How to Slow Economic Progress

Monopoly by its very definition means “the only seller.” Communists cannot live with the fact that a property owner (of a house, for example), is also a single, unique seller of this property or services derived from it.

The same goes for IP-communists: they hate property rights so much that they want to attack the most important property rights – full ownership control of services derived from inventions and original works authorship.

Currently, authors have economic incentives to mass-produce their works and sell limited services (personal use) of copyrighted materials to general public. IP-communists want to limit the scope of property rights to such extent that general public should be allowed to assume full ownership over all works that were designated for personal, non-commercial use ONLY. This communization and organized theft would completely destroy all profit motivation in today’s markets for copyrighted goods (a vast majority of all works produced). These fanatics would bring us back to the Dark ages, motivated by economic ignorance and good intentions.

In our fast paced world, it might serve small ventures better to simply produce, market and sell the product instead of patent it. That’s more resources invested in productivity. The patent process is long and expensive and by the time you have your patent, your produce might be out of fashion. Also, a patent is just a license to sue and if you’re a small firm, you certainly don’t have the resources to sue a larger one.

Patents are obsolete.

As I have argued in other places on IP, the elimination of IP would fundamentally transform the economy in ways Kinsella does not acknowledge in this article. Would it put a bunch of leeching lawyers out of work? One could hope. Is the present system unworkable? Undoubtedly; since reforms in 1793, the system has escaped the strict review of an eye like Jefferson’s. Would scrapping the whole system increase innovation and prosperity? Unknown and unknowable – it is possible, but it is not the guaranteed outcome prophesied.

The fundamental reasoning for my skeptical position on this topic is based on the motivations of the inventor. The inventor will act to maximize his own gains for any given invention. Today, there is a path to the mass market which is copyright and patent. Without that protection, many ideas may not be published or come to the attention of others at all. Who can make software in the face of Microsoft or Google? What incentive does someone have if their efforts to create something are simply swept up by a “more efficient” user of resources?

What then happens is obfuscation: Drug companies could contract with certain clinics or hospitals for the administration of certain cures. They could work to keep the compound secret via contract with patients, doctors, and/or other components of the supply chain. There would be no “generic” of an item because another company would have to re-engineer the compound or process completely.

Special machines would be subject to rent or lease agreements and not purchase. A company like Caterpillar could create a new earth-moving tool, but they could also work toward a contract model where they retain ownership of the actual equipment (since that is the only item of value to Kinsella). HP could invent a new printing technology, but then make it only available for use at a local Kinko’s instead of making them available for purchase.

Business models based on IP would change as the behavior of innovators trended toward greater secrecy. Controlling and contracting for access to the idea would replace patent law since control of who has access would then be the inventor’s only way to maintain monopoly status. Teams of lawyers would shift gears from enforcement of Microsoft’s patents into enforcement of Microsoft’s contracts.

Is IP a monopoly enforced by the state? Yes. Lots of people on this forum bristle no matter how you parse that statement. If the market were truly a level playing field of actors, I would perhaps feel differently about IP than I presently do. As an innovator, however, I know how my own behavior would change – and I am certain I am not alone in that sentiment. While a theoretical and perfect market may not need IP protections, such a system does not presently exist.

A more utilitarian position would be to make two changes to the existing system: (1) Using Jefferson’s criteria from 1790-1793, establish a system of grants based on an objective “point value.” See Bill James’ jury trial system for reference. Presently, we grant too many patents and copyrights. (2) Reduce the incentive of exclusivity to a period of 3-5 years. In 2011, this is enough time to go-to-market with an idea. If you are not established in the market within that time, someone else can obviously make better use of your idea.

Elimination of IP is the opposite extreme of our present system. Neither provide the best answer.

“Who can make software in the face of Microsoft or Google? What incentive does someone have if their efforts to create something are simply swept up by a “more efficient” user of resources?”

Aaahhhh.. but according to the anti IP folks all that matters is what’s best for the consumer. More efficient = better, Period. Full stop. End of discussion.

It’s not the more established, bigger companies fault that they have the resources to take advantage of economies of scale, and use lower prices to push out the much smaller start ups with far less resources
and no patent protection.

It is cheaper for the consumer that way, therefore it must be superior.

As far as I can tell, in this well-written re-hash of Kinsella’s original Against IP article with nothing new, except perhaps a new emphasis on the censorship angle.

He still fail to address directly the externality issue, which ironically is the gist of Sasa’s comments. Tomkow has a way of summarizing his entire arguments far more succinctly than I have ever been able to do. It is, however, satisfying to see at last an article by Kinsella where responses against his arguments outnumber those in support, counting myself, of course.

The fact that original IP laws came from royal decree is hardly surprising, given that England was a monarchy at the time. That IP cannot be a natural right given its limited term is hardly convincing, given that the natural right to life, last time I checked, also expires when you die. Ho hum.

The fact that the crown and the church had an interest in censorship is hardly surprising, and irrelevant to the contemporary circumstances surrounding the current function of IP laws, but that doesn’t stop Kinsella from giving it a try.

It is hard from me to get emotional over the thought of Susan Boyle not having complete freedom of expression by covering a Lou Reed song, because someone with right to prevent her use exercised that right. I’m amused that Kinsella enlists a scene from Britain’s Got Talent episode to make the point, perhaps thinking we would all share his outrage, but it’s a little hard for me to even visualize how that might have come out; I’m thinking of Provarotti singing the Light My Fire by the Doors.

Somehow, I’m happy to do without, and if copyright laws can prevent that from happening, then that’s just another reason I’m all for them.

Those familiar with the case will recall that Colting lifted most of the original book by Salinger, including the main character, his personality, supporting characters, some of the actual dialogue, and wrote a book set 60 years after the fictional time of Catcher in the Rye (notice any similarities?) and published the book with a statement on the jacket about being the “long awaited sequel to one of our favorite books” or something like that.

It was the very definition of a derivative work, so if Kinsella thinks we should all be outraged by the fact that Salinger (or his heirs) won the case, it can only be because of the very existence of copyrights in the first place, without which there could be no derivative work rights to violate or enforce. It is hard for me to be outraged that we were deprived of a rip off a book that was overrated in the first place.

This is not the abuse of otherwise good law, as Kinsella thinks proponents are sure to claim, nor is it the “law itself that is the abuse”. The abuse is clearly by Colting, who for whatever reason, attempted to take the shortcut to literary achievement by re-writing a book that has already been published, and then attempting to short-track marketing expenses by riding the shirttails of Catcher’s fame.

To put it simply, justice was clearly served.

And another thing…I hate this new software that requires a message to be broken into parts. It ruins the continuity. How is someone as verbose as I supposed to deal with that?

This issue reminds me a bit of the minarchist/anarchist debate so to see Wildberry advocating for IP seems consistent and to see Kinsellas arguing against also seems appropriate.

I can only add my practical experience. We are homebuilders and have borrowed from everyone but have copied no one. We have a small to mid sized firm that is considered “cutting edge” by the national builders. They appear to have copied much of what we have done on a much larger scale. We try to move on to the next product before they have offered something consistent with our last. Small firms have little appetite for patent disputes and we acknowledge that if we have “seen farther than others it is because we have sat on the shoulders of our predecessors”.

Homebuilding is not pharmaceuticals or technology but there are parallels.

“IP is particularly applicable when R&D costs and timeframes are very high and manufacturing costs very low. Writing and pharmaceuticals have much more in common in this regard. It is not sufficient to say that an industry or production process has an intellectual component, but when the production IS essentially an intellectual product, IP protections make much more sense.”
oh my god, us anti-IP peeps have never heard the R and D argument before. None of us have ever taken micro 101. I’m sure kinsella is about to reverse his stance.
ok. seriously. Kinsella has addressed said argument myriad times. one – if IP encourages the production of goods requiring heavy R & D, then it follows that without IP there would be a relatively increased incentive to produce goods that don’t require heavy R & D. For the utilitarian, the question becomes do we give up more value by forgoing the latter, than we get of the former? For the Austrian, this question cannot be objectively answered. per rothbard, interpersonal welfare-utility comparisons are impossible.

IF high fixed costs, and long time frames justify monopoly, then we should be granting monoplies to more than just essentially intellectual products.

if you tried to make a qualititative distinction between esssentially intellectual products and other products, where do you draw the line? do you have a non-arbitrary distinction?

finally: “And another thing…I hate this new software that requires a message to be broken into parts. It ruins the continuity. How is someone as verbose as I supposed to deal with that? ” – agreed.

I have a hard time with this actually. We libertarians like to say that private property is a ‘natural right’, but then have a hard time defining ‘property’. The main argument we reach for is http://en.wikipedia.org/wiki/Homestead_principle But, I don’t quite buy this. It feels like a special case, and one that almost never happens in real life.

I am trying to dig into the theory that ALL property rights are, at their core, about ‘monopoly’, conflict and force. So far, most responses look like this… :P. Ancaps don’t like it when govt is the one doing the enforcement. However, I see it as a core function of govt to protect (and define) private property. (Therefore I am a ‘minarchist’, not an ‘anarchist’??) That I have found people crazier than me, makes me happy for some reason. 😉

As a software developer, this fits in greatly with the ‘open source’ movement. ‘Open source’ makes sense along the lines of the ‘Bieber’ strategy above. Put your stuff out there for free, and you will saturate the market. And a lot of benefits follow from that.

@Kinsella – You are getting defensive about your circular logic and ascribing to me straw men which I have not raised.

If I borrow your car, who owns it? Although the car is in my possession, we agree to abide by certain rules which are established by you, the owner. Leasing and renting are various forms of limiting the rights, by contract, of the person in possession of a limited resource by the true owner.

If broad intellectual property rules are discarded altogether, use of new ideas will tend toward this model, as well. If the state cannot enforce the “ownership” of an idea, then the originator of the idea will seek to enforce that ownership, himself. To this degree, a greater level of secrecy will arise which is a hindrance to technological progress. Intellectual property allows an inventor to mass-market his idea; to share it with many people in an established “fair use” fashion. The overhead required for secrecy would necessarily limit access to those goods produced by the innovator.

Your headline is “How To Slow Economic Progress.” Perhaps I am reading this incorrectly, but is your intention to sloweconomic progress? Or is your point that state-enforced intellectual property constructs are slowing economic progress? I have couched my responses and refutations in terms of what causes the greater progress. I have not said that IP is a natural right (actually, the opposite); instead, I have said it serves as incentive to innovators. That incentive, however warped the current system may be, exists today. A better system requiring less intrusion, fewer lawyers, and fewer grants of intellectual property protection would lead to significantly greater economic progress. However, this is where you and I part: Abolishing the concept of intellectual property altogether would, I believe, do harm to technological and economic progress.

If your belief is that state-enforced intellectual property is immoral, unenforceable, and should be destroyed regardless of whether it benefits economic progress or not … then simply change your headline.

ITT: Wildberry fails by using consequentialist arguments against deontological claims.

You might as well be arguing that humans can be property because it creates a net benefit to humanity through cheap labor. It also promotes innovation because it allows the slave owners to focus on more scholarly pursuits because they don’t have to waste as many resources on keeping up the plantation.