“In retrospect, of course, the licences look expensive. But in retrospect, shares or houses sometimes look expensive. Like any other market, an auction simply matches willing buyers and willing sellers – it cannot protect them against their own mistakes.”
He’s right. With hindsight, the damage done to the sector by the huge 3G licence payments looks trivial next to that done by over-capacity, incautious acquisitions, huge borrowings and straightforward venality (or combinations thereof). As Klemperer also points out, encouraging big businesses to write huge cheques payable to ‘HM Treasury’ is an extraordinarily direct and efficient way of funding Government activity. Maybe we should come up with some more resources to auction? Airspace? Ocean? Mineral exploitation rights?