$45 Billion of U.S. Private Investment Has Been Mislaid.

This article suggests that the U.S. federal government should attach some urgency to the task of constructing government investment and capital accounts. The demand by economists for government capital data has not been very high in the past, because the absence of meaningful government output figures has precluded productivity studies of the government sector. But the article suggests that many government assets are important inputs in the private sector. Much of the apparent decline in the U.S. private capital-output ratio may have been due to the gradual replacement of privately owned railroad assets by government-owned highways and airports. The existence of a substantial stock of government financed assets used by private firms, particularly in manufacturing, suggests a number of interesting topics for further research. For instance, the rate of return on corporate assets in manufacturing during and immediately after World War II was considerably higher than in the 1950s and 1960s. While this was partly due to high utilization rates and the inflation of sales prices relative to asset values, a further factor may have been the substantial profits earned with government financed assets which did not enter into the capital base on which the rate of return was calculated.