Russell's Blog

There were a lot of remarkable things about Obama's campaign, but one of the most significant aspects is that it was funded by millions of ordinary people who could only muster small donations. I've been thinking a lot about how that model could be turned bigger problems. Here's what I've come up with so far.

Most people set aside part of each paycheck for a variety of things. 6.2% of each paycheck (up to $102,000) pays for contributions to Social Security, 1.45% goes to Medicare. Then there is income tax withholding, contributions to 401k plans, health plan co-payments, and so on. I think we should create an additional voluntary withholding item with a variable rate that would feed into a fund that invests in revenue generating national infrastructure.

The idea is to offer taxpayers an investment option with a risk profile somewhere between Social Security (which is designed to be a sure thing) and a 401k (which can be lost completely). Contributions would be invested only in critical national infrastructure projects, like transport and renewable energy. The investments would be structured so that they would pay dividends. For example, the fund could build wind turbines, and the dividends would come from the electricity revenue.

This would help solve three problems :

• It would give taxpayers a relatively safe investment option. The dividends might fluctuate from year to year, but the investment could never be lost. This would provide a nice compliment Social Security and a 401k.
• It would create a pool of money designated for projects of crucial national importance. The fund would be big enough that it could invest on a scale impossible for private equity. Also, the focus on generating long-term reliable revenue instead of capital gains would allow the fund to invest on a much longer time horizon than most private equity.
• It would bring patriotism, volunteerism and ecological-mindedness into alignment with individual financial self-interest.

I suppose similar things exist in the private sector already, mainly in the form of green mutual funds and suchlike. I've never been very impressed with them. Mutual mostly seem to focus on capital gains, which seems like a crummy way of monetizing basic infrastructure like electrical generating capacity. These funds are also generally very small, which means they cannot invest directly in projects and they have high overhead expenses.

I'm not interested in yet another speculative investment option. The private sector does a good job there, and doesn't need to be duplicated. I'm thinking of a different sort of model, more like social entrepreneurism, but with mass-participation.