The public wealth of nations


In 2013's Cash in the Attic ASI fellow Nigel Hawkins detailed £600bn of assets the government owned, but had never subjected to a market test. The paper recommended selling 10% of the assets off to begin with, in order to subject them to the market test and see if they were being best used, as well as giving the government money to reduce the national debt A new book, The Public Wealth of Nations, written by Dag Detter and Stefan Fölster, argues a lot of the same points—although with a much broader scope and deeper focus. The book's blurb runs:

When you look around the world it's almost as if Thatcher/Reagan economic revolution never happened. The largest pool of wealth in the world – a global total that is twice the world's total pension savings, and ten times the total of all the sovereign wealth funds on the planet – is still comprised of commercial assets that are held in public ownership. 

And yet, while this is the largest pool of assets in the world, is also one of the murkiest – what goes on inside them is often not even properly known by the governments who own them. In most countries this vast portfolio is both a fiscal and political burden on society. If professionally managed it could generate an annual yield of 2.7 trillion dollars, more than current global spending on infrastructure: transport, power, water and communications. 

Is there any reason why hospitals should own their buildings rather than rent them with long-term contracts? Outside of some historically-significant places couldn't the same be said for most public property. And how do we know whether an army barracks is well-placed if the army doesn't compete with other users over it?

The authors recapitulate their argument in a Citigroup note (pdf), with an introduction by Willem Buiter, going over their case for turning over government property to a properly-managed sovereign wealth fund.

As ever, the ASI is ahead of the curve!