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Source link: http://archive.mises.org/14877/ip-rights-as-monopolistic-grants-to-overcome-the-public-goods-problem/

IP Rights as Monopolistic Grants to Overcome the Public Goods Problem

December 4, 2010 by

Libertarian and other IP advocates sometimes get miffed when you refer to a patent or copyright as a monopoly privilege granted by the state (see my post Are Patents “Monopolies”?). But some IP proponents are quite forthright about this. Take this explicit opening passage in an article by an ardent IP advocate, Jerome H. Reichman, a law professor at Duke:

Governments adopt intellectual property laws in the belief that a privileged, monopolistic domain operating on the margins of the free-market economy promotes long-term cultural and technological progress better than a regime of unbridled competition.

… Intellectual property laws typically provide qualified creators with temporary grants of exclusive property rights that derogate from the norms of free competition in order to overcome the “public goods” problem inherent in the commercial exploitation of intangible creations.

(Reichman, “Charting the Collapse of the Patent-Copyright Dichotomy: Premises for a Restructured International Intellectual Property System,” Cardozo Arts & Ent. L.J. 13 (1995): 475.)

Notice how much is packed into this short passage. First, an explicit admission that IP grants are monopolistic and derogate from free market norms and are opposed to a regime of “unbridled competition”–i.e., IP is anti-competitive. As is to be expected–after all, it’s a monopoly grant. Second, that IP rights are only temporary–they are a mere policy tool, not a natural right (natural rights are not temporary; on this, see Tom W. Bell, Intellectual Privilege: Copyright, Common Law, and the Common Good, Part 1, Chapter 3, Sec. B.1.) Third, that the legitimacy of IP is based on the modern economic idea of “public goods” (see, on this fallacious notion, Hans-Hermann Hoppe, “Fallacies of the Public Goods Theory and the Production of Security,” in The Economics and Ethics of Private Property).

Update: From a recent article in Harvard’s Journal of Law and Technology (JOLT):

The “patent bargain” is an easily understood concept. Awarding an inventor twenty years exclusivity naturally entails considerable social cost — a cost that rises in direct proportion to the value of the covered invention. In certain instances — those where the patented technology is so useful that no substitutes exist — the award of a patent creates a complete economic monopoly.

— Alan Devlin, “The Misunderstood Function of Disclosure in Patent Law

Bonus quote from the same article:

To derive value from her insights, an inventor must transform abstract conceptions into a commercial product or license her discovery to a third party who will do the same. But if an inquisitive rival can inspect the end product and derive the underlying invention for himself, the inventor’s ability to reap pecuniary reward from her innovation will be jeopardized. To counter this dilemma—a problem deemed endemic in public goods—an inventor will have to manufacture complexity into her end product, artificially rendering it unsusceptible to reverse engineering. Like the myriad inventions that Da Vinci put to paper in impenetrable fashion, innovators would do everything within their power to mask their discoveries from unwelcome eyes.

But the truth is, as noted in my post Leveraging IP, due to the existence of IP, companies complicate and distort the design of their products to take advantage of IP rights, from Omega adding copyright-protected logos on watches to use an arcane aspect of copyright law to block price arbitrage imports; to laser printer vendors adding needless patented circuits to prevent competition from generics.

{ 42 comments }

Slim934 December 4, 2010 at 10:21 am

It’s actually kind of refreshing how he characterizes it.

I mean really this sounds like the position held by Jefferson when he was writing about the patent system when he was the 1st head of the Patent Office. How many proponents of the current patent system actually talk along these lines? Most usually treat it as some sort of legitimate property right, which is much more absurd position.

Not that it’s right, but atleast is it honest and accurate.

Stranger December 4, 2010 at 10:48 am

Great strawman mr. Kinsella, it richly deserves your beating.

Daniel December 4, 2010 at 1:14 pm

What strawman?

It’s a direct quote, is it not?

RWW December 4, 2010 at 4:17 pm

I’ve noticed that these pro-IP types always get offended when someone attacks a pro-IP argument other than their own.

iawai December 4, 2010 at 1:27 pm

Yeah, and characterizing IP skeptics as “Intellectual Communists” isn’t setting up a straw-man. I tried reading through your post, but it lacks a coherent thesis and is structured as a fractured string of attacks on what you perceive as your opponent’s positions, but you fail to cite to where they posited these “fallacies”.

As a person who believes in libertarian justice, I respect your rights to enforce what you believe to be your rights with your own resources. So if you think you deserve a patent, or if someone else does, by all means try to enforce that right – without infringing the rights of others. You sir, by appealing to some form of central planning to administering IP, are the “Communist”, despite how often you repeat the epithet toward your enemies.

Dave Narby December 5, 2010 at 10:08 am

From Merriam-Webster:

Definition of COMMUNISM

1 a : a theory advocating elimination of private property
b : a system in which goods are owned in common and are available to all as needed

So technically, you are correct.

Anti-IP advocates aren’t “Intellectual Communists”, they are “Intellectual Property Communists”.

Peter Surda December 5, 2010 at 10:41 am

The analogy would make sense if the set containing the property rights advocated by IP proponents was larger than the set containing the property rights advocated by IP opponents. However, at least for the purposes of our debate, the sets are identical. Unless IP proponents can resolve this contradiction, there is no point in analysing their theories.

Ohhh Henry December 4, 2010 at 2:24 pm

First, an explicit admission that IP grants are monopolistic and derogate from free market norms and are opposed to a regime of “unbridled competition”–i.e., IP is anti-competitive.

Note the use of the adjective “unbridled”. It compares business competition to a dangerous, runaway horse. Behind this choice of words is a Marxist assumption, that only the winner gains from capitalism and everyone else either loses the race or is trampled underfoot. Well of course, if capitalism is so dangerous then something must be done to rein it in!

Dave Narby December 5, 2010 at 10:19 am

To which I would add, the use of the term “Monopolistic” is pejorative, as it brings to mind the abuses of monopolistic industries.

The basic theme is: Monopoly = Bad.

In the case of industry, it’s easily argued this is the case as it is anti-competitive and hurts consumers.

In the case of original ideas, it’s not easily argued, as there are literally tens of thousands of original ideas created each day, the IP of which is under a time limitation, after which it becomes public domain.

And beyond which, ideas themselves compete with each other, a novel idea one week could be eclipsed by an even more novel idea next week.

But remove the value on ideas, and what happens? No need to compete any more, all ideas are equal in value… And what value do you think will ultimately be placed in this case?

Silas Barta December 4, 2010 at 2:33 pm

I don’t get miffed. I recognize that it’s an issue of labels that obscures the underlying dynamics and moral intuitions. I accept that IP rights are monopolistic grants to overcome the public goods problem in the same sense that physical property rights are monopolistic grants to solve a public goods problem.

No physical property rights –> people get signals rewarding them for uneconomic resource use (i.e. unsustainably deplete a resource now despite everyone being better off through the better stewardship rewarded by private property rights)

No IP rights –> people get signals rewarding them for uneconomic resource use (avoid projects that involve spending scarce resources to generate better ideas that would make everyone better off because the inability to restrict usage of the idea would make it impossible to recoup investment for a large class of projects)

Government grants and enforces physical property rights –> evidence of strength E against physical property rights

The government grants and enforces IP rights –> evidence of strength E against IP rights

Government causes ridiculous outcomes due to its incompetent management of physical property rights -> evidence of strength E2 against physical property rights

Government causes ridiculous outcomes due to its incompetent management of IP rights -> evidence of strength E2 against IP rights

People think that property rights can be replaced by a gift economy in physical goods -> morons

People think that IP rights can be replaced by a gift economy in ideas -> ???
***
It’s been my experience that IP opponents, even if one day they’ll find a good argument, are just unable to presently think at the level of abstraction necessary to notices these similarities .

Noob December 4, 2010 at 3:39 pm

What do you mean by strength E and E2?

Dan December 4, 2010 at 5:02 pm

“I accept that IP rights are monopolistic grants to overcome the public goods problem in the same sense that physical property rights are monopolistic grants to solve a public goods problem.”

There is no public goods problem in ideas. Ideas are not scarce. They can be shared by all without anyone having any less of the idea.

“No IP rights –> people get signals rewarding them for uneconomic resource use (avoid projects that involve spending scarce resources to generate better ideas that would make everyone better off because the inability to restrict usage of the idea would make it impossible to recoup investment for a large class of projects)”

So it would be IMPOSSIBLE for me to go to a site like thepoint.com and set a up donation for one of my ideas. It would be IMPOSSIBLE for someone like Eminem to say that he would only make a new album if he received a set amount of donations first?

The pro-IP people can’t see the many solutions to the problems they perceive that already exist in an IP world. The only reason artists aren’t using the solutions is it is very new and they have monopoly grants already with the State. New artists will see these new holes around all the barriers to entry and take advantage of them. An artist today can release all his music for free online, build a following, book live performances, and then use these new sites to take donations to produce their music. I have friends who make their living off their music and they have never sold an album. They give it all away for free and don’t even go after other artists who have ripped their music. They tour the country and are becoming extremely successful without any of the IP rights that you say are necessary. I mean based on your premise these guys are IMPOSSIBLE.

Now if you want to say music is not a large class of project then we should both be able to agree that IP in music and literature is no longer necessary.

“People think that IP rights can be replaced by a gift economy in ideas -> ???”

Yeah, a lot of artists are giving their music away so that people are willing to pay for them to do it live or produce more of it. You act as if there have always been IP rights and they were necessary to produce ideas in the past. Shakespeare didn’t have any IP protection and yet his ideas came to market and are still being used to this day.

I mean thank god for IP because Austrian economics would have never existed without it. If someone wanted to copy the ideas of Mises, Rothbard, Hoppe, Block, etc. it would be the death of the movement in their ideas as we know it. What horror it would be if I were to download Man, Economy, and State and then print copies and sell them to my friends.

Stranger December 4, 2010 at 6:30 pm

There is no public goods problem in ideas. Ideas are not scarce. They can be shared by all without anyone having any less of the idea.

If ideas were not scarce, there would not be pirate markets for them.

Matthew Swaringen December 4, 2010 at 7:12 pm

You are confusing scarcity with desirability.

nate-m December 4, 2010 at 8:20 pm

The problem is with the underlying concept of scarcity when associated with something like ‘ideas’. You can’t just say that ‘ideas are scarce like bread is scarce’ because that is not how things work. Your trying to violate some very basic ways the universe and reality works.

If I was to try to share a loaf of bread with the whole world then it would require me to give up my bread. It would end up being destroyed to the point of uselessness by the necessary divisions and the practical limitations of time and space. The bread would be turned to crumbs and either become so stale that it’s useless or rot.

This is the same thing with any commodity. They all have their natural aspects and properties, but to give somebody something means that somebody has to surrender something. That’s a commodity.

Trying to apply rules of economics like ‘labor’, ‘scarcity’, ‘demand’, ‘ownership’ and such things to the world of ideas, concepts, math, scientific discovery, and all sorts of different intellectual pursuits in the same manner that they apply to commodities is a exercise in madness. They are unique and distinct from anything physical. They are governed by their own rules and have proprieties that are unique to anything else in the universe. They are of the ether without physical form or constraint. To share ideas and exchange scientific advancements not only denies nothing to no man, but also is were these objects derive their value from.

Sure there is scarcity, demand and labor and all that to ideas and intellectual pursuits, but how these things work and rules that govern them in the universe is vastly different in basic nature to something like a washing machine or car or book.

Trying to say that something as artificial as ‘patents’ or ‘copyrights’ give property rights to ‘ideas’ is just not logical. It’s confounding and confusing the very nature of the items being discussed. In addition it does not even accurately reflect the goals and actions of laws that are that people are protesting against.

Stranger December 5, 2010 at 2:08 pm

Oxygen is desirable but not scarce. I do not need to engage with pirates to obtain oxygen.

Ideas are scarce. You simply think they aren’t because you are able to engage in parasitism.

Dan December 5, 2010 at 2:14 pm

I don’t need to engage with pirates to obtain ideas. I only need to hear or see them. I now have the idea and the originator still has the same idea. If every single person in the entire world can all share the same idea at the same time with nobody having any less of the idea, how in the world is their scarcity in ideas?

sweatervest December 6, 2010 at 12:14 am

“Oxygen is desirable but not scarce. I do not need to engage with pirates to obtain oxygen.”

You would if the government illegalized certain ways of obtaining air. I think you are assuming that there is any legitimacy to comparing people who run internet sites like thepiratebay.com with people who sailed around in ships murdering and plundering. Noticing that the same word is being used to describe them, which is literally for the purpose of stirring up support for IP rights, and then pointing out that the latter kind of pirates only pirate economic (scarce) goods doesn’t help at all to establish that ideas are scarce, which they are not. Drawing analogies between internet “pirates” and the other kind of pirates is pointless because those two have nothing in common save for the name people ascribe to them.

“Ideas are scarce. You simply think they aren’t because you are able to engage in parasitism.”

You really seem to like getting into other peoples’ heads, as I know you also like to try and convince IP opponents that they are “really” communists (for what it’s worth, comparing an opposition of intellectual property to some sort of advocacy of communism is a “red scare” of McCarthian grandeur. Again, you seem to have this already-formed theory of property rights that has never been laid out systematically, which is being used to make this claim that whoever disagrees with it is attacking the institution of private property.). Well, either way, I’m not gonna be so silly as to speak for anyone but myself, so I’ll tell you that I, an opponent of IP, that’s not why I think ideas are scarce. That’s one of the silliest straw men I’ve ever read. Government engages in parasitism with everything else, and I don’t hear Kinsella saying that means whatever the government takes isn’t property anyways.

Scarcity in the economic sense has nothing to do with the size of the supply, and it sure as hell has nothing to do with the existence of people that break government rules. Economic scarcity is, in my opinion, easier to understand by interpreting it to mean rivalry. A good is economic if and only if its use/consumption is necessarily rivalrous, that is that use/consumption by one person and a certain time implies that no one else can be using/consuming that good at that given time. Rivalry is essentially what scarcity means. Even if there would infinitely many houses in the world, it would not change the fact that houses are rivalrous. There is still only one house at a given location, or with certain other goods inside of it, and so houses are still scarce in this sense. There may be infinitely many houses in general, but still only one house right here.

This kind of scarcity determines which goods are economized and which are not. Oxygen is abundant only in this sense that one person’s breathing does not interfere with anyone else’s. There is a fixed, finite amount of oxygen in the world and whether there is “enough” to go around for everyone is a pointless question (what if someone really wants to use all the oxygen on the planet in some outrageous physics experiment?). It is non-scarce only in the sense that it is non-rivalrous. Me using oxygen does not mean everyone else cannot.

Ideas are exactly the same in this sense, and unlike air this can never possibly change. There may be a day when oxygen use becomes rivalrous and it will be economized and owned, but ideas will always be non-scarce. There will never be a state of affairs where my use of an idea, so long as this use is in accordance with *physical* property rights, can interfere with anyone else’s ability to use that idea. This is because one’s ability to use an idea is an extension of his physical property rights, including his body. Ideas are always non-rivalrous and are hence not subject to ownership. The reason anyone owns anything is because in order for them to use them, nobody else can be using them.

This is why it is absurd to consider an idea an ownable thing. The problem with me stealing someone’s car is that he no longer has a car! He can’t use his car while I’m out joyriding in it. If I use an idea that was presented to me by someone else this does not at all stop him from using that idea however he would like to. I lose nothing by other people using ideas that they heard from me. You can’t lose what you don’t have. You can’t lose “profits” that you never got. Saying that you lose something when other people profit from ideas they got from you is as absurd as saying that competitors in any business are “stealing profits” away from you.

Finally, every instance of a so-called IP right is no more and no less than a trespass on a physical property right. The instant you gain the “right” to copyright your music recording, every owner of a hard drive or any other storage device loses rights over the use of their physical property. If you took IP to its logical conclusion then physical property rights evaporate entirely, including people’s ownership of their bodies, and all action becomes impossible, because every action, even action itself, is the use of an idea, and so if you really believed in IP rights you would never be able to do anything, because you’d have to ask permission from the first person that did it first, and you couldn’t even do that, because you haven’t yet asked permission from the first person that thought to ask permission for something.

Peter Surda December 6, 2010 at 4:50 am

sweatervest,

very well argued in all posts. If I may, I’d like to provide you with the definition of scarcity that I arrived to, that might help you make your arguments even better.

My definition says that scarcity means the existence of mutually exclusive alternatives: exercising one of them makes it impossible to exercise the others. It does not necessarily mean that any of the choices invalidates all the others, merely that there are some that fulfil the criteria. For non-scarce goods on the other hand, there is no such thing and all options can be exercised simultaneously.

PS. as a musician you might enjoy the four chord song.

Dave Narby December 5, 2010 at 10:22 am

Ideas are commonplace.

Good ideas are rare.

Dave Narby December 5, 2010 at 10:30 am

Here’s a gedanken experiment for you:

You are a brilliant, hard-working, creative musician. I have a huge corporation.

I take your music and use it on all my ads without your permission.

I sell a lot of my goods using it due to the popularity of your music. You complain to your fans, but my corporation is huge, and my stuff is useful, so and despite your protestation, people begin to associate you and you music with my products. Every time a song of yours plays, people think of my products, and my revenue is increased, with absolutely no licensing compensation ever being in your future.

How’s that scenario workin’ for you?

Dan December 5, 2010 at 2:21 pm

We don’t need to talk about fairy tale scenarios. The group I talked about gives away all of their music for free. Other artists have completely ripped beats and lyrics from them. They don’t go after these guys. They make money because clubs want them to perform live, people pay them to produce more beats and tracks, games pay them to produce music for them. They developed this following they now have by giving everything away.

Now the scenario you mentioned would work fine for these guys. They put music on one of the NBA games free of charge. People played the game and associated the music with the game, I’m sure. They did it for the exposure and make more money because of it. So the scenario worked well.

sweatervest December 5, 2010 at 11:34 pm

“You are a brilliant, hard-working, creative musician. I have a huge corporation.”

I am a musician, so there’s no need to pretend.

“I take your music and use it on all my ads without your permission.”

I think it is absurd to consider “giving permission” to hear or store recordings I have released, so this would not apply to me, but let’s pretend I do get pissed off, for some reason, that you decided to advertise my work and give me more exposure than I, not owning a corporation, could ever do on my own. Thanks to your ads tons of people know my name. Unless you also plagiarized, but that’s not an IP problem (lying has nothing to do with any property rights, whether one considers IP rights legitimate or not).

“I sell a lot of my goods using it due to the popularity of your music. You complain to your fans, but my corporation is huge, and my stuff is useful, so and despite your protestation, people begin to associate you and you music with my products.”

So, what, I should be able to use the force of law to make people associate my creative works with what I think they should associate them with!? We are getting dangerously close to thought police, here.

People can associate with my music whatever they want to. I think it is paranoid to even concern myself with such affairs.

“my revenue is increased, with absolutely no licensing compensation ever being in your future.”

Your revenue increase also depended on you using the idea to make an ad, and use music in an ad. Should the first people that did that be pissed off and demanding compensation as well?

“How’s that scenario workin’ for you?”

Again, and this is coming from a musician, nothing would make me happier than to hear one of my songs in a commercial. In fact, it would vastly increase my opportunity to become a professional musician and live off of my creativity. Having one’s work in a nationally aired ad is a pretty strong resume builder. The only way to make it in such a business is to get your name out, and getting all pissy and litigous over people using and spreading around your creative works is the best, fastest way to doom everything you ever create to obscurity.

Furthermore, this is by far the most common method of argumentation used by IP proponents, some sort of attempted guilt trip into believing ideas that have never been supported by a systematic theory of property (IP proponents have never, in my experience, attempted to formulate their theory of property rights, they just jab at the ones pushed by Hoppe and Kinsella). It honestly reminds me a lot of hardcore liberals trying to cloud my judgement over things like socialized healthcare by putting me in the shoes of those destitute people I am intellectually screwing over. So what if I got pissed off by this situation? Since when are property rights those things that would piss you off if you didn’t have?

Sure it’d be great to write one song, one night’s hard work, and live like a king for the rest of my life and provide the same for my kids. And there’s nothing wrong with that happening. But relying on threatening and coercing everyone that owns a hard drive or a tape recorder in order to make it happen? Only a government would be involved in such a destruction of justice.

sweatervest December 6, 2010 at 12:38 am

I want to add something else to this.

Another thing we seem to be ignoring is that if this corporation owner furthers his own ad campaign with one of my songs, then he must think that I wrote a pretty good piece of music. I would expect that if it went over well, he would seek out the author of the music and offer to pay him to make more music so he can use it in his future ads. He can even strike some deals with me to release my music only to him first, so that it only becomes available to other advertisers after it is already being used in his ads. Such is the nature of a free market. Instead of putting guns in peoples’ faces we find a common solution. If anyone is gaining from my production of music, they have an incentive to pay me to keep making more. And as the sole owner of the ability to create, I can name my price, knowing that if he wants the kind of music I make, there’s no where else to go for it.

Musicians, and all other producers of creative works, would be far more successful without IP laws. The ones that will get screwed are the distributors, because the internet has brought the cost of distribution to basically zero. That is not because of IP. IP has become a huge issue because the internet has rendered huge distribution companies with lots of lobbying power obsolete and pushing IP is the only conceivable way to keep them around.

Finally, I really do think it is absurd that I can grab an instrument and “homestead” some sequence of notes or chords. The heir of whoever first played the I-IV-V chord progression should be taking the entire music industry to court!!

The Kid Salami December 6, 2010 at 2:58 am

“Thanks to your ads tons of people know my name. Unless you also plagiarized, but that’s not an IP problem (lying has nothing to do with any property rights, whether one considers IP rights legitimate or not).”

Please define “plagiarize”.

Peter Surda December 6, 2010 at 5:00 am

According to the definition I was able to formulate, plagiarism means intentionally misrepresenting to the customer the authorship of a product/service in cases when the customer considers the correct representation of the authorship to be a requirement for the product/service. It’s a type of fraud: the customer is not getting what he wants.

james b. longacre December 6, 2010 at 1:22 am

I take your music……….

how did you take their music?

Edgaras December 9, 2010 at 2:29 pm

As an amateur compositor/musician, I would be very very very happy if any commercial bastard “stole” my music and used it in their adds. It means FREE advertisizing. If it is stuck in peoples heads – I am almost rich. Haha, now that’s what I call succcessful musical business plan.

Is this the worst scenario you could come up? Because, man, that is SUCCESS.

Peter Surda December 5, 2010 at 5:52 am

I accept that IP rights are monopolistic grants to overcome the public goods problem in the same sense that physical property rights are monopolistic grants to solve a public goods problem.

You are wrong. There is no monopolistic grant on physical property rights. What you observe with physical good is the existence of mutually exclusive options, i.e. scarcity. No matter how you define a law or whether there is a law at all, taking one of the options makes the others impossible. This creates a social conflict and law merely provides a formalised way of dealing with it. There is no equivalent phenomenon of mutually exclusive options or of a social conflict in the immaterial world. For that you need metaphors.

Of course, there is another issue, which you months ago yourself recognised, but refuse to acknowledge that it refutes your argument: immaterial goods are a feature of the physical goods. No matter how you twist it, IP is just an attempt to obscure the scarcity of physical world. IP is a fraud.

DensityDuck July 19, 2011 at 6:11 pm

“There is no monopolistic grant on physical property rights.”

Are you in your automobile right at this moment? No? Well, I ought to be able to use it then, right? No? Why not? Are you saying you have a “monopolistic grant” on the right to use it?

J.E.C. December 4, 2010 at 7:27 pm

There are people who still believe in natural rights? I mean, other than religious people.

nate-m December 4, 2010 at 7:58 pm

Yes. Your right. Just like we longer have a need or desire for food and trees are made from plastic there is no longer any such thing a natural rights.

J.E.C. December 5, 2010 at 3:24 pm

Well, there never was any such thing as natural rights. They’re a pretty idea, but fundamentally pretend. Unless you believe in God, which is a whole other ball of problems.

Ohhh Henry December 4, 2010 at 8:59 pm

There are people who still believe in natural rights? I mean, other than religious people.

You mean supernatural rights. Natural rights exist without a deity.

J. Murray December 4, 2010 at 9:08 pm

Well, at the very core, you ain’t got rights you’re not willing to fight to keep.

Artisan December 5, 2010 at 5:55 am

Cool quote, I guess. But let’s not confuse the justification of your natural rights with your ability to fight for them.

Michael Wiebe December 5, 2010 at 12:19 am

Third, that the legitimacy of IP is based on the modern economic idea of “public goods” (see, on this fallacious notion

Public goods theory is not a fallacy; collective action problems are real. Here’s a simple example: why do Austrians say that cartels in a free market are unstable? The answer is that the colluders face a public goods problem: they’d all be better off cooperating, but privately they have an incentive to cheat, and so the cartel breaks down.

Also, Silas makes some excellent points that need to be addressed by IP opponents.

J. Murray December 5, 2010 at 12:23 am

There isn’t a public goods problem because there is no such entity called the public. Public is just an attempt to collectivize individuals with differing drives into some homogeneous creature.

Silas Barta December 5, 2010 at 2:36 am

Also, Silas makes some excellent points that need to be addressed by IP opponents.

Indeed, Michael_Wiebe, and I don’t think any of the responses did anything but confirm my claims.

Where’s the restless Peter_Surda when you need him?

Peter Surda December 5, 2010 at 7:14 am

Peter_Surda has been explaining to Silas_Barta the errors in his claims for nearly two years. Instead of confronting his opponents, however, Silas_Barta prefers to run away from debates.

J. Murray fully refuted Michael Wiebe’s argument (which, by the way, has nothing to do with IP). I don’t see how I can add anything new.

Zorg December 5, 2010 at 7:54 pm

“Also, Silas makes some excellent points that need to be addressed by IP opponents.”

I haven’t seen him make any serious points worth addressing. What he usually does is
attack anything that Kinsella says. He picks it apart in ridiculous ways, offers lame analogies,
and continues to avoid the central issues of property and rights.

Just look at his post above. He says that property rights are monopolistic grants. He plays
with words and analogies so much that he can’t distinguish between a right and a grant of privilege. He
equivocates between different concepts constantly. You can never get anywhere with such people, and they add nothing to the discussion.

sweatervest December 5, 2010 at 11:20 pm

“Public goods theory is not a fallacy”

The public goods theory is indeed a fallacy.

“collective action problems are real”

The public goods theory does not address the existence of so-called “collective action problems”, although I am already suspect that we are forgetting that only individuals act, even when they act in cooperation.

Public goods theory attempts to make a division between different types of goods, and explain why a competitive market is suitable for production of some of them while a monopoly is suitable for a production of others.

No matter how you try to draw this line between public and private, be it though non-rivalrous consumption, zero cost of free riders, inability to restrict consumption, etc. it will always produce absurd results and fail to include what is generally considered a “public good”.

Lots of people benefit from be dressing nice, acting nice, and keeping a neat yard. Why are these things not “public goods”? A half-full movie theater can admit additional patrons with no cost to the paying viewers. Why are they not “public goods”?

“why do Austrians say that cartels in a free market are unstable? The answer is that the colluders face a public goods problem: they’d all be better off cooperating, but privately they have an incentive to cheat, and so the cartel breaks down.”

That is not at all what Austrians say. First of all, they would be better off *not* cooperating, at least in the short run, that is why an incentive to cartelize exists at all. Second of all, the breakdown of cartels has nothing to do with what goods they are producing. The whole purpose of the public goods theory is to define two different types of goods (public and private), this has nothing to do with cartels. Even a cartel that produces what public goods theory calls a “private good” would break down.

It’s not that cartels break down in a free market, they never form in the first place. An attempt to do so would be so expensive it could only be afforded alongside a profit by externalizing the costs, that is by charging the customers more. As long as it is in fact a free market the customers would only pay more if the cartel offered what they considered better service, which contradicts the definition of a cartel. To the extent that a certain organization of a business is against the interests of its customers, it will fail in a competitive marketplace, in the same way a business selling dog poo ashtrays (thank you Mogambo Guru) would fail. No public goods theory enters the picture, at least when an Austrian discusses it.

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