Shiller: Why Citizens Should Be Given Shares Of Nation's GDP

Harvard Business Review:

Corporations use a combination of debt and equity to finance their investments and operations. Nations, in contrast, rely exclusively on debt. When a nation's economy stalls and its debt continues to grow -- you may have noticed this happening a lot recently -- disaster looms for the country’s taxpayers. This is why Europe is in turmoil right now. But things don’t have to work this way.

Here’s an audacious alternative: Countries should replace much of their existing national debt with shares of the “earnings” of their economies.

Read the whole story: Harvard Business Review

Comments

[nothingchanges]

11:07 AM on 02/22/2012

OK, I'll admit, I'm just an old former small business owner, with not a whole lot of formal education.

But I've been around a while.

America's infrastructure is crumbling, over 1/4 of our highways, bridges, water, and sewer delivery systems are either functionally obsolete or structurally unsound.

Interest rates are as low as I've ever seen them.

Why are we not seeing "Infrastructure bonds" flooding the market to fight against this problem AND provide much needed jobs in a stagnating economy?

Retired people would love to get a government guaranteed return on investment for as little as 2%.
Beats the crap out of C.D.'s and there are 100's of Billions of dollars right now parked in low paying C.D.'s

When Wall Street tanks, they tell us "Now is the time to buy" cause when stock prices are low, it's like buying them on sale, even if the economy in general is down the proverbial toilet.

So why is "investing" in US infrastructure any different?

Competition in the construction industry is nearly unprecedented, unemployment is "too damned high", borrowing costs are extremely low.

If not now.............when?

[Michael Gorecki]

09:53 AM on 02/22/2012

This would be a fascinating idea if it was limited to only those taxpayers who contribute to the GDP. What would happen to the concept if a Large, Multi-National bought up a large portion of shares and sold them overseas, or tried to use it as another way to defeat a US Consitution? Using it as Equity and allowing only US Citizens to Invest in America sounds like a fine idea.

[Enrique Iglesias]

10:11 AM on 02/22/2012

How can you control a market that already allows ADR's and other investment vehicles in our markets; haven't you head this is a Global Economy, which essentially means that we in America are responsible for the World...

[J T K]

05:22 PM on 02/22/2012

I think the assumption is that these trills wouldn't be an ownership stake. If that were the case it wouldn't matter who owned them because all they'd be doing is buying the right to a percentage of our GDP and to sell it at a market determined price.

One country could in theory buy up a large stake in another country's trills then try to manipulate that economy for their own profit but that is already possible in other ways. That would also be counterproductive unless they were using derivatives to short that country's trills since hurting an economy is easier than boosting it.