Tuesday, July 05, 2011

Asset Sales: A Third Option

Discussions of the current debt limit controversy mostly take it for granted that, if the limit is not raised, the federal government will either have to cut spending—often, it is implied, by defaulting on the interest obligations on the present debt—or raise taxes.

There is, however, a third option, one that has gotten quite a lot of attention in the Greek case: Asset sales. The U.S. government, like the Greek government, owns a lot of valuable stuff, most obviously land and buildings. I don't know what the total value is, but it is hard to believe that it isn't substantial. In the Greek case, I have seen it claimed that selling all such assets would come close to liquidating the national debt. 

Of course, there might be technical problems to doing it quickly, if only because of legal restrictions on how such can be sold.

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Robert Murphy has a fairly detailed discussion of assets that could be sold, concluding that the total of reasonably liquid ones is about $1.6 trillion. That doesn't include buildings that are currently unused or underutilized, and other more difficult to estimate (and perhaps to sell) assets.

7 Comments:

At 1:49 PM, July 05, 2011, Blogger David R. Henderson said...

David, Good idea. I had Bob Murphy write the July Feature Article on just this topic. See my post on it:
http://econlog.econlib.org/archives/2011/07/murphy_to_us_go.html

and his article:
http://www.econlib.org/library/Columns/y2011/Murphyprivatization.html

 
At 3:25 PM, July 05, 2011, Anonymous Anonymous said...

Sounds like a great way to further enrich financial middlemen. I'm sure Wall Street is salivating over the prospect of "helping" Greece.

 
At 10:45 PM, July 05, 2011, Anonymous Anonymous said...

Agreed Anonymous... Not to mention, once the good (sellable) bits are sold off cheaply to cronies, the unsellable bits will be held up as an example of the Government dragging it's feet.

Not to mention, selling off government assets is kinda like selling off body parts - it's a fast solution, but one you're gonna regret in the long term.

 
At 7:39 AM, July 06, 2011, Anonymous Anonymous said...

David, although I think it is politically impractical to do it, it is certainly technically feasible to make this happen. Here is how:

Make a list of the assets, chunked into pieces worth approximately $100,000 each. Randomly mix up the list. Now create 100 companies and assign 1% of the assets to each at random. Float the companies on the stock exchange, and give our debtors shares in exchange for extinguishing their debt/obligation. Give it to Social Security recipients in preference.

The private economy would sell them off at the right rate and the right price to optimize their value.

There is another really important aspect to this. The government has gazillions of dollars of assets which are basically lying dormant, or being massively underutilized. Privatizing them would make them productive again and cause a massive boost in the economy as these resource drains were turned into fountains of wealth.

 
At 8:22 AM, July 08, 2011, Blogger jimbino said...

Good candidates for sale are the National Parks and Forests, which the gummint mismanages and which it appears no minority Amerikans (whether Black, Brown or Red) ever set foot in.

As an alternative to forced busing of Amerikan minorities so that they could partake of our ludicrously valuable patrimony, it would be practical to offer them to the Japanese, Chinese, Germans or the AARP, since it is mostly members of those groups who seem to cherish visiting them. After all, taxpaying minority Amerikans simply won't have time and money to see Yellowstone or the Grand Canyon.

 
At 7:44 AM, July 14, 2011, Anonymous SwissEcon said...

David, the asset sale would generate some cash, but the state would loose some of its future income (park fees, telco revenues in Greece). Of course, the private sector would be better than the Greek state at running a phone company, but still the net gain may be small.

 
At 9:01 PM, July 16, 2011, Anonymous Libertarian Lover said...

Better solution: Stop paying the military.

 

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