Here’s a little fable for you.

Once upon a time, there was a king who granted all of the land in his kingdom to his friends the nobles. Then the kingdom expanded, and the new land was auctioned off but the only people whose bids had any chance of winning were the nobles or those courtiers who had become favored by the nobles. Then some mines were found, and the rights to those were auctioned off but again the only people who could win the auction for these new sources of wealth were the already-wealthy nobles and courtiers. This same pattern repeated many times, with some small turnover among the nobility but always with a noble class controlling all capital and a much larger non-noble class providing the labor. The nobles and their favorite lackeys called it a free market, not because it was but because it suited them to do so. The peasants, merchants and artisans were not fooled.

One hot issue nowadys is the potential return of the FCC’s Fairness Doctrine, which used to require that radio and TV stations provide equal time for opposing viewpoints on matters of public interest. The theory was that stations were trustees for a certain slice of the electromagnetic spectrum that had been set aside for their use, and that as trustees for a public resource they were required to serve the public in this way (among others). In 1987, for a variety of reasons that are not particularly important here, the doctrine was abandoned. Now that conservative talking heads dominate the airwaves and the Democratic Party controls (at least nominally) both houses of Congress, some liberals have expressed an interest in reviving the Fairness Doctrine as a way to get more exposure for liberal viewpoints. Never mind that reinstituting the Fairness Doctrine would probably result in creationists and global warming deniers demanding equal time under it, or that both the internet and advances in radio technology have seriously undermined the “public trustee” theory. Some people are pushing for a revival anyway. Some other people, instead of making reasonable arguments against it, have chosen to take the approach of saying that spectrum licenseholders had paid for their slice of the airwaves fair and square and should be allowed to do whatever they want with it. One example of this is serial liar and plagiarist Jeff Jacoby, writing in today’s Boston Globe.

Well, the supply of land is finite, too. Yet no one argues that real estate should be nationalized and licensed by the feds. It is obvious that land can be bought and sold in a free market without resulting in anarchy. Why should the broadcast spectrum be any different?

Besides the grammatical sloppiness of splitting what should have been the first sentence into two and then starting the second with a conjunction, and besides the noxious assumption that “bought and sold” means “subject to no regulation whatsoever”, there’s a lot wrong with that short passage. Many people do in fact believe that the finite nature of land makes it special and that land ownership should therefore be subject to special conditions. I do, as do the Georgists and Geolibertarians that I’ve written about. In that, we follow in some pretty hallowed footsteps such as those of John Locke and Adam Smith. I think those guys knew a thing or two about liberty, capitalism, etc. and it’s amazing to think that a paid professional commentator on such issues could be unaware of this line of thought. To be fairer to JJ than he ever is to those he bashes, though, such beliefs do not usually lead to a belief that real estate should actually be owned (what one might assume is meant by “nationalized”) by the state. That seems like correctness by accident, though, because it’s unlikely that someone who casually makes the “ownership = no regulation” assumption would appreciate or accept the distinction between state ownership of land and the state collecting rent on land – what the aforementioned groups actually propose.

Where JJ really goes astray, though, is in pretending that free markets have anything to do with this. Yes, both real estate and broadcast spectrum could be bought and sold in a free market without that resulting in anarchy, but that is not what has happened. Auctions do not automatically make a market free. The ease with which any auction might be rigged, in myriad ways, makes that an absurd belief. What has actually happened with both real estate and broadcast spectrum is very much like the kingdom in my opening quote, and the two-century absence of an actual monarch hardly changes the dynamics of the situation . . . which brings us at last to the thread title. Money laundering is a matter of performing transactions solely to remove the “taint” (usually of crime) from money, without actually creating any value or having any other effect. Spectrum auctions are exactly like that. They’re just a way of putting a “free market” blessing on a government-supported monopoly, and confer on the purchaser no special exemption from the normal rules of the market. In a true free market, exclusive use of a public resource would be considered a crime, and the government would not auction off licenses to commit crimes.