Private Wealth and Public Goods: A Case for a National Investment Authority
Journal of Corporation Law, Vol. 43, 2018, Forthcoming
61 Pages Posted: 23 Mar 2017 Last revised: 28 Nov 2017
Date Written: March 22, 2017
The American Presidential election of 2016 was won under the rhetorical banner of returning America to its past productive glory. Any such undertaking presents an extraordinary challenge, demanding a correspondingly extraordinary institutional response. This Article proposes precisely such a response. It designs and advocates a new public instrumentality – a National Investment Authority (“NIA”) – charged with the critical task of devising and implementing a comprehensive long-term development strategy for the United States.
Patterned in part after the New Deal-era Reconstruction Finance Corporation, in part after modern sovereign wealth funds, and in part after private equity and venture capital firms, the NIA is an inherently hybrid, public-private entity that combines the unique strengths of public instrumentalities – their vast scale, lengthy investment horizons, and explicit backing by the public’s full faith and credit – with the micro-informational advantages of private market actors. By creatively adapting familiar tools of financial and legal engineering, the NIA overcomes obstacles that ordinarily impede or discourage private investment in critically necessary and even transformative public infrastructure goods. By channeling presently speculative private capital back into the real-economy, moreover, the NIA plays an important role in enhancing the resilience and stability of the U.S. and global financial systems.
The Article makes original contributions not only to contemporary policy debates over how to revive America’s productive prowess and bring its financial system back into the service of the real economy, but also to current theoretical understandings of “public goods” and how to provide them. It offers a more complete and coherent account of such goods as solutions to collective action problems that pervade decentralized markets, hence as goods that can be supplied only through exercises of collective agency. The NIA proposal advanced in the Article operationalizes this theoretical insight by elaborating a specific institutional form that such collective agency can take.
Keywords: Administrative Law, Banking, Bonds, Development, Finance, Financial Markets, Financial Regulation, Infrastructure, Infrastructure Banks, Private Equity, Public Finance, Reconstruction Finance Corporation, RFC, Sovereign Wealth Funds
Suggested Citation: Suggested Citation
By Andrew Tuch