Signs Of Decline

Two unrelated stories in the news tonight remind us of the importance of the regulatory environment. First, Goldman Sachs announces that Americans will not be permitted to invest in Facebook:

Goldman Sachs decided to exclude US clients from the private offering of as much as $1.5 billion in shares of social-networking company Facebook, citing “intense media attention.”
In a statement provided to The Wall Street Journal Monday, Goldman said the move came after officials at the New York securities firm “concluded the level of media attention might not be consistent with the proper completion of a US private placement under US law.”

I have no idea what the reference to “media attention” means. This may be more revealing:

Private placements like the Facebook deal are subject to strict SEC guidelines, and Goldman’s statement Monday suggested that executives grew concerned that huge interest in the offering could expose the securities firm to regulatory vulnerability. One Goldman client was told the deal is being offered only to non-US clients because of regulatory concerns.

I’m not enough of a securities lawyer to know what all of those regulatory concerns may have been, but the bottom line is obvious. Who knows, maybe investing in Facebook is a dumb idea. But that is not a choice that Americans will be permitted to make.
This one is worse: Study: U.S. med-tech industry losing edge:

The innovative edge that brought the U.S. medical technology industry to global dominance may be slipping, according to a study that consulting firm PwC is releasing Tuesday.
In the next decade, the report predicts that China, India and Brazil will experience the strongest gains in developing next-generation life saving products, as capital, jobs and research gravitate toward these growing markets.
“The key finding is that the U.S. is declining when compared with other countries across the globe,” said Tracy Lefteroff, a Global Managing Partner of PwC’s venture capital practice. …
The report also touches on increasing demands placed on U.S. med-tech companies by the Food and Drug Administration, which regulates the industry. In this area, France, Germany and the United Kingdom rank higher than the United States because they “provide more supportive regulatory processes that encourage innovation yet ensure safety and effectiveness on a timely basis.” …
In terms of funding new med-tech inventions, the report found that the United States still ranks first in venture capital investment for start-up firms. But China represents the second-largest pool of venture capital, followed by Brazil. These countries are “building some of the world’s most entrepreneurial cultures,” the report states.

The Obama administration views industry as a goose to be robbed of its eggs, and takes comfort from the fact that big business contributes to Democratic candidates, allowing liberals, in the short term, to have their eggs and eat them too. The administration really doesn’t seem to understand that capital has global options, and that even as businessmen say “nice doggie” and write token checks to the Democratic Party, they are sliding out the door.

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