Berggruen Institute’s Saule Omarova Releases Plan to Reimagine US Finance and Investment
Proposal for a National Investment Authority offers detailed blueprint for evolution of American capitalism for a time of inequality and global disruption.
The Berggruen Institute has released a white paper proposing a National Investment Authority (NIA), a new public financial entity with flexible power to issue sovereign debt and make investments across the US economy. The lead author is Senior Berggruen Fellow Saule Omarova, The Beth and Marc Goldberg Professor of Law at Cornell University Law School. This paper builds on her previous work to provide details on the entity’s purview, functions, and governing structure.
The NIA would make loans or equity investments across the US economy to promote and ensure sustainable, balanced, and equitable growth. After an initial capitalization, the NIA would be empowered to independently issue debt in capital markets with oversight from Congress. As a public entity, the NIA would be able to make loans and investments at lower cost and over much longer time horizons than current sources of capital.
“Rebuilding America to thrive in a time of COVID-19, climate change, and global conflict requires new democratic institutions for economic stewardship,” said Omarova. “As capitalism has evolved, new tools have evolved with it. The NIA represents the next step in that process.”
NIA-funded projects could include public transit or infrastructure projects; green technology deployments; greater competition in strategically important industries like semiconductors; or growing small and medium-sized manufacturing enterprises. The report argues that the NIA must fund projects that provide substantial returns to the public but are too often ignored by the massive pools of capital that control most investment today. Among other public benefits, such as reduced carbon emissions, the result would be more resilience to inflationary supply shocks and more widespread and widely shared economic growth. The report includes case studies analyzing the potential impact of the NIA on many such projects, including passenger rail, semiconductors, and high voltage direct current power transmission.
The NIA would be governed by an innovative, democratic oversight system that incorporates both congressional and direct public oversight while preserving latitude for operational flexibility. The allocation of seats on the governing board could be regulated to ensure broad representation of economic interests, such as through a requirement that a certain number of seats go to representatives of labor unions or environmental groups.
“In the 21st century, private finance has done a poor job of sparking growth or building resilience to disruptions leading first to underemployment and now to inflation,” said Yakov Feygin, associate director of the Future of Capitalism program at the Berggruen Institute and a contributor to the report. “Widespread prosperity in today’s world needs a more deliberate and democratic process for coordinating resources toward shared goals.”
The Future of Capitalism program’s forthcoming initiatives will further explore the institutional arrangements needed to enable democratic and dynamic prosperity in the US and global economy. These events will include a workshop on the “coordination problem,” which will explore the deeper social questions underlying politics, economics, and resource allocation; a workshop on macroeconomic planning; and a conference on industrial policy.