Posted by Dag Detter and Stefan Fölster1
For more than a quarter of a century there has been a phony war raging between those in favour of public ownership of commercial assets and those against: privatisation versus nationalisation. This polarised and binary debate has missed the point. What matters is not so much who owns the assets but the quality of asset management.
For any ownership mode, be it private, public, mutual or cooperative, there is a very wide range of alternative management models/styles and the choices made from those alternatives will have a major impact on the value the asset delivers. Huge portfolios remain in government hands, including not only corporations but also vast swathes of real estate. In some cases, privatisation will make sense. In many others, it may be neither desirable nor feasible. The good news is that there are ways to sweat assets that remain in public hands, generating a higher rate of return on them—if governments follow a few sensible rules.