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Stan Liebowitz on copyright and incentives

From the Surprisingly Free podcast by Jerry Brito. Liebowitz’s basic argument seems to be this. Most copyright advocates think we should have a finite copyright term, selected to maximize incentives and “efficiency.” Legislators should select a long enough copyright term to incentivize creators—but not too long. According to him, “economists could hypothetically calculate the exact copyright terms necessary to incentivize creators to make new works without allowing them to capture ‘rents,’ or profits above the bare minimum necessary”. Thus, this economic approach might recommend some copyright term like 14, or 28, or 100 years, but in any case finite (as it is now).

However, we don’t do this in other areas of life or commerce, even though we could. For example, one could argue that many professions are overcompensated, since the actor gets more pay than he “needs” to be incentivized by his salary. A Michael Jordan would probably be a great basketball player at only $1M a year instead of the $10M a year he actually makes. So the excess $9M is a “rent” that “we” “allow” him to “keep.” If we were really serious about optimizing policy we would form an ideal tax system that would take away his $9M excess rent, and he would still provide the same benefits to the public, but at a lower “cost.” Yet we do not do this, for a variety of reasons. “Therefore,” we have no reason to do it in the copyright arena. “After all,” they are all just “property rights.” If it’s okay for Michael Jordan to make $10M a year, then why can’t JK Rowling make $1B a year from her copyright on her novels? Why do we want to reduce the copyright term to try to take away her “rent”? We don’t want to take away Jordan’s rent. So why take away Rowling’s? Ergo, copyright term should be perpetual.

Now Brito is more skeptical of copyright. I seem to recall him sounding more skeptical in previous podcasts (and he sounds more skeptical here http://jerrybrito.com/2012/07/25/how-copyright-is-like-solyndra/, although he seems to accept the idea that it would be okay for the state to enact copyright law if it really did lead to more creative output), but here he seems to share the empirical-utilitarian policy mindset of Liebowitz, at least to the extent that he thinks we need some copyright, but because he senses that the restrictions it imposes on others’ liberty is somehow different than those that accompany normal property rights (say, in a car), he thinks that the term should be limited. Liebowitz is more consistent. Like Galambos or Rand, he wants to take the logic of IP—of treating immaterial things as if they are scarce—to extremes. Brito senses something is wrong, but has trouble formulating a coherent criticism of Liebowitz’s approach. He seems at one point to sense that there is some difference between a law protecting your property right in your car (Liebowitz’s argument) and in a song or book, but he doesn’t have a solid propertarian-normative foundation. The right response, which Brito seems to sense but then shies away from, is that property rights in a scarce resource like a car prevent you from using someone else’s property; while copyright allows the copyright holder to prevent me from using my property (my body, my printing press, etc.) as I see fit. That is the connection that Brito almost glimpses, but backs away from. For to make this connection would require him to distance himself from the empirical approach and to have to adopt some normative principles, which seem to be regarded as “unscientific” by the utilitarian-empiricist approach so popular among academics today.

Stan Liebowitz on copyright and incentives

Stan Liebowitz

OCTOBER 16, 2012

Stan Liebowitz on copyright and incentives

Stan Liebowitz, Ashbel Smith Professor of Economics at the University of Texas at Dallas, discusses his paper, “Is Efficient Copyright a Reasonable Goal?” According to Leibowitz, economists could hypothetically calculate the exact copyright terms necessary to incentivize creators to make new works without allowing them to capture “rents,” or profits above the bare minimum necessary. However, he argues, efficiency might not be the best goal for copyright.

Liebowitz argues from a fairness or justice perspective that society should not favor an economically efficient copyright law, but one that treats creators of copyrighted works the same as workers in other types of industries. In other industries, he argues, workers are allowed to capture and keep rents.


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