As regulators ponder making it harder for speculators to invest in oil, University of Maryland law professor Michael Greenberg backed such acts against "passive" investing on WTOP radio yesterday. He correctly identifies them as having "no interest in actively controlling these assets, just hoping to make a buck when their prices rise."
I wonder when Greenberg will take arms against other forms of passive investing:
-The university which offers financial aid to smarter or more driven students, betting that their attendance will yield more donations long after they graduate.
-The company which helps pay for its employee's education, hoping the employee will remain with the company even after a minimum staying period.
-The firm which gives its employees on-the-job-training, familiarizing them with a system they could apple elsewhere.
-The patron of the arts who supports a starving artist in the hopes they will be a success later.
In each case, the person hasn't actually become valuable yet, just like the oil that investors jump on (or off of). Speculators (who bet the price will rise) will buy oil now and cash out when it's more valuable. Passive investors in human capital do the same thing.
Thursday, July 09, 2009
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