If you’re a nation tightly squeezed by deficits and spending commitments, The Economist has a smart solution: sell your property. In a pair of pieces, The Economist’s latest lays out the extent of national land and building holdings and argues forcefully for a new wave of privatization:
America’s federal government owns nearly 1m buildings (of which 45,000 were found to be unneeded or under-used in a 2011 audit) and about a fifth of the country’s land area, beneath which lie vast reserves of oil, gas and other minerals; America’s “fracking” revolution has so far been almost entirely on private land. The Greek state’s largest stock of unrealised value lies in its more than 80,000 non-heritage buildings and plots of land. With only one holiday home for every 100 in Spain, Greece should be able to tempt developers and other investors at the right price. Analysts at PwC reckon Sweden has marketable state-owned property worth $100 billion-120 billion. If that is typical of the OECD, its governments are sitting on saleable land and buildings worth up to $9 trillion—equivalent to almost a fifth of their combined gross debt.
The pieces go on to acknowledge the costs here: sales like this are only a temporary fix; privatizations done poorly can cause lots of trouble; some of the land is productive, which means selling it would eliminate an ongoing revenue stream. Still, if there were any time when a one-time revenue generating policy like this might make sense it’s now. Across the world governments are dealing with economic stresses that are both acute and temporary, because they spring from massive demographic shifts.As the Boomers age while birth rates decline in many Western nations, governments will be faced with large bills that current tax policies won’t be able to pay. When the Boomers shuffle off this mortal coil, the demographics will readjust themselves, but until then governments will need large funds to see them through the transition. The Economist’s proposal is a good place to start looking for some of that money; read the whole thing.