The Case for the U.S. Government to Get More Involved in the Economy

This morning, I had a conversation with Eric Spiegel, the new CEO of Siemens USA, about his company's diverse portfolio of products and its post-recession performance. Naturally, the conversation turned to the current debate about business uncertainty freezing out the economy. Some folks say the Obama administration's pro-reform, pro-tax agenda toward health care, the financial sector, and the Bush tax cuts are scaring businesses away from making new hires or taking on new big investments.

Spiegel had the opposite take. Siemens, which engineers and sells equipment for the new green economy (among a thousand other things), needs assurances that the government will take more action to tip the scales toward clean energy.

Spiegel mentioned three key areas where Washington's failure to act had created uncertainty. First, the failure of the climate change bill means the country could go years without a carbon price (FLASHCARD here) to advantage clean tech. Second, he lamented the absence of a national renewable energy standard (FLASHCARD here). Third, he expressed concern about the future of the wind turbine investment tax credit, which expires in 2011.

"If you don't do anything on carbon and you don't have renewable energy standards or investment tax credit, every utility company would go out tomorrow and build coal," he said.

This should be humbling for the cut-taxes-and-stand-back crowd that seems to think a laissez-faire government would magically rescue the economy. It's another piece of evidence that "government should remove uncertainty" is a euphemism for "government should enact the laws that make me profitable." For some companies, "make me profitable" might mean simply slashing taxes on income and capital gains, cutting public spending and getting out of the way. For other companies like Siemens, it means government getting in the way. It means putting a new tax on carbon, giving tax money to companies building wind blades, and adding new regulations for renewables.

To be sure, I'm not suggesting that Siemens isn't typically representative, or unrepresentative, of every company in America, or that Eric Spiegel should set tax and regulation policy. I'm merely reporting that a global leader in engineering and manufacturing, and the employer of 65,000 people in the the United States, says it wants the government to get more involved in the economy.

A full transcript of our conversation is forthcoming.

This article available online at:

http://www.theatlantic.com/business/archive/2010/08/the-case-for-the-us-government-to-get-i-more-i-involved-in-the-economy/61240/