Thread

1. baron816 · 1790866833 · focus · HN ↗

   Summary of why sovereign wealth funds are generally a bad idea: the governments don’t like to do things that could potentially harm their investments. If a government has large stakes in cigarette companies, they’re going to be resistant to regulate them.

   There’s also plenty of opportunity for corruption. But even with safeguards, there’s going to be opportunities to steer investment towards favored companies and industries and away from those that oppose the administration or otherwise do things the administration doesn’t like (think of efforts to divest from Israel or fossil fuel companies).

   “Just invest in the S&P”. Something like this would give substantial power to the index makers. But it also gives preference to already huge companies. Small, unlisted companies would be indirectly penalized by having to compete against companies with government funding.

   1. geysersam · 1790872508 · focus · HN ↗

      This is theory. If we look at the real world, do sovereign wealth funds typically invest in cigarettes? I don't think so. I think they typically have more stringent ethical guidelines than most regular funds.

      I'm typically not in favor of sovereign wealth funds anyway. Because I don't buy the idea that the free market is always more efficient than the public sector, and if that's the case then investing the funds in the public sector, schools and improving health and social outcomes, is better than buying SpaceX even if they're going to the moon.

      Of course there are exceptions.. if a country has more money than they know what to do with, it makes sense to pile it.

      1. voxic11 · 1790872804 · focus · HN ↗

         Its not a sovereign wealth fund, but China 100% owns China Tobacco and has generally avoided policy changes which could encourage people to stop smoking because it could hurt this extremely profitable company (China Tabacco has about 2x the before tax profit of Apple). <a href="https:&#x2F;&#x2F;www.theexamination.org&#x2F;articles&#x2F;deadliest-company-in-the-world" rel="nofollow">https:&#x2F;&#x2F;www.theexamination.org&#x2F;articles&#x2F;deadliest-company-in...

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