Keeping politicians' hands off the Net & everything else related to technology
When more players enter the market for expressive works, an author faces both new competitors and new customers. What affect does that have on copyright’s power to stimulate authorship? Assume, both for the sake of simplicity and because it seems reasonable, that the ratio of authors/consumers holds steady. I posit that copyright will in that event offer greater rewards for authorship. Allow me to explain, here with a parable, and in a later post with some graphs.
Read in the comments to Yglesias’s blog:
Going to popular/mass publication journalist-written books for an introduction to a country is a bit like taking Newtonian physics: it will get you some of the basic generalizations, but once you get more in depth you realize how wrong your introduction was.
I wonder if the person who wrote this actually took Newtonian physics. My understanding was that under most conditions people encounter in their day-to-day lives (i.e. you’re moving significantly slower than the speed of light and you’re larger than an electron and smaller than a black hole) Newtonian mechanics are quite accurate. I took several physics classes and I don’t remember the class where the professor said “OK class, that F=ma thing? We were lying about that.”
We’ve done a lot of writing about Internet gambling issues here at the TLF over the years. (Complete archives here). One of the things that always intrigues me about these debates is how passionate some policymakers can get about the supposed “evils” of private online gambling even though many of them support state-run lotteries.
What got me thinking about this again was an article in Sunday’s Washington Post entitled, “Officials Laud D.C. Lottery as Success.” The D.C. Lottery turns 25 this week and, in the article, one local lawmaker after another celebrates the fact that more than $1.4 billion has been generated by the lottery for the city treasury. “Every time you buy a lottery ticket, the city wins,” says the current DC Lottery director. And former DC mayor Marion Barry, who currently serves as a DC council member, argues that, “Nobody makes anybody play the lottery… It’s a voluntary contribution to the D.C. treasury. It was a great vision.”
OK, so what’s wrong with people playing for their own enjoyment? Nobody makes anyone play private games of chance either. But because the money goes to private interests instead of the State, apparently it’s immoral and “evil.” Stupid.
When the Institute for Policy Innovation published a study purporting to show the harms of movie piracy to the United States economy, I wrote a post critiquing it that was unnecessarily vituperative. After further reflection, I posted a follow-up post apologizing for the tone of that post. IPI president Tom Giovanetti apparently didn’t find my apology adequate, because he sent letters to the president and several board members of the Show-Me Institute, where I was employed at the time, seeking to have me reprimanded. Thankfully, they didn’t consider my post to be a firing offense.
I’d like to avoid repeating that experience, so I’m going to be a lot more polite in my analysis of IPI’s latest study, this one on music piracy. Unfortunately, the new paper exhibits the same methodological defects as the previous study, and introduces some new problems as well. The gory details are below the fold.
When economists draw graphs to describe monopolies, they typically represent both average revenue (i.e., price) and aggregate demand with a single line. Why? Because they assume that, by dint of revealed preference theory, sales of a good reveal the demand for it, and that a monopolist, by definition, alone satisfies the demand for a particular good. See figure one, below.
I question, though, whether that sort of graph does an adequate job of describing the sorts of monopolies protected by copyrights and patents. Because the law does not protect them perfectly, those sorts of “intellectual privilege” (the term I advocate in lieu of “intellectual property”) suffer unremunerated uses. Some such uses happen through infringement, such as street corner sales of pirated DVDs. Others happen by dint of special legislative exceptions, such as the unlicensed public performances of musical works allowed to certain small commercial retail establishments.
Over at Huffington Post, Timothy Karr claims that “One attendee — a member of the Darwin-challenged Discovery Institute — sought to argue that the Internet be completely free of regulation” during the question and answers following Google Chairman and CEO Eric Schmidt’s address to the Progress & Freedom Foundation’s Aspen Summit. That would be me. Actually, I make no such argument. There is a place for antitrust enforcement (provided it aims to protect competition, not competitors) and consumer protection. I draw the line at economic regulation, or competition policy, which tries to ensure that everyone who can afford to hire a lobbyist profits and no one who can afford to hire a lobbyist fails in the marketplace.
WARNING: The PFF Aspen Summitt served to both educate and inspire me, so expect a flurry of blog posts over the next few days.
While reviewing my notes during my 24 hour trek back to DC (most of which involved sitting in the Denver airport) I realized that Eric Schmidt said a lot of interesting things despite my intitial impression that his speech was rather devoid of content. Unfortunately for Dr. Schmidt, most of my conclusions are rather critical.
During the middle of his remarks, Schmidt pointed out that our web-powered world changes conventional thinking about business models and industry integration. In the past, Schmidt observed, vertical integration–buying up assets like, mines, railroads, and mills–cut costs by allowing one company to take a good from raw material to finished consumer good, without the transaction costs of swapping ownership throughout the process.
A great Hayek quote from Law, Legislation, and Liberty:
The understanding that “good fences make good neighbours”, that is, that men can use their own knowledge in the pursuit of their own ends without colliding with each other only if clear boundaries can be drawn between their respective domains of free action, is the basis on which all known civilisation has grown. Property, in the wide sense in which it is used to include not only material things, but (as John Locke defined it) the “life, liberty and estates” of every individual, is the only solution men have yet discovered to the problem of reconciling individual freedom with the absence of conflict. Law, liberty, and property are an inseparable trinity. There can be no law in the sense of universal rules of conduct which does not determine boundaries of the domains of freedom by laying down rules that enable each to ascertain where he is free to act. (Hayek 1973, 1:107)
Property rights are essential to a free society. But “property rights” without clear boundaries aren’t property rights at all, they’re an affront to the rule of law.
TechCrunch editor Michael Arrington self-identifies as libertarian, or at least a screen capture of his iPhone Facebook page says so.
Sean Garrett has posted a short interview with me on the 463 blog. In it, I rehash some of the thoughts I wrote up here earlier that day.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
