From Prof Mark Blyth.

Sir, Armeane M. Choksi (Letter, November 1) makes one telling point. The stimulus was indeed badly designed and did not work as planned. It became in many cases a prop for underwater state budgets, which was hardly going to “stimulate” new jobs. But he goes too far in blaming “Obamacare” and uncertainty over taxes as the reason for the continuing slump.

First, countries as diverse as Romania, Iceland and the UK all went into recession in 2008 and are, like the US, struggling to recover. Only one of them has Obamacare and the US tax code. Second, that US companies are sitting on piles of cash and not investing is readily explained by the National Association of Small Business surveys which indicate an anticipated lack of future growth – what used to be called demand – as their critical concern, not “cascading layers of unknown new taxes, new regulations and new uncertainty”.

Finally, it is hardly a surprise that large US corporations are eager to repatriate capital under a tax holiday since this will be their only way of juicing returns this year. Whether this adds to real investment and thus the recovery is an entirely different matter.

Mark Blyth,

Professor of International Political Economy,

Brown University,

Providence, RI, US

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