I have to say the Brits write well.  The Economist is a wonderfully written magazine which I appreciate even when I disagree.  Americans like me (especially me) are often less artful in our prose... rough, pithy and taunting.  An opinion piece in today's London's Telegraph by Irwin Stelzer is good reading with variety... it has a bit of nuance, a bit of surprise, and a bit of idiocy.

Let's start with the dumb stuff first. Forgive me for quoting liberally.

Gordon Brown and George W. Bush have one thing in common. No, not their brand of toothpaste, nor a fondness for jeans and casual jackets. Nor a willingness to see the Iraq war through to victory. Nor a belief that tax cuts can stimulate economic growth. ...

Both resist efforts to raise barriers to the free flow of goods into their countries, with an occasional politically necessitated lapse on Bush's part. And both favour the free flow of capital and welcome the investment of sovereign wealth funds in their nations' financial and other institutions.

Pure wacko free trader.  But then, he indicts the sovereign wealth funds... governments buying companies in other countries.

The sovereign wealth funds are not like other investors. They are large pools of capital controlled by governments. Governments have political as well as economic objectives.

Vladimir Putin aims to control the flow of natural gas into Western Europe, not just because he wants to maximise the profits from sale of Russia's natural resources. He also seeks political leverage: he can now threaten Western Europe with cold, dark nights if they prove too friendly to America, or too willing to provide Nato with adequate resources, or otherwise offend Russian sensibilities.

So, too, with the massive funds in the hands of Middle Eastern governments. Yes, their investment in Western banks, struggling to restore their balance sheets to some semblance of health after writing off sub-prime and other bad loans, is a blessing for the banks. But there is going to be a sting in the tail.

Consider Norway, hardly a country subject to the political pressures that exist in Russia, China, and the Middle East. It dumped Wal-Mart shares when the giant retailer fought to prevent the trade unions from getting a toehold in its stores. That was a political, not a purely economic, decision.

Or consider this: suppose Russia makes a bid for a major UK utility, such as Centrica, extending its control over energy supply. Or that the China Development Bank expands its $3 billion, three per cent stake in Barclays Bank to, say 10 per cent, which would certainly give it a policy say in the bank's lending policies.

Or that Middle Eastern sovereign wealth funds by their very presence as major owners of US and Western banks deter boards from funding entrepreneurs in Israel, or companies developing alternatives to oil-based fuels.

Is the remedy mere transparency?  Transparency seems like weak tea to me in the face of geopolitical gamesmanship.

Already the International Monetary Fund is calling for more transparency - a long-held Brown goal - on the part of these funds.

And regulators who rely on shareholders to discipline the executives of the companies they own are worried about two problems: either that the funds will be active investors and politicise investment, labour and environmental policies, or remain passive, in which case managements will be free to pursue their own interests rather than those of all shareholders.

Brown won't be able to rely on Adam Smith for intellectual support of unrestricted free trade. His townsman, faced with Chinese currency manipulation and artificial barriers to imports imposed by Japan, would say "There may be good policy in retaliations" if they force changes in the policy of trading partners.

And apparently voters in the UK are tiring of free trade policies that enrich the multinationals and impoverish the trodden masses.

Never mind that overall trade has enriched Britain, or that the perception that the middle- and lower-income groups have not benefited is much disputed. Economists of all political persuasions now feel comfortable advising politicians they serve that support for free trade might carry unpleasant consequences when the votes are counted.

That's the beauty of democracy.  The Very. Serious. People., whether in Washington or London, can sit in their incestual amplification chamber for a while, but then an election hits.  Self correction and renewal can sweep out the ideological detritus.  Realignment with reality then has a chance.

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