WHEN AUCTIONS WERE LAUGHABLE.

WHEN AUCTIONS WERE LAUGHABLE. L. Gordon Crovitz had an article in the Wall Street Journal (July 18) which describes some of the proposals for the federal government to use auctions of bandwidth rights to increase its revenues and to free up spectrum for other technological uses. Kids, back in the day, auctioning of rights by the government was almost inconceivable. Crovitz tells the story of how when Ronald Coase, the future Nobel Prize winner, proposed that the government use auctions to allocate radio spectrums, “a commissioner of the Federal Communications Commission jeered the idea, asking, ‘Professor, is this all a big joke?'” The way extremely valuable radio and television rights were allocated at the time was by what Crovitz calls “political cronyism”, comparative hearings “in which politicians and bureaucrats held broadcaster beauty contests to decide who got what.” I read some of the cases reviewing these hearings in my administrative law class in the late 60’s. The cases reviewed contests between groups of worthy citizens, where the decisions were made on the basis of which group was judged more worthy. The stakes were enormous. Lady Bird Johnson became rich in part by being a member of a group which was awarded television rights. It seemed bizarre, but Professor Paul Bator, a wise man, told us that there were people who thought there should be auctions, but he couldn’t imagine how it could be done. Now, of course, formally deciding which group is most worthy to receive a windfall from the government seems difficult to imagine.