People do learn you know

Even if slowly.

Oil giants will be forced to tussle for contracts worth an estimated $16bn (£9.7bn) live on Iraqi television in a bizarre contest they fear could end up resembling a game show.

More than 30 energy companies, including BP, Shell and ExxonMobil may be forced to make last-minute alliances and reveal their offers in a tense round of bidding due to start early next week.

I\’m not so sure about doing it over hours rather than weeks but this is an attempt to rerun Brown\’s auction of the 3G spectrum (it was Brown, wasn\’t it? One of the few things the Treasury has got absolutely right over the years, anyway).

It\’s a great way to extract the maximum rent possible from natural resources. That rent, rightly, going to the national authorities, in just the same way that the rent from spectrum did. One way of describing it is the Georgist (or LVT) taxation of land rents, exapnding our definition of \”land\” a little here.

It\’ll make no difference to the price at which the companies sell their products, as profit maximisers we already assume they\’ll charge the maximum the market will bear. It just affects the revenue split between those pumping the oil and those who own the natural resource.

Great idea, at least in principle.

4 thoughts on “People do learn you know”

  1. When did the treasury get to own the rights to that?

    Anyway, I reckon it’s a great idea, and they ought to extend it all the way up to visible wavelengths. If you mount a lamp on your land, the rights for the light travelling through space are owned by the government. Astronomers can buy up particular wavelengths to prevent light pollution ruining their observations. Those who like it dark at night can try to outbid those inconsiderate people who put up security lights that turn on every time a burglar passes by, waking everyone up. People with shiny windows can get charged for causing those annoyingly bright flashes of sun glare. And the government gets to collect the revenue from everybody! Fantastic!

    On the subject of land, I’ve often thought there is enormous potential for expansion into the third dimension. Ownership of land is normally taken to be ownership of the surface. But it wouldn’t work without the miles of rock underneath it. I’m pretty sure the government own that too. And if you don’t pay your taxes on it, they can send in miners to take it away.

    The airspace above you likewise. While taxing air has often been mooted, and indeed the carbon permit system is a step in that direction, there are still far too many people who allow their airspace to be used for free, gaining the advantages of air travel and satellites without paying enough taxes on them. If you were to tax the people who owned this airspace, and make airlines and satellite operators bid for access, the government could make a huge amount, and it wouldn’t hurt air passengers at all because airlines already try to maximise profit. I mean, it’s not like the costs on the supply side of supply and demand has any effect on whether a service gets offered at all, is it?

    There are many more natural resources we could tax. Sunlight. Beauty. Rain. Even the matter everything is made of – the atoms and molecules and stuff – is an eternal part of the natural world that we can only borrow temporarily.

    Tax it. Tax it all.

    Is human intelligence a natural resource, and can we tax it? If you’re naturally smart, shouldn’t you pay more to encourage you to use it for the betterment of mankind? It’s a question to consider.

    There’s no end to where this line of thinking could take you. It’s an amazing idea.

  2. Brown was the beneficiary but not the architect. The auction was setup by what we now call Ofcom and not in their wildest dreams did they expect the spectrum to go fro £22bn.

    Since then the law has been changed and Ofcom has a duty to consider wider aims when devising auctions rather than just revenue raising.

    We shall see how good they are at then when they eventually get round to starting the 2.6GHz 3G expansion band.

  3. “(it was Brown, wasn’t it? One of the few things the Treasury has got absolutely right over the years, anyway).”

    The 3G spectrum auctions in the UK and Germany came at the worst possible time – when the telecoms industry was shedding value.

    It cost the telecommunications industry tens of thousands of jobs, plenty of them in the UK. Mobile telephone research and development took a substantial hit. The high costs the companies paid also lent themselves to high costs of services. The Treasury probably lost a fair amount of revenue too.

  4. “Ownership of land is normally taken to be ownership of the surface. But it wouldn’t work without the miles of rock underneath it.”

    Not in Japan. Property rights are IIRC deemed to extend to the centre of the earth. This has apparently (again IIRC) caused all sorts of problems about leaseholds for flats, over and above the normal idiocies of that area of property law that is.

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