In a rush to stimulate the economy, the Obama administration is touting various “visionary” plans to make the American economy more progressive, more innovative, and more forward-looking by subsidizing politically-motivated projects like “green” technology. These hands-on policies will be ineffective. Recent research suggests that a much more effective way to accomplish the same goals would be to eliminate intellectual monopoly and to reduce the regulatory burdens on innovators.
According to conventional wisdom in economics, temporary monopoly rights–patents–are necessary to give people incentives to come up with newer, better ideas. After all, if people who came up with new ideas could see those new ideas copied without cost by competitors, why bother spending the time and energy? Hence, we have patents.
But the conventional wisdom is wrong. In their 2008 book Against Intellectual Monopoly, economists Michele Boldrin and David Levine dropped a bombshell that will, I hope, overturn the consensus about rights to ideas. Using carefully developed theory and a host of real-world examples, they show how patents actually reduce, rather than encourage, innovation. Innovators like steam engine pioneer James Watt, devoted enormous amounts of time and energy to defending monopoly rights rather than to creating new value. Innovation and growth proceeded apace once the patents expired. In Boldrin and Levine’s opinion, this delayed the onset of modern economic growth.
As these authors argue, intellectual monopoly is an unnecessary evil. Further, it is a relic of medieval and early-modern mercantilist regulations whereby kings and nobles granted efficiency-reducing monopoly privileges to favored constituents. Eliminating intellectual
monopoly would reduce the incomes of the intellectual monopolists, but it would unleash new creative energies throughout the economy.
In his recent book The Gridlock Economy, legal scholar Michael Heller argued that intellectual monopoly reduces the pace of innovation. He notes that innovative rap music, like Public Enemy’s initial work, was an early casualty of intellectual monopoly. Demands that artists pay royalties for borrowed music sharply restricted rap musicians’ ability to innovate.
While some people might not care about innovative rap music, many care about access to life-saving new medical technologies. Heller explains how this industry is particularly susceptible to the “tragedy of the anti-commons” created by intellectual monopoly. If an invention requires multiple patented innovations to be implemented, then every individual holder of one of the necessary patents can block further innovation. This slows the pace of economic progress.
Consider another example. Would Britney Spears’s artistic output fall if her intellectual monopoly rights were rescinded? I doubt it. Ms. Spears is much wealthier than she would be in the absence of intellectual monopoly, but her wealth is largely what economists refer to as economic rent: income in excess of her opportunity cost. Eliminating her intellectual monopoly very likely would not cause her to choose another occupation, but it would lead to an increase in net creative output.
Progress is also slowed by the regulation of food and drugs, which requires years of extensive and expensive testing before a drug can be approved for sale. This means that some lives are saved because people are restricted to hyper-safe drugs, but the lives saved come at the cost of lives that are lost because the appearance of these drugs on the market is delayed. Further, other drugs that would be useful but might carry greater risks never make it to the market to begin with.
White House Chief-of-Staff Rahm Emanuel suggested that the Administration should not waste the opportunities presented by the present economic and political crisis. Right now, the administration has the opportunity to make a bold move that will stimulate the
economy for generations to come. By eliminating intellectual monopoly and by liberalizing markets, we can encourage further innovation and greater prosperity.
Originally published by the Independent Institute.
{ 39 comments }
If Britney Spears could be cloned and put in some Borg-like accelerated growth chamber so that Ms Spears would have to compete with the Spears clones, then yes, her artificial monopoly over her own existence and “talent” (man, that was hard to write), would be severely compromised.
What a stupid example…
jc butte made me laugh. That’s the first time I’ve ever seen someone confuse copyright or any other intellectual property with cloning.
The repeated use of the word “monopoly” here evokes antitrust regulators who make similar misuse of the term to justify their violation of property rights. This may be lost on some libertarians in their enthusiasm to abolish intellectual property rights, but if they’re not careful, they will undermine the case for tangible property rights — as, again, antitrust has demonstrated.
Ok, I am absolutely for the abolition of government granted intellectual property rights. But I don’t think intellectual property would definitely without a doubt disappear in a truly free market. Suppose Britney Spears releases a new single in a free market completely devoid of copyright laws. Couldn’t she (or more likely the label) simply make not reproducing or sharing the content electronically part of the purchasing contract, with appropriate penalty? I’m not saying this would be easily enforceable, and I’m not saying it would be the optimal business model, but that’s for the market to decide.
I had to read most of this book for a course. I found the arguments about patents to be way more convincing than the ones about copyrights.
I doubt people would consent to signing contracts for such minor things as music(as for “clickwrap” agreements, I view clicking ‘yes’ the same as making your mark).
Michael, my point is that regardless of copyright laws, Ms Spears cannot be fully deprived of her “property” because it is inalienable. This is in contrast to patents, which while derived from the same source, namely talent and training, are very alienable and this merit the monopoly status that patents provide.
Question: What is the first thing an investor asks an inventor?
Answer: Do you have a patent?
Final question: How many innovations and enterprises were lost to mankind when Nicola Tesla gave up his patent rights to three phase AC power and thus the ability to self-fund his ideas?
Bonus points if anyone can recall the sum Edison screwed him out of after he electrified Edison’s lab.
@jc butte
If you’re talking about Britney Spears property rights in her body, I think I get that part, though I’m not putting together how that relates to copyright. Copyright only affects her ability to stop people from making copies of CDs or videos.
I could imagine copyright lasting for a five year term and not causing nearly so many problems as it does now, but as we’ve seen you can’t trust the government to limit such things to reasonable terms.
Have you read “Against Intellectual Monopoly” though? I found the arguments against patents very convincing, more convincing than the arguments against copyright, even. You can see Kinsella’s presentation here, too:
http://www.techdirt.com/articles/20080504/2229041029.shtml
I find the whole patent system to be a terribly wasteful thing. I’ve never seen a convincing argument for patents providing utilitarian benefits (though very simple, one step common sense-sounding arguments are often heard), and I see no moral justification for it, either, while the negative effects of patents are obvious for all to see.
Poorly worded that first paragraph of my last comment. Obviously copyright goes beyond only copying CDs and videos (derivative works, other artists covering songs, etc.).
Pfff! I’ll stick the ‘silas’ type of answer. People want I.P. to be scrapped for the same reason a developer wants the farmer to have his private rights negated because the developer can do much and serve many more people and make the world a better place than the farmer. The people who say “property is theft” are arguing private rights to land ejects everyone else out and calls them “trespassers” hence land rights aren’t creative merely cheap and restrictive. Private land owners argue they can get more done if they have ownership rights as it gives them incentive to produce more. Hence I.P. and private physical ownership just happen to go hand-in-hand with one another. (Besides Libertarians can argue the case for ‘homesteading’ to stop people claiming excessive land rights and being a wasteful rent-seeking ‘land hog’.)
Question: What is the first thing an investor asks an inventor?
Answer: Do you have a patent?
Next question – without patents, what would investors THEN ask first?
Answer: What does this thing do?
How many innovations and enterprises were lost to mankind when Nicola Tesla gave up his patent rights to three phase AC power and thus the ability to self-fund his ideas?
His innovations were in alternate current applications, not just 3 phase. Considering that the world’s grids are 3phase AC, I cannot see how it could have lost both enterprises and innovations just because Tesla decided not to patent his discoveries. The case can be made that AC power exploded into a world of innovative ideas thanks to the fact that it was NOT patented. So the answer to the question is: NONE were lost, a lot more was gained.
FTG,
Without patent rights, John Galt would never have been able to “stop the motor of the world.”
just sayin…
Taking away Britney Spears’s property rights over her CDs is the first step toward nationalization of all private property. Why she should not have a right to sell only a limited use rights that property (copyright)? The next logical step is to nationalize the real estate of those evil leeches who rent their property. I mean, they are evil because they claim monopoly over their own property, just like Britney Spears does with her CDs.
Unfortunately, you will see the real “tragedy of the commons” when authors and entrepreneurs, as well as their publishers, loose all profit incentives of providing these services (law of supply says so).
I’m with Gil.
It’s all well and good for you to raise the question: “Should all writing be creative commons?” I will answer it: no.
As a writer, I can see losing copyright to my work within ten or twenty years, but to have no recourse when my work is copied by those who put forth none of the intellectual effort? No thanks.
Are you a libertarian, or a socialist in libertarian’s clothing? What I write is mine. To say that everyone else has a right to it is no different from saying that I have the right to take the farmer’s food, except that enforcing the law against stealing food is simple and (usually) easy, and you want to put forth no effort to protect my property rights.
That creates two classes of citizen: the Tangibilist and the Intangibilist. The latter must pay for what he gets from the former, but the former, you argue, is to be allowed to take what he will from the latter with impunity. This is the very same thing as one class using the State to steal from another.
As bad as the proponents of abolishing intellectual property rights are at least their arguments hold water better than those that do support IP rights.
Sovy,
in your dreams…
@Wade Mc Master
“This is the very same thing as one class using the State to steal from another.”
Not at all. Farmer has to produce a material thing – potato, corn, tomato and someone has to deliver it with a truck, i.e. his work can not be copied and shipped across globe as an electric signal. Yours can – information is not a material thing. Ultimately, it boils down to the “sweat of the brow”. You may hope to write a book and not have to work for the rest of your life (and it has worked like that for some people), but that is not sustainable for all people at all times. Enforcement of patents and copyrights is a lost battle. The illusion was created in times when it was not simple to reproduce a song, book or a movie. Today it is very simple and people are doing it as we speak. No matter how hard you try to enforce it, you will only succeed in expending a lot of effort, spending a lot of money and maybe catch a negligible number of “offenders”. But, ultimately, the effort is doomed to fail.
My intent is not to demean your work, I’m only pointing to the nature of things. You write a book, get a publisher, make some money of it, fine. I buy the book and turn it into a PDF which I share via bit torrent with the rest of the world. What can you possibly do to million torrent suckers? Sure, you can try to fight it, get government to force my ISP to examine my network packets (an equivalent of postal service opening my letters), poison my torrents, but what’s the point? As an original author, your name will still be in high regard and publishers will want you to write more books and your true fans will buy them. I will remain a small pirate.
If I go to Barnes and Noble store and read your book there, am I stealing from you? Once information is put on the media and published, it is in the public domain. No amount of regulation will change that. And it is for the best – just watch the free/open source movement in software. There’s no way proprietary software can keep up with it long term. It’s like the difference between the secrecy of witchcraft or alchemy and openness of sound scientific research. You may be interested to read what Paulo Coelho (and some other authors) thinks about the issue of their work being distributed via file sharing:
http://torrentfreak.com/paulo-coelho-supports-the-pirate-bay-090415/
http://torrentfreak.com/book-authors-see-bittorrent-as-a-promotional-tool-080428/
@Sasha
> Why she should not have a right to sell only a limited
> use rights that property (copyright)?
It appears you have not read my reply in one of the previous comments: http://blog.mises.org/archives/009998.asp#comments
Copyright does not include “a right to sell only a limited use rights that property”. That description fits into the category of the (classical) property rights.
Basically, whenever you are talking about something that is a part of a contract, it automatically means you are not talking about intellectual property. It is a frequent error of people not acquainted with intellectual property to think that intellectual property refers to any right when applied to immaterial goods, whereas it only refers to very specific types of rights. A better analogy with regards to the (classical) property rights would be trespass or unlawful competition.
To go back to your question: I see no problem in Britney Spears having a right to put forth (and enforce) any sort of contract with regards to her music, and at the same time not having any enforceable IP rights. In fact this to me appears like the only consistent state of property rights.
If you do not agree, provide a real world example where such a right is referred to as “copyright”.
Cheers,
Peter
@Wade McMaster:
> … but to have no recourse when my work is copied by
> those who put forth none of the intellectual effort …
Even in a world without IP, you still have the ability to enforce contracts and sue for violations thereof.
Also, “copying” is a very vague term. See my previous post for some questions that need to be answered before you can define copyright: http://blog.mises.org/archives/009856.asp#comment-537584
Cheers,
Peter
Anyone else find it ironic that as the dispersion of information and commerce has accelerated, the duration of copyrights has increased? Under the original U.S. copyright legislation an author had exclusive rights for a period of 14 years. One additional 14 year term could be awarded if the author was still alive. Whereas now that period is 120 years or life of author + 70 years.
Alex Fabijanic said:
“If I go to Barnes and Noble store and read your book there, am I stealing from you?
Another beautiful example of anti-copyright folly. Barnes and Noble paid for (among other rights) the right of limited personal use. They can choose to provide this service to you. However, all other rights are retained by the book’s rightful owner and you can’t assume these expensive rights without owner’s expressed consent. use their property in an unauthorized way (trespass).
Not at all. Farmer has to produce a material thing – potato, corn, tomato and someone has to deliver it with a truck, i.e. his work can not be copied and shipped across globe as an electric signal. Yours can – information is not a material thing.
This is just another evidence of how technological advances confuse people into thinking that trespass is OK, as long as you do it without a runaway vehicle
. CD is a material thing that can be loaned or sold for limited personal use (unlike potato or corn). If you personally hate the idea of rent or limited-use agreements, just stop buying such services and simply purchase full ownership or co-ownership rights for a full market price.
=================================
Peter Surda,
do you even know what you’re talking about? Just curious… Copyright simply refers to contractual terms of allowed use when it comes to real property in form of authorship — and unauthorized use (beyond this contract) is a trespass by any definition. What is your problem with this (putting psychological issues aside)?
=================================
Nate,
What sophisticated research method have you employed in reaching the conclusion that current bust in unsustainable credit boom is due to copyright? I agree that any property, including books, cannot be exempt from homesteading for centuries…. however, this does not mean that we should nationalize all works of authorship by making them a public domain.
I understand that you hate the concept of limited use of vast knowledge (through copyright)… However, the alternative of not having these services provided would take us to medieval dark ages when these services did not exist. Imagine a world in which the authors and publishers don’t have a profit incentive to do any mass production of books (whose market price would plummet when unauthorized copies flood the market)… The only alternative they have is to make their works a super-luxury good that only a few selected aristocrats could be able to afford.
Alex Fabijanic:
>Ultimately, it boils down to the “sweat of the brow”.
By “it”, I understand that Alex means “property ownership.” The farmer receives it because he sweated for it. The inventor does not because he did not. And in that, you should understand the origin of Alex’s argument against IP – all productivity stems from labor, not intellect.
I have a serious problem with dissolution of intellectual property rights. Take the Watt example. I see two major flaws there.
The first stems from Watt’s motivations to innovate. He obviously had an immense financial motive to innovate, which is seen clearly in his personal expense of time in defending his patents. Without this motivation, and the protections afforded by patenting, Watt may have decided to become a farmer or an engineer, making already existing products, with the guarantee of rights to property.
The second is the assumption that Watt was capable of creating more ideas and innovations. Maybe he just had one great idea, and was banking on it. I don’t see how it isn’t economically logical for him to seek every possible benefit from his single great idea.
As a final note, this whole argument assumes that the ultimate goal is innovation itself, the betterment of society, not the individual. Arguably society would be better without patents, but it falls under the same argument as the government regulating EVERYTHING for the betterment of society.
@Sasha:
> Copyright simply refers to contractual terms of
> allowed use when it comes to real property in form
> of authorship — and unauthorized use (beyond this
> contract) is a trespass by any definition. What is
> your problem with this (putting psychological issues
> aside)?
This is incorrect, and if you tried to follow my request to find examples that confirm your claims you would know this because you wouldn’t have found any. Even wikipedia explains ( http://en.wikipedia.org/wiki/Copyright#Exclusive_rights ):
The phrase “exclusive right,†in this context, means that only the copyright holder has a legal power to secure relief from a court against certain, statutorily defined uses by others without the copyright holder’s authorization. The copyright holder is free to exercise those rights, unless doing so would violate rights of others. Copyright is sometimes called a “negative right†or “exclusionary right,” as it serves to prohibit or exclude other people (e.g., readers, viewers, or listeners, and primarily publishers and would-be publishers) from doing something they would otherwise be able to do, rather than permitting people (e.g., authors) to do something they would otherwise be unable to do. In this way it is similar to the unregistered design right in English law and European law. The rights of the copyright holder also permit him/her to not use or exploit their copyright, for some or all of the term. (Emphasis added).
Since violations of contracts are not permitted even in the absence of copyright, it is evident from the above definition that copyright has nothing to do with contracts.
Where do you get your definition from?
Cheers,
Peter
Peter Surda,
Have you ever seen something like this:
http://www.utsystem.edu/ogc/intellectualproperty/contract/cprtlic.htm
Do you have any clue what you’re trying to prove? You are only reaffirming my statement that copyright violation is a form a trespass — since it represents unauthorized use of another person’s property.
I also claim that copyright has plenty to do with contracts, since it deals with purchases of limited rights (free market exchanges, or contracts).
Either way, copyright is completely justified by private property rights and you haven’t even attempted to prove otherwise.
Just my two cents: it seems to me that the fundamental problem with government-granted intellectual property rights (from a libertarian perspective) is that they’re granted by government. The very fact that these rights can only exist through the workings of a coercive, monopoly government indicates that they are not true rights. It’s the same as the socialists who say that there exists a ‘right’ to health care or a minimum wage or a certain level of housing. We know these are not true rights because they require initiation of force against someone else. Since the creation and enforcement of U.S. patents and copyrights also requires the initiation of force (at the very least in the form of taxation to fund that part of the government), it seems that those are not real rights. However, I do imagine there could develop some form of market-based IP in the absence of the government system depending on how the costs and benefits play out in different situations.
Darren,
I believe you have your thinking reversed. You are equating the right of an owner to defend his property with the ‘right’ of a non-owner to acquire property or services provided by another.
It is a natural function of the law to protect property owners.
“If every person has the right to defend – even by force – his person, his liberty, and his property, then it follows that a group of men have the right to organize and support a common force to protect these rights constantly.” Frederic Bastiat, The Law
It is not a natural function of a free society to force an individual to perform services or give property to non-owners. That is legal plunder.
@Sasha:
I think you are skipping over my arguments and just picking up parts and reacting to them. The crucial point is that the term “property” can be used to describe different rights. So let me start from the beginning.
In my arguments here, I am not trying to argue for or against IP. Those arguments I provide elsewhere. I just want to clarify the definitions, and why your are wrong.
Let us divide property rights into two groups. Instead of using the previous labels “right to use” and “right to exclude” I’m now choosing labels which seem to be closer to your understanding: “contracts” and “anti-trespass”.
It should be evident that for every specific property right, whether it’s defined in current law or hypothetical, we can say that it’s either covered by contracts or anti-trespass. In other words, if the property right is violated, it either means that you violated a contract, or, in the absence of a contract, you trespassed. You cannot use these interchangeably as you are trying to do.
Sometimes, due to the nature of underlying goods (rival vs. non-rival), these rights cannot be exercised separately, sometimes they can. I think this confuses you.
So let us demonstrate this on the license agreement that you linked. Because you do not distinguish between contracts and anti-trespass, you are probably assuming that this contract is only enforceable in the presence of IP laws. That is not so. If you agree to the contract, it can be enforced regardless of the IP laws. What IP introduces is the ability to prosecute people that use the property in question without having agreed to the contract (i.e. are “trespassing” on that property). In other words, the presence of IP determines who you can enforce your property rights against, not what you can put into your contract. Since some immaterial goods are non-rival, these two rights can be exercised independently (consumption does not decrease supply).
Once we have ascertained the difference between those types of rights, we can investigate the economic or moral nature of them. From economic point of view, it is evident that the more critical right is the one to make contracts, because that creates markets. Obviously, the anti-trespass right also has its economic means (I described them elsewhere), for example you can use it to make competition more difficult. When these rights cannot be exercised separately, further discussion is useless. However, if they can be exercised separately, a discussion is possible and desireable, because we can analyse their individual effects.
Cheers,
Peter
The Myth that Patents are a Monopoly
A patent gives the holder the right to exclude others from making, using or selling the invention. 35 USC 154. It does not give the holder the right to make, use or sell their invention. A monopoly is an exclusive right to a market, such as an electric utility company. An electric utility company has the exclusive right to sell electricity in a certain territory. Since a patent does not even given the holder the right to sell their invention, let alone an exclusive right to a market, it is clearly not a monopoly.
When a person describes a patent as a monopoly to be consistent they should also state that they have a monopoly over their car or over their house. In fact, they have more rights in their car and house than a patent gives the inventor over their invention, since you have a right to use and sell your car or house. A patent does not give these rights to an inventor over his invention. All invention are built upon existing elements (conservation of matter) and if the elements that the invention uses are patented, then the inventor will not have the right to sell their invention without a license.
Some economists argue that a patent is designed to give the holder monopoly power. Those economists who are consistent also state that all property rights give some monopoly power. The property rights are monopolies thesis shows how confused economic thought is on this subject. The only logically consistent definition of a monopoly is an exclusive right to a market.
People who suggest a patent is a monopoly are not being intellectually honest and perpetuating a myth to advance a political agenda.
For more information on patents and innovation see http://www.hallingblog.com.
@aub:
Since you and I seem to be in complete agreement, I’m not sure what you mean by saying my thinking is “reversed.” I think maybe you misread my post.
how can one argue for ip on moral grounds, and yet not condemn “fair use”?
why is “some” use of ip without consent just dandy, but “too much” is bad. is this not pure arbitrariness?
re: newson
Maybe it’s like distinguishing between plagiarizing an essay/idea/movie vs. producing something based on it, but not a verbatim copy per se. Copycatting vs. creative innovation, that sort of thing.
Any attempt to draw a line between the two would probably be “arbitrary” in a sense. But saying that the two extremes don’t exist is not true.
to nick:
define “extremes” (without arbitrariness)! and what about the bit between the “extremes”, who decides, the bureaucrat?
Umm… I just gave some examples. Which obviously you don’t think is valid.
nick:
you’ve given me shades of grey, but the point is: who draws the line between plagiarism and using material as a “base”?
either way, it’s some bureaucrat that has the call. maybe that’s ok with you.
Darren,
It’s possible I’m misreading you. Here’s what I think you are saying:
“The right to intellectual property is no different from the socialist ‘right’ of health care because both rely on force from the government to provide. Neither are true rights because of this reliance on government force.”
And what I’m trying to say, perhaps badly, is that there is a difference – not all government force is the same. The individual has a natural right to defend his property – both intellectual and tangible – from appropriation by others. This natural right extends to the “collective organization of the individual to lawful defense” (ie government).
That is different from a collective organization taking away property or forcing individuals to perform a service in order to provide the ‘right’ of health care to another individual.
I get your reasoning that the IP system initiates force because it is taxpayer funded. However, those applying for patents offset the cost with their application and maintenance fees. Also, I believe that there are certain limited functions the government should provide – and I believe property protection is one of those functions.
ideas being fleeting, the only certain way to police ip is via one-world-government. otherwise, ip pirates copy from accommodating jurisdictions.
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“…this may be lost on some libertarians in their enthusiasm to abolish intellectual property rights, but if they’re not careful, they will undermine the case for tangible property rights — as, again, antitrust has demonstrated.”
on the contrary, the fellow who said that obviously hasn’t read the mises article on why intellectual property **makes physical property impossible.**
further, confusing property and “limited monopolies” only leads to confusion. the reason people keep using the word “limited monopolies” is that’s the phrase in the constitution, where they make it pretty darned clear that **there is no intellectual property** (article 1, section 8. look it up!) and if you’re not in the states it’s just as relevant a point– we’re the ones writing this atrocity of non-reason, choking off the world’s creativity with the most farcical red tape our particle accelerators can alchemy together.
in short though, if you care about physical property rights, abolish “intellectual property” today! the very thought is nonsensical, but you can probably have some “limited monopolies.” the trick is limiting them enough to allow real progress in a such a fast-moving world. can’t wait 20 years for patents to expire if you want to stop hiv. limited government monopoly is surely a step in the right direction for libertarians, who probably want “more” (less) than that.
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