Why governments should spend big on tech

I was talking to a large Silicon Valley video-conferencing firm the other day. ‘Just for interest,’ I asked, ‘what would it cost to provide your service to 65 million people?’

The reason I asked is simple. I don’t understand why it is fine for government to spend £60 billion on a railway or £20 billion on an airport, but not, say, £300 million a year providing the whole country with first-rate video-calling technology.

The argument for the UK seems especially compelling. An English-speaking country situated on the Greenwich meridian is likely to gain disproportionate business advantage from the widespread adoption of video–conferencing. If we were to negotiate a collective price for the whole of the UK to access the service, this would make the technology inordinately cheaper and hence more widespread among large and small businesses. The magical property of network effects means that (as with the telephone or fax machine, or Facebook) the value of such technologies grows with every person who adopts it.

Yes, in theory at least, these things will happen naturally over time. But you could have said the same thing to Sir Rowland Hill when he introduced the penny post. Even if the market will eventually solve such problems, it cannot hurt to accelerate the process. In the case of video-conferencing, the incidental benefits are likely to be huge: there would not only be gains in terms of simple economic efficiency, but also in terms of pollution, transport congestion, property inflation and geographic disparities in wealth (the only surefire way of being wealthy and contented in Britain is to work in London without having to live there).

Most collective goods (technically ‘public goods’), such as sewage, defence, roads, railways, postal services and the internet itself, have emerged from a mixture of public- and private-sector involvement.