2015’s Investment Heroes

By Eli Love

The Progressive Policy Institute’s (PPI) recent report, “U.S. Investment Heroes of 2015: Why Innovation Drives Investment” highlights companies that are leading the way by investing domestically and details reasons for our country’s current “investment drought.”

The investment drought is a recent trend identified by PPI defined by a decline in business capital spending in the U.S. economy. This is troublesome because “sustainable economic growth, job creation, and rising real wages require domestic business investment.” While innovation is occurring at a rapid pace in the telecom, energy, and Internet industries, other sectors of the economy like healthcare, manufacturing, and transportation are finding themselves left behind.

The companies that are investing domestically are providing tangible benefits to American consumers. For instance, Amazon continued to invest in its technology infrastructure and cloud computing platform Amazon Web Services (AWS) which stores the majority of its servers in the U.S. AWS provides reliable and low-cost infrastructure services to businesses in the form of cloud computing. Whether or not your small business needs to store more data, launch a website, or distribute content at low costs, AWS gives business owners the ability to do so. Investments like these are critical to maintaining the openness of the Internet as a platform for entrepreneurship, giving business owners the flexibility they need for success.

AT&T and Verizon, who rank one and two respectively on the list, are investing tens of billions of dollars to upgrade and maintain our country’s wireless and wireline networks. Doing so ensures that the United States continues to lead the world in 4G LTE by providing consumers with the fastest speeds. Your ability to quickly stream video, run multiple apps, and surf the web on your phone are direct results of the investment telecom companies are making to ensure the quality of their networks.

The top investment heroes, companies like AT&T, Google, and Verizon, exist in industries that are innovating rapidly. This in turn creates new markets and new opportunities for further investment. “Uneven innovation,” or rapid innovation in some industries coupled with stagnant advancements in others, “leads to a lack of investment, weak productivity growth, and sluggish growth of real wages.” While telecom, energy, and Internet companies are leading the way, what needs to happen to bring the rest of the economy up to speed?

First, according to the PPI, government policy should be focused on encouraging inclusive innovation. To do this, government needs to remove burdensome regulatory frameworks that discourage industries like healthcare from maximizing investment opportunities. In addition, the FCC’s recent decision to regulate broadband providers by imposing Title II regulations already seems to have had a negative effect. In the first half of 2015, telecom companies are spending at an 11% slower pace than this time last year.

Second, a focus on tax reform that, “imposes a lower rate on investments in intellectual property such as patents or copyrights” will go a long way towards rectifying a disparate economic climate.

Policymakers need to place a greater emphasis on innovation and domestic investment because over-regulation plus a tax system riddled with inefficiencies and inequities harms not only the economy, but hardworking Americans as well.



Eli Love is chief of staff at CALinnovates.