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Source link: http://archive.mises.org/11559/shugharts-defense-of-ip/

Shughart’s Defense of IP

January 29, 2010 by

Free-market economist Professor William F. Shughart II attempts to defend the need for IP in “Ideas Need Protection,” The Baltimore Sun (Dec. 21, 2009) (previously published in the Christian Science Monitor). Subtitled “Abolishing Intellectual-property, Patents Would Hurt Innovation: A Middle Ground Is Needed,” the piece suffers from flaws found in others defenses of intellectual monopoly and pattern privilege. For example, Professor Shughart writes:

Article I, Section 8, of the Constitution explicitly delegates to Congress authority “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

While it is true that copyright and patent are constitutional, this does not make these laws just. What the artificial law-writing coup-leaders wrote a document designed to help the state seize more power is simply not relevant to the normative question of whether there should be IP.

Pro-patent law arguments rest on the assumption that the patent system generates overall wealth–that its benefits are greater than its costs–without ever making this case. Instead, they point to ways that the patent system benefits some people, and never bother to even try to tally up the costs to make sure it’s a net positive. In other words, they don’t even take their own justifications seriously. Shughart makes the same mistake:

Developing and successfully commercializing new products and technologies typically requires large investments of time and treasure. Most research and development (R&D) investments end in failure.

Granting a temporary monopoly to the rare breakthrough is necessary, therefore, to provide its inventor with an opportunity to earn a return on the investment that led to the new idea–and to encourage additional such investments. Such protection is especially important in the pharmaceutical industry, where, in its absence, new drugs could be duplicated by competitors, and the incentive to invest would disappear, stifling the discovery process.

The word “therefor” is unwarranted; this is a non sequitur. Later on in the piece, he writes:

Incentives matter. Although there may be a passionate few who don’t require payment for contributing to the common pool of knowledge, technological advancement will be much more rapid if an explicit economic payoff is available.

Much more rapid–? How much more? Who knows? The IP advocates don’t. So how do they know it justifies the cost?I found this to be an refreshing admission of the stifling effect mercantilist intellectual monopoly has on the spread of ideas:

To paraphrase the late economist Joan Robinson, patents and copyrights slow down the diffusion of new ideas for a reason: to ensure there will be more new ideas to diffuse …

Unfortunately, he supports these laws anyway. Shughart also candidly and explicitly admits the monopoly character of of patent and copyright:

Granting a temporary monopoly to the rare breakthrough is necessary…

(Some IP advocates get very irked when patents are called monopolies. For example (as noted in Are Patents “Monopolies”?), patent attorney Dale Halling, in a piece entitled “The Myth that Patents are a Monopoly,” writes, “People who suggest a patent is a monopoly are not being intellectually honest and perpetuating a myth to advance a political agenda.” But it is common for IP advocates to acknowledge this. For example, Richard Epstein writes “Patented goods are subject to a lawful monopoly created by the state in order to induce their creation … The legal monopoly granted by the patent is the only mechanism that allows the producer to recover those fixed costs….” And Objectivist IP attorney Murray Franck has argued that “if the creator’s rights are not protected, his survival is jeopardized. If another can market his creation, the creator is deprived of the money he would otherwise earn.” See also my comments here, noting that even the Supreme Court and other federal courts slip up and admit the monopoly character of IP on on a regular basis.)

Consider this argument our author makes:

It is true that other means exist for creative people to profit from their effort. In the case of copyright, authors can charge fees for reading their works to paying audiences. Charles Dickens did this, but his heavy schedule of public performances in the United States, where his works were not protected by copyright, arguably contributed to his untimely death.

Can Shughart really be arguing that we need copyright, for otherwise another potential Charles Dickens might drop dead early? (This reminded me of a bizarre argument made by patent attorney Gene Quin, noted in this post. In an online discussion, IP opponent David Koepsell had mentioned “that in the 19th and early 20th centuries, two of the most innovative countries on earth (The Netherlands and Switzerland) had no patent systems at all.” In response, Quinn says: “Thank goodness the Swiss did have a Patent Office. That is where Albert Einstein worked and during his time as a patent examiner came up with his theory of relativity.” So … we need a state-granted monopoly system … so that Albert Einstein could have had a job in Switzerland. What does one even say in response to such an “argument”?)

Professor Shughart continues:

The hard questions are: What kinds of ideas should be eligible for patent and copyright protection, and how long should that protection last?”

What’s needed is a middle ground. Even if we can all agree that intellectual property is an important social commodity, one size doesn’t fit all in the modern Digital Age.

While a 20-year monopoly may be appropriate for new drugs, it may not be appropriate for software, a new electronic game or, as Justice Sonia Sotomayor seemed to suggest during questioning in the Bilski case, a new “speed-dating service.”

A 20-year patent monopoly on a method for speed-dating may not be appropriate?! How would Justice Sotomayor know, really?

As for there being “hard questions”–who can answer them? And if “we need a middle ground”–even though we have no evidence to know where the “optimum” is–how can we achieve this? Who can do it? Shughart’s answer: Congress and the courts:

Rather than abolishing patent and copyright protection for some categories of intellectual property, Congress and the courts should consider varying the length for which exclusive monopoly privileges are granted, depending on the expected commercial vitality of the creative work. [emphasis added]

The state is neither benevolent nor competent (well, they are good at two things: destruction, and propaganda). There is no reason to believe Congress or the courts want, or are equipped, to find the “right” answers to such questions. (As J.H. Huebert observes about government courts: “In general, judges and those who appoint them have no reason to want to limit government. … Have not judges been responsible for some of the most outrageous expansions of government power? And, after all, are judges not a product of the same political system that gives us legislators and presidents? What president would appoint judges who would tell him he cannot do anything he wants? What Senators would confirm a judicial candidate who tells them that everything they have ever done in office is unconstitutional? The whole enterprise of libertarian constitutional theory ignores all we have learned from public choice economics about the incentives of government actors.”) There is no reason to trust state employees to determine the optimum length of patent and copyright monopolies for various types of inventions and artistic works, much less by using “the expected commercial vitality of the creative work” as a test.

***

Appendix:

N.B: My original draft was done in very sarcastic style. At the urging of some friends, I ultimately decided to rewrite it in more standard, serious, respectful, straight style. But for those who like a bit of humor, here’s the original sarcastic post:

Shughart’s IP Parody

In “Ideas Need Protection,” subtitled “Abolishing Intellectual-property, Patents Would Hurt Innovation: A Middle Ground Is Needed,” free-market economist William F. Shughart II has penned a wickedly funny parody of typical arguments in favor of IP. Brilliantly, he somehow managed to slip it by the editors of The Baltimore Sun as well the Christian Science Monitor, where it was first published, without either publication realizing it was a parody.

Shughart mocks the arguments typically given in defense of intellectual monopoly and pattern privilege, such as appeals to authority and positive law, when he writes:

Article I, Section 8, of the Constitution explicitly delegates to Congress authority “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

Ha ha! As if what the artificial law-writing coup-leaders wrote a document designed to help the state seize more power is relevant to the normative question of whether there should be IP. Good one, Professor.

He goes on, mercilessly lampooning the intellectual monopolists:

Developing and successfully commercializing new products and technologies typically requires large investments of time and treasure. Most research and development (R&D) investments end in failure.

Granting a temporary monopoly to the rare breakthrough is necessary, therefore, to provide its inventor with an opportunity to earn a return on the investment that led to the new idea–and to encourage additional such investments. Such protection is especially important in the pharmaceutical industry, where, in its absence, new drugs could be duplicated by competitors, and the incentive to invest would disappear, stifling the discovery process.

I like this. First, he demonstrates how pro-patent law arguments rest on the assumption that the patent system generates overall wealth–that its benefits are greater than its costs–without ever making this case. Instead, they point to ways that the patent system benefits some people, and never bother to even try to tally up the costs to make sure it’s a net positive. In other words, they don’t even take their own justifications seriously. The point is reinforced by the totally unwarranted word “therefore” inserted above, in a blatant example of non sequitur. Revisiting this theme later on in the piece, our author writes:

Incentives matter. Although there may be a passionate few who don’t require payment for contributing to the common pool of knowledge, technological advancement will be much more rapid if an explicit economic payoff is available.

Much more rapid–? How much more? Who knows! The IP advocates don’t! “What are they jabbering about? How do they know?”, Shughart seems to be saying, if you read between the lines.

Professor Shughart has no doubt noted that although it gives IP advocates a case of the vapors if you call IP a “monopoly,” too many hapless IP advocates just seem unable resist admitting this. Thus, he writes:

To paraphrase the late economist Joan Robinson, patents and copyrights slow down the diffusion of new ideas for a reason: to ensure there will be more new ideas to diffuse … Granting a temporary monopoly to the rare breakthrough is necessary…

This is just a perfect impression of the typical blunder made by patent and copyright proponents when they inadvertently acknowledge the stifling effect mercantilist intellectual monopoly has on the spread of ideas. This is a very common faux pas of the monopolists, who forget to hide the fact that IP is, in fact, a monopoly. When IP’ers stray from the reservation like this, it really irks the organized pro-patent forces. For example (as noted in Are Patents “Monopolies”?), patent attorney Dale Halling, in a piece entitled “The Myth that Patents are a Monopoly,” writes,

People who suggest a patent is a monopoly are not being intellectually honest and perpetuating a myth to advance a political agenda.

But, as Shughart demonstrates, all too often the pro-monopoly forces can’t help themselves and inadvertently let the truth tumble out of their mouths. For example, we have pro-patent Richard Epstein (see Epstein and Patents), noting that

Patented goods are subject to a lawful monopoly created by the state in order to induce their creation … The legal monopoly granted by the patent is the only mechanism that allows the producer to recover those fixed costs….

And here we have Objectivist IP attorney Murray Franck arguing that “if the creator’s rights are not protected, his survival is jeopardized. If another can market his creation, the creator is deprived of the money he would otherwise earn.”

And see my comments here, noting that even the Supreme Court and other federal courts slip up and admit the monopoly character of IP on on a regular basis:

Section 154 and related provisions [e.g. Sec. 271] obviously are intended to grant a patentee a monopoly only over the United States market….”; “Congress made the policy choice that the “carrot” of an exclusive market for the patented goods would encourage patentees to commercialize the protected inventions so that the public would enjoy the benefits of the new technology during the patent term in exchange for granting a limited patent monopoly. In other words, the public expected benefits during ‘the embarrassment of an exclusive patent as Jefferson put it.’”; “We hold that the disputed royalties provisions do not inappropriately extend the patent monopoly to unpatented parts of the patented system”; “A patentee, in demanding and receiving full compensation for the wrongful use of his invention in devices made and sold by a manufacturer adopts the sales as though made by himself, and therefore, necessarily licenses the use of the devices, and frees them from the monopoly of the patent.”; “The Florida statute is aimed directly at the promotion of intellectual creation by substantially restricting the public’s ability to exploit ideas that the patent system mandates shall be free for all to use. Like the interpretation of Illinois unfair competition law in Sears and Compco, the Florida statute represents a break with the tradition of peaceful coexistence between state market regulation and federal patent policy. The Florida law substantially restricts the public’s ability to exploit an unpatented design in general circulation, raising the specter of state-created monopolies in a host of useful shapes and processes for which patent protection has been denied or is otherwise unobtainable. It thus enters a field of regulation which the patent laws have reserved to Congress. The patent statute’s careful balance between public right and private monopoly to promote certain creative activity is a “scheme of federal regulation . . . so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it.”; “Whatever weight is attached to the value of encouraging disclosure and of inhibiting secrecy, we believe a more compelling consideration is that a process patent in the chemical field, which has not been developed and pointed to the degree of specific utility, creates a monopoly of knowledge which should be granted only if clearly commanded by the statute. Until the process claim has been reduced to production of a product shown to be useful, the metes and bounds of that monopoly are not capable of precise delineation. It may engross a vast, unknown, and perhaps unknowable area. Such a patent may confer power to block off whole areas of scientific development, without compensating benefit to the public. The basic quid pro quo contemplated by the Constitution and the Congress for granting a patent monopoly is the benefit derived by the public from an invention with substantial utility. Unless and until a process is refined and developed to this point — where specific benefit exists in currently available form – there is insufficient justification for permitting an applicant to engross what may prove to be a broad field.”; “I agree with the Court that the question before us is a narrow one. Neither the future of scientific research, nor even the ability of respondent Chakrabarty to reap some monopoly profits from his pioneering work, is at stake. Patents on the processes by which he has produced and employed the new living organism are not contested. The only question we need decide is whether Congress, exercising its authority under Art. I, 8, of the Constitution, intended that he be able to secure a monopoly on the living organism itself, no matter how produced or how used.”

Anyway, Shughart must have noticed this habit of inadvertently admitting the true nature of the patent grant–a habit that makes fellow IP advocates grimace and exclaim, “Damn! He admitted it too!“–and imitated it here to perfection. “Those crazy patent guys,” Shughart seems to be saying, with a sly smile and a twinkle in his eye, “can’t get their story straight.”

Here’s another patentism Professor Shughart tackles. Sometimes IP advocates trot out the most ridiculous arguments when they have no other response available, such as this bizarre argument by patent attorney Gene Quinn (noted in this post). In an online discussion, IP opponent David Koepsell had mentioned “that in the 19th and early 20th centuries, two of the most innovative countries on earth (The Netherlands and Switzerland) had no patent systems at all.” In response, Quinn says:

Thank goodness the Swiss did have a Patent Office. That is where Albert Einstein worked and during his time as a patent examiner came up with his theory of relativity.

You got that? We need a state-granted monopoly system … so that Albert Einstein could have had a job in Switzerland. I mean, what does one even say in response to this, which is not even a pretense at serious argument? Our observant author must have noticed this and other such arguments, which he is clearly mocking here:

It is true that other means exist for creative people to profit from their effort. In the case of copyright, authors can charge fees for reading their works to paying audiences. Charles Dickens did this, but his heavy schedule of public performances in the United States, where his works were not protected by copyright, arguably contributed to his untimely death.

See? We better have copyright–you don’t want another potential Charles Dickens to drop dead early, do you?

Professor Shughart continues:

The hard questions are: What kinds of ideas should be eligible for patent and copyright protection, and how long should that protection last?”

What’s needed is a middle ground. Even if we can all agree that intellectual property is an important social commodity, one size doesn’t fit all in the modern Digital Age.

While a 20-year monopoly may be appropriate for new drugs, it may not be appropriate for software, a new electronic game or, as Justice Sonia Sotomayor seemed to suggest during questioning in the Bilski case, a new “speed-dating service.”

The IP advocate is here portrayed as unable to even definitively object to a 20-year patent monopoly on a method for speed-dating–”it may not be appropriate”! And the part about “these are hard questions” … who can answer them, oh who?– and “we need a middle ground”–even though we have no evidence to know where the “optimum” is. But wait for it–Congress might know! –

Rather than abolishing patent and copyright protection for some categories of intellectual property, Congress and the courts should consider varying the length for which exclusive monopoly privileges are granted, depending on the expected commercial vitality of the creative work. [emphasis added]

Shughart is so right here: the proponents of intellectual monopoly, like all interventionists, do indeed have an utterly misplaced, naive faith in the state’s benevolence and competence. Why, let’s have Congress should figure this out! Oh, I’m in stitches. And the courts–yeahhhhh, they’ll do a great job–the same courts witheringly described here by J.H. Huebert:

In general, judges and those who appoint them have no reason to want to limit government. … Have not judges been responsible for some of the most outrageous expansions of government power? And, after all, are judges not a product of the same political system that gives us legislators and presidents? What president would appoint judges who would tell him he cannot do anything he wants? What Senators would confirm a judicial candidate who tells them that everything they have ever done in office is unconstitutional? The whole enterprise of libertarian constitutional theory ignores all we have learned from public choice economics about the incentives of government actors.

I will close by noting my favorite line of this sparklingly humorous essay: to determine the right length of patent and copyright monopolies for various types of inventions and artistic works, Congress should be not only trusted to want to do this, but should use “the expected commercial vitality of the creative work” as the test! Oh, man. I’m crying.

{ 30 comments }

Lars January 29, 2010 at 6:31 am

Not to give credit, when credit is due, is a Bad Thing. To take credit of a discovery, from the man who has traveled over montains, stormy of waters, has overcome financial troubles, carried on despite mistrust from other people, to reach this discovery, is a Bad Thing. I think so.

Maybe this is off topic? Or?

newson January 29, 2010 at 6:40 am

of course, the utilitarian question of cost-benefit is moot if one accepts the impossibility of interpersonal utility comparisons.

Joshua January 29, 2010 at 8:20 am

Stephan: Your comment: “Unfortunately, he supports these laws anyway. Shughart also candidly and explicitly admits the monopoly character of of patent and copyright:” is formatted like it is quoted from Shughart’s article.

Russ January 29, 2010 at 8:32 am

newson wrote:

“of course, the utilitarian question of cost-benefit is moot if one accepts the impossibility of interpersonal utility comparisons.”

According to your logic, one also cannot say that not having normal property rights is worse than having normal property rights. Does anyone here actually believe that? Impossibility of interpersonal utility comparisons or no, consequences do matter, and have to be taken into account by anybody who wants to be taken seriously.

bob January 29, 2010 at 10:49 am

“Although there may be a passionate few who don’t require payment for contributing to the common pool of knowledge”

Complete straw man. The absence of patent law doesn’t mean that the creation of public knowledge cannot be done on a for-profit basis. Most open source software specifically proves this.

Silas Barta January 29, 2010 at 11:45 am

Actually, sarcasm and quick wit are my job. Watch me show how Stephan_Kinsella’s latest argument fails. Here is his post, making the same arguments, but against all libertarian property rights.

***

While it is true that property law is constitutional, this does not make these laws just. What the artificial law-writing coup-leaders wrote a document designed to help the state seize more power is simply not relevant to the normative question of whether there should be property.

Pro-poperty law arguments rest on the assumption that the property system generates overall wealth — that its benefits are greater than its costs — without ever making this case. Instead, they point to ways that the property system benefits some people, and never bother to even try to tally up the costs to make sure it’s a net positive. In other words, they don’t even take their own justifications seriously. Kinsella makes the same mistake:

Producing useful products typically requires large investments of time and treasure. Most business ventures end in failure.

Granting a monopoly to those who are able to purchase property is necessary, therefore, to provide producers with an opportunity to earn a return on the investment that led to the products — and to encourage additional such investments. Such protection is typically important to the mass production and heavy machinery industries, where, in its absence, new cars and factories could simply be seized by competitors, and the incentive to do large-scale investment would disappear, stifling the structure of production.

The word “therefore” is unwarranted; this is a non sequitur. Later on in the piece, he writes:

Incentives matter. Althought there may be a passionate few who don’t require payment for giving stuff away for free, economic production will be much more rapid if an explicit economic payoff is available.

Much more rapid–? How much more? Who knows? The property advocates don’t. So how do they know it justifies the cost?

I found this to be a refreshing admission of the stifling effect mercantilist fee-simple physical monopoly has on the spread of wealth:

Th paraphrase the late economist Karl Marx, property rights slow down the ability to seize wealth for a reason: to ensure that there will be more wealth to diffuse…

Unfortunately, he supports these laws anyway. Kinsella also candidly and explicitly admits the monopoly character of property law:

Granting exclusive rights to those who homstead a resource is ncessary…

Some property advocates get very irked when property is called a monopoly. For example, property shill Michael Dell, in a piece intitled “The Myth that Property is a Monopoly,” writes, “People who suggest property is a monopoly are not being intellectually honest and perpetuating a myth to advance a political agenda.” But it is common for property advocates to acknowledge this. For example, Henry George writes “Land is subject to lawful monopoly created by the state in order to induce its productive use… The legal monopoly granted by the property title is the only mechanism that allows the producer to cover the fixed costs in producing…”

Consider this argument our author makes:

It is true that other means exist for producers to profit from their effort. In the case of dancing, authors can dance on the street for donations. Billy the Homeless guy did this, but somehow it didn’t work out.

Can Kinsella really be arguing that we need property, for otherwise another potential great dancer might drop dead early? (This reminded me of a bizarre argument made by property shill Warrent Buffet. In a discussion, property liberator Ralph Nader had mentioned “that in the 19th and early 20th centuries, two of the most productive countries on earth, Sweden and Argentina, had extensive welfare states, depriving people of most of the substance of property rights.” In response, Buffet says, “Thank goodness Sweden did have a welfare state. That is how Alfred Nobel got off his feet after bad times, eventually establishing the Nobel Prize.” So … we need a property-wrecking welfare state-monopoly system … so that Alfred Nobel could have a gotten a start in business!” What does one even say in response to such an “argument”?)

Mr. Kinsella continues:

The hard questions are: What kinds of goods should be elegible for property rights, and how far should such rights extend?

What’s needd is a middle ground. Even if we can all agree that property is an important social commodity, one size doesn’t fit all in the modern information age.

While rights up to 50,000 feet in the air may be appropriate for an airport, it may not be appropriate for a farm, a race course, or a residential area.

A 50,000 feet zone for a residential area may not be appropriate?! How would anyone know, really?

As for there being “hard questions” — who can answer them? And if “we need a middle ground” — even though we have no evidence to know where the “optimum” is — how can we achieve this? Who can do it? Kinsella’s answer: MORE property rights, and the courts:

Rather than abolishing property law for some categories of goods, courts should vary the amount for which property monopolies extend, depending on the expected commercial vitality of the property.[emphasis added]

The courts are neither benevolent nor compenent (well, they are good at two things: telling people what to do, and justifying themselves through propaganda). There is no reason to believe the courts want, or are equipped, to find the “right” answers to such questions. There is no reason to trust courts to determine the optimum extend of property right monopolies for various types of property, much less by using “the expected commercial vitality of the creative work” as a test.

***

Stephan_Kinsella’s screeds: not as hard, or insightful, as you might think.

Silas Barta January 29, 2010 at 11:49 am

@Russ:

According to your logic, one also cannot say that not having normal property rights is worse than having normal property rights. Does anyone here actually believe that? Impossibility of interpersonal utility comparisons or no, consequences do matter, and have to be taken into account by anybody who wants to be taken seriously.

THANK YOU! You hit the nail on the head here. This post could have been written by me (except maybe without the elegant brevity).

Posts like these exemplify why I can respect Russ despite his persistent opposition to IP, and why I believe he helps advance the debate rather than muddle it.

Peter Surda January 29, 2010 at 12:08 pm

Dear Russ,

> According to your logic, one also cannot say that
> not having normal property rights is worse than
> having normal property rights.
Strictly speaking, this is correct. However, in my opinion, that is not the issue.

The feature of exclusivity is inherent in rival goods, regardless of the legal system. The “creation” of property rights by the legal system does not change that, they merely distribute who gets the cut. However, exclusivity of non-rival goods is not an inherent feature of them. IP is therefore truly an artificial construct.

Russ January 29, 2010 at 2:59 pm

Peter,

My previous post was simply a response to newson’s comment on interpersonal utility. His comment seemed to be a way of wriggling out of any discussion of consequences, disguised in Austrian jargon to make it more palatable, so I thought it had to be addressed.

I agree that IP is artificial, but so is central heating, and I’m not give that up if I can help it. Artificial isn’t always bad.

Silas,

Thanks for the kind words. I’m not sure how elegant the post was, though. I couldn’t figure out a way to say it without the double negative.

Russ January 29, 2010 at 3:22 pm

My idea on utility and IP is simple. IP allows people to rest on their laurels. Take patents, for example. Let’s say somebody come up with a way of doing something that is much more efficient than any other way. Barring the invention of a yet better way, the inventor gets a lock on the market for 17 years (that is still the length of patent protection, yes?). So he could do nothing innovative for 17 years before he has to worry about competition. If there were no IP, he would get a slight edge in the market before his idea was copied by competitors. He would have to continue innovating to retain the edge.

The main objection to the previous paragraph is that, due to the costs of research and development, the new idea would not be developed at all without IP. It just wouldn’t be worth it. This is possible. But without IP, those ideas that are produced will spread faster and benefit everybody sooner, because we’ll use our resources more intelligently. Could this systemic difference make the economy so much wealthier that the costs of research and development would be much lower?

Mark Hubbard January 29, 2010 at 3:37 pm

My idea on utility and IP is simple. IP allows people to rest on their laurels. Take patents, for example.

Well, no, take my car for example. That allows me to ‘rest on my laurels’, allowing me to drive to work rather than walk off my beer pot.

That’s the dumbest (and yet another utilitarian) argument against IP I’ve seen yet Russ.

You have property rights, or you don’t. The first makes individual freedom possible, the second destroys it.

mpolzkill January 29, 2010 at 3:46 pm

Wow, is it just me or is Hubbard the most obtuse guy that’s ever stuck around here for more than two comments?

Russ January 29, 2010 at 3:57 pm

It’s not just you. Wow, finally, something the two of us can agree on. *grin*

Russ January 29, 2010 at 4:02 pm

Mark Hubbard wrote:

“Well, no, take my car for example. That allows me to ‘rest on my laurels’, allowing me to drive to work rather than walk off my beer pot.”

I’m sorry, I know this isn’t civil, but I couldn’t pass it up.

I thought a car allows you to rest on your arse. I guess this means that you can’t tell your arse from your laurels.

Bill in StL January 29, 2010 at 10:21 pm

I’m still on the fence. Against IP is that intangible property is non-scarce, so exclusion isn’t required for the owner’s consumption. For IP is the obvious point that it is the product of a person’s labor.

As easily as one can argue that IP stifles innovation by allowing creators to take it easy, one can say the lack of it would dissuade them from ever entering the field.

Although reducing the owner’s utility is the common reason I’ve heard for the right to exclude material property, no one suggests that trespass or borrowing of material property would be acceptable in the rare situations where such temporary trespass does not reduce the owner’s utility.

newson January 30, 2010 at 1:48 am

to russ:
given that state coercion imposes costs on unwilling payers, a utilitarian has to come up to the impossible task of proving that the hurt to some brought about by these imposts is outweighed by the relief brought to others, net transaction costs of enforcement.

of course, this argument applies equally well to physical property, leading to the question, why should i pay for protection to your person and belongings, when that money could go towards my own.

…and so we return to the familiar anarchist-minarchist dance.

Deefburger January 30, 2010 at 9:19 am

“I agree that IP is artificial, but so is central heating, and I’m not give that up if I can help it. Artificial isn’t always bad.”

Except when it is an attempt to overcome by law the nature of the thing it purports to change.

Most of you I expect understand the mechanism of observation. As an observer you have means to be aware of the observed. In physical reality this means is usually associated with light and electro-magnetism. When you and I observe the same object, we see it via the awareness of light.

But when we talk of ideas, thoughts, and patterns, we are observing non-physical reality, what the legalese call intangibles. I can not help but notice that in some cases, the observed object is considered exclusive domain for the purpose of claiming property, but then the same object is claimed as “stollen” when observed by others and re-expressed.

Metaphysically, there is a problem also with the idea of exclusive creation in IP. If the observed non-physical object can not be manipulated, controlled, or altered in any way through direct contact with the object, then the object can only be observed. If the object can only be observed, then there must exist within our minds a means of being aware of that object, and a means for that object to be seen within our minds. If we can see it, then we can observe it. But would not the observed have to exist as an object in the first place prior to it’s being seen?

Creative thought, then is discovery, not creation.
The implications of observational metaphysics are that the non-physical reality is populated with objects of possibility, objects that exist a priori to their observation. Creative thought, then, must be similar to the finding a path up a mountain. The path exists prior to it’s discovery.

To prove this conjecture false, you would have to prove that the thought-space of your mind is different from the thought-space of my mind. If that is so, then, your ideas are un-knowable to me at any time, because they are contained in an exclusive space, owned by you, and controlled by you, and observable only to you.

If this is true, then you have no claim on any thought I have. That thought-space is just as exclusive for me as yours is for you. What claim then can be made on the objects within my mind that just happens to appear to be the same as the objects within your mind?

You have a catch-22. A paradox of logic in any attempt to prove ownership. You can only prove the need for protection if you admit the object you are protecting is metaphysically shared in the first place. And if you choose exclusive observation and exclusive thought-space, then you have no need for protection and no claim on any other individual’s thought-space.

Any takers?

Josh S January 30, 2010 at 8:15 pm

To turn the tables a bit, open-source development is not a good example because it has, so far, largely failed to usurp competition whose products require large aggregations of capital.

While I hear a lot of negative statements (there shouldn’t be a government, there shouldn’t be IP, there shouldn’t be laws, etc), I’d like to see a positive statement on how something might occur. So let me ask a very direct question:

Some modern video games require tens of millions of dollars to produce. Turning a profit on such a venture requires selling millions of units at between $50 and $100 apiece, depending on the territory. Now, it seems to me that if we had no IP law, such entertainment products would not be made at all. And in fact, there are countries that functionally have no IP law (like Brazil and China), and the producers simply do not operate there. So, for the anti-IP people, here is the question:

Will the product exist at all? Making copies of the same quality as the original is technologically trivial. It seems to me that the possibility of recouping a $10m investment vanishes if the creator does not have exclusives rights over production and distribution.

If your answer is “yes,” how can someone turn a profit in this environment? Please be thorough–do you think you could spend even $1m developing a game and profit by selling it in Brazil?

If your answer is “no,” is the conclusion then that said product is a waste of resources; e.g. any product that is not worth producing in a world where there is no copyright or patent is simply wasteful.

Bill in StL January 31, 2010 at 9:32 am

Deefburger:

“If the observed non-physical object can not be manipulated, controlled, or altered in any way through direct contact with the object…”

Where does this assertion come from? I don’t see how you get to it. If you’re talking about intangible property, let’s say a song, it can be manipulated. Just have two different singers sing it.

“Creative thought, then is discovery, not creation.”

On some level, yes, an artist has to discover the combination of sensory input that will produce the desired emotional response in the observer, but is that work not still his unique creation?

Stephan Kinsella January 31, 2010 at 9:41 am

Silas, your failed analogy helps to show what is wrong with IP. Thanks.

“While it is true that property law is constitutional, this does not make these laws just. What the artificial law-writing coup-leaders wrote a document designed to help the state seize more power is simply not relevant to the normative question of whether there should be property.”

Actually, to make the proper analogy, you’d have to say that just because the Constitution authorizes property in material things does not mean it’s justifified. But the constitution does not do this. It only empowers a federal government with enumerated powers. It presupposes the states already exist, and that private property rights already exist. Analogy FAIL.

“Pro-property law arguments rest on the assumption that the property system generates overall wealth”

This is not true. Another fail. We are not all utilitarians, you know.

Deefburger January 31, 2010 at 10:31 am

@Josh S

Your example is a good one. Video games require special hardware to operate, which affects the situation. However, creation of product is not trivial, even though copying of the creation is. The problem for the entrepreneur is the same in either case. Law does not prevent the action that the law prohibits. So whether law exists or not, the successful monetization of a product depends upon the plans to distribute and sell.

For video games, it would make sense for the company to give away downloadable copies of incomplete story lines, and then sell the remainder to those who wish to play the rest. Most people will buy from a reputable source, because they are wary of code that might harm their systems. If you download a freebie from EA, you will likely go back to the originator to purchase and download the full version. Failure to do this is an opening for fraudulent or even destructive code entering your system.

Lack of legal forces does not effect the market in a negative way. Reputable distribution sites will become the main sources of content, as is happening now in the news arena.

The questions of how to monetize the created product and distribute it are entrepreneurial questions. The philosophical question is whether or not the pattern can be owned and shared at the same time, and whether or not the use of positive rights is justified. A conflict of principals arises when the physical property nature and the laws surrounding that nature are applied to non-physical objects, which have a very different nature from physical objects.

Whether or not an entrepreneur or “creator” can monetize the non-physical is secondary to the philosophical question of whether or not non-physical objects can be owned in the first place. The true nature of non-physical objects has to be clearly understood before any law regarding their existence can be considered.

What most people are having trouble with is the very different nature of non-physical objects. They are not scarce, they are not confined, and they are not inaccessible to any one, and they can not be made to be inaccessible without threat of force, and even then, they can not be forced out of other minds except by death, and even that is in question if one considers there to be some “life” after death.

But as you can see by the numerous posts, most people are not considering the true nature of the thing they are trying to sell. Entrepreneurship is about considering this nature thoroughly and formulating a plan to market. Failure of the entrepreneur to properly consider this nature will result in failure to market. But this is not the issue with IP. The IP issue arises because of an attempt to force nature upon the non-physical that does not exist and to enforce the decreed scarcity upon the general populace for the purpose of monetization via secular law and physical enforcement.

If this is to be allowed, and even justified, then there is nothing to stop an enterprising corporation, group or author from using the law to force monetization of anything they deem to be physical.

Stephen Hawking remarked in a program I saw yesterday that he should have copy written the theory of everything and then charged everyone for the right to exist. This is exactly the problem of trying to make non-physical objects physical by decree. You may have the best intents, but the real world results of your decree are problems, not capabilities.

Non-physical material reality is larger, more expansive, less restricted and longer lasting than the physical reality sub-set it is associated with. Trying to make the non-physical objects in this reality physical is like trying to play checkers with stars. It doesn’t work. You can’t do it, even if you say you can by law.

And just because the non-physical object is copied into a physical form, does not make the non-physical object suddenly exclusively physical and exclusively yours. You can’t put the genie into the bottle in the first place. You can only say the genie is in there, and even then it is only a physical expression of the genie. To prove it, you have to open the bottle and reveal the genie. Now you can’t put him back in, because he wasn’t in there in the first place! Only a physical representation of him, a copy. The original genie is still an existent object in the non-physical reality you saw him in in the first place. He didn’t go anywhere just because you said so.

Non-physical material objects are the basis of our knowledge. Any one can visit this knowledge at any time if they so wish. Transmission of information is the transmission of “coordinates” that lead to the non-physical object. The unique expression of these “coordinates” is valued by others if the information is good and leads directly to a personal experience of the non-physical object.

What then is important to us is not just the coordinates, or the experience, but the originator of the expression, and the skill with which the originator constructs the expression. This is the value of authorship. If we want to have the experience of that story, that painting, that sculpture, that invention, then we seek out the originator of those things and value that individual for their ability to express.

THAT is what the libertarian entrepreneur will monetize, at least if he is rationally examining the true natures of the things and people he is selling and selling to.

Beefcake the Mighty January 31, 2010 at 10:45 am

Too many pro-IP’ers, when they aren’t making dubious utilitarian arguments, resort to analogies which are
superficially plausible but substantially vacuous.  Take for instance the claim that, just as a gun owner
is restricted from how he uses his gun by, say, a homeowner into whose house the gun owner could shoot
his bullets, so too are owners of factors of production restricted by how they use those factors by someone
who first thought of a way to arrange those factors.

First, let’s note that the question of ownership is completely separate from the question of what range
of justifiable uses is available to some property owner.  The gun owner absolutely and unconditionally
owns his gun, regardless of how he may justifiably use it (he still owns the gun even if his shooting of
bullets into someone’s house qualifies as aggression).  Second, the question isn’t IF such restrictions  
on property owners exist (clearly they do), but rather WHY such restrictions exist. 

In the gun owner-home owner example, the question comes down to first use.  The fact of first use is
what makes the gun holder and owner, and what makes the house occupier an owner, and why the house
owner is justified in restorting to defensive force against a shooter and seeking compensation (in some form)
from him. 

In the other example, first use is completely absent from the claim of the non-owner of the factors to
restrict how the owner of the factors uses those factors (based on the former having first thought up some
way of using these factors).  Indeed, the the former is in essence asserting propery rights over the factors,  
something the home owner in the previous example does not do in relation to the gun.  Now, defenders of
IP are free to put forth a theory of property rights NOT based on first use, and of course address the
criticisms of such alternative theories that are readily available in the libertarian literature (by Rothbard,
Hoppe, Kinsella, and many, many others).  As far as I know, they have never done such a thing.  Far
easier to put forth bad analogies, I guess.

Also, since this is the time of year where most people break their New Year’s resolutions, I might as
well say:  Silas, go back to molesting cats or whatever the fuck you usually do.  Asswipe.

Deefburger January 31, 2010 at 11:20 am

@Bill in StL

“Where does this assertion come from? I don’t see how you get to it. If you’re talking about intangible property, let’s say a song, it can be manipulated. Just have two different singers sing it.”

The singing of the song is the physical expression of the non-physical object, the song. This ability to express, both in the written form of the song, as well as the performance is valuable, as is illustrated by the market for concerts, as well as the market for material to perform.

But these expressions become memories of the non-physical object they are expressions of, when they are observed and enjoyed by the audience. What can not be done is to erase this memory from the observers that follow, or the non-physical object that they were led to by the performance of the song.

As far as the assertion of non manipulation and control is concerned, any thing you can “see” in your mind is seen via some form of awareness. In order for you to be aware of any thing, the thing must exist prior to your observation of it, no matter how unique your point of view. You can only observe non-physical reality.

“On some level, yes, an artist has to discover the combination of sensory input that will produce the desired emotional response in the observer, but is that work not still his unique creation?”

Yes it is. The physical manifestation of expression of view of the non-physical is both an ability and a skill that is, at the time of observation, a valuable ability and skill. I do not say that the observation and the expression of the observation is invaluable. What I am saying is that it is necessary to understand what part of the experience is physical, and therefore can be real property, and what is non-physical. Even if the experience is new to those who experience the expression, the non-physical object is still existent as a non-physical object, in spite of the creation of a physical representation of it.

As concious human beings we exist in two overlapping realities. One is physical and obeys physical natural laws. The other is non-physical and obeys non-physical natural laws.

Non-physical reality is a realm of discovery. Physical reality is a realm of expression and physical limitations. In both cases, objects are being, dasein. What their nature is depends upon which reality they exist in. Some, like yourself, exist in both simultaneously. The job of the philosopher is to reveal which ones are which.

Criminalizing natural behaviour is a recipe for conflict. Inventing legal damages for acts that have no possibility of actual damage is a false justification for use of force. So we must be clear on what we are talking about, and what the nature is of the thing we wish to monetize, as well as the nature of the people we wish to sell to.

Deefburger January 31, 2010 at 12:42 pm

@Bill in Stl

“Although reducing the owner’s utility is the common reason I’ve heard for the right to exclude material property, no one suggests that trespass or borrowing of material property would be acceptable in the rare situations where such temporary trespass does not reduce the owner’s utility.”

Borrowing and trespass of physical material objects do reduce the utility for the owner. It is this precise circumstance that Bastiat uses in his defence of interest. There are two different valuations and two different costs involved in the lease of either a tool or money. One is the loss of utility for a time, the other is the actual utility of the thing itself.

IP has only one utility, and that is as a model, a memory, a knowledge. Beyond that, there is no loss of utility when it is shared. There is no justification for interest or lease. It is not physical. It is not scarce.

Russ February 1, 2010 at 1:23 am

Deefburger wrote:

“Russ wrote: “I agree that IP is artificial, but so is central heating, and I’m not give that up if I can help it. Artificial isn’t always bad.”

Except when it is an attempt to overcome by law the nature of the thing it purports to change.”

If we have radio rights, then that is an attempt to make radio transmissions into something that they naturally aren’t. We want radio transmissions to be uninterfereable, so they can be used as a means of creating a communications channel. But by the nature of radio waves, that can’t be done naturally. So we institute a law that says that radio spectrum is property, and that (plus enforcement of said law, when necessary) solves the problem.

The moral of the story is, artificial isn’t always bad. Granted, trying to get around the nature of something could have unforeseen problems, so we have to be careful when we do this. But I don’t think it’s a stopper, in and of itself.

Beefcake the Mighty wrote:

“In the gun owner-home owner example, the question comes down to first use. The fact of first use is what makes the gun holder an owner, and that makes the house occupier an owner, and why the house owner is justified in restorting to defensive force against a shooter and seeking compensation (in some form) from him. ”

The “first use” rule may very well be what makes the owner an owner. But you’re breaking your own rule, and not looking at the WHY of all this. The “first use” rule is just procedural rule we have come up with for deciding who gets property. It’s not *why* we came up with the concept of property in the first place. Why we came up with the concept of property in the first place is because it’s a useful way of resolving disputes. In other words, we came up with it because it’s useful. It always eventually comes down to utility, even though you don’t want to admit that.

Beefcake the Mighty February 1, 2010 at 6:55 am

Russ,

I didn’t discuss the “why” part because it has already been more than adequately laid out elsewhere (eg by Kinsella).

It is a great source of frustration and annoyance that so many on the pro-IP side are ignorant of the basic issues of libertarian property rights theory.

Deefburger February 1, 2010 at 9:11 am

@Russ

The radio spectrum argument is put forth a lot as an example of IP but the radio spectrum is a real and natural phenomenon in physical reality. The spectrum itself is limited to variation in signal strength, frequency and wavelength, the physical properties of light.

As long as the rules correctly account for the physics of light, then allocation can both be observed and utilized fairly by all.

But to create a limitation that does not exist, to impose a limitation where there is no need for one, is where the problem arises in creation of limits on non-physical objects. They do not have the limitations that the physical radio spectrum has. The physics of radio defines the limits, the scarcity of spectrum, the distance from the transmitter to the receiver, relative separation of transmission sources, etc. etc. Non-physical reality has none of these physical limitations.

The better analogy is in the claiming of stars. They are observable to all, but reachable and controllable by none. This is not the case with the radio spectrum. I can control radio “space” by transmitting on one of the scarce frequencies. By doing so, I trespass upon any overlapping signal in my area (physical space, scarce frequency). This is physics. This is physical material reality.

By contrast, I cannot trespass in non-physical reality. I have no control over any part of it. I can only observe. I can direct my intent to see some part of it, but I cannot change any part of it I see. I can look somewhere else to see something similar, but I cannot change that object either. I can observe the objects there, but I cannot see anyone else observing. I can see but I cannot be seen. I have no non-physical transmitter to affect change there as far as I can tell, and therefore no means of preventing any one else from observing there as well. No physics of limitation, means no means of limiting.

Applying the rational of physical limitation on an object in a space that has no physical limits, is like trying to rope a cloud. You can pass all the laws and amendments you want concerning the roping of clouds, and it will only create problems for people who use rope. It will have no effect on the clouds whatsoever.

Bill in StL February 1, 2010 at 4:36 pm

I agree that in most cases, borrowing and trespass do reduce the owner’s utility. I’m saying that, in the exceptional situations where they do not, they’re still wrong. From that, I don’t think the owner’s right to exclude stems from his loss of utility, but is more fundamental.

The question I’m still working on is, what is that more fundamental right, and should it apply to IP?

Deefburger February 1, 2010 at 9:59 pm

“I agree that in most cases, borrowing and trespass do reduce the owner’s utility. I’m saying that, in the exceptional situations where they do not, they’re still wrong. From that, I don’t think the owner’s right to exclude stems from his loss of utility, but is more fundamental.

The question I’m still working on is, what is that more fundamental right, and should it apply to IP?”

What is more fundamental than the utility of knowledge? It’s presence? It has no mass. It’s appearance? It’s in your mind. What you can do with it in physical reality is use it to manipulate physical reality to meet your needs in physical reality. It’s non-physical. It’s utility is absolutely fundamental to it’s being, it’s Dasein. So what are you looking for? Substance? Apply it to the physical reality. Presence? Write it down or draw it. Utility? MAKE SOMETHING USEFUL!

That is the utility value of IP. But you can’t claim ownership of knowledge. Nobody owns knowledge that is known by more than one individual. The Knowledge, the Secret is the Genie. Tell someone and the bottle pops open. The Genie is not limited by physical reality. The Genie is only limited by the bottle opener. Once loose, there is no putting him back. Only forgetting will erase the event from reality. Some will be forgotten, and no one will benefit. Others will be remembered, and all will benefit from the memory.

The only other “fundamental” you can name is the value it has if you wish to believe in a legal fiction. But you can wish the Genie is yours all you want, you can believe that the object, in spite of it’s nature, is exclusively yours. By law and proclamation the Genie is yours to sell to the highest bidder. If you believe the legal fiction, then you create a prohibition on thought and the utility of that thought. You create criminals out of normal people and everyone around you is trying to steal what can’t be lost, except by forgetting.

And you see the results of this belief. And still you pine for the great “value” created by this fiction. That elusive fundamental that supports the belief. Perhaps it is your god given right to own a Genie. Perhaps it is. Say it enough times and it might come true.

The magic is not in the things we make, but in the metaphysics of the Genie. The Knowledge is Non-Physical. The Utility is Physical. The Knowledge is infinitely reproducible and limited only by the number of minds that can hold it. The Utility of it is limited only by the means available to apply the Knowledge in physical reality.

So, as a libertarian, do you create a legal fiction and monetize the fictional value, or do you accept reality on it’s face, and monetize the thinker? Last time I checked, I got paid for my time, product and skill, and the application of my knowledge in physical reality. Most of the time, the knowledge was key. But it was the application of it that unlocked the real value, not the key itself. The key was not physical. The utility of it was.

Etaoin Shrdlu August 1, 2010 at 3:28 am

We are not all utilitarians, you know.

So, you’d rather go with what doesn’t work?

Societies that protect IP rights have tended to produce major useful innovations and to have successful economies; examples include Britain and the United States, and Argentina up until Peron got into power. Societies that don’t protect IP rights, or that stop protecting IP rights, have tended towards economic stagnation; examples include Thailand, the good old USSR, and post-Peron Argentina.

Of course, part of that may be because societies that don’t protect IP rights also don’t protect any other property rights. One could posit that a lack of protection for IP rights is a sort of canary-in-the-coalmine indicator for whether a society is dysfunctional. In fact, I so posit.

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