that would matter, however, if the country failed to fix its ‘broken’ school system, which in Caterpillar’s case had seen more than half of all applicants even for entry level roles it advertised fail to meet required standards, causing American companies to battle to fill a gap in skills.
Oberhelman’s comments follow a report released earlier this month by the National Association of Manufacturers which showed that America was losing $2.028 trillion in economic growth each year because of costs associated with regulatory compliance.
Oberhelman said the key to competitiveness lay at the level of individual companies, states and the federal government.
He said Caterpillar had adopted an ‘ offensive’ strategy to international competitiveness throughout its history by, for instance, taking on an advancing Kimatsu in its home Japanese market in the 1960s and 1970s and nowadays investing heavily into China – the world’s largest market for construction equipment.
He insisted he is not against government regulation, but stressed the need for such regulation to be effective rather than simply burdensome.
“I understand and agree that business needs to be regulated,” Oberhelman said. “Those who say there’s no room for government in our economy are plain wrong.”
“But we’ve invented smart phones and smart cars – why can’t government invent smart regulations?”