There’s “Hope” for Reducing the Federal Debt

A Fox News report broadcast on November 28 supplies means of stanching the unprecedented effusion of budgetary red ink overseen by presidents George W. Bush and Barack Obama.

In that report, talking-head Chris Wallace interviewed Jeffrey Post, curator of the gem and mineral collection at the Smithsonian Institution’s Museum of Natural History. The story focused on the very rare and stunningly blue Hope Diamond, which after a long and fascinating history of intrigue, including a legendary (or maybe not) “curse” falling on its possessor, was donated to the Smithsonian by Henry Winston in 1958.

Near the end of the video, after Mr. Post had waxed lyrical about the gem’s unparalleled size, color and clarity (and having allowed his interviewer actually to hold it in his hands), Wallace’s natural question was, “And if you wanted to sell it?”

Post responded that, “If there’s anything in the world that one could point to and say, ‘it’s priceless’, you know, take the U.S. Treasury – or, even bigger, the U.S. debt – and try to take that money and go out and buy another diamond like this one, you literally could not to it. There’s not one out there anywhere.”

To an economist, of course, nothing – not even human life, which recent studies based on the compensation necessary for the average worker to be willing to expose him or herself to greater risks of injury or death on the job generate estimates of about $7 million – is “priceless.”

The market value of the Hope Diamond, while undoubtedly sizeable, is far from infinite. Selling it to a willing buyer or consortium of buyers, which may be Hugo Chavez or a country in the Middle East, would generate enough cash to at least make a major dent in the federal budget deficit and, perhaps, the accumulated national debt.

There is no public interest in “owning” the Hope Diamond or many other assets, such as millions of acres of federal land, thousands of government buildings, drilling rights on the outer continental shelf, and so on. Even if Mr. Winston imposed conditions on his donation to the Smithsonian, many precedents exist allowing the beneficiaries of gifts to abrogate donors’ intent, although such actions sadly are inconsistent with the law of contract.

Ever since the Smithsonian Institution acquired the Hope Diamond in 1958, the federal government rarely has run a budget surplus. Perhaps that is the modern version of the gem’s romantic curse. If so, we can transfer the curse to its new owner and, at the same time, raise funds to pay off some of the debt without saddling taxpayers with the out-of-control credit-card tab now being run by Washington’s politicians.

William F. Shughart II is Research Fellow and Senior Fellow at the Independent Institute, the J. Fish Smith Professor in Public Choice at Utah State University, past President of the Southern Economic Association, and editor of the Independent book, Taxing Choice: The Predatory Politics of Fiscal Discrimination.
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