From the Mises blog; archived comments below.
Below is a letter to the editor I just sent in to The Economist in response to a pro-patent piece. I doubt they will publish it, but here it is.
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Your May 5th piece on Patently Absurd contends that “America’s system of intellectual property has played a crucial role in generating economic growth, encouraging inventors and entrepreneurs by ensuring that they can make money from their good ideas” and that “there is no doubt that, collectively, [patents] are a useful contribution to an economy that is still struggling to grow.”
In fact, there is quite a bit of doubt. The Founders had no proof that any innovation gains from a patent system would outweigh its undeniable costs; they had only a hunch. In the ensuing two centuries there has been no clear showing that patent systems result in net gains for an economy. In an exhaustive 1958 study prepared for the U.S. Senate Subcommittee On Patents, Trademarks & Copyrights, economist Fritz Machlup concluded:
“No economist, on the basis of present knowledge, could possibly state with certainty that the patent system, as it now operates, confers a net benefit or a net loss upon society. The best he can do is to state assumptions and make guesses about the extent to which reality corresponds to these assumptions. … If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one.” [Fritz Machlup, An Economic Review of the Patent System 79-80 (1958)]
The empirical case for patents has not have not improved in the following fifty years. As George Priest wrote in 1986, “[I]n the current state of knowledge, economists know almost nothing about the effect on social welfare of the patent system or of other systems of intellectual property.” [George Priest, “What Economists Can Tell Lawyers About Intellectual Property,” 8 Res. L. & Econ. 19 (1986).]
Similar comments are echoed by other researchers. François Lévêque and Yann Ménière, for example, of the Ecole des mines de Paris, observed in 2004:
“The abolition or preservation of intellectual property protection is … not just a purely theoretical question. To decide on it from an economic viewpoint, we must be able to assess all the consequences of protection and determine whether the total favorable effects for society outweigh the total negative effects. Unfortunately, this exercise [an economic analysis of the cost and benefits of intellectual property] is no more within our reach today than it was in Machlup’s day [1950s].” [François Lévêque and Yann Ménière, “The Economics of Patents and Copyrights” 102 (2004), available at http://www.bepress.com/cgi/viewcontent.cgi?article=1001&context=leveque]
More recently, Boston University Law School Professors (and economists) Michael Meurer and Jim Bessen conclude that on average, the patent system discourages innovation. As they write: “it seems unlikely that patents today are an effective policy instrument to encourage innovation overall” (James Bessen & Michael J. Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk (2008, http://researchoninnovation.org/dopatentswork/, p. 216). To the contrary, it seems clear that nowadays “patents place a drag on innovation” (p. 146). In short, “the patent system fails on its own terms” (p. 145).
There is no doubt that the patent system infringes on liberty and property rights, and imposes considerable costs on individuals and the economy. (See, e.g., the comments of Professor Alan Devlin, “Awarding an inventor twenty years exclusivity naturally entails considerable social cost — a cost that rises in direct proportion to the value of the covered invention. In certain instances — those where the patented technology is so useful that no substitutes exist — the award of a patent creates a complete economic monopoly.” [Alan Devlin, “The Misunderstood Function of Disclosure in Patent Law”].)
Given the inability of researchers to show that there are any net innovation gains to the patent system at all, much less gains that outweigh the system’s costs, there is no basis for supporting patent law. Property rights permits scarce goods to be used productively, in a cooperative division of labor. Ideas, knowledge, information, by contrast, may be used by many people at once. Information spreads, is transmitted, is learned, and emulated. Emulation itself is a crucial aspect of competition in a market economy. Imposing artificial scarcity on information–which is the goal of the patent system–is a form of censorship and an attempt to protect favored market actors from competition. IP advocates can hardly deny this. As free market economist and patent proponent William Shughart admits, “patents and copyrights slow down the diffusion of new ideas for a reason: to ensure there will be more new ideas to diffuse.” [William F. Shughart II, “Ideas Need Protection,” The Baltimore Sun (Dec. 21, 2009).]
As for the American Founders, Thomas Jefferson famously observed that “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.” And as the inventive Benjamin Franklin realised: “As we enjoy great Advantages from the Inventions of others we should be glad of an Opportunity to serve others by any Invention of ours, and this we should do freely and generously.” For the sake of property rights, liberty and, yes, innovation–the patent system should be repealed.
[Mises]
May 8, 2011 at 10:15 pm-
My contrary opinion is that, as an actual inventor working on an invention, the thought of the reward does keep me up working on my invention! Without it, i wouldn’t bother. So my real-world example supports the current patent system.
May 8, 2011 at 10:35 pm-
And if I was paid a hundred dollars every time I picked my nose, I’d start digging. The question is not whether the subsidy gives you incentive but whether the incentive is to do anything useful in the first place, much less something valuable enough to justify the costs.
May 8, 2011 at 11:40 pm-
Ooh, an actual inventor we have here, eh?
How about you go invent a way to make a profit without hiding behind the skirts of your bully State?
- May 9, 2011 at 12:12 am
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Why don’t you invent such a beast, since you think it is possible? You are only speaking to the already-converted otherwise.
May 9, 2011 at 8:46 am-
Um, such a way exists. It’s called offering your goods on the market. Moreover, convenient of you to ignore Seattle’s response… An instance of possible personal gain to you is by no means sufficient to justify, economically, the patent system, “real world” or otherwise.
- May 9, 2011 at 7:28 pm
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You are ignoring my argument that the incentive of the monopoly patent system produces extra effort on my part- like having a special reward in a race, but only for the winner! Withoput the extra incentive, would people be as inventive? I doubt it.
May 10, 2011 at 2:42 am-
So IP is just a kind of targeted, government-directed economic stimulation, like cash-for-clunkers?
May 10, 2011 at 5:04 am-
Nuke,
You are ignoring my argument that the incentive of the monopoly patent system produces extra effort on my part- like having a special reward in a race, but only for the winner!
And you are ignoring:
– the contradiction, i.e. IP being theft
– the “zero sum problem”, i.e. the incentive must be offset by disincentives
– externalities are all around us, indeed, unavoidable (apart from exotic cases which we can safely ignore in this debate), and if they were the reason for property rights, we would be long extinct
- May 10, 2011 at 10:28 pm
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I’ve been trying to understand this point, but you could also say that my having any private property because i want it in no wat justifies, economically, the private property system, ‘real world’ or otherwise.
May 9, 2011 at 1:46 am-
Nuke:
This is not meant to be applied to current society. Imagine a Libertarian Cruise Boat that is a Sovereign State where new rules can be applied and there are n o patents. So the question is whether you would chose to invent, just for the fun of it, or go drink a margarita and let someone else do the inventing?
May 9, 2011 at 9:13 am-
I don’t know about Nuke Gray, but I’ve been driven to create things since I was born. When I am unable to due to external constraints, my mood drops and I feel useless. If anything, patents get in the way of this by setting a minefield of obvious things I cannot create myself and use (there are so many obvious patents these days it’s amazing, just ask any programmer). Even if not obvious, I have to avoid using those ideas in my creations. It’s easy to look at things and figure out how they work and what principles they employ, and I love to take things apart and examine how they work, merely for the fun of it. This fills my head with ideas which I must tell my brain not to make use of, even though this is exactly how human brains work.
May 9, 2011 at 1:17 pm-
Shay, if you are speaking as a programmer I’d say as someone does some of that myself that I agree with you. But I’ve noticed that programmers tend to do more sharing. We spend huge amounts of time on improving or making applications but we also gain much from reviewing others code/etc. I think that collaboration and learning that’s available on the internet is one reason why we tend to side against IP more than other creative types.
It’s artists aren’t influenced by other artists, but they tend not to notice it in the same way. I’ve noticed this in the open source movement. You can find plenty of open programs out there that do useful things. With open source games, however, there is a lack of development even though many programmers show interest in it. The halt in making things tends to come down to graphic design and 3d modeling and other sorts of things that are necessary to make a good game. It seems like artists are just generally not for sharing on the same level as programmers.
There are a few good open source games, but the few that exist generally are all lacking in the graphics department.
May 10, 2011 at 12:19 am-
Apparently, new knowledge is always created from modification of some sort of previously existing knowledge. Knowledge embodied in programs is so massive that its useful modification probably is only possible with detailed study and/or reverse engineering of previously written stuff. On the other hand, artists can easily gain knowledge about any art by simply looking at it or listening to the music… there are no patents in arts.
- May 11, 2011 at 6:26 pm
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I didn’t mean to imply there was patents in art, but rather was referring to IP generically on this point.
However, I think the point you make is interesting. Programming is a lot more about study and knowledge than art, which is more talent driven, and so this may explain why programmers have understood that sharing of knowledge makes what they do possible.
- May 9, 2011 at 3:56 am
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Nuke,
patents do not enable people to earn money from selling their inventions. They merely restrict markets in them. You can sell your inventions anyway, based on the principles of private property.
- May 9, 2011 at 1:11 pm
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The problem is Nuke probably doesn’t want to actually make anything except the design. He wants to sell the design to earn money and let someone else take the risk for producing based upon his design.
- May 9, 2011 at 6:08 pm
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He could still do that too of course, just would probably make less money.
- May 9, 2011 at 9:05 pm
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I want to licence the design, not sell it!
- May 10, 2011 at 4:57 am
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Nuke,
you can sell your inventions, sell them and add a restrictive contract (e.g. they owe you money if they copy it), or lease them. This has nothing to do with IP. IP is about restricting competition, i.e. restricting people you dot have a contract with.
- May 10, 2011 at 10:30 pm
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Peter, could you clarify your terms? Earlier, you claimed that IP is theft. Now you say, and this sounds more in line with my understanding of it, that IP is restriction. What do you mean by IP, please?
- May 11, 2011 at 9:29 am
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Nuke,
Peter, could you clarify your terms?
Which ones? By the way, you said you want license and not sell, but do not explain what exactly the distinction is supposed to be, leaving me to do guesswork.
Earlier, you claimed that IP is theft. Now you say, and this sounds more in line with my understanding of it, that IP is restriction.
These are merely different ways if interpreting the same phenomenon, based on one’s perspective. From the perspective of property rights (in scarce goods), IP is theft. From the perspective of markets, IP is a restriction.
What do you mean by IP, please?
Well, it should actually be the IP proponents that define it, don’t you think? My analysis shows that there is no coherent definition. In fact, as soon as you shift from the metaphors to proper formal claims, you’ll notice problems right away.
However, I was able to reverse-engineer the arguments of IP proponents and come up with one that matches the typical cases. It’s not actually the direct definition of IP, rather the definition of copying, that is problematic. IP would then be merely the claim that copying should be illegal. Copying means if there is an object A, and someone creates an object B, that is causally related to A, and can be used for the same purpose as A, then B is a copy of A.
As you can clearly see, there are many problems with this. The main ones are, in my opinion, that causality extends to infinity (thereby making copying an omnipresent phenomenon), and the purpose is subjective (which prevents an objective evaluation). Also, from an economic point of view, we call objects that are causally related externalities, and objects that can be used for the same purpose substitutes. Why should they be illegal? That would make all competition illegal too.
So my conclusion is that the whole argument for IP is unscientific.
May 9, 2011 at 12:32 am-
1. Any system of property “constrains the liberty” of non-property holders against using that property.
2. The private owning of any good always incurs a “social cost” insofar as others are deprived of its enjoyment.
3. Ownership of any item gives the owner a “monopoly” on it.
4. The acquisition of anything makes the acquired thing “scarce” in the relevant sense and the scarcity is always “man made”.
5. Why should we give inventions “freely and generously” to others and not other products of our labor.
6. Do you think that property rights in any good evaporate when doing so increases the productive use of the good?
7. How are your arguments that we should “serve others”, “freely and generously” to promote the “productive” use of goods “in a cooperative division of labor” different from the standard socialist arguments against any form of private property?
May 9, 2011 at 3:08 am-
Patent comes damn close to be the monopoly on a mere “function”. This infringes on free will itself, not just on the “enjoyment of a specific acquired good”.
You cannot restrain “Free will” to certain “arbitrary” functions, less no property has any sense at all.
If I may not pull a cork out of my own bottle of wine in a certain “way”, wherever I am, because somebody else has the monopoly on that “way”, absent from any materiality, isn’t that obviously going quite a bit further than the mere ownership concept?
What about patenting Human genes? or a certain way of breathing? or a certain way of curing a deadly disease? What sense does that make?
Just call it slavery.
BTW: the opposite of slavery is not socialism.- May 10, 2011 at 12:23 am
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Slaves could be owned both privately (like in antebellum usa or ancient greece) and publicly (like in inca’s empire). So slavery is both compatible to capitalism and socialism. It is complementary to them.
May 9, 2011 at 7:55 am-
“1. Any system of property “constrains the liberty” of non-property holders against using that property.”
If an idea can be property then you might think this. Though I don’t see how you can conflate real property rights saying “you can’t use my car without my permission” with IP rights saying “you can’t use ANY car cause I thought of it first”.
“2. The private owning of any good always incurs a “social cost” insofar as others are deprived of its enjoyment.”
I don’t care for these utilitarian arguments. But you’re not even correct from a utilitarian sense. Private property in scarce goods is clearly (on net) a tremendous benefit to society even if you can point to a few people who THINK (incorrectly I suspect) that they’re worse off because of it. The many references in the letter show that it’s not remotely clear that patents benefit society, even though you can certainly point to specific individuals and groups who do benefit.
“3. Ownership of any item gives the owner a “monopoly” on it.”
But can you own an idea and exclusive rights to think and utilize that idea. You can’t just assume away the fundamental question.
“4. The acquisition of anything makes the acquired thing “scarce” in the relevant sense and the scarcity is always “man made”.”
You’re redefining terms to suit your ends. I acquire oxygen about 20-30 times a second. That does not make oxygen scarce here on earth. Those specific oxygen atoms perhaps, but that’s a silly position. What is meant by “scarce” is that if I take it as my own you are nessecarily deprived of it. If I take a car you can’t have the car. When I inhale oxygen you are deprived of the ability to inhale those specific atoms of oxygen, but there is a huge surplus of oxygen available to you and all of us and one O2 atom is as good as another when it comes to breathing. so we say (at least on the surface of the Earth) that oxygen is a non-scarce good. We can all have as much of it as we need to breathe without conflict. Ideas are even less scarce. Hypothetically one can imagine environments where breathable air IS scarce and becomes a highly valued property. An interstellar spaceship maybe, or a lunar colony. An idea is NEVER scarce. My having an idea in NO WAY deprives you of the same idea. Ideas are not scarce.
“Why should we give inventions “freely and generously” to others and not other products of our labor.”
We shouldn’t. You want to keep your idea to yourself you are free to do so. Just don’t be upset if someone else comes up with the same idea. The quotes by Jefferson and Franklin were just to show that the founders were not completely sold on IP.
“Do you think that property rights in any good evaporate when doing so increases the productive use of the good?”
No, he doesn’t think IP is, or ever was, a legit property right at all.
“How are your arguments that we should “serve others”, “freely and generously” to promote the “productive” use of goods “in a cooperative division of labor” different from the standard socialist arguments against any form of private property?”
I don’t think he ever suggested that.
- May 9, 2011 at 8:51 am
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“I don’t care for these utilitarian arguments. But you’re not even correct from a utilitarian sense. Private property in scarce goods is clearly (on net) a tremendous benefit to society even if you can point to a few people who THINK (incorrectly I suspect) that they’re worse off because of it. The many references in the letter show that it’s not remotely clear that patents benefit society, even though you can certainly point to specific individuals and groups who do benefit.”
Nice, total refutation of these stupid, shallow utilitarian “argument” (read: assertion.) Mises has over and over shown how a system of private property and free exchange benefits everyone from those not even engaged in economic activity to capitalists and entrepreneurs by making goods more widely available and increasing productivity and therefore wages of all those involved. Insofar as -scarce- resources – not ideas or anything which is non-rivalrous in its consumption – are concerned.
May 9, 2011 at 9:09 am-
I don’t recall having seen your comments before, but that was a very nice point by point refutation.
- May 9, 2011 at 10:19 am
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Jake,
I welcome you too (our new insect overlord). Well done.
If I may, I can maybe provide my own definition of scarcity, in order to make the distinction more clear and formal. By scarcity I mean mutually exclusive states. For example, a molecule of air cannot simultaneously exist in my lungs and your lungs. Both states are simultaneously impossible. At any time, some states are present and some absent. If you change the state(s), some become present and others absent. That is why there is a conflict in the first place. If all states simultaneously were possible, there would be no conflict and the question of property rights would lose its meaning.
If you drop the requirement for mutually exclusive states as a decisive factor for property rights boundaries, then all hell breaks lose. You could pick any combination of situations, for example, eating and apple and blowing your nose, and declare that there are property rights in “blowpple”, meaning for example that if you blow your nose, other people may not eat apples. Imagination is the limit.
May 9, 2011 at 2:03 pm-
@Jake May 9, 2011 at 7:55 am
The welcome wagon appears to be out.
“1. Any system of property “constrains the liberty” of non-property holders against using that property.”
If an idea can be property then you might think this. Though I don’t see how you can conflate real property rights saying “you can’t use my car without my permission” with IP rights saying “you can’t use ANY car cause I thought of it first”.
Of course, an idea cannot be property, IP does not protect ideas, and your example is not illustrative of anything that IP laws do. Ideas are specifically and explicitly excluded from the subject matter of patents and copyrights.
“2. The private owning of any good always incurs a “social cost” insofar as others are deprived of its enjoyment.”
I don’t care for these utilitarian arguments. But you’re not even correct from a utilitarian sense. Private property in scarce goods is clearly (on net) a tremendous benefit to society even if you can point to a few people who THINK (incorrectly I suspect) that they’re worse off because of it. The many references in the letter show that it’s not remotely clear that patents benefit society, even though you can certainly point to specific individuals and groups who do benefit.
Then I guess you don’t care for economics in general, which is a derivative of utilitarianism. If you have some evidence of how your net cost/benefit analysis comes out, and what evidence you have used to reach that conclusion, we would all be interested. It appears far from a settled issue.
“3. Ownership of any item gives the owner a “monopoly” on it.”
But can you own an idea and exclusive rights to think and utilize that idea. You can’t just assume away the fundamental question.
No. Ideas are in the commons.
“4. The acquisition of anything makes the acquired thing “scarce” in the relevant sense and the scarcity is always “man made”.”
You’re redefining terms to suit your ends. I acquire oxygen about 20-30 times a second. That does not make oxygen scarce here on earth. Those specific oxygen atoms perhaps, but that’s a silly position. What is meant by “scarce” is that if I take it as my own you are necessarily deprived of it. If I take a car you can’t have the car. When I inhale oxygen you are deprived of the ability to inhale those specific atoms of oxygen, but there is a huge surplus of oxygen available to you and all of us and one O2 atom is as good as another when it comes to breathing. so we say (at least on the surface of the Earth) that oxygen is a non-scarce good. We can all have as much of it as we need to breathe without conflict. Ideas are even less scarce. Hypothetically one can imagine environments where breathable air IS scarce and becomes a highly valued property. An interstellar spaceship maybe, or a lunar colony. An idea is NEVER scarce. My having an idea in NO WAY deprives you of the same idea. Ideas are not scarce.See my response to Kinsella. Scarcity is based on use. Demand creates scarcity, and production reduces that scarcity. Also, beware of equivocating “ideas” and IP.
“Why should we give inventions “freely and generously” to others and not other products of our labor.”
We shouldn’t. You want to keep your idea to yourself you are free to do so. Just don’t be upset if someone else comes up with the same idea. The quotes by Jefferson and Franklin were just to show that the founders were not completely sold on IP.
The competing objectives of IP is to 1) internalize the economies of production to the producer, and 2) encourage widespread public access to innovation. Your position is to choose to defeat one of the other; either externalize production, or deny access. This is the worst of both worlds, and is far from anything that could be called economically efficient.
“Do you think that property rights in any good evaporate when doing so increases the productive use of the good?”
No, he doesn’t think IP is, or ever was, a legit property right at all.
I can define you as irrelevant by defining relevance as “being in favor of IP”. That that make it a good definition? Kinsella defines property such that IP can never be property according to his definition. It is based on an equivocation of “ideas” and IP, and a definition of scarcity that excludes all informational goods. Easy.
“How are your arguments that we should “serve others”, “freely and generously” to promote the “productive” use of goods “in a cooperative division of labor” different from the standard socialist arguments against any form of private property?”
I don’t think he ever suggested that
He doesn’t suggest it, he advocates it. As do you, he asserts that an innovators choice is either to 1) produce willingly for external economies by releasing to the public domain, or 2) maintain secrecy in exchange for access. In the case of 1), we must produce for the public domain (i.e. slavery or socialism) or 2) assume the enormous transaction costs of secrecy surrounding each and every market transaction (diminishing the economic value of production) and thus forcing the outcome to 1).
This is antithetical to the principle of property rights in the private means of production. A social theory based on the public ownership of the means of production is the definition of Socialism that Mises advocated.
- May 9, 2011 at 9:32 pm
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The welcomes are appreciated by hardly necessary, I’ve been here quite a long time.
“Of course, an idea cannot be property, IP does not protect ideas, and your example is not illustrative of anything that IP laws do. Ideas are specifically and explicitly excluded from the subject matter of patents and copyrights.”
The distinction is trivial. If you prefer, substitute “patterns”, “arbitrary arrangements of chords”, or words, or shapes, boat hulls, whatever, in place of where I use the word “ideas”. The key element is that the state imposes monopoly on the use of an idea (or whatever you want to call it), a thing that can be infinitely copied without depriving anyone of use of it.
“Then I guess you don’t care for economics in general, which is a derivative of utilitarianism. If you have some evidence of how your net cost/benefit analysis comes out, and what evidence you have used to reach that conclusion, we would all be interested. It appears far from a settled issue.”
Disagree, you’re conflating a science (the study of human action) with a moral principle. Economics is the study of how people act to satisfy their needs. It is value-free in that it abstains from saying how people SHOULD act. But we’re not properly talking about the science of economics here, we’re talking about what ought to be not what is. It is not necessary to be a utilitarian to be an economist or an Austrian economist. I suspect even that an Austrian-utilitarian would be on rather precarious footing given what Austrian economics tells us about the impossibility of interpersonal comparisons of utility. Perhaps like the socialists, utilitarians cannot calculate.
“See my response to Kinsella. Scarcity is based on use. Demand creates scarcity, and production reduces that scarcity. Also, beware of equivocating “ideas” and IP.”
Well, I most certainly did not ignore the fact that oxygen COULD be scarce, given that I pointed out two such examples in my first post. I don’t know what the origin of scarcity has to do with whether it is or is not a key factor in something being property or not. And nothing about my post implies that something that is currently NOT scarce could some day become scarce. Again, I said this. BUT, ideas, or patterns or information, or whatever it is you think IP protects, are necessarily non-scarce, my gaining knowledge of something you know does not deprive you of that knowledge. The Idea/whatever is the ultimate non-scarce good.
“The competing objectives of IP is to 1) internalize the economies of production to the producer, and 2) encourage widespread public access to innovation. Your position is to choose to defeat one of the other; either externalize production, or deny access. This is the worst of both worlds, and is far from anything that could be called economically efficient.”
Since when is it the government’s job to “internalize the economies of production”. And what evidence do you have that IP is necessary to do this? This is a familiar strain of IP argument… without IP how would the poor artists, musicians, inventors, etc. eat? I don’t know, but if there is a demand for their products I’m pretty sure a way can be found. It’s not justifiable to impose immense cost and trouble on everyone so that artists can rest easily at night secure in the knowledge that their antiquated business model is protected by state’s guns and prisons.
As for the second goal, that has to be the most self-apparently absurd justification that could be offered. Clearly IP exists to PREVENT the public’s access to innovation by locking it up behind monopolistic privilege. Even if someone independently discovers some new drug, mechanism, etc. They can be sued for infringement of someone else’s IP… how is that making innovation available to the public?
“Kinsella defines property such that IP can never be property according to his definition. It is based on an equivocation of “ideas” and IP, and a definition of scarcity that excludes all informational goods. Easy.”
Well you can, but I think his definition is better than yours. What is your definition of scarcity that does not exclude informational goods?
“He doesn’t suggest it, he advocates it. As do you, he asserts that an innovators choice is either to 1) produce willingly for external economies by releasing to the public domain, or 2) maintain secrecy in exchange for access. In the case of 1), we must produce for the public domain (i.e. slavery or socialism) or 2) assume the enormous transaction costs of secrecy surrounding each and every market transaction (diminishing the economic value of production) and thus forcing the outcome to 1).”
No, that’s just what you imagine must the be the case. But we’ve no reason to accept your imagined scenario as realistic. No, the innovator can sell his goods on the free market, he can develop new techniques, technologies, new products, and benefit from the recognition he receives as a producer of innovative stuff. He just can’t prevent someone else from offering the same or very similar good to his own.
If you think the IP of a product is the critical and determining factor in it’s marketability I’d think you know very little about the production of goods. Most inventors are not failures because they lacked IP, but because they lacked the ability, means, or desire to actually provide a good product. I develop new products for a living, very rarely do we make any attempt to file for patent protection or encourage our clients to do so. It’s a huge expense and hassle that is largely irrelevant for all but the largest corporations who can actually afford to litigate. On the occasions we are tasked with expanding a client’s IP the motivation is quite the opposite of what you imagine. It’s not “oh my, how can we market this product without exclusive rights to (usually trivial) feature A?” rather it’s “see if you can’t find some way to make my competitor have to do something more expensive, more time consuming, or of lesser quality to compete with me”. I’ve never seen a product get shot down because the developer was unable to acquire a patent, it’s a “nice to have” rather than a necessity. I HAVE definitely seen products not make it to market because someone else’s patent prevented it, and I’m ot talking about “knock-off” products, but a totally new application or a very significant improvement over the patented product (in at least one case we hit upon a very significant improvement to a patented idea long before we ever knew it was patented… we were the independent inventors who were unable to benefit from our innovation because of the IP system. “BUT” you might respond, “if it’s really that much better then patent the improvement”. And by doing so you’d reveal your naive few of IP laws. Possibly we could spend 20 thousand dollars and at least 6 months trying to get said patent. In the end it would come down to the whim of the patent examiner and his personal opinion of whether our idea was patent-worthy or not. In the industries I work with the risks of all that effort being for naught do not remotely justify the limited gains from a patent. We went back to the drawing board and resumed work on an inferior concept that was not patent protected. Our client never bothered patenting the design we did for them. They were hard pressed to pay for the limited development we did for them, it would have more than doubled their costs to get a patent, and would probably cost ten-fold more to actually defend it.
“This is antithetical to the principle of property rights in the private means of production. A social theory based on the public ownership of the means of production is the definition of Socialism that Mises advocated.”
Depends on how you define property rights doesn’t it? That seems to be the fundamental issue so I look forward to your elaborating on YOUR definition. Like I said before, I think you are naive to the nature of production if you think IP protection is a part of “the means of production”
Your argument also fails because Mises’ very insightful point was that socialist planners could not know the proper prices of the factors of production and so could not rationally allocate resources or economize production (or even know what to produce, but that’s not really relevant here). Non-scarce goods do not have prices, so the whole calculation argument is moot. Calculation is not necessary in factors of production which are effectively limitless. Or do you consider the extra oxygen your body will consume in deciding whether or not to exercise???
- May 10, 2011 at 12:50 am
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You are wrong. What patents are solely about is ideas. Patents are precisely the ownership of ideas. Not any ideas though but only those having to do with designs.
Copyrights are supposed to be an ownership of text and pictures, e.g. objective encoding of ideas in a medium, but try writing your own version of harry potter – i am sure u d be sued your pants off.
May 10, 2011 at 2:11 am-
You are wrong. What patents are solely about is ideas. Patents are precisely the ownership of ideas. Not any ideas though but only those having to do with designs.
Patents create monopolies. They are legal papers that you purchase from the government that gives you the right to sue anybody that uses their own private property in a manner that infringes on your patent.
You are also able to sell patent licenses to third parties. These licenses are, in effect, promises not to sue.
Copyrights are supposed to be an ownership of text and pictures, e.g. objective encoding of ideas in a medium, but try writing your own version of harry potter – i am sure u d be sued your pants off.
Copyrights make it illegal to perform certain actions on certain items. Namely certain types of acts of copying on certain types of items considered ‘original works’ by the USA government.
It is very specific and arbitrary on what type of ‘copying actions’ are legal and which ones are not legal. Also it’s very arbitrary what is and what is not covered by copyright.
- May 10, 2011 at 2:12 pm
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The ‘governmental’ origin of patents is irrelevant, just as is origin of copyrights. What now matters, not what was during the age of water-mills. What you said is just what i said.
- May 11, 2011 at 9:41 am
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The ‘governmental’ origin of patents is irrelevant
Hardly. I gave a accurate definition of patent. You didn’t.
“Ownership of Ideas” is not only physically impossible it is something that patents don’t even attempt to provide for.
What now matters, not what was during the age of water-mills
Now that is something that is irrelevant.
- May 11, 2011 at 1:18 pm
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Wildberry,
Demand creates scarcity, and production reduces that scarcity.
Demand does not create scarcity, it makes it more apparent. Or you could also say that it makes it relevant from social point of view. Production does not, per se, reduce scarcity, rather it increases the value of existing goods. Maybe it is possible to say that homesteading reduces scarcity, but that also requires making too many assumptions.
Also, beware of equivocating “ideas” and IP.
As I said many times before, since it is impossible to interact with ideas without the use of media, the difference is only meaningful in metaphysical sense. From the point of view of human action, they are equivalent.
May 9, 2011 at 10:17 am-
Actually, there is extensive evidence that patents increase the rate of innovation. Those countries with the strongest patent laws have the fastest rates of innovation and diffusion of innovation. Those countries with weak or non-existent patent laws have the weakest patent laws. Before patent laws became widespread in the western world, the rate of innovation was slow enough that the per capita income of the west had not changed in centuries. Note that many of the other conditions of a free market, such as low taxes, property rights, etc existed for centuries before per capita income started to increase in Europe. If you believe this is just correlation, the burden is on you to prove it since all the evidence is against you.
May 9, 2011 at 10:48 am-
Halling is a patent attorney and a shill for the system; he never presents any serious arguments or evidence. I just presented several serious analyses that conclude otherwise; many others exist–see http://blog.mises.org/10217/yet-another-study-finds-patents-do-not-encourage-innovation/. He confuses correlation with causation. The argument that American/Western prosperity is due to our patent system is so ludicrous one hardly knows how to respond to it. But if he wants a rebuttal of his “presumption,” it’s been done.
May 9, 2011 at 10:52 am-
“Ask, and you shall receive”
May 9, 2011 at 1:29 pm-
“Halling is a patent attorney and a shill for the system; he never presents any serious arguments or evidence.”
I’d be careful before opening up a comment on here with an ad hominem.
@Hall: The number of pictures of cats with captions increased exponentially with the rise of the Internet. Does this mean that anytime an Internet is created, the number of pictures will exponentially increase? No. Correlation, no matter how strong, does not mean causation. It hints at the possibility of, which then has to be proven.
- May 9, 2011 at 5:04 pm
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Ad hominem? He was right in the context of this thread. The guy presented absolutely no evidence to back up his assertion here. I have no reason not to trust that he has done similar elsewhere until he’s proven otherwise.
- May 9, 2011 at 6:09 pm
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A shill is someone who adopts a position in their own self-interest. It is quite obvious that the vast majority of patent attorneys who are vocally in favor of patents are doing so since it is in their self-interest, since their arguments are almost never sincere. They never take up the challenge to show evidence of how they know the patent system is “worth it” by their own standards. They never even pretend to have a clue as to what the numbers are. How do they know it’s a net positive? What is the cost? What is is the cost of lost innovation? What is the value of innovation gained? What is the net? Instead they trot out obviously, transparently horrible arguments like “Well duh America is doing pretty good so patents must be a good idea”.
- May 10, 2011 at 12:26 pm
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shill n. One who poses as a satisfied customer or an enthusiastic gambler to dupe bystanders into particpating in a swindle. v. 1. To act as a schill for (a deceitful enterprise). 2. To lure (a person) into a swindle.
Where is the swindle and who is participating?
- May 9, 2011 at 1:23 pm
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Mr. Kinsella,
Your article seems a bit like lining up 10 Keynesians and 10 Austrians, each criticizing each other for not being able to “prove” who is “right” with empirical evidence. I fear the same is true of the argument regarding the social utility of patents, despite the experimental evidence you cite in the Torrance paper. If it were possible to conduct social experiments by simulation to a certain conclusion, wouldn’t that finally have settled the Keynesian/Austrian debate?
Instead we are left with analysis based on assertions and assumptions which lead us to reasonable conclusions, pending further analysis. In that vein, allow me to make the following critical observations:
1. Your personal criticisms of Dale Halling is a little bit of the pot calling the kettle black. Is it that he does not have the correct client list? Certainly a person who derives his livelihood by the same means as another cannot be criticized him for doing so. If anything, it is more reasonable to criticize the anti-slavery advocate who nonetheless practices in the trade.
2. Your continued reliance on the “ideas are free” line of reasoning is a disservice to the analysis. As you know, neither “ideas” nor “information” is adequate to define or describe the subject matter of patents. I’m sure at this juncture it is no necessary for me to elaborate, but in this context, your continuous use of the Jefferson quote is unpersuasive.
3. You are in no better position to distinguish causation from correlation than anyone else. Certainly one can observe that the Industrial Revolution and the economic prominence of the patent system coincide historically. The debate as to the relative influence on one upon the other is just that, a debate; neither side is relieved of the burden of persuasion.
4. Since the subject of economics is a utilitarian analysis, there is nothing wrong with making an economic case one way or another. All speculative analysis has problems, as you correctly point out. To argue that you have no burden for your side of the argument is, however, ludicrous. Both sides of a debate have the burden of persuasion.
As I have mentioned before, the strongest arguments for IP appears to be the economic argument of externalities, and the conflicting economic principles of private property rights to production on the one hand, and public access to innovations on the other. As far as I know, you have never addressed this issue.
5. It is not valid argumentation to demand that the other side produce data that no one has. You do not have cost data on the patent system that you can weigh against benefits, either. For all the litigation costs you can identify, you cannot identify the litigation that was avoided by the IP system of rights and enforcement, to give one example. While counting the cost of litigation against IP, you ignore the deterrence value of litigation for those other market actors who otherwise might be tempted to violate established market rules, just as the threat of prosecution for crimes has some deterrence effect on some would-be criminals. These effects appear very difficult to quantify on either side of the argument. Evidence on either side is welcome.
6. On the subject of monopolies, again there is a problem of equivocation of meaning and connotations, as I have previously said. All property rights are monopolies of exclusive use. Even market monopolies that attempt to create monopoly prices are defeated by free market operations, which is why, for example, cartels are so difficult to maintain.
Even if the terms you use were clearly defined, the issue of their harmfulness is in question as a general matter. It is competition that is critical, not monopolies. The study of the effects of supposed monopolies in relations to anti-trust regulation is at best uncertain; (see David Friedman’s Law’s Order).
As he points out by using the example of word processing and spreadsheet software, at each stage a market monopoly existed (i.e. WordStar, WordPerfect, and MicrosoftWord), yet the market was able to respond and replace existing monopolies with what was subjectively perceived by consumers as superior products. This is strong evidence that even the existence of market monopolies and first-mover advantages are not sufficient to prevent competition. That is an important data point to keep in mind with arguing against IP on the basis of its monopoly characteristics.
7. Finally, for now, many posters here echo your “scarcity” argument for denying property protection for intellectual production. Most who have followed your writings have by now figured out how you use this definition, combined with “ideas are free”, to assume your conclusion that IP cannot be treated as property. (See Paul Cwik’s paper, just to name one that some here might not have encountered).
Scarcity is a function of usage. As one poster here observed, oxygen is not scarce here on earth, yet he ignores how scarce it is when he is under water, or when it is in his lungs. At one time oil was not scarce, but as demand developed it went from a non-scarce nuisance, to hotly contested property, even in your very limited terms.
It is the desire to possess something that makes it scarce, not the difficulty in making a copy from the original. Desire-to-possess makes for an economic good, and economic goods imply property rights to exclusive use. To assert otherwise is to advocate for production for external economies, or to demand secrecy in exchange for access.
In this regard, IP laws reduce scarcity by internalizing the externality of free-riding, and encouraging widespread access to innovations through normal market operations, based on a system of assigning property rights in the production goods of a producer who uses his private means to make them. A fundamental principle of liberty is the right to keep and use what you have made with your own means.
- May 9, 2011 at 5:34 pm
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If you are going to impose a system on society like patents, you should have the evidence. If you want to infringe upon the rights of others, you should at least be able to make the utilitarian case.
“As you know, neither “ideas” nor “information” is adequate to define or describe the subject matter of patents. ” – Yes, it is adequate. You assume that it’s not adequate, but a patent is ownership of a pattern or design which is made up of ideas and information.
“you cannot identify the litigation that was avoided by the IP system of rights and enforcement, to give one example. ” – Provide a reasonable example of litigation IP would avoid. I’m not seeing how you come up with this.
“WordStar, WordPerfect, and MicrosoftWord” – these are under copyright law, not patent, so you could make a similar program to handle word processing. There wouldn’t be an alternative other than using a typewriter if these were under patent.
“Scarcity is a function of usage. As one poster here observed, oxygen is not scarce here on earth, yet he ignores how scarce it is when he is under water, or when it is in his lungs” – Oxygen is always scarce by the definition we are using, which is why it has the potential to be ownable (such as when compressed, underwater, etc.) Scarce means that 2 people can’t have the same oxygen at the same time. The reason oxygen is not owned in the atmosphere is due to abundance and the fact it is always moving.
“It is the desire to possess something that makes it scarce” – 100% wrong, as stated above, it’s the fact 2 people can’t have the same item at the same time.
“Desire-to-possess makes for an economic good” – only in combination with scarcity, otherwise you promote the self-contradiction that is inherent in IP, that you can own property that limits others property rights. As I’ve pointed out before, you have to assume that IP is higher than regular property otherwise it’s either completely worthless or an unresolved contradiction.
“externality of free-riding” – You have to assume your conclusion to arise at “free-riding” as being some sort of problem.
“A fundamental principle of liberty is the right to keep and use what you have made with your own means” – If I take this point to it’s full extent you should be advocating the ownership of words, ideas, techniques, methods, fashion designs, etc. But you’ve made the point of rejecting IP as including these things, so I think your statement needs a lot of revision to work.
Perhaps “A fundamental principle of liberty is the right to keep and use what you have made with your own means, except if it’s really simple and/or doesn’t fit some arbitrary guidelines for ownership defined by case law and legislation.”
- May 10, 2011 at 5:34 pm
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@Matthew Swaringen May 9, 2011 at 5:34 pm
If you are going to impose a system on society like patents, you should have the evidence. If you want to infringe upon the rights of others, you should at least be able to make the utilitarian case.
Mises made the case when he observed that in the absence of IP, the producer of intellectual goods would be producing, for the most part, for external economies. As far as I know, this has never been addressed by Mr. Kinsella, or you.
Also, as you well know, whether one infringes upon the rights of others is a matter of the prior assignment of rights and/or liabilities. This is a Coasean externality problem, but regardless of what methods are used to internalize the benefits, the principles are consistent with the libertarian principles of private property, and the idea of keeping what you make.
Yes, it is adequate. You assume that it’s not adequate, but a patent is ownership of a pattern or design which is made up of ideas and information.
As has been repeated often by now, we are all capable of distinguishing between an idea and a book. You assume such a distinction is unimportant or impossible to make, but many others, including me, disagree. The ability to distinguish between one thing and another is rather important in nearly every sphere of the human experience. You can distinguish between a sound and a letter, a letter and a word, word and sentence, Dr. Zoos and the Gettysburg Address. To lump all of this together in the same pile in the middle of the room and call it all “ideas” is to destroy whatever useful meaning exists in the English language. It is simply the fallacy of equivocation, nothing more.
Provide a reasonable example of litigation IP would avoid. I’m not seeing how you come up with this.
If you know that if you steal my car, you will have to pay a penalty greater than the value of the car, you will buy it from me instead of stealing it. That saves us both from having to carry the burden of going to court. By having clear property rules and consequences spelled out in advance, commerce can proceed in an orderly, efficient manner without the need to call the cops in on every deal. That is an example.
these are under copyright law, not patent, so you could make a similar program to handle word processing. There wouldn’t be an alternative other than using a typewriter if these were under patent.
This was meant to be in response to the issue of monopolies and competition. Software may be protected by both copyright and patents. The idea of using software for word processing on a computer is an idea. Mere ideas are not patentable or copyrightable. If what you say were true, that once patented that no one else could write an application, then how is it under our system of patents and copyrights we have more than one manufacturer for most products we consume, including word processing software?
After all, they were produced within the context of IP laws, and surely a company like Microsoft or Lotus123 would have taken full advantage of any IP rights they could obtain. Yet miraculously, even IP AND a monopoly didn’t stop competition from producing superior alternatives. How do we have any innovation at all, if IP stifles innovation so? Something is wrong with your logic here.
Scarce means that 2 people can’t have the same oxygen at the same time. The reason oxygen is not owned in the atmosphere is due to abundance and the fact it is always moving.
The reason oxygen is not owned is because that would be bad public policy. But you do own the oxygen you enclose within your body or on your property. Water exists in abundance and is “always” moving (oxygen and water at absolute zero are not moving), yet there is something called water rights. How do you explain that?
100% wrong, as stated above, it’s the fact 2 people can’t have the same item at the same time.
This is why scarcity is such a weak concept of property rights. In one sense it means rivalrous. In another sense, it means conflicts in ownership claims. Two people can occupy land, which is scarce, but if they are not in conflict over its possession, then it is non-scarce. Oxygen is scarce but not property, yet under the right circumstances, there can be life-and-death conflict. Tangible goods are scarce, but intangible goods are non-scarce, so land itself can be property, but an intangible interest in land is also property. And you think IP is arbitrary?
only in combination with scarcity, otherwise you promote the self-contradiction that is inherent in IP, that you can possess property that limits others property rights. As I’ve pointed out before, you have to assume that IP is higher than regular property otherwise it’s either completely worthless or an unresolved contradiction.
This sounds like Peter Surda talking…
If you and I enter a contract for the transfer of land, who owns the paper that it is written on? Is that the basis you would use to resolve a property interest in the land transfer? Whoever owns the paper owns the land? Is that an unresolved conflict that can only be resolved if we decide which right is higher, the owner of the paper the contract is written on, or the rights defined by what the contract says? In my view, this is a no-brainer. The value of the contract is the property interest that is fixed upon the paper, not the paper it is written on. Why is this such a difficult concept?
You have to assume your conclusion to arise at “free-riding” as being some sort of problem.
Are you saying that free-riding does not exist in general, or just not in the context of IP? Free-riding is an externality to the producers of the good that is being appropriated. You don’t think externalities are a problem? Have you read Coase? Mises?
“A fundamental principle of liberty is the right to keep and use what you have made with your own means”
<blockquote – If I take this point to its full extent you should be advocating the ownership of words, ideas, techniques, methods, fashion designs, etc. But you’ve made the point of rejecting IP as including these things, so I think your statement needs a lot of revision to work.
It is a fundamental principle. In all but some special cases, of which IP is an example, it works without much refinement or revision. The issue is how this principle is applied within the context of IP. In order to have coherency, IP would need to support this principle while excluding these things you list from the subject matter of IP protections. Is that possible?
Apparently so, which you or anyone else can figure out in detail in about the amount of time it takes you to read a novel. IP is not the simple thing you seem to suppose it is, but a coherent set of rules and concepts that seeks to strike a balance between conflicting interests, like most other laws.
If you are asking why I am not advocating what you suggest, it is this; ideas are in the public domain (or commons if you prefer) and one function of IP is to make sure the public domain is protected, while also securing the rights to IP. The laws attempt to strike a balance between these conflicting objectives by including only subject matter that is protectable, and excluding everything else. What is excluded is either in the public domain, or treated as a trade secret. Over time, even protected work moves into the unprotected public domain. In order to understand this dichotomy in the subject matter of IP, it is necessary to distinguish between one thing and another.
So if you want to debate what IP is and how it operates, it helps to be precise about what the subject matter is, how it is defined, and how it is distinguished from subject matter that is not protectable. What I can say in short is that mere ideas are not and should not be protected by IP laws. To do so would undermine the flow of information and use of accumulated knowledge in the same way that protecting the use of the alphabet would have a negative consequence for the use of written language. In neither case is it desirable to own their use, but neither restricts how they can be used and combined. Both are essential tools of language, communication and knowledge. IP seeks also to protect our individual rights to those public resources.
The fact that one important function of IP laws is to protect this public right to ideas seems to be lost on most IP opponents; in fact they claim just the opposite by equivocating ideas and IP.
Perhaps “A fundamental principle of liberty is the right to keep and use what you have made with your own means, except if it’s really simple and/or doesn’t fit some arbitrary guidelines for ownership defined by case law and legislation.”
First, do you disagree with what I wrote before you elaborated? I doubt it. It is a general rule of private property rights. But as we both know, no right is absolute; all rights are circumscribed by the rights of others. All rights have the potential for conflict with the rights of others. Resolving these conflicts peacefully and equitably is in fact the subject matter of case law and legislation, in principle. Even the fact that it fails in SOME cases does not prove that it must fail in ALL cases.
So in the end, any attempt to resolve some specific conflict of rights must employ an approach, a system of rules that draws distinctions between what are otherwise fuzzy lines and boundaries; exactly WHEN are your rights curtailed by mine? HOW? To just blow that entire problem off advances nothing. To say that something is arbitrary is just another way of saying that in order to arrive at a reasonable outcome, a desirable outcome, difficult decisions are made that COULD have been made along different lines, sometimes even with the same outcome for a given set of facts.
Sometimes what appears arbitrary in one context makes good sense when viewed from a larger context; for example what seems like arbitrary decisions about where to draw the lines of IP in the context of a single case, makes more sense when viewed in the context of public policy, like the policy of making sure the public domain remains public.
- May 11, 2011 at 8:47 am
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Wildberry,
Mises made the case when he observed that in the absence of IP, the producer of intellectual goods would be producing, for the most part, for external economies.
And Walter Block made the case, multiple times, that producers of anything are for the most part producing for external economies. I pointed it out several times, only for you to keep ignoring it. Face it or shut up.
Furthermore, what is “intellectual good” and who are “producers of intellectual goods”? How do you distinguish it from other goods and other producers? You don’t say. If you can’t avoid vagueness, then shut up. Noone is interested in your voluminous posts about nothing.
As far as I know, this has never been addressed by Mr. Kinsella, or you.
Nevertheless, it was addressed by me. So stop making deceptive claims.
Anyway, since you scarcely post anything that is simultaneously relevant, coherent and correct (or at least falsifiable), you should shut up altogether. Just make one post a week, saying “I’m still clueless, stupid and want others to recognise my non-existing greatness”. That would save both you and us a lot of time.
- May 11, 2011 at 10:51 am
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@ Peter Surda May 11, 2011 at 8:47 am
If you ever said anything that was intelligible or interesting, you would be a lot more fun. Instead you are just rude and a whiner.
Are you saying that Walter Block argues there are no internalities, for the most part? Funny, if I show up to work, I get paid. Output equals income. Strange.
No one here, as far as I know, has ever addressed the issue that Mises raises, and Coase and Friedman explore in depth, as externalities are related to the economics of IP laws. Besides, I rarely understand what you are saying, if anything.
“I’m still clueless, stupid and want others to recognise my non-existing greatness”.
What are you doing? Are you a psychiatrist too?
I support your idea of saving time. No need to respond anymore. You contribute nothing.
- May 11, 2011 at 11:13 am
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Wildberry,
If you ever said anything that was intelligible or interesting, you would be a lot more fun. Instead you are just rude and a whiner.
I regularly provide a point by point refutation of your claims, only for them to end up being ignored by you. Your assertion that they are not intelligible is not very persuasive, since you, to my recollection, never asked for a clarification. When I provide a reformulation nevertheless, you ignore it. In general, nothing you say is very persuasive anymore, due to the discredit you brought to yourself due to your blatant lies.
Are you saying that Walter Block argues there are no internalities, for the most part?
No, that is not what he says. Yet another demonstration of ignorance of elementary logic and how you instead prefer to confuse. I already explained this point several times. If it was unclear to you, you have had many opportunities to ask for a clarification. Yet, you did no such thing, instead make huge irrelevant posts.
Funny, if I show up to work, I get paid. Output equals income. Strange.
Since this has nothing to do with my argument, I will only repeat how you deliberately avoid confrontation all the time.
What are you doing? Are you a psychiatrist too?
I’m not a psychiatrist, I just want to warn others about you. There are, of course, other possible explanations for your behaviour. Speculating about which of them is correct is pointless. What matters is that your con is stopped.
By the way, thank you for proving my point. Did you address my objections in your “reply”? No, you didn’t. So, shut up.
- May 11, 2011 at 1:41 pm
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“Blah, blah, blah.”
Sir, I’m afraid I have no idea what you are saying. Can you please clarify?
“Blah, blah, blah.”
I’m still having some trouble. Can you try again?
“Blah, blah, blah. Shut up!”
Got it.
- May 11, 2011 at 5:48 pm
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Wildberry,
if you limit your posts to ones like this on a weekly basis, you would do the whole world a great favour. Noone would need to read your voluminous fairy tales anymore.
- May 9, 2011 at 6:15 pm
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Mr. Wild,
Your article seems a bit like lining up 10 Keynesians and 10 Austrians, each criticizing each other for not being able to “prove” who is “right” with empirical evidence.
It’s a blog post, not an article.
And it is you guys, you IP proponents, who insist such laws are justified for utilitarian reasons. Yet you blame us when we answer you on your own terms. That’s rich. Moreover, even on your own standards the evidence is not on you side. Did you not read the things I quoted and cited? Where is ANY serious evidence that the patent sytsem does any net good? Halling’s ridiculous off the cuff non-serious correlation-is-causation argument? Are you kidding??
1. Your personal criticisms of Dale Halling is a little bit of the pot calling the kettle black. Is it that he does not have the correct client list? Certainly a person who derives his livelihood by the same means as another cannot be criticized him for doing so. If anything, it is more reasonable to criticize the anti-slavery advocate who nonetheless practices in the trade.
This is absurd. Halling has no serious arguments. He is a patent lawyer arguing for the legitimacy of the legal system to which he owes his profession. I have tangled with him before — see http://blog.mises.org/11559/shugharts-defense-of-ip/ , http://c4sif.org/2010/12/patent-shills-want-to-make-patents-incontestable/ , http://c4sif.org/2010/11/are-patents-%E2%80%9Cmonopolies%E2%80%9D/ . There is every reason to think he is a shill.
I, by contrast, have no reason as a patent lawyer to argue for the abolition of the patent law. How does this make me a shill? Lolwhut?
May 9, 2011 at 9:09 pm-
What milking both extremes of the IP debate makes you then?
- May 10, 2011 at 11:59 am
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@ Mr. Kins, May 9, 2011 at 6:15 pm
It’s a blog post, not an article.
Right again! I can see that makes all the difference.
And it is you guys, you IP proponents, who insist such laws are justified for utilitarian reasons. Yet you blame us when we answer you on your own terms.
So far, I have only argued that the principle of keeping what you make SHOULD apply to inventions and works of authorship. I have argued that the laws that currently attempt to secure that right are justified, in principle. That is not the same as saying that there is absolutely nothing wrong with IP laws. I am beginning to understand that equivocation is one of your favorite techniques.
Moreover, even on your own standards the evidence is not on you side. Did you not read the things I quoted and cited? Where is ANY serious evidence that the patent system does any net good? Halling’s ridiculous off the cuff non-serious correlation-is-causation argument? Are you kidding??
Look, I don’t plan to make a career out of debating this subject. But I have to wonder, what would “evidence” of what you seek actually look like? Can you prove that tobacco actually does any net harm to the U.S. Economy? I mean sure, you can show me a few people with cancer, but how do you prove that such cancer is really a net harm? Is it reasonable to demand that your opponent merely produce the impossible to prove his point?
As an exercise in futility, let me offer a high-level analysis of the situation. If we assume that all IP related litigation cost is on the negative side of the ledger, what is on the positive side? It is some approximation of all of the economic activity that is conducted under the premise of IP laws and government enforcement of last resort, less the transaction costs. Decrease the viability of enforcement, increase the transaction costs. Decrease profit from production, eliminate production for anything below the marginal cost to produce it. Increase the profit, reduce demand through competition. IP is subject to market forces as is any other good.
What we can intuitively see is that the size of the economic activity is greater than the litigation costs plus transaction costs, and therefore in an economic sense must be a net positive. From that point we can only speculate on the mutual causalities involved.
We can look to the operation of the laws under a specific fact pattern, and where the outcome seems wrong, try to understand the specifics of that case, and attempt to generalize that understanding in terms of suggested modifications and/or revisions. That is a long, hard process of evolution, much like common law.
Anyone is free to attempt to collect empirical evidence to support their case, and all evidence is subject to criticism. Certainly simulations are highly suspect in predicting social outcomes, otherwise they would be a primary policy tool, and praxeology would be at best redundant.
This is absurd. Halling has no serious arguments. He is a patent lawyer arguing for the legitimacy of the legal system to which he owes his profession. I have tangled with him before — see http://blog.mises.org/11559/shugharts-defense-of-ip/ , http://c4sif.org/2010/12/patent-shills-want-to-make-patents-incontestable/ , http://c4sif.org/2010/11/are-patents-%E2%80%9Cmonopolies%E2%80%9D/ . There is every reason to think he is a shill.
I, by contrast, have no reason as a patent lawyer to argue for the abolition of the patent law. How does this make me a shill? Lolwhut?I am always fascinated to see what you choose to respond to. I am not surprised in this case that you chose to argue that your ad hominem directed at Halling is justified, and that you, on the other hand, are immune from such criticism. It is at least as reasonable to wonder why someone advocates against their own self-interests as it is to suspect someone’s motives for advocating what is in their self interest. It seems to me that both are suspect, though perhaps for different reasons.
I am curious to know if you find being against the very body of laws that generates your income interferes with either your practice or your politics; it seems common that one or the other often suffers for one’s principles. On the other hand, not everyone that promotes laws that are in their own self interest is a mercantilist or a shill. Discretion appears as important here as elsewhere.
In any case, it seems a serious charge for one attorney to call another a shill, since it implies dishonesty and lack of ethical principles. I wonder if Halling is seriously offended?
And, I didn’t call you a shill, you inferred it.
- May 10, 2011 at 2:00 pm
- May 10, 2011 at 6:31 pm
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@Stephan Kinsella May 10, 2011 at 2:00 pm
Mr. K.,I have not seen an argument.
To see, you must look.
I have no idea. the burden is not on my. IT’s on you utilitarians. I think your whole utilitarian case is metholodically and morally flawed. But you don’t even satisfy your own standards. YOU are the ones who want to say state monopolies that infringe liberty and restrict competition and the free flow and use of information are justified b/c of some “net gain” theory. You tell me what it means and you tell me how you propose to prove it.
This one paragraph assumes so many conclusions one hardly knows where to start.
The net gain is obvious. If all innovation is subject to IP laws, and if IP works in the best interest of the innovator (even if unfair to the consumer by making the pay monopoly prices, yet not all innovators choose to go the patent route?), and given that some large part of all commerce involves some element of IP, it is not necessary to show the positive contribution of IP specifically, since all positive and negative consequences are already baked into the transactions. We can say that since we have innovation, any negative effect of having IP must be overwhelmed by the positive effect; otherwise innovation would have eventually disappeared instead of exploding over time.
So, on the positive side you have the GDP. On the negative side you have litigation costs to both protect and defend IP. That number is a small percentage of GDP. How could IP be a net negative? If it cannot be negative, why would you insist that an IP advocate find a way to distinguish that part of the GDP negatively affected by IP (cost) and that part positively affected? The only question seems to be, could it be better (or worse) within the range of net positive?
On the other hand, for an opponent to show that IP is a net negative, you would have to show how the transaction costs would change in your hypothesized economy that does not rely on any form of IP. You would have to show that the new hypothesized GDP would be a net increase in the absence of your no-IP assumption and the absence of IP litigation costs, over what it otherwise would have been in the presence of IP. Can you do that, even by simulation?
At least if someone was inclined, there would be real number to analyze to make the pro-IP case you seem to demand, yet you feel no need to offer anything like such an analysis for your no-IP proposal. I don’t get it.
As an exercise in futility, let me offer a high-level analysis of the situation. If we assume that all IP related litigation cost is on the negative side of the ledger, what is on the positive side?
good quesiton.
You respond as if I said nothing after this. It was a rhetorical question, right?
YEt another problem with the coherence of your entire utilitarian approahc. But the burden is on you to come up with a coherent argument, in your proposal to restrict property rights and liberty.
You have a habit of trying to create burdens in your opponents that you don’t accept yourself. Worse, you seem to be saying that property rights and liberty have no restrictions, nor should they. Is that what you really mean? If so, how does that comport with a general theory of property rights in a division of labor society? I must have misunderstood you.
Anyway, as I said economics is a derivative of utilitarianism, and one issue we have yet to argue about is the issue of externalities. That is an economic issue, is it not? Doesn’t that fall into the realm of the economics of law?
I agree, they are not all. But there is good reason to believe Halling is. He has had may opportunities to back up his ridiculous assertions and never even tries; it is transparent that he is just mouthing the arguments he’s heard his law profs make and that serve to keep his laws in force.
Well, not everyone is as brilliant as you and me. Maybe you are right, I don’t really care, but I would hope you have more than a feeling when accusing someone of knowingly participating in a swindle. And by name?
I hope so. He is advocating serious restrictions on my liberty. At most all I’m doing is insulting him.
I guess that’s fine, as long as others view it that way, too. Like all rights, even your right to say what you want has limits…
I wonder if you can say, in one little sentence or two, how you believe that he is “advocating serious restrictions of your liberty”?
I know the long version, but is there a short one?
- May 11, 2011 at 9:36 am
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Wildberry,
To see, you must look.
Before making an argument, think one must.
Yoda.
- May 11, 2011 at 9:52 am
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Wildberry,
So far, I have only argued that the principle of keeping what you make SHOULD apply to inventions and works of authorship.
I do not recall anyone suggesting inventions and works of authorships (which you still haven’t defined, by the way) should not be kept. In fact, I recall several people pointing out that you are free to do that. So stop confusing.
What we can intuitively see is that the size of the economic activity is greater than the litigation costs plus transaction costs.
No, we do not see that. That is merely your imagination, an unfounded claim lacking scientific rigour. Presenting your imagination as “facts” has been quite a common occurrence in your posts, by the way.
- May 10, 2011 at 6:16 pm
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Eureka – now I understand Fed policy! All you have to do is take the “ideas are free” and “ideas are not scarce” arguments and apply the same arguments to money!
- May 10, 2011 at 6:36 pm
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Ha! I think you have it!! Fed monetary policy revealed!
- May 10, 2011 at 7:54 pm
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Viagra was developed by a company with the specific hope of a monopoly patent- IP. The company strove toward this goal because of the reward they expected, and got, from the current system. Can an anti-IP writer point to a real example where Viagra has negative externalities? (I suppose rhino hunters might be out of jobs if rhino horns are no longer needed. anything stronger?)
May 10, 2011 at 8:02 pm-
Are we really supposed to believe that no one would have the incentive to invent Viagra without IP laws? That otherwise there are no profits in being the first to market such a drug? Sometimes such arguments just amaze me. They suggest a fundamental failure to understand how markets work.
- May 10, 2011 at 8:02 pm
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Also, I can’t believe your comment made it through the spam machine
- May 10, 2011 at 8:49 pm
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Viagra took a long time to develop, and the patent terms give them time to recoup the costs. Would anyone have taken as long as it took without some sort of protection to get back what they invested? If there were no IP, they would not have bothered, since, in an anarcho-capitalist country, there product would have been copied endlessly. The current IP system rewards companies for taking the time to make new, wanted, products. As such, it works.
- May 10, 2011 at 9:06 pm
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Central planning works! Maybe if we extend the patent to 100 years, we’ll get even more amazing stuff. Monopolies are the key to progress!
- May 10, 2011 at 9:17 pm
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When competing with the patent-backed economies of the free-market West, Central economies did not work- they collapsed of their own accord, as the believers became disbelievers. Patent laws have lasted a lot longer, and patent economies have not collapsed when competing against no-patent communist societies. your argument has holes in it.
- May 11, 2011 at 2:23 am
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Worse yet, this talk of government-directed “incentivization” smacks of social engineering, ant-farm style. Leave the door for thoughts like that open, and the potential of legislating “incentives” aimed towards achieving GDP-based “growth” becomes unlimited.
P.S. Having grow up in the USSR, I have to laugh when anyone invokes the USSR as an example of IP-free society. That’s a very nuanced argument, you know. Especially when the Soviets did, in fact, have rudimentary forms of IP. They just were clueless about its part in the planned economy puzzle. If IP “works” in the West, it could be just because the monopoly-produced and goverment-incentivized product is traded in an otherwise relatively free, competitive market.
- May 18, 2011 at 10:05 pm
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From private companies- Viagra! From Anti-I.P. writers- vitriol… I know which one I prefer.
- May 10, 2011 at 11:45 pm
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What is really surprising that it was not invented earlier – it is not a complicated drug like interferon. You would think that it would have been invented in China or India where there was no IP until recently. However, with both countries experiencing explosive population control, erectile disfunction was not perceived an important problem.
The market had to wait until it had a target market – the Republican Party, who were not too embarrassed to admit they had a problem. It must have taken a lot of courage for Bob Dole to break the taboo on this subject. Without it, I’m not sure that Viagra would have had a large enough market if you had to buy it as a prescription drug.
May 11, 2011 at 3:28 am-
Sadly, I too suspect The Economist wont publish it. Its simply too long for the letters page, unless they run it on its own page as its own piece.
Don’t hold your breath. Their record of giving any airtime at all to Austrian points of view, other than the very rare tip of a hat to Hayek, is lamentable.
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