It’s become conventional wisdom that corporate America has fallen victim to myopia and short-termism. Companies are spending billions buying back stock that could have gone to innovation and investment. Corporate executives have compensation packages tied to stock prices, which focuses their attention on quarterly earnings rather than long-term growth. Investors want immediate results, rather than building for the future. Whatever the merits of the short-termism thesis, America’s weakness in capital spending is all too real. The Progressive Policy Institute first noted the “business investment drought” in 2010 and 2011.
Indeed, we started our “Investment Heroes” annual ranking in 2012 precisely to highlight those companies that were investing heavily in the United States. Jason Furman, head of President Obama’s Council of Economic Advisors, gave the keynote talk at a 2015 PPI conference on “Reviving Private Investment” and highlighted how the private investment drought undercuts U.S. productivity growth and, therefore, income gains.
This report continues the annual Investment Heroes ranking again this year by identifying those U.S. companies resisting short-termism and making long-term domestic investments in buildings, equipment, and software.5 We call these companies “Investment Heroes” because their capital spending is helping raise productivity and wages across the country. Further, we use our “Investment Heroes” analysis to help understand the potential causes of the current short-term mentality and discuss some policy options for reversing it.
