Matt Yglesias

Buy High, Sell Low

I understand that California’s got budget problems, and looking into the sale of potentially valuable state owned land thus has some merit, but it seems to me that it would be pretty unfortunate to sell these parcels amidst a huge recession and real estate bust. The time to sell publicly owned property that’s ripe for redevelopment is when times are good. During good times when there’ll be plenty of buyers you can make sure to sell it to someone whose development plans serve some kind of reasonable conception of the public interest.

Besides which, the smart thing to do would be to monetize those assets during an upturn, and then sock the money to plug budgetary holes during downturns. Or even better, you could use the money to fund capital projects. Currently, we tend to do capital projects during good times when revenues are high, even tough this is also when costs are high. Meanwhile, we sell assets during bad times when revenues are low, even though this is when sale prices are low. The smart thing would be to do the reverse—the overall tax burden would be the same, but we could get much more infrastructure for our money. Not, of course, that sound budgetary practices are typical of state governments in general or California in particular. But our failure to adopt sounded budgeting at the state and local level significantly lowers our economic growth and overall well-being in the long term.