Since I only write about issues of global importance on Davos Newbies, I was struck by this line in Jeff Garten’s Financial Times op-ed this morning:
When it comes to foreign investment by state-owned companies or from sovereign wealth funds, the US and the EU need to set common standards for transparency, ownership and reciprocity. The rules should be enforceable – not milk-toast, voluntary guidelines.
Oh, Jeff. Milquetoast isn’t a word that means soggy toast. It means a sissy. It originates from a cartoon character, Caspar Milquetoast. Someone at the FT should have known that.
Other than language issues, I wonder if Garten is right to tie the growth of sovereign wealth funds and what he calls state capitalism so explicitly to greater regulation. Here’s his worry:
While prudent regulation in selected areas can be justified, the new zeitgeist is likely to produce too much government intervention, too fast. We can expect less productivity, less innovation and less growth, since governments have many goals that the private sector does not. These include employment generation, income redistribution and the aggrandisement of political power.
I think goals of employment generation and income redistribution are exactly what government policy should work towards. And some of the regulations that Garten decries in his piece, such as environmental regulations, strike me as good for individual countries and for the world at large. You don’t have to be a free trade fundamentalist to think free trade is a good thing. Advocating sensible regulation doesn’t make you a milquetoast.