Greek “Privatization” Isn’t
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.