The Best Deal Going: Privatize U.S. Public Lands

Steve H. Hanke's picture

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

Earlier this week, Nobelist Vernon L. Smith penned an important piece, “Trump’s Best Deal Ever: Privatize the Interstate,” which was published in The Wall Street Journal. Smith correctly argued that the Trump administration should expand the scope of its privatization efforts to include the Federal government’s vast holdings of commercial public lands.

Unfortunately, President Trump’s Secretary of the Interior, Ryan Zinke, is dead set against privatization. Indeed, during his confirmation hearings, Zinke said, “I am absolutely against transfer or sale of public lands.”

Zinke’s misguided views bring back an echo from the past: President Reagan’s Secretary of the Interior and Sagebrush Rebel James Watt. Fortunately, Reagan the intellectual slapped Watt down and fully embraced the idea of privatizing public lands. Whether Trump will take Zinke to the woodshed remains to be seen.

Let’s take a closer look at Reagan the intellectual and the case for privatizing public lands. A true intellectual conveys to the public new ideas on a wide range of subjects, unearthing these notions long before most people do. That is the essence of Nobelist Friedrich von Hayek’s definition of an intellectual. In his 1949 University of Chicago Law Review essay “The Intellectuals and Socialism,” Hayek also underlined that for better or worse, intellectuals are more important than most people think. After all, they shape public opinion.

Austrian economist Hayek was one of Ronald Reagan’s favorite thinkers. And Reagan, by Hayek’s definition, was an intellectual. Reagan the intellectual? The book Reagan, In His Own Hand answers that question. This volume, with an illuminating preface by George Shultz, contains 259 essays Reagan wrote in his own hand, mainly scripts for his five minute, five-day-a-week syndicated radio broadcasts in the late 1970s. The essays were Reagan’s own handy work, not material written by his staff. And they laid out the philosophical framework for his presidency.

No wonder Reagan always appeared to be relaxed and in control. He had thought things through. As someone who was a senior economist on the President’s Council of Economic Advisers during 1981-82, I saw his intellectual acumen firsthand.

One of my early assignments was to analyze the federal government’s landholdings and make recommendations about what to do with them. This was a big job. These lands are vast, covering an area six times that of France.

These so-called public lands represent a huge socialist anomaly in America’s capitalist system. As is the case with all socialist enterprises, they are mismanaged by politicians and bureaucrats, who dance to the tune of narrow interest groups. Indeed, the U.S. nationalized lands represent assets that are worth trillions of dollars, yet they generate negative net cash flows for the government. I first presented my recommendations to the annual Public Lands Council meeting in Reno, Nevada in September 1981. The title of my speech was “Privatize Those Lands.”

My Reno speech caused a stir. James Watt was furious.  He was adamantly opposed to privatizing public lands. Instead, he favored the transfer of federal lands to state governments – exchanging one form of socialism for another. Needless to say, I thought I was in deep trouble. Hoping to avoid political immolation, I rapidly sent my analysis to the President.

Much to my surprise, Reagan instantly responded, taking my side. Better yet, he swiftly made my proposals the Administration’s policy. He went public in his budget message for fiscal year 1983 when he endorsed privatizing public lands: “Some of this property is not in use and would be of greater value to society if transferred to the private sector. In the next three years we would save $9 billion by shedding these unnecessary properties while fully protecting and preserving our national parks, forests, wilderness and scenic areas.”

It turned out that Reagan had already thought about this issue. Reagan, In His Own Hand contains several essays on the subject that clearly foreshadowed his policy statement. His 1970s musings on public lands echo the writings of another fine thinker, Adam Smith. While Reagan never cited Smith, their reasoning was similar.

Smith concluded in The Wealth of Nations (1776) that “no two characters seem more inconsistent than those of the trader and the sovereign,” since people are more prodigal with the wealth of others than with their own. In that vein, he estimated that lands owned by the state were only about 25% as productive as comparable private holdings. Smith believed Europe’s great tracts of crown lands to be “a mere waste and loss of country in respect both of produce and population.”

Political opposition stopped Reagan from privatizing. Consequently, U.S. nationalized lands remain ill-used. But Reagan the intellectual had it right long ago. While there is no evidence that Trump has even thought deeply about public lands, as Reagan did, we shall wait to see whether Trump will override his Secretary of Interior and embrace privatization.

 

This piece was originally published on Forbes. 

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redmudhooch's picture

First off, Fuck Reagan. Why is he a hero. This country has gone to shit since that asshole.

Second, why is socialism OK for the elite, but BAD for everyone else?

Third, any economic system could probably function well if the elites and politicians were not there to be sure it fails.

Socialism, communism, capitalism, all the same when a tyrannical govt. and evil buisnessmen are at the wheel.

alphasammae's picture

Privatize public lands a mistake and no politician (R or D) should have a say on this unless it goes as a referendum for all voters to vote on it. 

Mustafa Kemal's picture

Privatization sounds good, until you find out that only the rich get to buy and it is just another asset transfer mechanism to the rich.    

toady's picture

Here in Arizona they have bunch of state land that they tricked the voters into giving up. They said they'd sell it and give the money to "the schools". I was trying to get in on the deal, buy me a 160 acres and set up a ranch, but there was never a sale. "The schools" never got any money, and the land.... well, nobody seems to know who owns it now... probably the governor who pushed through the law and his henchmen. 

unsafe-space-time's picture

Fuck privatizing public land. Homeless that are able can go and live in the woods.  Hunt and fish. Unless you want to grant me a few thousand acres.Need to deport 200mil then land prices would be affordable. How about making property tax illegal. 

LastAgeRN's picture

Oreilly, I absolutely agree with your comment! The only people that will be able to bid on these lands will be the mega powerful corporate interests. Then God himself only knows what will happen after that. Welcome to the USA!!

logicalman's picture

Does government own the land, or do the population.

Shouldn't be able to sell what you don't own, just because a bunch of idiots voted for you.

Oreilly's picture

Yes, because privatizing has worked out so wonderfully when it's been done in the past. The way government goes about privatizing almost guarantees that the bulk of all sales goes to existing corporate or wealthy interests, and the proceeds from the sales goes into the hands of bureaucrats (never to be seen again). Look at privatizing the airwaves, privatizing communications, privatizing roadways ... the average person has no chance in participating in these privatizing schemes, and the end result is a virtual private monopoly on what was once a public asset. Land would be exactly the same. You and I would never be allowed to buy 40 acres when the opposition bids things up beyond our reach, and you know that's the way it would go.

I'm not saying there's anything wrong with being rich, but I am saying I don't want the rich to own any more of this country than they already do. I'd rather the land sat unused in public trust then it fell in to the hands of private trust funds or corporate holdings where it would be held in perpetuity for the few.

Ckierst1's picture

The antidote to this is to determine the area of a state's public lands to be disposed of and also the number of individual (not corporate) taxpayers in the state (in a very recent past tax year) and assign each taxpayer a pro rata allocated tract area so that each taxpayer is guaranteed a tract share.  The tracts include both the surface and mineral estates. Then they bid on the available tracts.  An implicit right of way exists for each tract.  Every taxpayer bids on every tract either actively or in inactivity (minimum bid in inactivity is assumed to be $0.01) The high bid on a given tract is accepted and leaves the tract pool when good funds are tendered.  The winning bidder also leaves the taxpayer pool.  The iinactively bid tracts and inactive taxpayer bidders can then optionally either re-bid for the remaining tracts or win a specific tract by lottery.  This disposes of all the lands and all the taxpayers have an opportunity to bid on a preferred tract and still receive a tract if they fail.  They should be able to bid on any or some or all of the tracts, but each individually, only, not collectively.  In this way revenue is returned to the government, every taxpayer gets a tract and the lands are privatized, getting the government out of the bigly land management business.  Joint taxpayers are entitled to bid to acquire two tracts.

E-Knight's picture

I'd downvote this chitty article if I could. People who think we should privitize everything forget that as smart/rich as they think they are, are NOT in the elite group that will be the only ones to 'play' anywhere.

oDumbo's picture

So let's see... private equity funds buy up all the newly privatized land, hold it, hold it... then sell it to the Chinese!  Great plan retard.  No!  Do not privatize any land.  We have enough Cash For Gold and used car lots cementing the entire country.  All cement, no nature.  Fuck that and fuck privatizing 'our' land so it can become more cement garden waiting to fail, become populated by freeloading democrats and bangers.  God, what a stupid idea.  

Luc X. Ifer's picture

Agree, what a fucking retard idea.

Ckierst1's picture

So I guess it's better to enjoy the "tragedy of the commons" and gummint intervention in the economic development of the state, tying the hand of the state legislators and citizens of the state?  Massachusetts telling New Mexico what to do with its lands?

cheka's picture

sell that sh-t and put the money back in the social security fund