An American Sovereign Wealth Fund: The Key to American Prosperity?

President Donald Trump has officially signed into law the creation of a U.S. sovereign wealth fund. This is one of the few of his controversial executive orders that have been signed that may have a bit of merit when it comes to addressing the affordability crisis the United States is facing.

A sovereign wealth fund is a government investment fund that pools and manages a nation’s revenues, often derived from natural resources, trade surpluses, or foreign exchange reserves, to generate long term wealth and stabilize the economy. Several economic powerhouses have a wealth fund: Norway,  Singapore, Saudi Arabia, and the United Arab Emirates (Dubai Fund) have used SWFs to diversify their economies, invest in global assets, and provide financial security for the youth. These funds have enabled these nations to achieve high levels of economic stability, global influence, & sustained growth, even during periods of global economic uncertainty, all while empowering their citizenry.

Trump signing the Executive Order 2/3/2023

The fund with the most long term exposure and demonstrated long term practical excellence is Singapore’s Central Provident Fund.

Singapore’s Central Provident Fund (CPF) offers a noteworthy model for the US. In the 1960s, Singapore faced significant economic challenges that necessitated comprehensive reforms. When Singapore became independent the nation faced significant economic challenges. Over 70% of households lived in overcrowded conditions, with a third residing in shanty towns on the city’s outskirts, and more than half of the population was illiterate. The situation was further exacerbated by a heavy influx of immigrants prior to Singapore’s expulsion from the Malaysian political union, leading to an unemployment rate of approximately 15-20%. (Asian Development Bank).

Fast forward 50 years, and Singapore’s transformation is remarkable. The literacy rate has soared to 97.65% as of 2021. The nation consistently ranks at the top globally in educational assessments for math, science, and reading. Unemployment has plummeted to around 2%, significantly lower than the global average of approximately 6%. Additionally, about 90.7% of Singaporeans are homeowners, a stark contrast to the United States, where the homeownership rate is at approximately 50%. This extraordinary progress can be largely attributed to the determination and hard work of Singapore’s populace,  as well as the Central Provident Fund. (Asian Development Bank).

The Central Provident Fund

Singapore’s exponential growth after establishment of CPF

Prime Minister Lee Kuan Yew recognized the potential of the existing Central Provident Fund (CPF), established in 1955 during British colonial rule, as a tool to address economic challenges. The Fund was originally designed as a compulsory savings scheme for retirement, the CPF required contributions from both employers and employees. Unlike traditional social security systems funded by taxes, the CPF allowed individuals to own and control their savings, providing flexibility in how funds were utilized. This structure enabled citizens to manage their accounts while also engaging with private banking institutions.

In 1968, the government expanded the CPF’s scope to include housing, permitting withdrawals for the purchase of government flats. This policy not only addressed housing shortages but also fostered social stability and economic growth. Over time, the CPF’s functions further extended to cover healthcare and education, ensuring that citizens’ basic needs were met and allowing them to focus on personal development and community engagement. These strategic expansions of the CPF were instrumental in transforming Singapore’s economy and enhancing the well-being of its population (Asian Development Bank, n.d.).

After the CPF expanded its focus to housing, enabling citizens to use their savings to purchase government built housing units the homeownership rate is now up to 90% in Singapore. For the U.S., a sovereign wealth fund could potentially support housing initiatives, allowing Americans to leverage tax advantaged savings for home purchases, thereby fostering ownership and equity building. (International Monetary Fund).

Beyond housing, the CPF encompasses healthcare and education, allowing citizens to allocate savings toward medical insurance and lifelong learning. This approach reduces financial burdens and enhances productivity by alleviating concerns over essential services. A U.S. sovereign wealth fund could adopt similar strategies, offering dedicated accounts for healthcare and education expenses, possibly with employer matched contributions to accelerate wealth accumulation. (International Monetary Fund).

Implementing such a system in the U.S. presents significant challenges and hurdles . Political resistance to state managed savings programs and the complexities of federalism could impede adoption. Additionally, effective management is crucial to prevent issues like corruption or market volatility. Nevertheless, the potential benefits such as; reduced wealth inequality, increased productivity, and a buffer against economic downturns- are alluring. (PricewaterhouseCoopers).

While the executive order establishing a U.S. sovereign wealth fund is still in its early stages, Singapore’s CPF demonstrates that integrating state oversight with individual agency can transform citizens into stakeholders. For modern Americans burdened by housing costs, medical debt, and student loans, a similar fund could offer substantial relief and innovate on America’s financial institutions in a positive way.

Richard E. Carroll explores the potential for sovereign wealth funds at both the state and federal levels in the United States as a solution to financial challenges. At the state level, 20 U.S. states have established SWFs to manage natural resource revenues and benefit their citizens. For example the Alaska Permanent Fund, established in 1976, is the most well known, currently valued at over $5 billion. Many Alaskans get dividends from this fund, giving them expendable income for education or subsistence needs. New Mexico has done something similar, reducing the tax burden of the average citizen by about $1,000. I for one am a firm advocate for a SWF.

The Fund could be used to invest in infrastructure projects, such as roads, bridges, renewable energy, and broadband, creating jobs and stimulating economic growth. However, generally Americans are skeptical of government run programs, particularly those involving personal savings and investments. Therefore, building public trust would be essential for the fund’s success, perhaps including an opt out for citizens would be beneficial, but after their decision to opt out they should not be eligible to receive any benefits from the program- which is within their right. However, if the fund is managed properly, a steady stream of income from the SWF, the federal government could reduce income, corporate, or sales taxes, which could in theory put money back into the pockets of citizens and businesses. In essence America would be paying you for contributing positively to the American economy.

Having outlined all of that, the key question is whether the U.S. can adapt this model at the Federal level complicated by its diverse landscape. Time will tell.

Sources:

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  • International Monetary Fund. (2020). Sovereign wealth funds and public savings: Lessons from global models.  

Robert Moses: The Unelected Master Planner

Robert Moses is a figure that’s relatively obscure to the general public. However his influence has had a lasting impact throughout the United States. He would be paramount in engineering how cities in the States were structured, effectively influencing how and where Americans would spend their money.

Who was Robert Moses? Well, to start, he was unelected public official who held about 12 positions in the Greater New York city area. His stints in public office span from 1924-66. The positions he held had tremendous influence over urban planning. Urban planners aren’t often thought of as being political behemoths but Robert Moses’s tenure in these positions forces us to reconsider the influence unelected politicians may have over society.

Mr. Moses was a relentless, effective, and a calculated worker. His ability to start and finish public projects is arguably unmatched within the scope of American history. Furthermore, his ability to manipulate power goes far beyond the scope of anything Machiavelli could have imagined within a democratic republic. Robert Moses wasn’t fully understood or recognized outside of New York until the publication of Rob Caro’s Pulitzer winning book The Power Broker. The book gives us a grandiose look into the Moses. Robert Caro spent years researching for his book which spans roughly 1,300 pages. His scholarship, alongside with years of historical developments since the initial publication, are what guide my analysis on Robert Moses. Through our investigation of Robert Moses we will come to understand how a lot of cities in the United States mirror each other in terms of structure and societal development. And, albeit indirectly, an analysis of Moses forces us to consider a few philosophical questions when it comes to ideal local governance in the United States. But before we attempt to get understand why these two inquires are relevant , we have to investigate the rise of Robert Moses.

 Robert Moses assent spanned various societal backgrounds. His tenure in public office spans three major historical events in the United States. Moses held positions during the economic boom of the 1920s, a crippling Depression in the 1930’s, World War II, and the subsequent post war economic boom.

The 1920’s: The Rise to Power

After finishing up his PhD at Columbia University, Moses decides to enter New York politics as a political idealist motivated to make change. A story familiar to many young professionals who aim to change the “old guard” within political systems. Moses had plenty of issues he wanted to grapple over. The society he was living in was corrupt, had little to no consumer protection, and certain industries were dominated by monopolies. He briefly worked for the Bureau of Municipal Research and with the U.S. Food Commission. But soon he realized that philosophical theories and logic, no matter how beneficial, wouldn’t take you far when it came to political advancement. His initial propositions were brushed under the rug by the seasoned veterans of government. Though his theoretical understanding of politics would come in handy from time to time, his practical education of political power would be where he was able to hone the craft of political power.

After a series of fortunate events  Moses found himself appointed as the chief of staff to a woman named Belle Moskowitz. She was the leader of a commission tasked with organizing New Yorks administrative structure. A responsibility which came with significant power. It’s worthy to note Belle Moskowitz wasn’t elected by anyone. Rather, Moskowitz was appointed by Alfred Smith the Governor of New York. Smith was of course elected. I include these details not to be redundantly informative but rather to highlight the opaque nature of local government when it comes to transparency. People who you may assume are in control are passing that responsibility to an “advisor”, meaning there are various puppeteers pulling the strings. Moses’s time with Moskowitz is where he would learn the “tricks of the trade” in terms local governance. After managing to impress Alfred Smith through the early 1920’s, Moses found himself appointed to his first positions of power. The appointments would lead him to a notorious political squabble with an eventual US president, Mr. Franklin Delano Roosevelt.

The Appointed One & The Fight with Roosevelt.

In 1924 Moses was appointed as the leader of both the Long Island State Park Commission and State Council of Parks. Moses actually drafted the legislation that created the power of these commission earlier in his career. Personally, when I read the names of these positions I didn’t immediately think POWER.  But let’s remember that Moses was calculated.  He strategically used the power that he did have to gain even more power. Being head of these political bodies allowed him unprecedented control over land-use and highway construction. Behind the scenes he usurped control over certain political entities from elected officials. Moses would lobby constituents, politicians, and special interest groups into allowing him to have independent control over land-use and highway development commissions. Overtime he began to resemble a mini dictator. However, his power wouldn’t go unchallenged.

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Young Roosevelt.

Franklin Roosevelt, at the time leader of the Taconic State Parkway Commission, had a political spat with Moses. It all started when Roosevelt had a plan to build a parkway through a region of New York City called the Hudson Valley. Moses had different plans. He managed to funnel all the funds from Roosevelt’s project to his own project. Moses was able to keep the funding to Roosevelt’s project so low that it could barely even maintain operations. Roosevelt complained to the governor that Moses was “skinning” Smith’s administration alive. But nothing happened. Eventually, Roosevelt became governor and eventually his parkway project was completed. Roosevelt had another goal in mind, and that was to remove Moses from power. But the removal of Moses was almost impossible by the time Roosevelt became governor. Robert Moses had set up a powerful base of political independence by using legislation, public funding, the press, and young political reformers to support his positions. He would later spearhead a commission which aimed to consolidate 187 separate agencies into eighteen departments. In just 10 year’s Moses was able to absorb power from potential opponents and build a powerful network to get his projects done. But this was just the start there was much more to come from Robert Moses.

The Depression & Beyond

During the 1930’s the United States suffered an economic depression. During this economic catastrophe Robert Moses would blossom. Ironically, his former rival actually enabled this via New Deal legislation lead by President Roosevelt. Moses was granted even more executive and monetary incentive to solidify his power by the Federal Government. Roosevelt, not forgetting his political tenure in New York, attempted to get Moses ousted by making federal funds available only if Moses was removed from office. Moses wasn’t threatened. He told the press of Roosevelts demands. Subsequently, the Federal Government had to stop after increasing public pressure. But as World War II was being waged, Robert Moses’s influence on New York City began to take shape.  The Master Builder started to work on his vision. One unnamed federal official commented on Moses during this era saying:

“Because Robert Moses was so far ahead of anyone else in the country, he had greater influence on urban renewal in the United States – on how the program developed and on how it was received by the public – than any other single person.”

That quote gives us an insight on the magnitude of power Moses had. He was responsible for many projects ranging from the United Nations Headquarters, Shea Stadium, and the Pratt Institute. But he also led initiatives to spur more highway developments, suburban housing developments, strip malls, and other public amenities. Moses got even better at getting projects done. A common strategy involved starting projects knowing that financially they couldn’t be accomplished , but he would leverage political clout in order to manipulate political officials to complete his projects anyway. While in the depression his projects employed a largely jobless populous during the Great Depression. During this era, he held numerous public positions at the same time. None of the positions required him to be publicly elected.

WWII & The New America

The world dramatically changed after World War II. The United States emerged as an economic and political powerhouse within the International community.  Moses understood this and he wanted to further influence the new world around him. His goal for NYC was one that attempted to integrate an urban center to suburban areas which would all be interconnected via parkways. The bureaucrat’s vision would influence America for the years to come.

After World War II America’s social community began to change. Women entered the work force in droves, the nation was in better economic shape than a lot of nations in the world, and the ideal of “Americanness” began to solidify. What do I mean by Americanness? I mean white picket fences, increased home & automobile ownership, and the development of mass consumerism. After WWII plenty of soldiers came home to start anew. They were incentivized to start “nuclear” families, to buy homes, develop their market skills, and most importantly to spend money in order to expand the American economy. Robert Moses was fully aware of this societal shift. He saw the traditional layout of American cities as archaic and counter intuitive to the world’s economic demands. Small retail owners were dismissed in favor of shopping behemoths

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Robert Moses and NYC Mayor Jimmy Walker.

such as Macy’s, Sears, and the advent of the shopping mall. Local restaurants were forgotten as Dairy Queen and McDonalds slowly became staples in the American diet. Automobiles slowly eliminated the reliance on public transport, allowing people to buy suburban properties further away from NYC.  Moses preferred a sprawl model over concentrated urban communities. And he developed plenty of projects to incentivize the sprawl model. New Yorkers, such as Robert Caro, criticize Moses for destroying New York neighborhoods in favor of vast highways that connected the suburbs to the City. When developing these projects Moses displaced hundreds of thousands of people, destroyed economic centers, and arguably community identity. This led critics to surmise that Moses perhaps preferred automobiles and shopping centers over people. Furthermore, Moses played a part in depleting New York’s resources to develop his projects.  But despite that, the Moses model was in demand in post war America. Plenty of public officials from around the country demanded Robert Moses’s expertise in developing their city plans. This may explain why many American cities, especially in the Midwest, mirror each other in a plethora of ways.

In hindsight Moses’s city planning was a perfect model for a globalized economy. It was predictable; generally people would work a similar hourly schedule, consistently consume products from publicly traded corporations, and, by driving, consumers would

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Robert Moses

support the gas, oil, and automobile industry. This model has its merits. It’s predicable, safe, and allows people to consume their preferred products. However, a community too reliant on the Moses model is more susceptible to global economic crises. This isn’t just a theoretical proposition, practical examples are evident when we look at Detroit and Las Vegas during the 2008 financial crisis. But it’d be remiss to not mention how many new and innovative developments Moses was responsible for. He was able to engineer and execute massive urban plans that did help a considerable amount of people. But at the expense of displacing many people out of their communities. But one of the most disturbing things about Robert Moses is his ability to become an immensely influential political figure without having to get elected into political office.

Moses’s story forces us to think about the type of local (& perhaps national) governments people would prefer. Do we prefer governments that can be taken over by “Mosesesque” figures in order to get long term, and perhaps beneficial, projects done? Or do we want a system that is a bit more decentralized which doesn’t allow any one sole “political will” to dominate? Whatever you prefer, each has its positive and negative implication.

Which begs a peripheral question: How much do YOU know about the unelected officials in your local government? A question to consider.

Sources:

Power Broker by Robert Caro

ROBERT MOSES AND THE RISE OF NEW YORK THE POWER BROKER IN PERSPECTIVE by KENNETH T. JACKSON

A Consumer’s Republic: The Politics of Mass Consumption in Postwar America by Lizabeth Cohen

https://www.pbs.org/wnet/need-to-know/environment/the-legacy-of-robert-moses/16018/

http://fordhampoliticalreview.org/the-legacy-of-robert-moses/