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Source link: http://archive.mises.org/11151/ip-and-artificial-scarcity/

IP and Artificial Scarcity

December 3, 2009 by

Someone recently told me “I just ran across a few of your interviews and writings. I was particularly impressed with the point that IP creates scarcity where none existed before. Despite its obviousness, it is characteristic of IP that had not occurred to me before.”

So I thought I would elaborate a bit on this. The “artificial scarcity” insight is indeed a good one, but it is not mine. From pp. 33-34 of Against Intellectual Property:

Ideas are not naturally scarce. However, by recognizing a right in an ideal object, one creates scarcity where none existed before. As Arnold Plant explains:

It is a peculiarity of property rights in patents (and copyrights) that they do not arise out of the scarcity of the objects which become appropriated. They are not a consequence of scarcity. They are the deliberate creation of statute law, and, whereas in general the institution of private property makes for the preservation of scarce goods, tending . . . to lead us “to make the most of them,” property rights in patents and copyrights make possible the creation of a scarcity of the products appropriated which could not otherwise be maintained.[64]

Bouckaert also argues that natural scarcity is what gives rise to the need for property rules, and that IP laws create an artificial, unjustifiable scarcity. As he notes:

Natural scarcity is that which follows from the relationship between man and nature. Scarcity is natural when it is possible to conceive of it before any human, institutional, contractual arrangement. Artificial scarcity, on the other hand, is the outcome of such arrangements. Artificial scarcity can hardly serve as a justification for the legal framework that causes that scarcity. Such an argument would be completely circular. On the contrary, artificial scarcity itself needs a justification.[65]

Thus, Bouckaert maintains that “only naturally scarce entities over which physical control is possible are candidates for” protection by real property rights.[66] For ideal objects, the only protection possible is that achievable through personal rights, i.e., contract (more on this below).

[64] Arnold Plant, “The Economic Theory Concerning Patents for Inventions,” p. 36. Also Mises, Human Action, p. 364: “Such recipes are, as a rule, free goods as their ability to produce definite effects is unlimited. They can become economic goods only if they are monopolized and their use is restricted. Any price paid for the services rendered by a recipe is always a monopoly price. It is immaterial whether the restriction of a recipe’s use is made possible by institutional conditions–such as patents and copyright laws–or by the fact that a formula is kept secret and other people fail to guess it.” [For more on Mises's view of IP, see Mises on Intellectual Property.]

[65] Boudewijn Bouckaert, What Is Property? (text version) in “Symposium: Intellectual Property,” Harvard Journal of Law & Public Policy 13, no. 3 (Summer 1990), p. 793; see also pp. 797-99.

[66] Bouckaert, “What is Property?” pp. 799, 803.

Bouckaert’s paper, What Is Property? (text version), is, by the way, superb and highly recommended.

Update: Jeff Tucker’s article and recent speech had me thinking about something that ties into this post well. People want to impose artificial scarcity on non-scarce things because they think scarcity is good. But they have it backwards. If anything, we should want material things to be non-scarce.

In Tucker’s talk, he was pointing out the difference between scarce resources and non-scarce, infinitely reproducible ones. Yes, they are different, but I think we also need to combat another fallacious view: people seem to implicitly think it’s bad that ideas are infinitely reproducible. This is a “problem” we need to combat by making them artificially scarce. But it’s a good thing.

i.e., at least ideas are non-scarce; but unfortunately, material things are scarce. But it would be good if material things were more abundant. So imagine that some benevolent genius invents a matter-copying device that lets you just point it at some distant object, and instantly duplicate it for free for you. So I see a coat you are wearing, click a button, and now I have an identical copy. I see you having a nice steak, and duplicate it. Etc. This would make us all infinitely wealthy. It would be great. Of course people would fear the “unemploymetn” it would cause–hey, I want to be unemployed and rich! And the rich would hate it because they would now not be special. They couldn’t lord their Rolls Royces and diamonds over the poor; the poor would have all that (it would be similar to how audiophiles were irked by the advent of the CD so tried to find granite turntables etc. to pretend they were still better). So imagine a rich guy suing a guy who “copied” his car…. imagine farmers suing people who copied their crops to keep from starving… how absurd! And what damages would they ask for? Not monetary damages–the defendant could just print up wealth to pay him off! So the only remedy he could want would be to punish or impoversih the defendant… for satisfation, to once again feel superior. How sick.

As my friend Rob Wicks noted, you could imagine a short story based on this in which judge orders a famine as a remedy to crop-copying.

{ 44 comments }

Shay December 3, 2009 at 12:46 pm

The usual justification for intellectual monopolies is of course that of incentive. Monopolization limits them to behaving almost like physical goods, in terms of scarcity. This allows the usual market mechanism to fund their production, where capital is invested and profit made via sales. What a costly way to achieve this, though, by negating their primary quality, that of near costless reproduction. If at some point in the future someone develops a way to copy physical goods with similar ease, I wonder whether it will be severely restricted as well.

It’d be interesting to come up with other hypothetical examples of restrictions like this put on things in order to encourage investment. One that comes to mind is making it illegal to enter a market “developed” by another company. For example, once the first company released a portable music player, it could be made illegal for any other company to make portable music players without a license. The first company had to make significant investments to develop the product and test the market. If it didn’t have market protection, other companies could come after it and avoid the initial costs of feeling out the market, thus removing the incentive of companies to find new markets for new products. Similar laws could be made for new services, forming of new towns, etc.

Silas Barta December 3, 2009 at 12:56 pm

So would EM spectrum rights be an example of an artificial but justified scarcity? After all, this scarcity is not “possible to conceive of it before any human, institutional, contractual arrangement”, Bouckaert’s criterion.

Do you follow the logical implication of your view, Stephan_Kinsella, that there should be no EM spectrum rights, either? My broadcasting does not prevent you from broadcasting. Oh sure, you’d *prefer* that your signal be clear, but why does that matter?

Shay December 3, 2009 at 2:01 pm

This article isn’t about Mr. Kinsella; it’s about creating artificial scarcity where there is none. The notion of spectrum rights is separate from ideas-as-property because there is an inherent physical nature to it, thus I don’t think it’s part of this topic. If you read the article, you’ll see it’s talking about creating artificial scarcity for the sole purpose of turning them into conventional market goods, even though this ultimately reduces their natural value.

Some Dude December 3, 2009 at 2:24 pm

If fewer people write new books, then new books are more scarce. If few people develop new medical drugs, then new medical drugs are more scarce.

It is very clever to say “IP creates scarcity where none existed before”, but it does not address the fact that fewer things might exist if it weren’t for IP protections.

It may be true that the same number different books of different drugs might be invented even if other companies can simply copy a text or formula and compete with the author or inventor. I don’t know. But saying “IP creates scarcity where none existed before” like it ends the argument is unhelpful. As far as I know, there would be scarcity, since there might be fewer new products.

Silas Barta December 3, 2009 at 2:27 pm

@Shay: This article isn’t about Mr. Kinsella; it’s about creating artificial scarcity where there is none.

So is EM spectrum rights.

The notion of spectrum rights is separate from ideas-as-property because there is an inherent physical nature to it,

information has a physical component to it as well.

If you read the article, you’ll see it’s talking about creating artificial scarcity for the sole purpose of turning them into conventional market goods,

And amazingly, that’s what’s done with the EM spectrum! Now it’s something that can be bought and sold!

You really need to work harder at coming up with a way to distinguish these cases.

scott t December 3, 2009 at 3:15 pm

“If fewer people write new books, then new books are more scarce. If few people develop new medical drugs, then new medical drugs are more scarce.

It is very clever to say “IP creates scarcity where none existed before”, but it does not address the fact that fewer things might exist if it weren’t for IP protections.”

…the fact….that fewer things…might….exist????

is that a fact??

i have heard others here speak of new equlibriums establishing themselves out side of ip…i can only speculate how that would occur.
if say sony added 10.oo extra to every media player or tv it sold and and the extra money went to putting artists on retainerships for studio performances…medical insurance slash drug research companies…reduced insurance for trying experimental drugs, etc. i am not completely sure.

Martin OB December 3, 2009 at 3:57 pm

I see an area where artificial scarcity would be a good thing: blog comments ;)

Shay December 3, 2009 at 4:06 pm

Silas Barta, you’re correct about EM being similar. What I was really getting at is that you seem to have an ongoing debate with Mr. Kinsella about the EM issue, and I was trying to suggest that you let this discussion be about the article, and not simply a continuation of your discussion with him on EM. My idea was that there is value to limiting this discussion to that of how IP in general is a form of artificial scarcity. By discussing a single topic, everyone can follow along more easily, and there can be more focus. But whatever.

Some Dude, “IP creates scarcity where none existed before” isn’t meant to end the argument, simply to highlight a fumdamental fact of it. It’s an odd thing to try to eliminate one of the key aspects of something which gives it great value over material objects, to try to make it emulate the limitations of material objects. Sure, there are reasons people feel this is useful, but this basic fact should give one pause, considering all the drawbacks that the scarcity brings.

Hume December 3, 2009 at 4:21 pm

Stephan,

This is off topic, but I remember a website you put together that was a collection of libertarian and philosophical publications, mostly in pdf format. I believe the site was stephankinsella.com/texts, or something along those lines. Is this site still up and running? Thanks.

Hume December 3, 2009 at 4:22 pm

Nevermind, that is the website. For some reason I got an error message. Thanks.

Silas Barta December 3, 2009 at 4:50 pm

Shay, if I can show why the arguments in *this* article prove something that Stephan_Kinsella — and most IP opponents — don’t believe, that *makes* it relevant.

The world doesn’t neatly divide into separate topics like you seem to think.

bob December 3, 2009 at 4:58 pm

@some dude

new drugs – are you saying christopher reeve wouldn’t have put as much money into curing his condition if it couldn’t have been kept scarce? This seems like the avenue the market would take. There are still strong incentives and methods to create new drugs. People would have more money to fund such efforts because IP wouldn’t protect drug companies from competition, reducing drug costs.

new books – the highest selling book of all time isn’t copyrighted. and maybe it’d be a good thing if books were more suited to art, expression, science, and other such ideas that seek publicity from their own merit, rather than cheap entertainment.

Ohhh Henry December 3, 2009 at 5:17 pm

“People want to impose artificial scarcity on non-scarce things because they think scarcity is good. But they have it backwards. If anything, we should want material things to be non-scarce.”

Let me try to put it another way. It’s not that they think scarcity itself is good. Rather, they wish to create a brand new type of scarcity – property – so that they can homestead it. Get it for free in other words, and then make everyone else pay for it.

While governments can and do confiscate “real” property from people, this action is fairly risky because ordinary property (land, money, labor) is universally recognized as such and there will be determined resistance to its confiscation.

But if you can invent an entirely new type of property then it’s like a whole new territory waiting to be homesteaded by legislators, lawyers, judges, rent-seekers and camp followers of all kinds.

Intellectual property – the ownership of thoughts and ideas – is such an indefinable and airy-fairy concept that there is literally no end to amount of complicated and remunerative legalistic webs that can be woven around it. Instead of conceding ownership of thoughts to the individuals possessing the brains in which the thoughts exist, they invent a kind of intellectual ether in which thoughts are supposed to float like fluffy sheep, declare this “thought-ether” to be a commons which is too valuable to exist unmanaged and unlicensed, and then appoint themselves as its administrator.

Before you know it, they have people stating (as I have frequently seen in online forums) that copying a piece of music without paying the copyright holders is “exactly like walking into a store and stealing a CD”. A record company owns that part of the ether in which Guns N Roses songs exist, and anyone who grabs it from the ether without paying them is just a doggone thief!

There are probably other types of undefinable, non-scarce, so-called property which governments have invented, then homesteaded and declared themselves the exclusive administrators. For example, “our vital interests in the Middle East”. What’s a vital interest? How can you own oil which has not even been extracted or shipped yet, and which may be bought by someone else entirely?

“Our children’s future” is another one that’s been homesteaded, it’s good for a few tens of billions per year.

Some Dude December 3, 2009 at 5:45 pm

bob
new books – the highest selling book of all time isn’t copyrighted. and maybe it’d be a good thing if books were more suited to art, expression, science, and other such ideas that seek publicity from their own merit, rather than cheap entertainment.

That is a fairly presumptuous statement. You say it would be a good thing, but apparently cheap entertainment is pretty popular. Are you conceding that cheap entertainment would become more scarce without IP protections?

Silas Barta December 3, 2009 at 5:46 pm

@bob: new factories – are you saying that Joey McJoester wouldn’t have put as much money into building a widget factory if it couldn’t have been kept scarce? This seems like the avenue that the market would take. There are still strong incentives and methods to create new factories in the absence of libertarian property rights. People would have more resources because they could just help themselves to whatever they needed without having to pay someone with title to the resources.

Yeah, libertarianism sure works — as long as everything is done as an act of charity.

Peter Surda December 3, 2009 at 5:58 pm

@Silas
You have not addressed my objections for several months, so let me reiterate:
You argument boils down to: as a restriction (e.g. EM rights, sound waves, IP) has a benefit to someone, they are alike.
Which is obviously a completely pointless argument, because any restriction whatsoever has a benefit to someone. Taxes, wars, censorship, state religion, they all benefit someone. Does that mean they are all justified? I don’t understand why you use this argument.
However, there is a significant difference between those two (EM and IP), which I have been pointing out to you and which you have either ignored or ridiculed but never addressed. The difference being, that in order to consume the goods addressed by IP, there is no necessity to exclude (or regulate) others. In EM and material goods, the necessity exists. This has independent of subjective valuations and and objectively measurable phenomenon. You can create an instrument which measures EM consumption by others, but you can’t create an instrument that measures IP “consumption”.
If you disagree, then how about demonstrating how you can consume EM spectrum that is already being consumed by someone else? Or how about constructing an instrument that measures people using IP or interfering with other people’s IP?

newson December 3, 2009 at 7:10 pm

silas is right to pin down kinsella over em, where it seems to me that much work remains to be done.

to me the em issue is a bit like trademark. if i’m happy listening to 2dayfm, and then the new guy in town transmits over my favourite radio show, i the listener can sue him, but 2dayfm can’t. i can oppose the invasion of my house by radio waves that lessen my enjoyment. but 2dayfm doesn’t have a monopoly right to transmit to me.

in a practical sense, all this could be sorted out via torts. newcomer transitters would be be averse to using existing frequencies on account of claims for damages by existing listeners, but they should not be barred from doing so in advance.

radio waves have to pass through private property not owned by the transmitter; this is not the typical homesteading situation where defined borders enclosing the property are essential.

reservation of bandwidth for essential services appears to me to be a tacit acknowledge that government owns the entire landmass. police at least need a warrant to enter my physical property, but police radio waves can intrude and there’s nothing i can do to contest this invasion.

ABR December 3, 2009 at 10:15 pm

“Ideas are not naturally scarce.” — They are easily transposed from one human mind to another via language.

But the minds that conceive interesting or profitable ideas, these minds are few.

Stephan Kinsella December 3, 2009 at 10:42 pm

ABR: “But the minds that conceive interesting or profitable ideas, these minds are few.”

Well, even if this were true, so what? That does not mean that patterns of information are economically scarce. They are not; they can be copied infinitely without taking them away from anyone.

And it is not true. Listen to Tucker’s speech linked above–the stuff about Eli Whitney etc.–the cotton gin and other inventions were not just invented out of nothing one day by one man… it’s been a sequence of gradual contributions by thousands of people over centuries. In our movement we have too much of One Big Man syndrome–too much focus on Big Key Players in economic history, in science, in politics, in technology and invention and music and art. It’s thousands and millions of often small contributions, building on what others are doing and have done.

ABR December 3, 2009 at 11:27 pm

Newton would likely not have developed his theory of gravity had Kepler not earlier developed his 3 laws of planetary motion. Does that make Newton a pygmy? No. He used Kepler’s work and invented calculus to produce his own great work on gravity.

Geniuses are few and far between. Current IP law does nothing to reward those involved in pure math or science.

Should we expand IP protection to pure ideas or formulas? No. The consequences would be disastrous if not ludicrous.

Is there some way we could reward an Einstein for his contributions? Yes: it’s called charity. Do we want our brightest and most productive minds to be relying on charity? It doesn’t sit well with me, but perhaps the alternatives are worse.

The current IP protection seems also to be extreme and in some cases, counter-productive. Is there a fix? I don’t know.

We could eliminate IP protection entirely, in which case a larger class of productive minds would either end up as charity cases or employed in work that earns a living.

It seems plain wrong to me that a person who digs a ditch merits pay, while someone who makes a hugely important discovery merits nothing.

My gut feeling in no way justifies IP law or State coercion. It’s just a gut feeling.

newson December 3, 2009 at 11:46 pm

the ditch digger should pay royalties to the genius who thought up the shovel…it just seems plain right.

Kerem Tibuk December 4, 2009 at 6:34 am

“I just ran across a few of your interviews and writings. I was particularly impressed with the point that IP creates scarcity where none existed before. Despite its obviousness, it is characteristic of IP that had not occurred to me before.”

If you don’t define concepts clearly this kind of fallacy is bound to happen.

What is artificial scarcity and what is natural scarcity?

Is apples naturally scarce or artificially scarce?

Can apples be produced so abundant that they wouldn’t fetch any price?

If they can be, but they aren’t because men doesn’t want it that way, can this be a case of artificial scarcity?

Shay December 4, 2009 at 9:06 am

“the ditch digger should pay royalties to the genius who thought up the shovel…it just seems plain right.”

Agreed! And similarly, the townspeople should pay the ditch diggers monthly for the benefit of not having flooded streets. And don’t forget the monthly payment to the plumber who installed the fixtures when your house was built. After all, you’re constantly picking the fruits of their labor, so it’s only right that you pay for each one.

Peter Surda December 4, 2009 at 10:05 am

@ktibuk:
First of all, I don’t like the term scarcity and I don’t think it’s appropriate to use it with regards to IP. I prefer rivalry.
Scarcity => supply is finite.
Rivalry => consumption decreases supply.
In my opinion, those two are not identical. However, I remember in one of Stephan’s talks he said that he considers “rival” to have the same meaning as scarce. So I’ll use the word “scarce” in second meaning.

> What is artificial scarcity and what is natural
> scarcity?
Natural scarcity is a result of natural phenomena, when consumption decreases the supply. Artifical scarcity is not a result of natural phenomena, consumption wouldn’t decrease the supply, but there are other circumstances that don’t allow one to consume the good (e.g. social pressure, market regulations).

> Is apples naturally scarce or artificially scarce?
Ask yourself: if an apple is consumed, does the supply decrease?

> Can apples be produced so abundant that they
> wouldn’t fetch any price?
As long as consumption decreases supply, they are scarce. Only if it was possible, somehow, to eat an apple without the apple being “used up”, then they would be non-scarce. Maybe if we had replicators such as in Star Trek, apples might be considered non-scarce (although as long as they would have to be powered, even that is not entirely correct).

Also remember that if person A has apples, and person B grows additional apples, person A’s ownership does not magically extend over to person B’s apples.

> If they can be, but they aren’t because men
> doesn’t want it that way, can this be a case of
> artificial scarcity?
Unless consumption leaves the existing supply intact, no matter how much you produce, it will still be scarce. Even if you filled our whole solar system with apples, they would be scarce.

Scarcity is not about production, it’s about consumption. IP, on the other hand, is about production. Excessive attempts to thwart consumption would not be simple or socially acceptable, therefore the law targets producers (competitors). However in the recent times, we have seen an increasing amount of attempts to apply IP to consumers, often in ways that do not have precedents or legal foundation. Just like I said a couple of sentences back, this causes enforcement problems and increasing protests.

Cheers,
Peter

Bala December 4, 2009 at 10:50 am

Kerem Tibuk,

First you say this

” If you don’t define concepts clearly this kind of fallacy is bound to happen. ”

and then you say this

” Can apples be produced so abundant that they wouldn’t fetch any price? ”

It’s not about “apples” in general and in the plural sense either. The apple in my hand is scarce because there is only 1 of it. The apple in my hand cannot be in yours as well unless you are the kind that feels you can have your cake and eat it too. Actually, that is a fundamental aspect of all physical goods – there is only 1 of each. That’s the real concept of scarcity.

The same idea, on the other hand, can be in both our minds at the same time. As long as we are talking of the same idea, there is no such thing as the idea in mind and the idea in your mind. They are the same and can simultaneously exist in 2 locations. That’s why ideas are not scarce.

The key point about scarce resources is that they have to come out of one person’s hands to go into another’s. That’s not true of ideas. If your idea comes from your head into mine, it does not cease to exist in yours.

Wonder who is engaging in fallacious arguments out here….

Nathan December 4, 2009 at 11:12 am

It’s somewhat comical how Silas jumps in and post his nonsensical EM spectrum question every time one of these is made. EM spectrum is not like IP, and even if it were, there is not a strongly coherant argument for controlling it. Somalia, has NO EM spectrum laws, yet has the most highly developed cell phone network in Africa. AM and FM are only scratching the surface of what is possible in signal processing and broadcasting. It is possible to send and infinite amount of information over any medium using electromagnetic waves.

Broadcasting EM spectrum is a form of pollution and as society moves more towards being information based we will see more businesses and individuals requesting their property not be invaded EMI from the local radio, satellite, and government broadcast systems.

scott t December 4, 2009 at 1:08 pm

“As long as consumption decreases supply….”

the greater extent that an ‘idea’ is consumed in the market it seems to me that idea actually becomes less scarce.

if correct, it would seem that ideas themselves dont respond to scarcity laws but the generators of ideas (poeple) are.

JL Bryan December 4, 2009 at 1:59 pm

@scott t

That’s a really nice point. The more IP is “consumed” (learned or copied) the more abundant it becomes–the exact opposite of what happens with physical resources.

C Keith December 4, 2009 at 2:42 pm

It seems to me that the whole EM spectrum issue is not about IP whatsoever. It is more like land with an added dimension. Property rights are assigned by geographical location and frequency, with enough deadband between slices to prevent interference. Trespassing (interference) can be handled easily by the courts.

To homestead, I first must locate a portion of the spectrum that is not being used in the area and transmit at a power that doesn’t leak significantly into the listening area of another spectrum owner’s transmitter. In addition, I might timeshare on a frequency band and location.

The EM spectrum is a scarce good, completely unlike IP. Finite bandwidth is available at any particular time and place for transmitting information, and some frequencies are better suited that others for certain kinds of transmission. Only certain frequencies are capable of sky-wave propagation, for instance. It seems like only a person completely unfamiliar with radio could mistake it with IP.

Silas Barta December 4, 2009 at 3:16 pm

Nathan said:

It is possible to send and infinite amount of information over any medium using electromagnetic waves.

Wow. Hope that gives you guys an idea of what I’m dealing with here.

(In case you didn’t know, infinite information transfer capacity is impossible, as it violates the laws of thermodynamics. Stephan_Kinsella can confirm this.)

@C_Keith:

Why does broadcasting at frequency F count as homesteading? That’s my point. By broadcasting at F, you don’t prevent me from broadcasting at F, nor I you. We just make it less valuable for each other. But why does that matter? If you accept that it does matter, I can make the same claim for IP — you diminish the value by being able to “broadcast” the same idea that I got to first.

Think about it.

Stephan Kinsella December 4, 2009 at 3:27 pm

C. Keith:

It seems to me that the whole EM spectrum issue is not about IP whatsoever. It is more like land with an added dimension. Property rights are assigned by geographical location and frequency, with enough deadband between slices to prevent interference. Trespassing (interference) can be handled easily by the courts.

To homestead, I first must locate a portion of the spectrum that is not being used in the area and transmit at a power that doesn’t leak significantly into the listening area of another spectrum owner’s transmitter. In addition, I might timeshare on a frequency band and location.

The EM spectrum is a scarce good, completely unlike IP. Finite bandwidth is available at any particular time and place for transmitting information, and some frequencies are better suited that others for certain kinds of transmission. Only certain frequencies are capable of sky-wave propagation, for instance. It seems like only a person completely unfamiliar with radio could mistake it with IP.

You are quite right; great points. I made similar points in Why Airwaves (Electromagnetic Spectra) Are (Arguably) Property.

Poor Silas has a monomaniacal, yet gadfly-like, obsession with this issue, in his desperate desire to defend some IP system (though like all other IP advocates he can’t even describe the system he advocates).

Peter Surda December 4, 2009 at 3:58 pm

@Silas:
> Why does broadcasting at frequency F count as
> homesteading?
Dunno. Maybe it doesn’t. From my point of view it’s completely irrelevant.

> That’s my point. By broadcasting at F, you don’t
> prevent me from broadcasting at F, nor I you.
Yes Silas, as usually, you are correct in a completely irrelevant way. As I said a couple of posts above, scarcity is about consumption, not production. And broadcasting is not a consumption of EM spectrum, rather signal transfer is. If one signal transfer prevents another signal transfer, then EM spectrum is scarce.

> We just make it less valuable for each other.
Again, correct but irrelevant. We rejected the value based property definition, remember?

> But why does that matter?
It doesn’t.

> If you accept that it does matter, I can make the
> same claim for IP — you diminish the value by
> being able to “broadcast” the same idea that I
> got to first.
Again, completely irrelevant. Any action whatsoever can decrease the value of immaterial goods.

Have you created the fabled instrument that measures IP interference yet?

Cheers,
Peter

C Keith December 4, 2009 at 5:26 pm

Thanks Stephen. I’ll go check out your other post next.

> Why does broadcasting at frequency F count as
> homesteading?
Well, if that band is unused at the particular time and place, then it is simply the appropriation of an unused good from nature. This is the definition of homesteading. If the good is homesteaded, then property is gained naturally by the use of it.

If I set up a radio station that transmits continuously, without walking on another homesteader’s airwaves, then I could rent out my airtime to people who want their messages heard by listeners with appropriate radio sets. If I am broadcasting and someone else broadcasts over the top of me, then my property right is violated. An analogous situation is one in which I have rented a convention hall. If some nitwit waltzes in and starts yelling over my speech, then he is violating my rights.

If I broadcast every Wednesday from 5-6 pm, then a property right could be granted for that time slot. In this way a frequency band – geographical listening region can be shared. This method is called Time-Division Multiple Access (TDMA). Other methods of sharing a frequency band are FDMA and CDMA — look ‘em up. All methods of sharing bandwidth reduce the amount of information that each sharer can transmit (in average bits per second), therefore, it is scarce.

The consumers of EM spectrum are actually the people whose information is being transmitted. That is why advertisers pay for airtime.

At this point, I think that the whole EM as a scarce good issue should be fairly settled. It just isn’t like IP at all.

scott t December 4, 2009 at 6:59 pm

“you diminish the value by being able to “broadcast” the same idea that I got to first….”

unless greater value if found by broadcasting over , i dunno, objectionable material in a transmission, the new same-frequency broadcast then takes on a value of its own.

air-wars in a sense where no ‘property’ per se is trespassed on.

Brian Macker December 5, 2009 at 1:40 pm

“I was particularly impressed with the point that IP creates scarcity where none existed before.”

Absolute and utter nonsense. Let’s do this in steps.

1) Suppose a writer just created an original new book that never existed before. How does that create a scarcity where none existed before? It can’t. The odds that someone else will create the same book without his as the source are astronomical to the point of impossibility. His creation does not diminish the quantity of the book but only adds to it.

2) Next step. Suppose he decides that he wishes to publish his book with a copyright. This too only adds to the quantity of copies of his books. There is no “creation of scarcity where none existed before”.

3) Suppose you trespass against his rights by copying his book in violation of contract?

4)Suppose he wins in a court of law and you have to pay damages? That does not create a scarcity where none existed before.

5) Suppose he decides to stop publication of his book. That also does not create a scarcity where none existed before. In total his actions have created more of his books than would have existed otherwise.

No step involves a creation of scarcity (a reduction in goods) where none existed before. We were not awash in a sea of copies of Harry Potter before the author decided to make them scarce via copyright.

You cannot compare actual to potential to determine that there has been the creation of scarcity. Nor is the creation of scarcity even a crime.

You cannot compare the potential to the actual to arrive a scarcity.

Your wives, your daughters, and even your sons are all potential sex workers and could sell themselves out a prostitutes. There is a potential for a vast increase in the quantity of sexual services were they to do so. That however does not mean that they have produced an artificial scarcity, or have somehow created a scarcity where none existed, or have committed some economic crime.

If you think rivalry is the true problem (and not scarcity) well then there are non-rivalrous mechanisms to spread the sex. Your wives, daughter, and sons could reduce rivalry over their bodies by producing porno videos, or taking in in multiple holes at once.

Using this argument from imagined creation of artificial scarcity and/or artificial rivalry then how can you justify keeping peeping toms from videotaping your sexual activities for the entertainment of others? After all pointing a camera at you doesn’t keep you from using your resources to the best of your ability.

Many of our property rights are based on so called “artificial scarcity” or “artificial rivalry”. There is no reason why someone else couldn’t use your yard for sunbathing while you are at work. If this argument works then why do you think you should be allowed to keep others from using your property (or your body) in ways that do not cause rivalry and reduce scarcity?

The ludicrous hypothetical is asked of us “So imagine that some benevolent genius invents a matter-copying device that lets you just point it at some distant object, and instantly duplicate it for free for you.” Seems to me this would give me even further ammunition against your claims that we should be able to copy at will regardless of rights.

People are objects, and therefore the machine could be pointed at your wife and now her sexual services would be non-rivalrous.

The inventor of such a machine I could create only one, if he wished, and then duplicate all the women he found most attractive in such vast quantities that they would be hard pressed to find food for themselves.

He wouldn’t have to press them into sexual slavery. He only need only trade the vast quantities of resources his machine could produce for their voluntary services. Not only that but he could make many copies of himself (each with the machine) in order to indulge his fantasies even more, along with providing the manpower to create an army to protect their invention from the prying eyes of others.

I think your imagination proves more than you wish it to. Let’s stick to the real world and not Startrek fantasies. Our ethics need to be bound to our real problems. In a world with such a machine the laws of economics would no longer hold and this web site would be pointless.

Silas Barta December 5, 2009 at 1:54 pm

C_Keith: Well, if that band is unused at the particular time and place, then it is simply the appropriation of an unused good from nature. This is the definition of homesteading. If the good is homesteaded, then property is gained naturally by the use of it. …If I set up a radio station that transmits continuously, without walking on another homesteader’s airwaves,

Sorry, but you’re still assuming your conclusion. *Why* does this count as “walking on” “another’s” airwaves to begin with? On what basis do you call it interference? Both people can broadcast at the same frequency. Both can set up a circuit that generates an oscillating electric field at 100 kHz or whatever. Both are unimpeded in their actions. Both can send those waves to their heart’s content.

The ONLY way you can say that a “resource” is being used in a way that denies another the use of it, is if you VASTLY expand what counts as a homesteadable resource. And this will inevitably cause you to draw the boundary so large to include IP.

Peter Surda December 5, 2009 at 2:49 pm

@Silas
> *Why* does this count as “walking on” “another’s”
> airwaves to begin with? On what basis do you call
> it interference?
Either you have trouble comprehending or you are ignoring my refutations. Maybe an example will help you?

Let’s say I own a wall and someone paints a graffiti on it. Does that prevent me painting something else? It doesn’t. But the acts of consumption exclude with each other, you can’t have there both paintings concurrently. Therefore, the medium (wall) is scarce.

> The ONLY way you can say that a “resource” is
> being used in a way that denies another the use\
> of it, is if you VASTLY expand what counts as a
> homesteadable resource.
You are completely incorrect. The way to determine that is pretty simple, you observe whether the consumption prevents other consumption. Broadcasting is not consumption.

Stephan Kinsella December 5, 2009 at 4:41 pm

Macker:

“”I was particularly impressed with the point that IP creates scarcity where none existed before.”

“Absolute and utter nonsense. Let’s do this in steps.

1) Suppose a writer just created an original new book that never existed before. How does that create a scarcity where none existed before? It can’t. The odds that someone else will create the same book without his as the source are astronomical to the point of impossibility.”

Well, first off, are you now conceding that patents are invalid? Because they quite often involve the grant of a monopoly to someone for an invention others may have invented soon after the patentee did (or even before).

Second, it is not the writing of a novel that creates scarcity, but the grant of a copyright to him. It is the state copyright grant that creates artificial scarcity. If this guy lets his out into the public domain why shouldn’t others be able to act on these facts, on their knowledge? After all, even the novelist in your example is using ideas he learned from the public domain, from previous thinkers and writers.

Stephan Kinsella December 5, 2009 at 5:04 pm

Re the issue of the prices charged for things like apples etc.–see my post Imagining the Fate of Copyright in a Future World.

Imagine 1000 years from now, if we still have these ridiculous IP laws…. you can choose between an almost infinite supply of older, public domain work, or pay for a new one. That will force the new works’ price to be almost zero. In fact, I suspect the IP socialists would at that point come up with a new IP right–basically a renewal of copyright held by someone who “rediscovers” older work forgotten in the almost infinite pile of public domain work. Imagine living in a world where Michael Jackson’s work, or the music of hte 70s, had been forgotten, surpassed by all the music over teh ensuing centuries … then some DJ starts playing it, people redicscover it anew.. shouldn’t he get credit for this? Afer all, it takes a lot of work to loook thru all the old stuff and find “what to recommend.” Shouldn’t he be rewarded for this? After all, if he’s not, you consumers would never have heard of Michael Jackson, would not have the pleasure of knowing what (free) tracks to play at your party. What’s the harm of awarding the DJ a monopoly? After all, you would never have found that needle in an infinite haystack, so no one is worse off, and everyone is better off. Copyright can never die; it only gets reincarnated. O brave new world! That has such laws in’t!

Silas Barta December 5, 2009 at 7:53 pm

@Peter_Surda: Broadcasting is not consumption.

Oh, so now you think EM spectrum rights are illegit? Okay then…

Peter Surda December 6, 2009 at 3:05 am

@Silas:
> Oh, so now you think EM spectrum rights are
> illegit?
Apparently, you have trouble connecting the dots. Did it occur to you that by broadcasting you also cause other phenomena than merely the broadcast itself, and those are the cause of the property violation?

newson December 6, 2009 at 3:49 am

silas says:
“Oh, so now you think EM spectrum rights are illegit?”

yep. as nathan points out, undesirable em could be regarded as pollution, trespass on my property, interfering with my electrical instruments etc.

the only way i can see of legitimately granting spectrum rights is that there be some sort of covenant attached to the land that the acquirer not transmit at a particular frequency from that land. much like people in a private retirement village have to agree to abide my certain rules to gain entry. so the em aspect really becomes one with the land use.

when you buy land, there is no prohibition on using audible frequency; if the neighbours’ noise starts causing you hurt (loud arguments at all hours or burst eardrums), then there are grounds for damages.

the scarceness of the audible spectrum is not the issue.

Brian Macker December 7, 2009 at 9:03 pm

Steven Kinsella,

“Well, first off, are you now conceding that patents are invalid? “

I’m not “conceding” that they are invalid. I always have claimed them invalid. I’m with Rothbard on this. Like him I think only copyrights are valid, and you’d have to use something similar to copyright to replace patents.

The difficulty of proving your invention was copied would be a large hurdle for those who wished to use in outside the field of literature.

“Because they quite often involve the grant of a monopoly to someone for an invention others may have invented soon after the patentee did (or even before).”

Which would mean they didn’t copy the persons private property. Since Rothbard and I only support copyright no such monopoly could be granted. As Rothbard said an inventor would have to take great care to prevent forced disclosure on others.

You can’t invent the weed wacker then go around using it in plain sight. By doing so you are forcing your ideas into the brains of others. It is then not their fault if they use what you, the inventor disclosed without contract.

“If this guy lets his out into the public domain why shouldn’t others be able to act on these facts, on their knowledge?”

I was not talking about someone who just lets things out into the public domain. I’m talking about someone who takes care not to let it out and has contracts to enforce it.

“After all, even the novelist in your example is using ideas he learned from the public domain, from previous thinkers and writers.”

One can make something original from that which is in the public domain. Happens all the time.

The way we create originality is by taking the existing and rearranging it into new relationships that didn’t exist before. There is an infinite number of new relationships.

The original invention does not exist in the public domain before it is created, no more than a pile of lego blocks represents all the possible configurations that they could be arranged in.

If the instantiations of prior original works are in the public domain then anybody is free to use them. That doesn’t mean that their new original content is in the public domain. Obviously, since they could destroy it without disclosing it to the public in any way.

Jeff March 17, 2011 at 2:42 pm

Here is Common Law fraud with my break down noted for this issue:

Common law fraud has nine elements:[4][5]
* a representation of an existing fact; The fact that a buyer set the price of purchase under the assumption it was for personal use and not for distribution.
* its materiality; The price was set lower based on this assumption.
* its falsity; The buyer instead freely distributed the product in the marketplace.
* the speaker’s knowledge of its falsity; He purchased this in order to distribute it….
* the speaker’s intent that it shall be acted upon by the plaintiff; The speaker purchased the product at said price under this agreement
* plaintiff’s ignorance of its falsity; We had an agreement and I took him at his word.
* plaintiff’s reliance on the truth of the representation; The price was set under the assumption I could charge the same price to the recipients of the illegal copies for a * period of time without the defendants competition.
* plaintiff’s right to rely upon it; It was a voluntary agreement between individuals. I have a right to be told the truth before entering into contract.
consequent damages suffered by plaintiff. Unrealized revenue. Point of contention: What percentage would have bought at initial price without the market distortion created by free copies?

Your argument boils down to this: You have a right to enter into any voluntary contract you want except you can’t grant an exclusive license to your product. That work you did thinking that stuff up and typing it in is worthless and if I can trick you into giving it to me with the understanding that I won’t copy it and then distribute it myself, you are a fool and out of luck.

I am not a fan of IP laws as they stand now, but that doesn’t mean there are not rights associated with certain unique and novel ideas…

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