Creation of a USA Sovereign Wealth Fund in Development
The President has ordered his administration to formulate a plan to create a sovereign wealth fund. These funds have been used by nations around the world for investing and supporting their national expenses with the proceeds. Some examples are the Norway Wealth Fund, Saudi Arabia Public Investment Fund, Alaska Permanent Fund, and the Texas Permanent School/University Fund. There are also more than a dozen other similar funds at the state level in the USA.
These funds have different purposes, revenue sources, and management styles. Business Insider explains that people are largely familiar with public pension funds that invest retirement savings for millions of teachers and other city, county, and state employees. Sovereign wealth funds, on the other hand, are similar, but they invest on behalf of an entire state or country. While pensions invest money that needs to be repaid in the future, such as employee retirement savings, sovereign wealth funds tend to have a surplus of money stemming from a natural resource, oil being a common source, but can also include helium, lithium, and other natural resources.
James Broughel, a senior fellow at the Competitive Enterprise Institute, a nonprofit that advocates for deregulation, pointed out that the fact sheet accompanying the executive order alludes to $5.7 trillion in existing assets. “The US does have considerable natural resource wealth,” Broughel said, noting that the US is now the largest oil producer in the world. He added, “There is a case to be made that we should take better care of the assets we have and be better stewards for maintaining their value over time and preserving them for future generations.”
Sovereign wealth funds are also a type of open-source style strategy, also known as Geoism, where the economic rent derived from land and natural resources belong equally to all members of society in common share. Geoism is concerned with the distribution of economic rent caused by land ownership, natural monopolies, pollution rights, and control of the commons, including title of ownership for natural resources and other contrived privileges such as intellectual property.
Proper investment can help to facilitate massive growth as well while proceeds help to pay for schools as in Texas, utilities or infrastructure as in Saudi Arabia and other oil rich Middle Eastern nations, or other common needs within a state or country such as a citizen’s dividend or basic income as in Alaska. How they operate can be as far ranging as their sources of revenue, but they are typically managed by a board or organization that needs to be transparent and made accountable to the public. Depending on the country of origin, some Sovereign Wealth Funds tend to be more corrupted than others.
While sovereign wealth funds are a beneficial way to improve the lives of the public they serve, they also need to be publicly transparent using open-source methodology to keep them operational within the public trust. The creation of a USA Fund will be an interesting one to watch and see how development is handled. We will continue to report on the progress.
