Okay, just exactly what is it that we don't like about sovereign wealth funds? The Swoop, with customary brisk efficiency, declares (link):
[C]oncerns are rising that these government-controlled investment vehicles lack transparency. Their potential access to sensitive US infrastructure and technology has raised questions of national security.
This doesn't quite wash. We are (or should be) concerned about lack of transparency with any investment. Access to sensitive stuff is superficially more appealing, but we don't seem to worry about access to sensitive stuff with, e.g., Blackwater or Halliburton or Carlyle. Anyway, if you are a hairy-chested libertarian, why should it matter? If states don't matter, why do we care that the investor happens to have the name of "state"?
My friend Ignoto thinks the problem is simple racism: we don't like brown people as investor/owners. I won't exclude this possibility; but it would be interesting to see how we would respond to a sovereign wealth fund of, say, Swiss or Swedes (quaere, what do the Norwegians do with all that oil money?).
I can offer an objection to sovereign wealth funds that has nothing to do with any of the above: I mean the abuse of sovereign power--monopoly of violence and all that--that allows a self-selected elite to control the rents. Think of all those South American countries where you can surmise a man's military rank from the brand of Toyota he drives. Think of China, where the residuum of the old nomenklatura continues to thrive for its own benefit only (Russia, where the billionaires get some competion from the state, looks almost benign by comparison). Think of Viet Nam, which has learned how to fashion itself into a Teamsters-style labor contracting operation.
Interestingly, one thing you don't hear anything about is old-fashioned mercantilism. Evidently even the self-perpetuating elites have read their Smith and Ricardo; they know the difference between stocks and flow. Ironically, perhaps it is the semi-sovereign wealth funds--Blackwater, Halliburton, Carlyle--that are the only forces sufficient to keep the sovereign wealth funds even remotely honest.
Afterthought: I think that line on "mercantilism" is probably wrong, but I have to give it some thought. More anon.
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What do the Norwegians do? What you would expect: they invest according to their conscience.
http://www.nytimes.com/2007/05/04/business/worldbusiness/04norway.html?pagewanted=2&_r=1&sq=norway%20sovereign%20wealth%20fund%20invest&st=nyt&scp=3
Maybe your friend is right, maybe we don't want brown-skinned people gaining control of our companies. And maybe we just cloak that with arguments suggesting it is a moral issue: that we don't agree with the way they might invest (China is Sudanese oil). Not sure we (the U.S.) have a much better claim to the moral high ground here. Certainly not as good a claim as that of Norway.
Personally, to my mind, the Norwegians come across as naive, but in that wonderfully Scandinavian manner. I suspect their view will change as the outside world closes in and the oil fund begins to dry. I suspect the Norwegians are, in their heart of hearts, more pragmatic than idealistic.
Which leads me to think that we're just being the same. Maybe economics ultimately suggests otherwise but, as a political matter, it just plain doesn't feel right to let a bunch of foreigners bleed off profits for their own purposes.
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