New Labour should use the windfall from the sale of mobile telephone licences for a bold act of social engineeringby Michael Prowse / June 20, 2000 / Leave a comment
The british government has raised more than ?22 billion by auctioning chunks of the radio spectrum to mobile phone companies-seven times more than expected. By using the latest game-theory techniques, the treasury has squeezed huge sums out of such savvy companies as Vodafone and Orange. Rarely has nerdish intelligence been put to better use. The challenge now is to find an equally imaginative way of using the windfall. True to his image as a tight-fisted son of the manse, Gordon Brown has talked only of paying off the national debt.
Yet thanks to the public spending squeeze of the early years of the Blair government, Brown is already set to meet his targets for the debt-to-GDP ratio. The lump sum raised by selling off the radio spectrum can and should be used in other ways. There are, of course, numerous public services short of cash. But a once-and-for-all windfall should not be squandered on current spending. Far better to treat it as an endowment fund and use the income from the fund to provide something of continuing value for the public as a whole. That way, one permanent public good-the radio spectrum-would be converted into another permanent public good, and there would be no sudden change in the fiscal stance.
But what kind of public good should Brown promote? He need not look far for the answer. The notion of creating a “stakeholder society” has been gaining support in both Britain and the US. This is not stakeholding in the sense used in the mid-1990s by Will Hutton and others-the attempt to dilute the rights of shareholders and shift power to employees, customers and others with more informal stakes in businesses. I mean stakeholding in the sense that Yale Law School professors Bruce Ackerman and Anne Alstott discuss in their recent book, The Stakeholder Society. Ackerman and Alstott want to give all young Americans a financial stake in society in the shape of a capital sum of $80,000 (chosen because this is the current cost of a four-year education at an elite US university). They believe that young people should be able to use their stakes for whatever purpose they please, but they envisage most of the money being spent productively-for example, to pay for vocational or higher education, to start up businesses, or to finance down-payments on houses. They see the provision of stakes or capital sums for all…