President Obama reportedly will use the SOTU address to push competitiveness initiatives:
Perhaps the clearest came in an overlooked speech in North Carolina last month, one that will likely serve as a template of what the nation is about to hear. Obama said then that making the U.S. more competitive means investing in a more educated work force, committing more to research and technology, and improving everything from highways and airports to high-speed Internet.
Count me dubious on the idea that government spending can boost competitiveness, since it's allocated to political favorites instead of market winners. But at least it's better than industrial policy, I guess.
Anyway, if Obama's serious about boosting competitiveness, he might want to read my article Corporate Governance and US Capital Market Competitiveness:
This essay was prepared for a forthcoming book on the impact of law on the U.S. economy. It focuses on the impact the corporate governance regulation has had on the global competitive position of U.S. capital markets.
During the first half of the last decade, evidence accumulated that the U.S. capital markets were becoming less competitive relative to their major competitors. The evidence reviewed herein confirms that it was not corporate governance as such that was the problem, but rather corporate governance regulation. In particular, attention focused on such issues as the massive growth in corporate and securities litigation risk and the increasing complexity and cost of the U.S. regulatory scheme.
Tentative efforts towards deregulation largely fell by the wayside in the wake of the financial crisis of 2007-2008. Instead, massive new regulations came into being, especially in the Dodd Frank Act. The competitive position of U.S. capital markets, however, continues to decline.
This essay argues that litigation and regulatory reform remain essential if U.S. capital markets are to retain their leadership position. Unfortunately, the article concludes that federal corporate governance regulation follows a ratchet effect, in which the regulatory scheme becomes more complex with each financial crisis. If so, significant reform may be difficult to achieve.Keywords: corporate governance, securities litigation, federalism, Sarbanes-Oxley
