Obama is asking for ideas, and while I have no faith that they will go anywhere, I sent one in anyways.
Namely, I’d like to see a sovereign wealth fund ultimately responsible to the Treasury, under advisement of Commerce and Labor. The mandate for the organization would include:
- Ensuring restored market liquidity by sheer force of gravity (if possible), or via the right of the stockholder (as necessary).
- Providing venture capital to entrepreneurs, particularly in carbon-negative (e.g. clean energy, public transit, etc.), ecologically renewing (e.g. toxic waste cleanup/disposal, recycling, etc.), and high-tech (e.g. high-speed telecommunications) industries.
- A lender of last resort for stable companies during dire times (e.g. right now).
I also had points about creating a federal credit rating agency, but I think the end goal would be better served by requiring outside audits of credit ratings. I also had a point in there about investing in existing businesses who add jobs in the U.S., but I think you’re guaranteed to have pretty severe corruption in such an investments program, to the point that it undercuts the profitability of the program.
It isn’t a particularly radical idea, most resource-rich countries already have SWFs, and Sarkosy was stumping for this in Beijing weeks ago. Further, it’s my understanding that much of this authority is already held by the U.S. government today. The primary change is reorganizing the disparate authorities into something resembling an investment bank — with the taxpayer as shareholder and a mandate for profitability.
Oversight must be absolutely airtight, perhaps a well-funded adversarial organization within the executive branch (a joint operation by Justice and the SEC which provides their investigators with a petri dish of what nonsense to look for in the private sector — perhaps they will then be able to keep up with changes in the market?) in addition to the more traditional oversight exercised by Congress.
I cannot stress enough that the success of such a program — rather than it’s devolution into a cookie jar of farcical proportions—requires that there be as many people as possible who’s feifdoms depend on rooting out corruption in such a program.
“Namely, I’d like to see a sovereign wealth fund”
Minor problem — to have a sovereign wealth fund, you kinda need some wealth.
…or someone to loan it to you. The U.S. had no problem upping the debt ceiling by $700bn for the bailout.
Sure, and pay for it with the increase in capital gains tax…Since when did it make more sense for the bureaucrats to invest in things rather citizens.
Russ:
Whether an investment bank is owned by a government or private stockholders has no real bearing on how bureaucratic it is internally. It’s the size of an organization, not it’s nominal ownership. The other sovereign wealth funds in existence — the ones who now own large shares of Citi, JPM, etc. — seem to have no more or less trouble than anyone else in this regard.
@Russ, Private sector investment’s doing *great* this year
@Ian McKellar
What kind of private sector you are talking about? State controlled fractional reserve banking system? It is the state intervention that is a cause of current crisis. In banking area free and unregulated market doesn’t exist since decades now.
@James
You are ALMOST right. It is true that the bigger the company the more similar it is to state. However it is huge difference in nominal ownership. Private owner (in free market of course) has resources limited to its own. State however can drain citizens pockets to bitter end.
BTW. Sorry for my bad english.
Hajdai:
…as are you. States are also mandated to provide for the well-being of their citizenry, something corporations (as they have no citizens) are not.
@James:
As long as you believe that majority of citizens has mandate to decide whether money of some minority should be stolen and used for different purposes than intended by owner.
Hajdai:
Since the government issues the currency and bears the costs of maintaining it’s value (and consequences for not doing so), your concept of the ultimate “owner” of money is rather strange. A poor person could just as easily disbelieve the state’s mandate to add a certain percentage to the top of his purchases and use it to defend the rich person’s privilege…
@James:
Government doesn’t bear any costs. Taxpayer does. Government doesn’t also face the consequences for not maintaining currency value. Inflation is mostly sponsored by end receivers of created fiat money: normal workers on salary. In fact inflation can be used to sponsor government. And the only reason why only government issues currency is usage of coercion.
What do you mean by “my concept of ultimate owner of money”?
When it comes to state mandate, what I really want to say is that it is founded on tyranny of majority over minority. And whether you like it or not is also founded on coercion.