It takes some doing to get four or five economists into a speech on reform of the wireless spectrum but Larry Summers, director of President Barack Obama’s National Economic Council, was up to the task.
Here is part of his speech today explaining the president’s plan to make available an extra 500 Mhz worth of wireless spectrum via auctions over the next ten years.
Mancur Olson famously wrote about the tendency of stable democracies to become sclerotic as the accretion of entrenched interests blocked progress. In a similar vein, the great economic historian Alexander Gerschenkron took as his central theme the ironic advantages of what he termed ‘economic backwardness’. Gerschenkron suggested that countries that were late to industrialise were sometimes able to bypass many of the dead-ends and outdated practices that encumbered the early industrialisers. These countries, he stressed, could start with an open canvas free from what John Stuart Mill once called “the slavery of antecedent circumstances”.
The argument here is that because America’s wireless spectrum is already heavily used, it may lose out to rivals with emptier airwaves, which they can quickly use for innovative technologies.
A couple of points. First, an implication of Mr Summer’s logic is that the president is removing a competitive disadvantage here, not creating a competitive advantage. That would suggest this kind of measure is needed to sustain – rather than increase – the trend growth rate.
Second, the link Read more