Greek “Privatization” Isn’t
By Mary Theroux • Wednesday June 29, 2011 11:49 AM PDT • 1 Comment
Greece is reportedly putting into practice Independent Institute Senior Fellow William Shughart’s recommended course of action to insolvent governments: sell off government-held assets, pay off your debts, and get your fiscal house in order for the future.
And Greek’s government owns vast swathes of highly desirable property:
An umbrella company for most of Greece’s government real estate counts some 70,000 properties. They include beaches, commercial sites in Athens, farmland, government buildings and railroad rights-of-way. A few years ago, the socialist think tank estimated the value of the portfolio at about €300 billion.
Unfortunately, Greece’s National Tag Sale is unlikely to produce anything like the revenues it needs to cover its debts, and for a very simple reason: actual property rights are not being offered. First, any given property’s title is often disputed. Passing that hurdle, the would-be property developer then faces “bewildering” zoning rules, administered by myriad government agencies. Although Greece is proposing a “fast track” for new owners to get their plans approved, as one government official admits “the fast track cannot undo laws.”
And the laws are numerous, conflicting, and easily exploited by almost anyone wishing to block development of almost any property. A retired Olympic Airlines flight attendant has been blocking the development of shoreline near her for 7 years, with no resolution in sight, while the mayor of a suburb on which another prime piece of property sits has successfully fought its development for 10 years.
Caveat emptor, indeed, and it is hardly conceivable that Greece will be able to sell itself out of its fiscal difficulties.
But other governments can, and should. Municipalities, counties, and states across the U.S., as well as the federal government itself, own billions of dollars of property, as for example the State of California’s ownership of 1 million acres of real estate in 15 high-land-cost counties. Such ailing governments would do well to sell while they can negotiate the terms of trade rather than wait for fire-sale conditions such as Europe now faces.
Tags: Bailouts, California, Europe, Land use, Nationalization, Privatization, Property Rights, Regulation, Socialism 
When we the people discover that our monthly costs exceed our monthly income, we do one or more of the following. 1) Increase our income, 2) decrease our expenditures, 3) sell assets to raise funds to pay debts.
When the government discovers that they have exceeded it’s monthly income, it does one of the following 1) burrow more money (increase debt) 2) increase income (taxes) 3) decrease expenditures.
in the case of the citizenry, it is rare that we can increase our income simply because we need funds, but the government makes the “need” argument when it wishes to increase the burden on the taxpayers. The first course of action for most people is to immediately reduce expenditures – “stop the bleeding” as it were. While that is not the last resort of the government, when it does reduce spending, it is almost always vital functions that are cut so that the politicians can point to how painful it is for the citizenry and use that as an argument to increase taxes (whenever a state faces shortfalls, and asks for a tax increase, politicians ALWAYS point to teachers and firefighters and say without it, these people will be laid off... never explaining why they don’t propose trimming fat instead).
While selling extra “stuff” is commonplace for Americans – see the huge success of e-bay and Craig’s list as an example, government selling assets is rare to unheard of, except in the case of old military supplies, and then these items are sold for pennies on the dollar.
Governments like to keep their stuff while taking our stuff... and that boys and girls is how we got big government.
joe4liberty | Jul 6, 2011 | Reply