defending the right to innovate
Monopoly corrupts. Absolute monopoly corrupts absolutely.
Copyright Notice: We don't think much of copyright, so you can do what you want with the content on this blog. Of course we are hungry for publicity, so we would be pleased if you avoided plagiarism and gave us credit for what we have written. We encourage you not to impose copyright restrictions on your "derivative" works, but we won't try to stop you. For the legally or statist minded, you can consider yourself subject to a Creative Commons Attribution License.
I thank John Bennett for this post, and for the quality of his posts here in general. I've been following Lessig via change-congress.org more closely and frequently than I have been watching the Against Monopoly feed lately. A lot of the posts here just seem to be preaching to the choir, limited to debunking obvious libertarian myths, or discounting the economic non-experts merely for not previously reading the same literature. What we really need is people more like Lawrence Lessig, pushing the wider public for substantive changes in the way government makes these decisions, about IP and everything else. Anyone who really wants to get anything done in America needs to start by joining change-congress.org, especially after the horrible Citizens United vs. FEC decision in the Supreme Court. If we don't do something about America's pay-for-play political structure immediately, we will never see any real IP reform in our lifetimes.
[Comment at 02/07/2010 09:02 PM by Fred McTaker]
Fred, I'm doing something immediately. I'm working on the Contingency Market. this is something that can level up the lobbying playing field wrt citizen vs corporation, just as it provides a non-copyright based revenue mechanism for the commissioning of published works.
'Doing something' is hard work that there but for the grace of god most people will go. Unfortunately, corporations (including those in their pay) have little incentive to help citizens out-lobby them or render their monopolies redundant.
Discussing what should be done, or what will happen if no-one does anything, are easy enough to be done in one's spare time. Still very helpful of course - I enjoy such discussion too.
[Comment at 02/08/2010 06:53 AM by Crosbie Fitch]
It does seem strange to me that when we are faced with the possibility of a 23 trillion dollar national debt and more government influence in our lives than ever that anyone could be too concerned with intellectual property, which would appear to rank as a relatively low priority in the face of the government's apparent wish to take over our entire society along with their "take from the rich (and semi-rich) to give to everyone else" philosophy. If we fail to fix the government and reign government in, all else becomes meaningless.
I am sometimes disturbed by "government is evil" comments, but our politicians do seem to be trying hard to prove that the comments have merit.
[Comment at 02/08/2010 01:18 PM by Anonymous]
Anon, state granted monopolies are effectively licenses for corporations to collect taxes on mankind's art and knowledge (that naturally belongs to mankind not monopoly holders) - given that 99% of the price of a monopoly protected work ends up as pure profit.
What happened to "No taxation without representation!" eh?
The world's greatest bank robbery has just occurred and no-one's noticed - that's as in 'robbery by a bank'. Indeed, more money has just been stolen by the banks from the people than has been stolen in all the bank heists put together since banks were invented.
[Comment at 02/08/2010 01:50 PM by Crosbie Fitch]
Highlight of this comment: -- A solution to government will likely neither work nor be supported widely if it does not focus on a few key bottom-line issues: -- One of these is that concentration of wealth results in the opposite of competition. The billed "solution" would want to support competition and not concentration of wealth, even if we have to set rules to enforce this. -- Another point is that "all" people be given a fair chance to compete even if they start off weakly or did badly "last year". A system that allows accumulated effects to keep growing year after year will naturally lead to an upper class of some sort with the majority paying the price for the biased playing field from that point forward. How wide is the gap between these two major classes will largely depend on how much competition we required existed (as per above point). The US anti-trust laws today are not nearly enough (and enable a very wide gap). We need IMO wide and significant competition guarantees where no independent player or colluding players are allowed to get too large of a market. This requirement (which hopefully will be flexible) will introduce inefficiencies but prevent more harmful effects down the line. For example, rather than have a software company spread their proprietary wares widely to lock in a market, they would be forced into creating standards and rules that would enable competition. Their failure to support good standards that others do build upon will likely simply lead to "referee" action within a few years.
***** Now, the blah blah blah
I think any alternative to the current system needs to support a government that makes it a very high priority to support wide-scale independent competition where, almost by definition, no player owns too much of a market or related markets (going beyond the US antitrust laws, that focus on preventing exploitation of only the most extreme of cases).
The idea, but perhaps even encoded into "last-resort" rules, that should support this approach is that concentration of wealth in few hands is against free markets. Concentration means competition has been and will be disrupted without some sort of correcting action outside of this market failure.
Rules would recognize (assuming we believe this) that wealth concentration is against most individuals in that they can end up with small levers that would preclude reasonable efforts on their part, generally, to gain leverage tomorrow on those with the larger levers today. Anyone played Monopoly? Anyone consider how boring it would be to start each new game of Monopoly just as it was left off the last round (with losing players simply going further and further into debt of some sort)? Would those playing from the weak hand consider the "new" game to be fair?
The wealthiest, collectively, have an incentive to compete very little amongst themselves if they could legally collaborate and instead work largely to keep others out. They have a much farther way to fall than to rise, especially in the general case for a given quantity of effort and resources spent. There will be internal strife, but it will generally be accepted that outsiders should have a difficult time getting in. Just look at mob action. It's tough to get in, at least in a position to advance. In other words, most do not partake in the easy money. Markets are partitioned by the major players, yet there is still room for factions to overthrow past leaders. Needless to say, this system does not help the general welfare.
To consider a libertarian approach of no government or government that sets very few rules will not solve the problems stated above. We need teeth to enforce rules to require competition, and a natural consequence of this if we have good rules is that wealth is largely distributed rather than highly concentrated.
But let's go a little further. Can we have fair competition that is long-lasting and mindful of a democratic process if many people are being short-changed? I don't think so. If nothing else, people will not be able to strongly support the contradictions, and the masses will always be accessible to the next revolutionary with violent ideas. In fact, many will be skeptical of any "solution" that they think will enable Big Business to stomp on them and their rights. A "solution" without a strong-enough referee or social structure will be rejected by the masses (in my opinion, and rightfully so).
So if we support everyone, this implies we need rules that provide a degree of insurance (call it socialism) for everyone. Something that would allow anyone to have a chance to negotiate without being pressed between a bad option from those with large levers or otherwise potential death, illness, extreme poverty, ostracization, etc. Market participants need to be healthy (have a realistic chance to vote without duress and have access to information to make choices they believe will benefit them) to help a market be healthy.
Also, remember that it is much much easier to compete when you already have money even if you are foolish in your decisions. [A simple test: invest $100 vs $100 million in the stock market in the same industry and see in which scenario do you profit more and thus gain more future leverage.] So any rule or taxing regime will always have to recognize this, existence of growing amounts of easy money begot by earlier money, in addition to helping support this safety net system (whether directly or otherwise as a consequence of good rules that lead to this result in practice).
As a suggestion for a safety net system: require the first part of everyone's work to be paid/earned in such a way that basics of life are afforded. Then leave enough time in the week for people to compete for the "extras" in life. This system can be achieved probably in many ways, but it cannot be afforded if we don't have restraints on what some can earn at least with this first part of the work week, and relative to the cost of basic goods. Price controls would likely be essential (and doable perhaps if we use a "dollar" that is different from the ordinary dollar). We owe society a debt no matter how wealthy we are. We pay it off with the first 5-20 hours of the week (depending on your job and level), and then have the rest of the week to compete for the extras (or be an entrepreneur if you can't find such an "extras" job you like).
[Comment at 12/23/2010 03:54 PM by Jose_X]
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