The Mordan Domestic Investment Fund

State-owned enterprises are a central feature of state capitalism. Though there are many reasons why the state would own certain businesses, in a state capitalist society the prime function of a SOE is to generate revenue for the government.

Once the Humanist Republic of Mordan will be established, the Mordan Domestic Investment Fund (MDIF) will be responsible for managing Mordan State-owned enterprises. The revenues generated by the export of mineral resources will be the principal source of funding for the MDIF.

Economic development and diversification are the main purposes of the MDIF. Its board will have the authority to set up new enterprises as they see fit. In the long run these state-owned enterprises will be (partially) privatized. This will be an incentive to create profitable businesses, as no private investor will buy shares of unviable companies.

The main reason to set up the MDIF as holding corporation for state-owned enterprises, is to isolate these enterprises from direct political interference. The government owns the MDIF and appoints its board. On its turn the MDIF owns and manages said enterprises.

Most of the dividends earned and profits made through privatization should be reinvested in new enterprises. Only a small portion of the revenues generated by the MDIF will be paid to the government.

As a sovereign wealth fund the MDIF will, of course, pay no dividend nor capital gains tax, as this would make no sense as the money will flow to the government anyway.

The MDIF will be restricted to domestic investments, as is implied by its name. The management of foreign currency assets of the Mordan government will be assigned to the Mordan Foreign Investment Corporation.

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3 thoughts on “The Mordan Domestic Investment Fund”

  1. Will there be an invitation for a free dinner at a nice restaurant? I don’t mind listening to the reasons for the investments if I get a good meal. 🙂 Actually I toss all the invites in the trash.

    1. I am afraid there won’t be such invitation, especially if it will end up in your trash. The MDIF will be government agency and its investments are meant to keep the tax rate for citizens low; so I don’t think many people will actually care about the specific investments and trust their senators with adequate oversight.

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