Democrats Should Create a 'U.S. Common Wealth Fund' to Challenge Republican Business Hegemony

The problem with the 'left' in America is that they don't want to play the game any more. They refuse to accept the fact that democracy in America has been co-opted by Big Business and it is now virtually impossible to get it back by simply pointing to the Constitution and jumping up and down screaming, "Unconstitutional! Unconstitutional!"

The game has changed and here's a way for America's left-out to get 'right' back into the game. Pool the financial resources of America's progressives into a 'U.S. Common Wealth Fund.' Very quickly this fund would have at least 7.2 billion in cash. Think about the net worths of America's activists as a subset of American households that hold something like $36 trillion in assets at the end of 2006 according to the WSJ. Let's say that only 10% of America is truly progressive and sincerely cares about the direction the country is heading; that's 10% of $36 trillion or $3.6 trillion. If the owners of this $3.6 trillion in assets were to give just 1% to such a fund it would have $36 billion to work with. To get started, let's say the fund raises just a 20% of the $36 billion available - that's still $7.2 billion dollars. What to do with that $7.2 billion?

This new fund would be modeled on the various Sovereign Wealth Funds (SWF) that have sprung up in Norway, Kuwait, Singapore and elsewhere. The objective of these funds is to mobilize capital in strategic ways per a commonwealth agenda. Absolute returns are not the main objective of the fund; strategic returns are the goal. Norway's strategic SWF, derived from its North Sea oil fields is used to better health and education regardless of whether or not the fund returns absolute cash-on-cash returns. The theory is that bettering the commonwealth results in hard to monetize long term benefits but it is worth perhaps taking a short term risk for that benefit.

One of the goals of the left's new U.S. Common Wealth Fund (USCWF) could be election reform. The fund would be mobilized to achieve this end with the understanding that this might not produce cash-on-cash returns but rather, strategic long term goals-on-cash returns.

It's not hard to pinpoint the source of most of the alleged voter angst. Most of it centers around the primary marker of electronic voting machines, Diebold.

Diebold (DBD:NYSE) is a listed company that's worth about $2.8 billion company. This is not a large cap company. Starbucks is worth around $13 billion and Google is worth about $170 billion and Exxon Mobil about $500 billion.

To take a 20% position in Diebold - a position that certainly qualifies for board representation - is around $500 million in stock. On margin this would cost $250 million. Goosing the margin requirement using various derivative products means you could probably take a 20% position with less than $100 million in cash.

This would use up only a fraction of the fund's 7.2 billion dollar 'buying power' and leave billions left over for more strategic, pro-commonwealth investments.

How about this... the left doesn't like the way the phone companies are collaborating in destroying civil liberties in America. Verizon (VZ:NYSE) is a $100 billion company. $1 billion invested in their stock would buy a lot of influence. If need be, take the company over and shut it down.

What about the employees? Wouldn't that kill the jobs market?

Yes and no. If the employees are thinking purely as instruments of the corporation's pogrom of civility in America; automatons that will do whatever they are told without thinking about it than yes, they would lose their jobs. If the employees are concerned about the commonwealth and the welfare of their country and countrymen than the employees should pressure their employer to conform to the rule of law and the spirit of the Constitution and maybe make a little less this quarter (management cuts their salaries and stock options?) so that employees can keep their jobs.

Also keep in mind that by breaking up monopolies; whether in the telephone, drug, copyright or other cartels would have a net effect of increasing jobs and wages as more companies means more competition. Breaking up AT&T did exactly this. AT&T should have stayed broken up. Unfortunately the parts have been allowed to reassemble back into a monopoly and the results have been catastrophic for democracy and competition in America.

Another issue for progressives is the war in Iraq. More than half the soldiers are private contractors and various war profiteers. CACI and TITAN and Haliburton, too, are publicly listed companies whose stock can be bought up by the USCWF and changes can be made at the board level.

Obviously, cash preservation must be an objective of the fund to keep it viable so keeping 30 - 50% of the fund's assets in properties that offer good upside; like Clean Tech, or Al Gore's new fund, or micro-lending projects that offer high yield in developing countries; would provide high social benefits while keeping the net asset value of the fund constant.

Until 'the left' in America decides to get real and tackle the right's strangle hold of Big Business - by stepping up to the plate and mobilizing their substantial monetary resources and organizing a strategic fund there probably won't be much progress made by progressives.

Comments

[zaneblue]

You, sir, are a genius! If only this could actually happen.

[maxkeiser]

thanks for that comment - but I must say that any genius I have comes from studying what the Founding Fathers were trying to achieve with the original design of american politics and economics. the question then, and now is; how do you incentivize people to work as hard as their imagination and drive wills them to do so without ending up with a plutocracy (like we have now); I think that if you start with that basic proposition, you start to come up with ideas like the one I suggest in this blog. we ameircan's if we understand what the founding fathers were trying to do are all geniuses. let's shut out the royalists on Fox News who are pushing to bring back penury and debt slavery. all we have to do is shut our eyes and remember who we are.

[drkazmd65]

I like the way you think Mr. Keiser,... I'll pony up a couple thousand if this gets off the ground out of my stagnant IRAs.

Think of it as a really bid S&L - pooling money from a connected group for the larger benefit of that whole group. Kinda Capitalism meets Socialism.

[maxkeiser]

it's a myth this idea of pure capitalism and/or pure socialism. in the U.S. for example, the Fed does not operate as a capitalist institution - allowing rates to be set by the market... it acts more like a socialist entity with rates set based on what the Fed believes is a good level. health care in america is mostly socialism for drug companies and capitalism for the people who pay for the gov't subsidies and tax breaks for Big Pharma.at the point of health care at hospital or drug store. The U.S. system, when originally created, was designed for checks and balances that would have the greatest chance of giving the largest number of people a fair shot at equality... the system now is tilted - and I think that we don't need to scrap the system, but we need to re-balance the system... so, yea, I agree with what you're saying... and I think it is possible to use words like capitalism and socialism and still come up with a market efficient system that distributes equality to a maximum number of citizens..

[boogieandjive]

By the way, the first thing we should do with our wealth fund is give the Fed the one million dollars a year they allege it would cost them to print M3. The data is out there, however, one just has to compile it. And M3 is now running at 17% a year!!!!!!!!

We will never be able to build a wealth fund if our wealth is evaporating at 17% a year . . .

http://www.shadowstats.com/alternate_data

So number one priority is to slash Fed's inflationary bailout of bankers and property speculators.

Stop money supply growth to make that which we have worth more!

[boogieandjive]

What a great idea. The Sovereign Wealth Funds of Abu Dhabi, Qatar, Saudi, China and Singapore are bailing out - to the tune of tens of billions - the Wall Street banks. What are they getting in exchange? Probably more of our sovereignty. Imagine if we had our own wealth fund that would retain that sovereignty? And imagine if the bankers had to come to us with their begging bowl.

While that is all well and good, it is about independence. I just don't get it why so many seem to be convinced that being in major debt and having no plans or savings for the future adds up to anything other than a lifestyle that looks free . . . at least in the magazine ad.

[tinyrooster]

I like this idea because it's a longterm strategy that doesn't just copy what the right has done, but sort of leapfrogs it.

[maxkeiser]

good point. it does 'leapfrog' the progressives and rises them above betting into nic picking debates that they always lose because they control very little of the MSM. The economic back bone of the country has to be realigned to better reflect all the interests of all the stake holders. The economy as it is, mostly financial, and not so much agricultural or manufacturing (most of the S&P 1000 profits come from finance); it is necessary for a political opposition party to embrace this reality and do battle accordingly...