That's what the regulators told Coase when he proposed auctions.

The problem with this argument is that it presumes spectrum would be allocated productively (or "fairly") in the absence of an auction. But that historically wasn't the case, and isn't the case with any number of other scarce resources doled out by governments.

Even among good-faith claimants, there is competition, obstinacy, incompetence, and waste; those things are fundamental to all of enterprise. That's true of auction winners as well, of course, but at least we're (a) getting revenue for the resource, and (b) forcing people to put their money where their mouth is: you don't write a 9-10-figure check without having at least some earthly clue of how you'll put the thing you bought to use.