Dag Detter is Principal of Detter & Co where he advises governments and public institutions on public assets, balance sheets and ownership reform. He is the the former President of Stattum, Sweden’s state holding company. He’s also the co-author of The Public Wealth of Cities, The Public Wealth of Nations and Public Net Worth.
For me, this conversation was a long time coming (I first read Dag’s work way back when in 2017, so I’ve been a fan for a while now). All in all, this made for an interesting conversation and one where I was definitely learning in realtime. Enjoy.
Cities Don’t Know What They Own [00:00–04:34]
Jeff frames the conversation around the increasingly precarious fiscal position of American municipalities. If the federal government becomes less able to backstop local governments, cities may have to find new ways to finance themselves. Detter’s work appears to offer one such alternative: cities already possess enormous stores of wealth, but much of it is underused or otherwise lost in the couch cushions.
Detter identifies two causes of this blindness.
The first is technical. American governmental accounting records many assets at historical cost rather than current market value. A property acquired decades ago may therefore appear on a city’s financial statements at a fraction of its actual (current) economic value.
The second is institutional. American municipalities have historically had relatively little incentive to examine their balance sheets because taxes, debt, and intergovernmental transfers have remained their default financial tools. Cities in parts of Europe and Asia, facing greater pressure to be financially self-sufficient, have had stronger incentives to manage public assets as productive holdings.
How American Cities Are Blind [04:34–11:56]
Historical-cost accounting does more than produce inaccurate paperwork. Detter argues that it actively distorts decision-making.
He estimates that the stated book value of assets in many American cities may equal only 10 to 30 percent of their market value. In the most extreme case he has encountered, Pittsburgh’s assets were worth roughly 70 times their recorded book value.
Financial statements can serve as a government’s dashboard. They help officials decide where to maintain, invest, develop, or dispose of assets. When the dashboard says that a valuable property, bridge, station, or utility asset is worth little or nothing, it becomes easier to neglect.
This also interacts with the political cycle. Maintenance is less visible and electorally rewarding than police funding, emergency services, social programs, or newly announced projects. Politicians can postpone repairs to water systems, bridges, roads, and buildings while leaving the eventual failure—and its cost—to their successors.
American Cities Are Rich [11:56–18:12]
Detter distinguishes “commercial assets” from purely administrative or public-service assets. Commercial assets include anything publicly owned that can generate revenue:
Real estate
Airports and ports
Railways, buses, and other transportation systems
Publicly owned operating companies and infrastructure
He argues that the total value of these assets is often comparable to the annual economic output of the entire city, county, or state.
The figures he cites include approximately:
$382 billion in Los Angeles
More than $200 billion in Chicago
$140 billion in Boston
About $100 billion each in Atlanta and Salt Lake City
Roughly $40–50 billion in Cleveland
More broadly, Detter contends that the public sector is usually the largest property owner in any given jurisdiction. American cities may own even larger commercial portfolios than many European cities because U.S. municipalities frequently retain ownership of water systems, airports, and substantial real estate.
The difference between public and private assets is therefore not necessarily their underlying economic character. It is how institutions perceive them. A government building or parcel is treated as an administrative object while publicly owned, but the moment it is sold to a private buyer, it is recognized as a commercial asset.
This conceptual failure contributes to what Detter describes as a century-long transfer of wealth from the public to the private sector. Governments fail to value assets properly, wait until they face a budget emergency, and then sell at the wrong time and from a position of desperation.
A List of Ingredients is Not a Recipe [18:12–22:55]
Simply compiling a list of public assets is not enough. Detter compares an asset register without valuation or strategy to possessing all the parts of an engine without instructions for assembling it—or all the ingredients for a meal without a recipe.
Cities need to understand:
The current and potential market value of each asset
The opportunity cost of its current use
Whether it is in the right location
Whether it is being maintained
Whether it is producing appropriate revenue
Whether it could be redeveloped or used differently
Officials often object that public assets cannot be valued because they are not for sale. Detter rejects this premise. Governments routinely sell assets, especially when fiscal pressure becomes acute. Refusing to value assets in advance does not prevent privatization; it merely ensures that any eventual sale will be poorly informed.
The objective is not indiscriminate sale. It is to recognize the economic cost of every existing choices and make intentional decisions about whether that arrangement advances the public interest.
Fragmentation and the Swedish Railway Example [22:55–27:38]
The next obstacle is fragmented ownership. Individual departments, transit agencies, school systems, counties, states, universities, and special districts each control their own pieces of the public estate. They seldom coordinate, and no single official is responsible for optimizing the complete portfolio.
Detter uses Chicago as a hypothetical example. The City of Chicago, Cook County, the State of Illinois, transit institutions, universities, and the medical district all own major real-estate portfolios. Yet each institution may lack visibility even into its own holdings, much less those of neighboring public entities.
Sweden addressed this problem by separating real estate from operating entities such as the national railway, telecommunications company, and electricity system. Properties were placed in a professionally staffed company with a mandate to develop and manage it. When that happened, even experienced Stockholm real-estate professionals were surprised when they saw the complete asset map. Once the portfolio became visible, the government could identify underused sites and coordinate development across them.
Detter credits this approach with helping Sweden double railway capacity without relying on additional taxes or government debt. It also enabled the creation of a major innovation district connecting universities, technical institutions, and medical facilities, alongside tens of thousands of homes, offices, and schools.
The critical intervention was not the discovery of a single valuable parcel. It was the ability to see relationships among assets that had previously been treated as unrelated.
Socialism? Neo-liberalism? Some Secret Third Thing? [27:38–35:16]
Jeff observes that the idea of government engaging in profitable activities can scramble American political intuitions. U.S. debate often assumes that cities must either tax, borrow, cut services, or privatize. The possibility that publicly owned assets could earn revenue and cross-subsidize public services receives less attention.
Detter argues that this is partly ideological. Public institutions are treated as incapable of commercial management, even though private buyers immediately use the same assets commercially after acquisition. He also criticizes American governmental accounting standards for failing to encourage fair-market valuation and says he has received little response despite presenting the issue to national organizations representing cities, counties, governors, and other public officials.
For Detter, professional management does not mean selling everything or transforming government into a conventional profit-maximizing corporation. It means recognizing that the public sector is already the largest wealth manager in society and should develop the capacity to perform that role competently.
Revenue from one part of a portfolio can finance development or maintenance elsewhere. This need not be described as a subsidy; it is the ordinary function of portfolio management.
Both Jeff and Detter agree, however, that technical arguments alone will not create reform. Reform requires two distinct skill sets: people who know how to manage public wealth and political champions who can make the subject intelligible and exciting.
Cities Are Sitting on the “Housing Machine” [35:16–41:35]
The conversation then turns directly to housing.
Jeff characterizes Detter’s position as the provocative claim that cities already possess most of the tools needed to address housing shortages. Detter agrees, describing government as sitting on the housing machine while unable to operate it because the dashboard is dark.
Public authorities commonly claim that insufficient land is available. Detter counters that the public sector may own 30 to 50 percent of the real estate in an American city. The problem is therefore not always the absolute absence of land but the failure to recognize, combine, move, and redevelop what is already publicly owned.
He compares the process to a sliding puzzle. A school district, transit agency, or municipal department cannot do much with its isolated set of parcels. But once holdings across departments and levels of government are mapped together, it becomes possible to rearrange uses:
A depot may not need to remain in the city center.
An administrative function may be relocated from valuable land.
A transit site may support housing.
Several adjacent publicly owned parcels may enable district-scale redevelopment.
Agencies may trade or consolidate sites so each can operate more effectively.
The goal is not a frictionless “solution.” Detter repeatedly emphasizes that governance consists of trade-offs. Portfolio visibility makes those trade-offs possible to identify and negotiate.
Three Cheers for Technocracy [41:35–49:50]
Commercial assets should be managed at arm’s length from short-term political intervention, Detter argues. Elected governments should define the public objective—developing a station, harbor, housing district, or innovation district—while professional managers receive enough independence to execute on it.
The mandate must be realistic, specific, and measurable. An institution will struggle to recruit capable personnel if managers remain subject to constant political interference or are held responsible for objectives they lack the authority to achieve.
This arrangement is not privatization. The government hires commercial and technical capacity internally while retaining public ownership and increasing the public’s wealth.
Public Assets, Creditworthiness, and the Singaporean Model [49:50–54:45]
Professional asset management can also improve access to credit. Detter says lenders and rating agencies already look beyond tax capacity. A city that demonstrates positive and growing net worth, along with reliable non-tax revenue, may receive a stronger credit rating and a lower cost of capital.
This changes the meaning of debt. Borrowing is less dangerous when backed by productive assets, and it can be used strategically rather than simply to defer fiscal problems.
Detter identifies Singapore as the clearest international example. He says approximately 20 percent of Singapore’s public income comes from non-tax revenue generated through professionally managed public assets. Despite carrying a very high gross debt burden, Singapore maintains a AAA credit rating because investors consider its net worth and asset-generated income.
Sweden’s reforms similarly arose from crisis. Facing severe financial difficulties, the country was advised to privatize its state-owned assets. Instead, its socialist government chose to professionalize their management. Detter presents the resulting turnaround as evidence that public ownership and commercial competence are not mutually exclusive.
His final message returns to the central metaphor. Governments are already sitting on the engine needed to address housing shortages, infrastructure needs, and fiscal pressure. They must first clean the windows, illuminate the dashboard, understand what they own, and create institutions capable of putting those assets to work.
