Is a sovereign wealth fund a progressive policy?

Carney just announced a sovereign wealth fund for Canada. Not many details have been released yet. But the idea is to invest federal money into a fund that will be used to secure the country against economic shocks and grow the Canadian economy by investing in Canadian infrastructure projects which will have a tremendous impact on productivity.

Historically, it is a great idea. Resource rich nations have used this same idea in the past and it has greatly benefited their people. These include Norway, Singapore, and many Gulf states.

When I go through the model in my head of how the money is moved, it made me think that this is inherently a progressive policy, maybe even a leftist one. Canada takes on debt and Canadian tax dollars and moves that money into the fund. This fund grows, ideally 5% higher than the interest rate on the debt. With the current initial investment being $25 billion, $1.25 billion dollars each year which either compounds or it is used to invest in Canadian infrastructure. We know that the top 5% earning Canadians pay about 30% of the tax revenue the government collects. So, the highest earning Canadians are paying for infrastructure improvements which will benefit all Canadians. And if the money is allowed to compound, having then Canada could enter a surplus and lower taxes. And it is likely that taxes will be lower for lower income Canadians before it is lowered for the highest income Canadians since that is where the voters are.

This is not mentioning that the fund will be used to invest in Canadian businesses. Not only will these businesses hire more Canadian workers and expand to other countries, but it will indirectly give ownership of these companies to regular Canadians.

To me it seems like a very progressive policy. It is almost a direct redistribution of wealth from the wealthy to the rest of the country. Coming out and saying we are going to tax the wealthy more and help those with lower income is a logical and good policy but the wealthy will fight and fight and fight against it. This roundabout way of redistributing wealth is much more subtle and less likely to be opposed, especially when there are so many good examples of how well it actually works.

I think this is very sharp from Carney. This is something most Canadians will support and benefit from, while at the same time, the wealthy will have a hard time opposing it. I am very impressed and happy to see this kind of policy from Carney. My initial impression was skeptical with him being a conservative banker focused on making businesses grow. But this kind of policy shows he is not ideologically shackled and has the understanding that progressive policies are also good economically. And it also shows that he has the political savvy to do it in a way that it will actually get passed. I'm excited to see what he has up his sleeve next and I hope he continues to move in this direction.