This is an updated and adapted version of an article that was published at the Foundation for Economic Education on 3/16/2023.
The federal government of the United States is about $40.2 trillion in debt as of August 2026. Net interest payments on this debt are now the second-largest spending category, after Social Security, and that’s without even paying off the principal. Moreover, if you were to take a full stock of the actual debts owed by the US federal government, you may have to include reparations for a plethora of horrific past injustices, and this total may far exceed the amount described in popular calculations of the national debt.
Luckily, the federal government has a huge portfolio of assets that it could liquidate to repay some of its huge debts. And these assets would be better utilized if circulated into the free market than they are under the grotesquely misaligned incentives of federal bureaucrats and policymakers. Therefore, not only would justice be served by these assets being privatized in this way, but improved economic prosperity would follow as well.
Low-hanging fruit in this regard is the federal government’s portfolio of “public” lands. Their overall land holdings are about 640 million acres, or 28% of the 2.27 billion acres of the United States.
We don’t know specifically how best to utilize this extremely valuable set of resources. In order to get a good answer to that question, we need the market process to play out, testing different possible uses against each other through the capitalist competition of profits and losses. This would only give us an approximate and tentative answer, which would be always evolving. But that would be vastly better than the stagnant and coercively imposed status quo that currently prevents market experimentation from unfolding.
As a new paper from the National Bureau of Economic Research found:
The analysis suggests that a.) federal lands will have lower production value than comparable private, all else equal; (b). federal lands management will be less responsive to shifts in economic costs and benefits. Public goods may be provided for high amenity, recreation, and ecological areas, but the dominant Multiple Use management principle provides no objective criteria for allocation or for periodic outcome assessment and adjustment.
To understand why this would be the case, it is useful to review some basic economic theory of the price system from economists Ludwig von Mises and Friedrich Hayek.
Prices Versus Pricelessness
It is commonly understood, even by avowed socialists, that socialist economies are generally less conducive to economic growth than market economies. One primary reason for this is that markets result in a mechanism of resource allocation that maximizes efficiency like no socialist, communist, or fascist economy has ever been capable of. And that mechanism is known as the price system.
The price system is merely the logical consequence of resources being controlled by individuals rather than collectives, and exchanged voluntarily rather than by force. These are the characteristics of a market economy, and they result in consumers and producers having extremely precise knowledge, communicated via prices, of how useful each resource is for a wide range of potential uses, given the nature and scarcity of the resource relative to alternatives. This precise knowledge allows budgeting, financing, shopping for the best among many available products, and so on to be subject to highly accurate calculations.
This crucial difference between market and non-market economies was first clearly articulated by the economist Ludwig von Mises in his 1920 essay, “Economic Calculation in the Socialist Commonwealth.” In it, Mises offered the following example:
Picture the building of a new railroad. Should it be built at all, and if so, which out of a number of conceivable roads should be built? In a competitive and monetary economy, this question would be answered by monetary calculation. The new road will render less expensive the transport of some goods, and it may be possible to calculate whether this reduction of expense transcends that involved in the building and upkeep of the next line. That can only be calculated in money. It is not possible to attain the desired end merely by counterbalancing the various physical expenses and physical savings. Where one cannot express hours of labor, iron, coal, all kinds of building material, machines and other things necessary for the construction and upkeep of the railroad in a common unit it is not possible to make calculations at all.
This point is expanded on by Mises’s disciple, the Nobel Prize winning economist Friedrich Hayek, who explains that these calculations result in the widespread and decentralized production and communication of useful knowledge which allows complex economies to function. He gives the following instructive example in his 1945 essay “The Use of Knowledge in Society”:
Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. … All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply. If only some of them know directly of the new demand, and switch resources over to it, and if the people who are aware of the new gap thus created in turn fill it from still other sources, the effect will rapidly spread throughout the whole economic system and influence not only all the uses of tin but also those of its substitutes and the substitutes of these substitutes, the supply of all the things made of tin, and their substitutes, and so on; and all this without the great majority of those instrumental in bringing about these substitutions knowing anything at all about the original cause of these changes.”
Now think of the price system, or lack of one, in the context of federal lands.
The High Stakes of Resource Allocation
There are countless ways that individuals, or society generally if you prefer that framing, could utilize a given plot of land. People could live on it, thus increasing housing affordability and expanding the range of available options of where to live. People could convert its raw materials into transportable resources such as lumber or oil, thus improving commodity abundance and lowering the threshold at which the poor could afford to have their needs met. People could employ unique characteristics of its ecosystems to conduct scientific research. The land could be preserved in its current state, if its environmental, recreational, and/or aesthetic properties are deemed more valuable than the alternatives. Manifold possible uses exist, many of which can probably only be imagined by the innovators of the future, and many of which will be more or less beneficial overall than the alternatives.
When so much wealth and potential are on the line, the difference between efficient and inefficient resource allocation is the difference between countless livelihoods saved or destroyed. When housing prices, or food prices, or gas prices, are increased or decreased by the availability or unavailability of a few million acres worth of resources, it can make or break the health and safety of anyone whose current standards of living are near the margin of viability. And even for those well enough above the margin to be unconcerned about basic necessities, changes in the cost of living can still make or break their access to important commodities and opportunities such as a higher education, the ability to start a small business, or any other ambition they might have that requires significant investment.
In the long run, the broad economic effect of better resource allocation is hard to overstate. As the economist Tyler Cowen has explained, “In the medium to long term, even small changes in growth rates have significant consequences for living standards. An economy that grows at one percent doubles its average income approximately every 70 years, whereas an economy that grows at three percent doubles its average income about every 23 years—which, over time, makes a big difference in people’s lives.”
In his amazing 2018 book Stubborn Attachments, Cowen uses a thought experiment to illustrate the real-world implications of seemingly small changes in the growth rate. “Redo U.S. history, but assume the country’s economy had grown one percentage point less each year between 1870 and 1990,” he writes. “In that scenario, the United States of 1990 would be no richer than the Mexico of 1990.”
Public Versus Private Ownership
When land is privately owned, the price system facilitates numerical comparisons between different possible uses of each plot of land (or useful subdivision thereof), such as people living on it, or excavating it for minerals, or growing crops on it, or conserving its current state—or countless other possibilities.
There is no way of knowing with certainty which is the best use of each plot of land, given the virtually infinite variables such as what alternative resources could be used for each of the possible uses of the land, how scarce and applicable to alternate uses each of those resources is, and so on. And of course, even the price system can’t account for all the variables, given that every event in the world comes with externalities and uncertainties. But the price system accounts for more of the variables, and does so with more accuracy, than any other system because prices reflect each individual’s specific preferences in a quantifiable form whereas all other systems reflect either randomness or the preferences of some authoritarian subset of the population that has managed to coercively suppress the preferences of others.
(It is worth noting that the assumptions people make about the relative significance of one set of externalities over another tend to be totally unjustified. For example, there is a common assumption that the negative environmental externalities of industrial development such as logging or oil drilling outweigh the positive economic externalities. But it can just as easily be the case that when commodity prices are reduced by such supply increases, the resulting poverty alleviation and wealth creation generate positive externalities, such as more education and technological and scientific research, that outweigh the negative externalities.)
Private land is more likely than land governed any other way to be used for its optimal purpose, because its owner is free to sell it to the highest bidder, and the bidder with the most valuable idea of how to use it will typically be willing to pay the most for it. By contrast, “public” land is doomed to be allocated comparatively suboptimally. Because no individual is free to sell it to the highest bidder, it is instead trapped in its current use by whatever regulatory mire is preventing individuals from optimizing it. The corrective mechanism of market exchange that helps resources fall into the hands in which they are most useful is frozen out of the process of resource allocation of federal lands.
Privatizing public lands by selling them off to private owners would go far toward solving two problems at once: the problem of rampant resource misallocation, and the problem of federal debt. Given this wonderful opportunity, US citizens should have little patience for the federal government taxing them and inflating their currency to spend so lavishly while hoarding such a gigantic supply of underutilized resources.