New Sovereign Wealth Fund: Trump's Order

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Post on Feb 04, 2025

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New Sovereign Wealth Fund: Trump's Order – A Deep Dive into Executive Order 13877

On December 20, 2019, then-President Donald Trump signed Executive Order 13877, establishing a new sovereign wealth fund, officially titled the American Technology and Competitiveness Fund (ATCF). This move sparked considerable debate, raising questions about its purpose, funding, management, and potential impact on the US economy and geopolitical landscape. This article will delve into the details of the executive order, exploring its rationale, potential benefits and drawbacks, and its legacy in the context of broader discussions surrounding national economic competitiveness and strategic investment.

The Genesis of the ATCF: Executive Order 13877

The executive order framed the creation of the ATCF as a critical response to the growing economic and technological competition from China and other global rivals. The order cited concerns about the vulnerability of the US technological sector to foreign influence and the need for proactive measures to ensure American dominance in key strategic areas. National security was explicitly cited as a primary driver behind the fund's creation.

The ATCF's stated goals included:

• Boosting American technological leadership: The fund was intended to invest in cutting-edge technologies, fostering innovation and ensuring the US remained at the forefront of technological advancement.
• Counteracting foreign influence: By investing in critical technologies, the order aimed to reduce US reliance on foreign entities and counter the potential for foreign governments to leverage technological dependence for strategic gain.
• Supporting domestic job creation: The expectation was that investments made by the fund would stimulate economic growth and create high-skilled jobs within the US.
• Securing critical supply chains: The executive order underscored the importance of securing domestic production of essential technologies, thus reducing vulnerabilities to foreign disruptions.

Funding Mechanisms and Governance Structure

The executive order was notably vague regarding the ATCF's funding mechanisms. While it didn't specify a precise funding source, it envisioned leveraging both public and private capital. Several potential funding avenues were suggested by experts at the time, including:

• Government appropriations: Direct funding from Congress through the annual budget process.
• Investment from private sector: The order anticipated partnerships with private investors, leveraging their expertise and capital to amplify the fund's impact.
• Reinvestment of returns: The fund was expected to reinvest its profits to generate further growth and expansion.

The governance structure of the ATCF was also left relatively undefined in the executive order. It envisioned a board of directors composed of individuals with expertise in technology, finance, and national security. However, the precise composition and appointment process for this board were not specified, leaving room for future regulatory actions to clarify the details.

Potential Benefits and Drawbacks

The proposed ATCF, despite its ambition, faced potential benefits and serious drawbacks.

Potential Benefits:

• Strategic Technological Advancement: By focusing investments in critical technological sectors, the fund could have fostered breakthroughs in areas such as artificial intelligence, quantum computing, and biotechnology, strengthening US competitiveness.
• Job Creation and Economic Growth: Investments could have stimulated economic growth through the creation of high-paying jobs in innovative industries, benefiting both the national economy and individual citizens.
• Enhanced National Security: Reducing reliance on foreign technologies and strengthening domestic production in critical sectors could have enhanced national security by mitigating vulnerabilities.
• Attracting Private Investment: The fund’s presence could have attracted additional private investment into strategic technological areas, creating a multiplier effect.

Potential Drawbacks:

• Lack of Transparency and Accountability: The vague nature of the executive order regarding funding and governance raised concerns about potential lack of transparency and accountability in the fund's operations.
• Potential for Political Interference: Concerns existed that the fund could be susceptible to political interference, with investment decisions driven by political considerations rather than purely economic or strategic ones.
• Market Distortion: Government intervention in the market through a large sovereign wealth fund could potentially distort market mechanisms and create unintended consequences.
• Inefficient Allocation of Resources: There was a risk that the fund's investments could be inefficiently allocated, failing to achieve their intended objectives despite substantial financial commitments.
• Limited Scope: Focusing only on technological sectors may neglect other equally important industries for national economic strength.

The ATCF's Legacy and Unfulfilled Potential

Ultimately, the American Technology and Competitiveness Fund, as envisioned by Executive Order 13877, remained largely unrealized. Despite the stated intentions and the urgency highlighted in the executive order, the fund was never fully established. The lack of concrete details regarding funding and governance, coupled with shifting political priorities, contributed to its failure to materialize.

This non-implementation highlights the challenges of translating ambitious policy goals into tangible action, particularly when dealing with complex economic and political dynamics. The debate surrounding the ATCF continues to serve as a case study in the challenges of strategic national economic planning and the difficulties of implementing large-scale governmental investment initiatives.

The discussion surrounding the ATCF, however, is not entirely closed. Its conceptual underpinnings—the need to enhance national technological leadership, secure critical supply chains, and counter foreign technological dominance—remain highly relevant in the ongoing geopolitical and economic landscape. The future may see similar initiatives emerge, potentially learning from the shortcomings of the ATCF's initial proposal to create a more effective mechanism for achieving these crucial national goals. The legacy of Executive Order 13877 serves as a cautionary tale and a blueprint for future efforts in this critical area. Further research and analysis are needed to fully understand the implications of this unrealized initiative and its potential long-term effects on the US economy and global technological competition. The lessons learned from this attempt should inform future strategies for fostering national technological leadership and economic security.