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Comment by msandford | Hacker News Reader

That's the problem with trying to value an asset that's granted by the government. Just because they have acted a certain way in the past doesn't guarantee that they will continue to act a certain way in the future. Spectrum auctions could be considered similarly. One day the government could decide to auction off tons more spectrum, devaluing the existing licenses. It'd suck that they did that, and that in hindsight you paid too much for what you got, but that's just the way it works.

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It would suck for existing spectrum holders, but not for the spectrum consumers.

The same thing happens with any commodities, anyway. If I just bought a diamond mine and they discover a massive vein of new diamonds in an easily accessible place, that sucks just the same.

Ironically the diamond industry is controlled by a few large companies inflating the price by artificially restricting availability.

Or, in the case of Copyrights, a government granted asset can be an entire business model, and when efficient at making money, the industry becomes a force that can strong arm the government to further its interests at home (Copyright term extensions) and abroad (SOPA/TPP).

> That's the problem with trying to value an asset that's granted by the government. Just because they have acted a certain way in the past doesn't guarantee that they will continue to act a certain way in the future.

I see that problem with any asset; 'past performance is no guarantee ...'. And one reason any asset can be unpredictable is the behavior of actors on which it depends; for example, if Apple changes the rules or features for the next version of iOS, your app might not be viable anymore. I don't see government as a special case.

Oh I totally agree. Trying to value an asset that someone else controls in a meaningful way is very difficult. Like you pointed out with Apple or whatever.

Valuing an asset based solely on income in a true market is the best way to not get screwed. True markets are few and far between, though. The degree to which your market is regulated determines your external risk.

> Valuing an asset based solely on income in a true market is the best way to not get screwed. True markets are few and far between, though. The degree to which your market is regulated determines your external risk.

I think you make good points, but I'd add that certain regulation is necessary for a "true" market: 1) The regulation that prevents the fraud and cheating that distorts markets, and 2) regulation that prevents the market from ignoring the externalities that are not factored into price, such as health, safety, labor rights, and environmental impact.

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