Suppose we wished to create (literally) trillions of dollars for the global economy without too much drama. What could we do? My suggestion for a new Alexandrian paradigm for global value accretion looks like this. First, we get the United Nations to play referee, setting perhaps some of their smarter economists over the matter as a council. Then they coordinate a new kind of investment program, which (of course) has never been attempted before. Innovation is what drives free markets, and innovation is positively Alexandrian.
The idea is to have nations use some of the tax money they collect for investment in a global, national co-op, with a staggered entry into the worldwide stock market — carefully calibrated to create “a rising tide” that floats all economic boats. Consider the large amount of (total) money collected by nations in taxes each year. Suppose they collectively pooled their resources (but not purchasing the same assets so as to avoid collusion) by each using, say 20% to invest diversely and broadly in the global economy (stock market with other investment instruments like REITS).
This large amount of money entering the markets would (of course) cause speculation or added momentum, giving rise to a bit of volatility — but all in the upward direction, with some “ringing of the register” (selling some shares to procure sound profits) going on at the same time. Each nation entering the investment market would help all the others who had already done likewise, and would create the momentum for the next entrants as well. This is called “synergy,” the mutually reinforcing support of all the component parts (Yogi once said “It’s like a vicious cycle, only without all the vice”).
This is, I believe, the closest thing to sure money, with almost zero risk. The velocity of the rising tide is also carefully managed by the referee (like the Fed in the US economy with the FOMC sets the overnight and prime lending rates, or “price of money” to slow or accelerate the rate of growth here). The mutually reinforcing nature of the staggered investments creates a momentum that can be perpetuated almost indefinitely. Here’s how to do that.
Each nation, or set of smaller nations, invests its money at an appointed time to ensure a relatively smooth rising tide, playing against the speculators that jump in (which is good). They then put their money into an irrevocable (national) trust, which is used to pay down the amount of taxes citizens of each nation must pay. Lower taxes over time draws foreign investment, since businesses are future-oriented entities. In subsequent years, after the year of entry into the markets, each nation takes (say) 5% of its collected taxes and buys more of the same securities or derivatives (or what have you — warrants are a must-have under these conditions) or adds a new best-of-breed purchase to its holdings.
This continues the “rising tide” effect indefinitely. This is why the trusts so held by each nation MUST MUST MUST remain irrevocable by international law — with help from the ref (U.N.). This drives the markets upward indefinitely in principle, but perhaps with diminishing returns at some point — who knows where or when I cannot say. Perhaps the rate of return will not diminish. But it would rise nevertheless.
There is no good reason not to do this, and it would in fact create trillions of dollars for the global economy and probably indefinitely, given the fidelity of the participants to maintain the inviolability of the trusts. This would create an enormous number of jobs worldwide, with an economic boom, and with near zero risk, given the sound coordination and management of entry by the nations and speculators. Only the short-sellers would get crushed, but the volatility factor they represent is best removed from the markets (as a liability) anyway. Sorry hedge funds.
Finally, the nations should set apart a small percent of their gains to create a single (again irrevocable) charity trust to use to fund the medical and other basic needs worldwide — as a kind of charity machine like the one described earlier on this blog. These could create universities or medical research centers, support nations under unique economic burdens. etc
This recipe can and would win — cause worldwide success for everyone — most probably like no economic program ever has. The calibrated and staggered entry of nations into the markets would insure stability as well as general prosperity. Score ten trillion (plus) for the Alexandrians — give or take.