I read something unexpected in the Wall Street Journal (November 20, 2012) recently. William E. Conway, Jr., co-founder of the Carlyle Group, a private equity firm with assets of more than $150 billion in management, the third largest such firm in the world, wrote an Op-Ed piece entitled,“Why We’re Investing in America.” Conway noted that his firm has invested in nearly every region of the world over 25 years, but these days they are putting their investments in the United States because, in his words:
The US is characterized by inherent attributes that are often taken for granted: freedom, the rule of law, confidence in regulatory agencies. America has admired universities, the deepest and most-liquid capital markets, peerless medical systems and pockets of innovation such as Silicon Valley-all of which, though not perfect, are highly advanced and function smoothly. Nowhere on the globe can my firm invest in companies with as much confidence as we do in the US. And while we take comfort in the long-term safety of US assets, we also see opportunities for growth. This is because of a combination of very low interest rates, a strengthening housing market, and significant domestic energy discoveries.
I don’t know much about Conway except that he’s very rich and the Carlyle Group has been implicated in dealings with the Bush family, Middle East and even Osama Bin Laden, and recently bought a chain of nursing homes. They undoubtedly invest in some odious companies and industries. But I’m making a different point. I quote from Conway’s piece because I think it’s an astounding acknowledgement from a powerful US businessman that the United States, for all of our strict regulations and our corporate taxation that business loves to complain about – is a great place to invest precisely because we don’t suffer from widespread corruption, we have a highly educated and productive workforce, and orderly markets that are strictly regulated (not strictly enough, as we learned from the disastrous sub prime debacle of a few years ago and as former FDIC Chair Sheila Bair points out with frequency in her excellent book, Bull By the Horns) and business thrives under these conditions. Indeed, Conway talks of confidence in regulatory agencies in the US; they are predictable and they operate under the rules of administrative law. Conway ends the piece with this:
Many in America and beyond have been paralyzed by fear of the fiscal cliff, frustrated with Washington’s partisanship, mesmerized by the presidential election or stunned by the post-Great Recession recovery. Any way you look at it, though, now is a great time to invest – and there is no better place than America.
His Op-Ed tells us that a strong regulatory structure that attempts to keep capitalism in check is not only good for consumers, citizens and taxpayers, but also good for business.