Monday, February 6, 2012

Spectrum Dinosaurs at the FCC

I'm not much of a techie.  But, Gordon Crovitz's opinion piece on the need for broadband spectrum struck me as both culturally timely and apposite to the broader ideological debates informing government policy.  Viz., 
It's time for the FCC to go back to the basic lesson that Prof. Coase taught. His now-famous Coase Theorem says that without regulatory interference or high transaction costs, valuable resources will flow to their most valued use. The ownership of broadband needs to be determined by markets as quickly as technology changes, not as slowly as Washington decides who deserves to be a winner and who should be a loser.
Picking the winners and losers in DC according to characteristics unrelated to the service being provided, or the people being served, is what the last fifty years have been all about, especially the last three.  That's the Democrats way, the Obama-Genachowski way.

It's not the American way, however, which is exceptional.  First of all, it's not fair because favoritism denies everyone a chance to earn the business.  Opportunity flows to the select few, irrespective of their merits, which is the affliction that has bedeviled governments and societies from time immemorial.

Secondly, it unfairly burdens the forgotten men--the very people burdened by exclusion--who must pay the premium for the layer of political patronage added to the goods and services they are provided.

Years ago, while teaching at an Ivy League business school, I had the experience of sitting next to a young alumnus whose business was applying for government scientific grants.  Was she a scientist?  No.  Did she know anything about the projects she was bidding for?  No.

What, then, was this young woman's talent?  She was politically connected, and knew how to exploit government rules that mandated a quota for women in the receipt of scientific contracts.  This, in the name of fairness and gender equality.

She would subcontract out all the technical writing, and work, to male scientists in universities.  But, she would apply for the grants in the name of her company.  Her modest earnings for this charade: $10 million per year.

She was quite content with the arrangement, as were the scientists who paid her this protection money, and our school's administrators--all men--who courted her for alumni contributions.  

Why not?  They weren't paying for it.  As Milton Friedman said, nobody spends other people's money as carefully as they spend their own.  I left the table early to go blow off steam in the closet.

This young woman's earnings were added to the cost of every project for which she received a grant.  Multiply her $10 million by thousands of such young women, then blacks, then who-have-yous, and it's easy to see why the federal government sows $1.5 trillion dollars more than it reaps in taxes on the productive.

It is also easy to see why the federal government is so hated.  It's so unbelievably corrupt and unfair.  That the President of this fraud would never cease to invoke fairness as a rationale for forcing the forgotten men to pony up the cash for it, only adds insult to injury.

We're told that government as the great leveler and job provider will redistribute resources in order to end inequality and injustice.  Nonsense.  In picking the winners and losers, government just adds to the cost of everything it does, and burdens the diregarded tax payers with the entire cost of its moral views about who should have what.

Even worse, it foments a morally smug, self-righteous breed of bureaucrats in the heart of government that justifies its self-serving ways and self-lining pockets with self congratulations for its enlightened social perspective.

These people are a curse to the nation, and must be unplugged from the sugar-daddy-DC machine they've created in order to help them return to reality, America to survive its creditors, and the people to recover their belief in open opportunity--the freedom that makes America great.

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