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Intel CEO: Things Need to Change in the U.S.

By - Source: Tom's Hardware US | B 133 comments

Intel's Paul Otellini predicts that the "next big thing" won't happen in the States unless government policies change.

Monday night Intel CEO Paul Otellini warned government officials that the U.S. will face a huge tech decline if government policies are not altered. In fact, the "next big thing" won't be invented here in the States, and jobs will be created outside our borders.

The warning was part of his observations about the Obama administration and the nation's economy during dinner at the Technology Policy Institute's Aspen Forum. He took aim at the U.S. legal environment, claiming that its become so hostile to business that there could be "an inevitable erosion and shift of wealth, much like we're seeing today in Europe--this is the bitter truth."

He went on to criticize the administration's Keynesian policy of economic stimulus and its inability to understand the concept of creating new jobs. "They're in a 'Do' loop right now trying to figure out what the answer is," Otellini told the audience.

"I can tell you definitively that it costs $1 billion more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States," Otellini said. He also added that the majority of his costs were taxes and regulations not imposed in other countries. If the rates matched those with the rest of the world, outside corporations would have more of an incentive to invest in the U.S.

Former HP CEO and current Republican Senate candidate Carly Fiorina pointed out just a day prior that corporate tax rates are the second highest in the world. Fiorina also said that government policies are pushing jobs overseas rather than making U.S. companies more competitive against international rivals.

Bottom line, if politicians don't cut business taxes, people will not invest in the United States. "They'll invest elsewhere," Otellini said.

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  • 35 Hide
    hellwig , August 25, 2010 7:52 PM
    I normally don't like Intel's business practices, but he makes a good point (read the CNET article for more elaboration). He's not talking about the pressure from the FTC or anything like that. He's talking about the ridiculous taxes and laws that various governments (federal, state, local, etc..) setup that hinder business rather than promote it.

    Remember that Simpson's episode where they were going to film the Radioactive Man movie? The town drove away the movie producers because they started taxing EVERYTHING. Well, that might have been fiction, but lots of communities behave that way. Microsoft would be located in Albuquerque today if it weren't for stupid tax laws in place when Bill Gates used to live there.

    Some small county sees a big corporation and doesn't think "wow, thanks for all those jobs you provide, pumping in money to people's pockets which then gets spent at other shops, benefitting all of us". No, they think "how can we get more of those millions to fund important projects like gold-plated toilets in City Hall and putting up new fancy lights on Main Street to replace those old, drab, yet fully functional lights we already have?"

    My uncle incorporated his business a few years ago. His single largest expense (more that wages, resources, anything) was hiring a business lawyer to make sure he complied with all the ridiculous laws (and he incorporated in Delaware, which was supposed to make it easier).

    The days of forming a company in your mother's garage are done for. Heck, if you try to sell anything out of her garage, the local police would probably bust your ass for zoning violations. That's the main reason you hardly see lemonade stands anymore, them kids ain't got the right permits.
  • 35 Hide
    ohseus , August 25, 2010 7:49 PM
    @2real
    Learn to read. He wants the U.S. economy to be strong. That requires businesses being able to cost effectively do business. Stock holders want a business to do well for stock values and dividends. Keep in mind stick holders are people trying to save for retirement, 401k plans and many retirement funds.

    So if building a plant in the U.S. is more cost effective they will and that makes jobs. Not rich getting richer, everyone being better off.
  • 30 Hide
    azcoyote , August 25, 2010 7:53 PM
    Actually Otellini is 100% right.

    The claim of corporate greed is tired at best...

    Businesses run where they can make money. As a publicly owned company (Intel) it is THEIR JOB to turn a profit. Expecting them to stay in the US from loyalty is not reasonable in a global world economy. It would be nice, but not reasonable.

    So he is spot on....

Other Comments
    Display all 133 comments.
  • 35 Hide
    ohseus , August 25, 2010 7:49 PM
    @2real
    Learn to read. He wants the U.S. economy to be strong. That requires businesses being able to cost effectively do business. Stock holders want a business to do well for stock values and dividends. Keep in mind stick holders are people trying to save for retirement, 401k plans and many retirement funds.

    So if building a plant in the U.S. is more cost effective they will and that makes jobs. Not rich getting richer, everyone being better off.
  • 35 Hide
    hellwig , August 25, 2010 7:52 PM
    I normally don't like Intel's business practices, but he makes a good point (read the CNET article for more elaboration). He's not talking about the pressure from the FTC or anything like that. He's talking about the ridiculous taxes and laws that various governments (federal, state, local, etc..) setup that hinder business rather than promote it.

    Remember that Simpson's episode where they were going to film the Radioactive Man movie? The town drove away the movie producers because they started taxing EVERYTHING. Well, that might have been fiction, but lots of communities behave that way. Microsoft would be located in Albuquerque today if it weren't for stupid tax laws in place when Bill Gates used to live there.

    Some small county sees a big corporation and doesn't think "wow, thanks for all those jobs you provide, pumping in money to people's pockets which then gets spent at other shops, benefitting all of us". No, they think "how can we get more of those millions to fund important projects like gold-plated toilets in City Hall and putting up new fancy lights on Main Street to replace those old, drab, yet fully functional lights we already have?"

    My uncle incorporated his business a few years ago. His single largest expense (more that wages, resources, anything) was hiring a business lawyer to make sure he complied with all the ridiculous laws (and he incorporated in Delaware, which was supposed to make it easier).

    The days of forming a company in your mother's garage are done for. Heck, if you try to sell anything out of her garage, the local police would probably bust your ass for zoning violations. That's the main reason you hardly see lemonade stands anymore, them kids ain't got the right permits.
  • 30 Hide
    azcoyote , August 25, 2010 7:53 PM
    Actually Otellini is 100% right.

    The claim of corporate greed is tired at best...

    Businesses run where they can make money. As a publicly owned company (Intel) it is THEIR JOB to turn a profit. Expecting them to stay in the US from loyalty is not reasonable in a global world economy. It would be nice, but not reasonable.

    So he is spot on....

  • 26 Hide
    proxy711 , August 25, 2010 7:54 PM
    Lets not forget we need to revamp the copy right system. that in itself is a huge hindrance to developing new technology.

    Or all company's will slowly become rambus.
  • 9 Hide
    xenol , August 25, 2010 7:57 PM
    Yes, this guy seems to think about the bottom line, but the fact still remains if this is true. Not enough jobs in the US because companies pay too much in taxes, the poor will get poorer anyway.

    Not to mention I haven't paid a single dime to the IRS since I've entered the workforce. All that income tax? I got that back because I wasn't in a high enough tax bracket. And with enough know how, you could still reclaim a lot of your money that the government took.

    So complaining that I now suddenly have to pay taxes just so I have the possibility of getting a (possibly better paying) job when I pay nothing to the Man sounds like a slap on the face.
  • 17 Hide
    squiggs77 , August 25, 2010 7:58 PM
    Government only grows one direction (bigger) until it gets taken over or falls apart. That's history. There are a lot of governments in this world getting close to the point of falling apart.
  • 4 Hide
    adikos , August 25, 2010 7:59 PM
    i thought we elected change?
  • 4 Hide
    xenol , August 25, 2010 8:02 PM
    2realAre you serious? What'd all those tax breaks Bush gave to the big companies do for the economy? It ruined it as you can see by the recession we have now. The move NEVER trickles down to the middle and lower classes. The people at the top just keep the money for themselves. If you can't see that, then wow...


    Obviously someone hasn't read anything about the economic crisis. I'm probably pulling this out of my rear but I'm pretty sure there was something called unaccountability and irresponsible spending/loaning involved. Or you could start blaming Apple for conspiracy considering they are one of the few companies that had record profits during the recession.
  • 20 Hide
    TeraMedia , August 25, 2010 8:02 PM
    Global Foundries (fka AMD) is building a fab plant here in the US, practically in my backyard. They worked with the gov't to get some tax breaks, and those breaks will ultimately be offset by a net increase in both income and corporate tax revenues.

    As long as they do right by the environment and don't simply try to dump toxic waste somewhere, everybody wins.

    Maybe Intel just needs to learn how to negotiate plant deals better. I'm sure they could learn a trick or two from Wal-mart, the demise of western civilization.
  • 14 Hide
    dirgle , August 25, 2010 8:04 PM
    It's a business not a charity. You wouldn't want to work for free. Your effort is worth something. They are paying an insane amount in taxes for what? It doesn't assist them in any meaningful way. It merely pumps money into failed government programs. So many people act like it's their duty to be forced under the penalty of imprisonment to fund the government and every one that has a symbiotic relationship with the government. It's not there duty to support
    people. Hate the company if you want, don't buy their products if you don't consider them the root of all evil. But using them as uncle money bags is an unacceptable and self destructive practice. And before any body cries Intel fanboy I can assure you AMD and similar feeling on the issue.
  • 18 Hide
    ct1615 , August 25, 2010 8:04 PM
    adikosi thought we elected change?


    we did, we got rid of an incompetent republican who dislikes terrorists with an incompetent democrat who lets terrorists do they as they please...that's change!
  • 0 Hide
    eloric , August 25, 2010 8:05 PM
    Obama is not screwing the country. We have had high corporate tax rates for decades. The regulations have been growing for decades. Our wealth has been leaching to Asia for the last 25 years. Obama needs to listen, and help get it fixed. Don't blame him until he doesn't fix the problem.
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