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Not Only in Norway

Anders Åslund of the Peterson Institute, with some observations on sovereign wealth funds that former Treasurer Peter Costello should have taken to heart:

Since the Norwegian fund was established in 1990, every incumbent government has lost elections because the opposition has promised all kinds of popular expenditures from the abundant fund. Democratically, it is difficult to defend an excessive public reserve fund.

Åslund also notes that SWFs are profoundly anti-democratic:

They reflect a paternalistic—and economically illiterate—notion that the ruler knows best while citizens are so irresponsible that they cannot be entrusted with their own savings. It would be more economical and democratic to cut taxes and let citizens save and invest themselves.

posted on 05 December 2007 by skirchner in Economics, Financial Markets

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