Tuesday, June 16, 2009

Debating Intellectual Property Rights

via FEE blog

The following excerpts are by Jeffrey Tucker:

Should You Give Away Your Precious IP?

Here is a scenario that helps you see how the state's IP laws distort people's judgment.

Let's say I get a phonecall from the company "Simply Asia" and they inform me that my grandfather invented a unique noodle shape and that the patent on it passed to me in probate. Now, until this moment my life had been perfectly normal, flowing by day by day like every other life, but now I am aware of a long-hidden treasure in my family history.

What do I think? I think: $$$$

You might too.

You would want to know more about this company, how many noodles they expect to sell, how much money you are going to get per noodle, how big a house you will be able to buy, how fast your new Maserati will drive on the autobahn, and what date you can retire from your day job.

So it is. Not that you had anything to do with the stupid noodle design. It is an accident of fate that the patent happened to fall into your hands. But you don't think about that fact. All you can think about is you newfound wealth. You are imagining a scene from the opening of the Beverly Hillbillies. Black gold, Texas tea.

Sadly, the company that wants to put the noodle in production informs me that they want to give me $500 and be done with it forever. I'm thinking: who do these people think they are? What a ripoff. My family's noodle design is fantastically valuable! Maybe I will produce it myself and not let these robbers in on the deal. The gears in my wild imagination start turning and turning and turning.

However, it turns out that I really don't know anything about the noodle market. I don't know how to make them, package them, sell them, or anything else. A month or two goes by and I lose interest in the whole noodle thing. Having turned down the company, I'm no worse off than I was before. But I won't call them back and take the $500 because, who knows? Maybe next year I can get into the whole noodle-making thing.

We know the end of the story. Nothing happens. The noodle stays out of production. The noodle company is sad but not devastated. There's always another shape of noodle it can sell.

That's the story of hundreds of books. Thousands of books. Tens of thousands of books. Thanks to horribly egregious copyright legislation, books published from the late sixties onward are typically under copyright for 100 years, meaning that someone besides the author is charged with administering rights. That person is usually completely ignorant of book publishing and the content of the book or why it matters. All he wants is money that is not there. More often than not, this person will refuse to make a deal. And the book stays out of print, for the rest of our lifetimes at least.

This is what copyright extensions have amounted to: great impediments to printing books and preserving literary legacies. Already, provisions of the law have burned more books than most despots in human history. And this has only just begun. We are going to be seeing this nonsense for another 100 years at least.

Sad to say, many of the books that will fail to be printed are great books. But they might as well have never been written. The author is in no position to protest because he or she is six feet in the ground. His or her legacy, about which the heir cares less than nothing, is buried too.

The problem is that within the structure of IP there is no rational way to price anything. The property is made scarce only by the state. Its scarcity is otherwise wholly artificial. The function of prices is to rationally allocate scarce goods but when goods are infinitely reproducible and made scarce only by the state, pricing too becomes akin to pricing under socialism. You just end up making things up in the face of radical information asymmetries.

The Mercantilism of Our Time

Someone handed me a book the other day – a cult classic among music geeks – and urged me to read it, and, when I had finished, sign my name in the front cover. That way I could be added to the already long list of readers in the front cover, each of whom add added his or her scrawl to the book after having read it.

How charming!

Except for one thing: this is complete violation of the spirit of intellectual property law. All these readers were sharing the same book instead of buying a new copy. Think of the revenue lost to the publisher and the royalties lost to the author! Why, if this gets out of hand, no one will ever write or publish again! These readers are all pirates and thieves, and they should probably be subject to prosecution.

So goes the rationale behind intellectual property law. It's what economists call a "producers' policy," design to create maximum revenue for one side of the economic exchange, consumers be damned. In that sense, it is exactly like trade protection, a shortsighted policy that stymies growth, robs consumers, and subsidizes inefficiency. It's Bastiat's "petition of the candlemakers against the sun" all over again.

Apply the IP principle consistently and it's a wonder we tolerate public libraries, where people are encouraged to share the same copy of a book rather than buy a new copy. Isn't this also an institutionalized form of piracy?

The defenders of IP would have to admit that it is. They are often driven to crazy extremes in sticking the claim that copying is a form of theft.

I asked one emphatic correspondent about the ethics of the following case. I see a guy in a blue shirt and like it, so I respond by wearing one too. Is this immoral?

No, he said, because the color blue occurs in nature.

What if a person draws a yellow happy face on the blue shirt? Can I copy that? No, he said, this would be immoral. I must ask his permission and gain his consent. Actually, it's even worse than this case suggests. If even one person had previously worn a blue shirt with a happy face, no one else on the planet would be able to do that without seeking consent.

It should be obvious that if everyone were required to seek the permission for the use of every infinitely reproducible thing that "belongs" to someone else – every word, phrase, look, vocal inflection, chord progression, arrangement of letters, hair style, technique, or whatever – or if we were really to suppose that only one person may possess the unique instant of any of these things, civilization would come to a grinding halt.

Sadly, this is where our laws are tending. Right now, there are laws being considered that would step up IP enforcement to the point of clear absurdity. Just last week, YouTube removed the background music of countless videos for copyright reasons, even though such videos help popularize the music. Even home performances of songs written in the 1930s – young kids playing piano and singing – were taken down at the behest of producers.

People are talking about extending patents to sports moves, extending copyright to story lines, imposing a central plan on computer design to comply with patents, forcing everyone on the planet to obey U.S.-style IP laws by means of military force. Kids are going to jail, institutions are hiring internal police forces to watch for IP violations, and an entire generation is growing up with a deeply cynical attitude toward the entire business of law.

We are at a prohibition-style moment with regard to IP, just as with liquor in the 1920s. The war on the banned thing isn't working. Those in power face the choice of stepping it up even further and thereby imposing a militarized state in place of anything resembling freedom, or they can admit that the current configuration of law has no future and bring some rationality to the question. Other societies have indeed crushed innovation with this very impulse.

Do you know why we celebrate Columbus Day instead of Cheng Ho Day? Cheng Ho was a great Chinese explorer who, in the early 15th century, took his fleets to Africa and the Middle East, but he was forced to stop when the elites in the home country began to feel threatened by his discoveries. The Chinese government won the war on exploration, and became static and inward. You can win a war on progress but the gains over the long term are few.

Realize that for young people today, the initials RIAA and MPAA are the most hated on the planet – the equivalent of the IRS of a past generation. The heck of it is that these are private entities. Think what this means.

Capitalists of the world, please pay attention: you have a serious problem when an entire generation is being raised to HATE private, capitalistic institutions. Now, you and I know that these institutions are doing something illegitimate, namely enforcing "intellectual property," which is really nothing but state coercion. Still, this besmirches the reputation of free markets. So too is a generation of socialists being raised to hate U.S. foreign policy on the belief that its export of IP is a form of capitalist imperialism.

For these reasons, no one has a stronger interest in abolishing intellectual property than supporters of capitalism.

The New Frontier in IP

1 comment:

  1. The “scarcity theory of property rights” is being advanced by a number of scholars at the Cato and Von Mises Institutes. Using this theory they suggest that there is no justification for intellectual property rights. The logical conclusion of their theory is intellectual labor is not deserving of pecuniary reward.

    Are they correct that scarcity is the basis of property rights? See http://hallingblog.com/2009/06/22/scarcity-%e2%80%93-does-it-prove-intellectual-property-is-unjustified/

    Is the conception of ideas and inventions subject to scarcity? See http://hallingblog.com/2009/06/25/scarcity-and-intellectual-property-empirical-evidence-for-inventions/

    Is the distribution of ideas and invention (technology diffusion) subject to scarcity? See http://hallingblog.com/2009/06/25/scarcity-and-intellectual-property-empirical-evidence-of-adoptiondistribution-of-technology/


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