When President Trump announced in August that the federal government took a capital participation in Intel, he boast that the taxpayers had “paid zero” by a company that now “is worth $ 11 billion.” Actually, taxpayers paid a lot: $ 8.9 billion in subsidies with potentially more to come. The government simply dressed the raffle as an investment, which some leaders see how only the beginning.
If you are not deaf for the applause of Secretary of Commerce Howard Lutnick, you will listen to economists from the right and the left expressing alarm. The politicians who choose the winners, subsidized the favored companies and now take government property stakes create the market distortions that the conservatives once denounced.
In addition, acting as a regulator and shareholder generates conflicts of interest at an epic scale. Will Washington regulate Intel with as much force as the company's competitors or inclines the field? The question answers itself.
So worrying that it is the agreement, some policy formulators now say that it should only be an “initial payment” in a sovereign wealth fund (SWF) of the United States. Director of the Kevin Hassett National Economic Council recently said CNBC that “many, many countries” have SWF and suggested that Intel's stake moves the United States in that direction.
This idea is terrible.
More than 90 countries operate SWFS, but look more closely. These funds exist in one of the two environments: in antidemocratic regimes such as China and the United Arab Emirates; or in countries rich in resources such as Norway and Kuwait whose governments generate consistent budgetary surpluses, often of oil and gas revenues that they later invest.
As my colleague colleague, Jack Salmon Center explains A detailed publicationNorway has the largest background in the world. In the last 15 years, average surpluses are also executed equivalent to almost 10% of their GDP. Singapore, often cited by its SWF model, executes an average fiscal surplus of 3.6%. Eau rich in oil publish surpluses of approximately 3%.
The United States has no surpluses, with average deficits of 7% of GDP during the same period. The gross debt of the United States is approximately $ 37 billion, with the congress flirting with adding another $ 116 billion in the next 30 years if you do not reform law programs.
Washington has no spare income; Prests pay bills that include increasing interest on the debt that we must already. Proposing loans even more to play the role of investment administrator is fiscal madness.
SWF defenders argue that the government can exploit an alleged arbitration of “free money” when borrowing at risk -free rate (through treasure values) and then investing at the highest market rate. That premise collapses under scrutiny.
First, interest rates linked to this process are not permanently low; They rise when the debt seems unsustainable, as the United States debt surely. Secondly, even if loan costs seem lower than investment yields, private investors already pursue these opportunities. The US capital market does not have much money. There is no profit for society when the government simply displaces private investors and leaves taxpayers to assume the additional risk and debt.
SWFs are political institutions and, unlike private investors, governments are never disciplined by profits and losses. As the then presidential candidate Barack Obama Once warned in 2008They can be “motivated by more than market considerations.” His portfolios, such as salmon documents, have become playgrounds for lobbying, regulatory capture and ideological crusades.
In Australia, successive governments have redirected the “future background” towards politically convenient projects. In New Zealand, the “retirement fund” has been disintected from politically disadvantaged investments. The South Korean fund has been repeatedly restructured by bureaucratic internal struggles.
Strictly speaking, these three are not funds of classical sovereign wealth, but that distinction is irrelevant here. Once governments are grouped and invest great sums outside the normal budgetary processes, money is politicized. The evidence is overwhelming that the funds become capitalist tools of vulnerable to the changing political winds and the creep of the mission. They do not isolate market policy; They inject politics into each investment decision.
An American SWF would strengthen the search for rentals on an invisible scale from the New Deal corporate experiments. Image billions directly in actions and bonds, and Washington decides which industries deserve support. Imagine political decisions on energy, technology, labor standards and even foreign relations defended by government financial participation.
Once uncle Sam begins to acquire slices of corporate cakes, the temptation to direct the regulation to protect his wallet will be overwhelming. And for those on the right who think that Republicans have the right values to achieve this, remember that it will not always be in power.
We do not need another subsidy machine disguised in investment. We have something better: the American economy itself. The best way to strengthen it is not through bureaucrats who buy actions, but promulgating structural reforms to strengthen each sector for each worker and consumer. That means reducing regulatory barriers, restricting spending and setting rights.
Veronique de Rugy He is a senior research member at the Mercatus Center of the George Mason University. This article was produced in collaboration with the creators Syndicate.
