Vic Fleischer has a very interesting post entitled Taxing Sovereign Wealth Funds. Here’s a tiny taste:
The big worry is that these sovereign wealth funds are Trojan horses which will allow foreign governments to shape and influence American enterprise in a manner inconsistent with our economic and national security interests. Even if funds are currently acting in a manner consistent with other, non-governmental institutional investors–and by most accounts they are–there’s no guarantee that they will continue to do so in the future in circumstances where the financial interests of the fund and the political interests of the government that controls the fund diverge. Giving foreign governments partial ownership of companies like Citigroup and Merrill Lynch gives those countries new leverage in foreign policy discussions; sudden withdrawal of foreign state-owned investment could harm the financial services sector of the U.S. economy. Of course, one can also view these investments in a more positive light; China’s investment in Blackstone might help it learn to modernize its own financial infrastructure, a development which would benefit the U.S. and China alike.
A very interesting post & also a model for the use of blogging for early development of scholarship. Check it out!