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Source link: http://archive.mises.org/14623/state-antitrust-anti-monopoly-law-versus-state-ip-pro-monopoly-law/

State Antitrust (anti-monopoly) law versus state IP (pro-monopoly) law

November 12, 2010 by

As discussed in previous posts, the state grants monopolies (patents and copyright) then penalizes companies for using (“abusing”) them, in contravention of state antitrust law–so that there is a “tension” between these state laws.[1] (And of course the state exempts its own monopoly powers from antitrust regulations, and partially exempts the IP monopolies it hands out to supplicants.) On Techdirt, Mike Masnick points out another example of this “tension”: Once Again, Security Company Suggests Microsoft Making Its Own Software Secure Is An Antitrust Violation.

I have an idea. Eliminate the only true monopoly: the state and its agencies, its monopolization of the roads, courts, legal system, police, military, and also its monopoly-granting agencies–the USPTO (patent and trademark) and commerce department (copyright)–remove Microsoft’s copyright and patent monopolies but remove antitrust laws too and let them be.

True, large corporations often lobby for and benefit from (relatively speaking) antitrust and other regulations, but still, remove their state-granted monopolies and remove state anti-monopoly restrictions, and let the free market work.[2]

1. See Hsieh and Mossoff on IP and Sewing Machines; When Antitrust and Patents Collide (Rambus v. FTC); The Schizo Feds: Patent Monopolies and the FTC; The Schizophrenic State; Intel v. AMD: More patent and antitrust waste; Are Patents “Monopolies”?; Patents, Prescription Drugs, and Price Controls.

2. See note 10 and accompanying text of my article Reducing the Cost of IP Law (“Once again, as in the case of minimum-wage, social-security, and prounion laws, federal legislation works in favor of big business, … For a recent example, UPS is currently lobbying Congress to enact legislation that would redefine its rival, FedEx, as a trucking company rather than the airline it started out as in an attempt to make it easier for the Teamsters union to unionize FedEx drivers and raise their wage rates—and of course FedEx’s cost structure. See Del Quentin Wilber & Jeffrey H. Birnbaum, Taking the Hill By Air and Ground: Shift in Congress Favors Labor, UPS Over FedEx, Washington Post (September 14, 2007).

See also Murray N. Rothbard, Origins of the Welfare State in America, Mises.org (1996) (“Big businesses, who were already voluntarily providing costly old-age pensions to their employees, could use the federal government to force their small-business competitors into paying for similar, costly, programs…. [T]he legislation deliberately penalizes the lower cost, ‘unprogressive,’ employer, and cripples him by artificially raising his costs compared to the larger employer.… It is no wonder, then, that the bigger businesses almost all backed the Social Security scheme to the hilt, while it was attacked by such associations of small business as the National Metal Trades Association, the Illinois Manufacturing Association, and the National Association of Manufacturers. By 1939, only 17 percent of American businesses favored repeal of the Social Security Act, while not one big business firm supported repeal.… Big business, indeed, collaborated enthusiastically with social security.”); Llewellyn H. Rockwell, Jr., “The Economics Of Discrimination,” in Speaking of Liberty (2003), at 99 (“One way the ADA [Americans with Disabilities Act] is enforced is through the use of government and private ‘testers.’ These actors, who will want to find all the “discrimination” they can, terrify small businesses. The smaller the business, the more ADA hurts. That’s partly why big business supported it. How nice to have the government clobber your up-and-coming competition.”); Rothbard, For A New Liberty (2002), pp. 316 et seq.; Rothbard, The Betrayal of the American Right, 185-86 (2007) (“This is the general view on the Right; in the remarkable phrase of Ayn Rand, Big Business is ‘America’s most persecuted minority.’ Persecuted minority, indeed! To be sure, there were charges aplenty against Big Business and its intimate connections with Big Government in the old McCormick Chicago Tribune and especially in the writings of Albert Jay Nock; but it took the Williams-Kolko analysis, and particularly the detailed investigation by Kolko, to portray the true anatomy and physiology of the America scene. As Kolko pointed out, all the various measures of federal regulation and welfare statism, beginning in the Progressive period, that Left and Right alike have always believed to be a mass movement against Big Business, are not only backed to the hilt by Big Business at the present time, but were originated by it for the very purpose of shifting from a free market to a cartelized economy. Under the guise of regulations “against monopoly” and “for the public welfare,” Big Business has succeeded in granting itself cartels and privileges through the use of government.”); Albert Jay Nock, quoted in Rothbard, The Betrayal of the American Right, 22 (2007) (“The simple truth is that our businessmen do not want a government that will let business alone. They want a government they can use. Offer them one made on Spencer’s model, and they would see the country blow up before they would accept it.”).

See also Timothy P. Carney, The Big Ripoff: How Big Business and Big Government Steal Your Money (2006), and also Rothbard, Confessions of a Right-Wing Liberal (“This is the general view on the right; in the remarkable phrase of Ayn Rand, Big Business is “America’s most persecuted minority.” Persecuted minority, indeed! Sure, there were thrusts against Big Business in the old McCormick Chicago Tribune and in the writings of Albert Jay Nock; but it took the Williams-Kolko analysis to portray the true anatomy and physiology of the American scene. … As Kolko pointed out, all the various measures of federal regulation and welfare statism that left and right alike have always believed to be mass movements against Big Business are not only now backed to the hilt by Big Business, but were originated by it for the very purpose of shifting from a free market to a cartelized economy that would benefit it. Imperialistic foreign policy and the permanent garrison state originated in the Big Business drive for foreign investments and for war contracts at home.”)

See also the Wikipedia article on Rothbard: “Rothbard was equally condemning of relationships he perceived between big business and big government. He cited many instances where business elites co-opted government’s monopoly power so as to influence laws and regulatory policy in a manner benefiting them at the expense of their competitive rivals. He wrote in criticism of Ayn Rand’s “misty devotion to the Big Businessman” that she: “is too committed emotionally to worship of the Big Businessman-as-Hero to concede that it is precisely Big Business that is largely responsible for the twentieth-century march into aggressive statism…”[49] According to Rothbard, one example of such cronyism included grants of monopolistic privilege the railroads derived from sponsoring so-called conservation laws.[50]

Patents are state-granted monopolies, which are in “tension” with antitrust law; you can have and use this monopoly, even though it technically seems to violate the antitrust laws, so long as you don’t abuse it. This means that the larger companies who amass the large patent arsenals (and cross-license with each other) sort of have immunity from antitrust law while smaller competitors are not only subject to the anticompetitive effect of the patent monopolies possessed by the big players but also subject to antitrust law still. Absent antitrust law perhaps smaller companies could cartelize somehow to combat the patent monopolies of the big companies–for example perhaps they could form defensive patent pooling arrangements–pools that might under current law violate antitrust (I am not sure, have not looked into it in detail). I.e., the antitrust law (maybe) gives enough of an exemption to big companies to acquire large patent monopoly arsenals and to cross-license with each other forming anticompetitive barriers to entry but does not give enough of an exemption for smaller companies to collude and cartelize and form defensive patent pools. I sense that this is basically one thing that is going on.

Another example would perhaps be Big Sports. If I recall correctly federal antitrust law had to grant a special exemption to certain college or large sports leagues, so that they would not be hampered by antitrust law. I can imagine that the combined effect of antitrust law and the special exemption might give some favoritism to the NFL etc. This may be on point but not sure it’s the only one: http://en.wikipedia.org/wiki/Sports_Broadcasting_Act_of_1961.

Update: See Jeffrey A. Tucker, Does Favoring Free Enterprise Mean Favoring “Business”?:

The first great error here is the mental habit that many have of thinking that big government and big business are somehow at odds. The whole of American history from the beginning to the present suggests precisely the opposite. From Alexander Hamilton to Goldman Sachs, a careful look at the history shows that there has been no major expansion of government that some sector of big business hasn’t backed with pressure and funding.

Who won from the mercantilism of the 19th century? Who came out ahead in the war socialism of Woodrow Wilson? Who was the major power behind the economic regimentation of the New Deal? What sectors of American life made out like bandits during World War II and the Cold War and the regulation of medical care and the American workplace in the 1960s and 1970s? Without exception, the corporate elite were behind every push for expanding the leviathan state.

The 19th-century history here has been carefully documented by Thomas DiLorenzo. Murray Rothbard has revealed the role of business in World War I. The postwar period through the New Deal is documented by Butler Shaffer in his great book In Restraint of Trade. The New Deal racket received a thorough exposé with John T. Flynn. The Cold War and after are shown to be radically probusiness in For a New Liberty, as well as Robert Higgs’s excellent works. And this is just the US case: it’s been true in every country where free competition was overtaken by state interventions.

Update: Antitrust vs. Trademark Law

{ 10 comments }

Bennette Sebastian November 12, 2010 at 2:31 pm

Libertarianpress.blogspot.com

Ohhh Henry November 12, 2010 at 4:58 pm

It is not unprecedented for different factions of government to fight with each other for the right to control and steal from the public. In Nazi Germany the rivalries between top leaders were notorious. It was said to be one of Hitler’s favorite management techniques, to give ambivalent orders for overlapping responsibilities to two or more of his underlings. In Mao’s Cultural Revolution the factional rivalries apparently got so heated that there were army units fighting in the streets with tanks. In these extreme cases it may have been the deliberate policy of top leaders to divide and control their underlings, or it may be a natural and inevitable result of total government.

Each government department naturally wants to expand forever. When the public has been so tyrannized that there is almost no activity left which is not already controlled by some part of government, the departments must then fight to displace each other if they want to expand. Given the recent lack of fresh, new wealth and unregulated, successful industries to control and plunder in America, perhaps you will see a turf war between the IP Zealots and the Trust Busters.

Stranger November 13, 2010 at 1:40 pm

The distinction is really quite obvious. Anti-trust law limits what you can do with your property, while IP laws limit what other people can do with your property (you are still free to limit or not limit other people’s access to your own property).

This makes anti-trust laws anti-economic, while IP laws are pro-economic.

Stephan Kinsella November 13, 2010 at 2:25 pm

Stranger, you are confused: IP laws tell others what they can do with their OWN property. For example one effect of a patent on a method for tweaking your engine to get better mileage would be that I cannot tweak my own car’s engine to get better mileage.

Stranger November 13, 2010 at 2:45 pm

There’s no need for me to explain this fallacy, as Rothbard already did so long ago in Man, Economy and State.

http://mises.org/rothbard/mes/chap10e.asp#7._Patents_Copyrights

Matthew Swaringen November 13, 2010 at 3:21 pm

You said “IP law” when you should have said copyright then. If you agree only with copyright you should clarify your terms. You engage in (perhaps unintentional) deception when you have spoken in defense of IP only to trump someone who gives a patent example with talk of how only copyright is valid.

Nevertheless, Rothbard was wrong.

“For literary creations are unique products of the individual; it is almost impossible for them to be independently duplicated by someone else.”

One might agree with this statement, but it only applies towards the whole sum of a book. Surely someone can write a similar plot, paragraph, character, or come up with a similar name? And yet copyright applies not only to entire books. There is “fair use” but fair use excludes the right to produce adaptations or extended works. Why would Rothbard disallow this? He might not disallow this, in which case his argument is not for anything like current copyright law. The problem is he doesn’t say, so exactly what copyright entails is entirely unclear.

He does imply copyright could be used for inventions that are sold, requiring the purchaser not to reverse-engineer them. But say that the purchaser does anyway, and a third party benefits who wasn’t party to that agreement. Say the third party has no knowledge of that agreement whatsoever, and produces a similar device. What recourse has the original seller against the third party? And what justification is there for recourse?

Rothbard didn’t think this through. And the reason he didn’t think this through is because the conditions of his time didn’t warrant a lot of thought on the subject. This is unfortunate. I think if Rothbard were from this era he would have come to the right conclusions. You may think differently on that matter, but what should at least be clear is that Rothbard didn’t spend nearly sufficient time to explain the whole of what his copyright entailed in comparison to the state, and all of it’s ramifications in a society where copying is nearly free.

“There would, however, be copyright for any inventor or creator who made use of it, and this copyright would be per­petual, not limited to a certain number of years. Obviously, to be fully the property of an individual, a good has to be perma­nently and perpetually the property of the man and his heirs and assigns.”

This idea is not so devastating when one thinks of an entire book and the rights to print and reproduce that book, except what if the heirs of the man’s heirs are fools and don’t give anyone the right to print the book, a choice the man would not have made? What if knowledge is lost to all because of their choice? This is ok? Perhaps to you it is, but to me it is a travesty.

When I think of land as property, I think of homesteading and improvements made to the land. But if an heir allows the property to be reclaimed by nature, does not exist on the land or use the land… is he the owner of it? I would say he isn’t any longer. One cannot gain land simply by claiming it, one has to do something to earn that ownership. And that something has to continue. To disagree with this principle is to say that ownership should last even when the scarce resources aren’t in use, and to say that I should be able to claim “all unused parts of the world” and shoot anyone who dares enter them.

ABR November 14, 2010 at 12:24 am

Rothbard believed that land once homesteaded must remain ‘owned’ until or if the owner declares otherwise.

Matthew Swaringen November 14, 2010 at 1:38 pm

I wouldn’t agree with him on that either.

Zorg November 14, 2010 at 8:34 pm

As I recall, he left the door open for abandonment of property in land.
His underlying assumption was that the present owner of record had
the superior *claim*. If another comes along to challenge that claim, then
that newcomer would have to show that his claim is superior.

Rothbard pretty much dismissed other theories of land ownership. He
talked about the importance of land being managed by absentee owners
and speculators even if it’s “unused” at present. I think he correctly sensed that there are a lot of pitfalls here. Some people have gone over the edge and seem
to want to start from scratch. If that is not a recipe for disaster, I don’t know
what is.

Rothbard just said that you’d have to challenge a title and then prove your
case. I don’t think he dismissed the idea that property could be considered abandoned at some point and that a “squatter” could homestead it. But he
was arguing against people – mostly socialists of one kind or another – who
still view property through collectivist lenses even when they give a nod to
private property.

I think there is more work to be done regarding land just like there is more
to be done on IP and other property issues. It does take time for these issues
to unfold and get the attention they deserve. Bad arguments take time to
reveal all their flaws just as good arguments need to be proven over time as they
withstand the attacks of less worthy arguments.

Latarsha Aunkst November 27, 2010 at 11:56 am

I’m sure I will get very angry reading more of this.

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