[[{“value”:”That is the topic of my latest Bloomberg column, here is one excerpt: It is true that the expected rate of return of the US stock market is higher than the US government’s borrowing rate. But what matters is the net social increase in investment value, not the nominal returns on the government’s portfolio. If the government buys some
The post Against an American sovereign wealth fund appeared first on Marginal REVOLUTION.”}]]
That is the topic of my latest Bloomberg column, here is one excerpt:
It is true that the expected rate of return of the US stock market is higher than the US government’s borrowing rate. But what matters is the net social increase in investment value, not the nominal returns on the government’s portfolio. If the government buys some of my mutual funds, for instance, and it earns the 7% return that I would otherwise have earned, there is no net increase in social value. On paper, the sovereign wealth fund looks like a big success, but the government has simply issued more debt and redistributed some equity returns away from the citizenry and toward itself.
To the extent the government can initiate new investments and “pick winners,” it could boost overall social returns. But that is a far trickier endeavor than just putting funds into the stock market. And just as Democratic administrations have encouraged or mandated labor and diversity standards for many government subsidies and contracts, they might impose similar requirements on US SWFs — which would then be eliminated, or revised, under a Republican administration.
Recommended, there are other significant arguments at the link.
The post Against an American sovereign wealth fund appeared first on Marginal REVOLUTION.
Current Affairs, Economics, Uncategorized
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