TO SELL or not to sell? That is usually the question cash-strapped governments wrestle with when reviewing public holdings of companies, land and infrastructure. But this public-versus-private, left-versus-right debate is a “phoney war”, argue Dag Detter and Stefan Fölster in an upcoming book, “The Public Wealth of Nations”. They advocate a third way: ring-fencing assets from political meddling in independent “National Wealth Funds” (NWFs)—holding companies whose professional managers are free to sweat them as if they were privately owned. The focus, they argue, should be on yield, not ownership.
Governments have trillions of dollars in assets, from companies to forests. These are typically poorly managed, and often not even recorded at all (Greece, for instance, still has no proper land registry). Dozens of countries have asset-management agencies, but these tend to be run by government departments, not external experts. Only 1.5% of public assets are in politically insulated NWF-style funds with wide latitude to value them at market rates, restructure them, and keep, sell or merge them as they see fit.
Mr Detter sees public wealth as “a huge but sorely neglected asset class”. How big is difficult to say due to gaps in the data, but the authors believe the pool of public “commercial” assets (lumpy stakes in companies, property and the like) is $75...
from The Economist: Finance and economics http://ift.tt/1Ix65cX
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