KOL483 | The Economics and Ethics of Intellectual Property, Loyola University—New Orleans

Kinsella on Liberty Podcast: Episode 483.

I delivered the following lecture yesterday: “The Economics and Ethics of Intellectual Property,” Loyola Economics Club and Louisiana Mu chapter of Omicron Delta Epsilon, Loyola University—New Orleans, Miller Hall (12:30 pm–1:45 pm, Feb. 24, 2026). Hosts were the aforementioned Econ club and econ honor society, as well as Walter Block and Leo Krasnozhon. ¹ Audio for the Q&A portion was poor due to some technical mishaps, but has been boosted as much as possible.

Slides streamed below. Pictures, transcript and shownotes below.

Photos

Shownotes (Grok)

Shownotes: Stephan Kinsella – “The Economics and Ethics of Intellectual Property”

Loyola University New Orleans Economics Club & Omicron Delta Epsilon

February 24, 2026 (KOL 483 podcast)

Approximate timestamps based on transcript pacing (~70-minute total runtime)

00:00 – Welcome and Introduction

Leo Krasnozhon opens the event, welcoming attendees despite a boil advisory and introducing Stephan Kinsella as a retired patent lawyer, LSU alumnus (undergrad and law school), and longtime Mises Institute affiliate who has collaborated with Walter Block. He highlights the topic of intellectual property rights, admits his own limited knowledge of it, notes the co-sponsorship with Omicron Delta Epsilon (with chapter president Emily Tion present), and passes the floor to Tyler, president of the Economics Club, to officially begin.

01:25 – Brief Co-Sponsor Welcome

An Omicron Delta Epsilon representative offers a short welcome and mentions that a Q&A session will follow the presentation.

01:35 – Stephan Kinsella: Personal Background and Path to Anti-IP Views

Kinsella thanks the hosts—Omicron Delta Epsilon, the Loyola Economics Club, Walter Block, and Leo Krasnozhon—and recalls his long acquaintance with Block (both former Mises senior fellows). He recounts his career: beginning law practice around 1992 in Houston (initially oil and gas), shifting to intellectual property and patent law, with stints in Philadelphia before returning home. As a longtime libertarian, Austrian economist, and anarchist, he initially assumed intellectual property was legitimate property, partly influenced by Ayn Rand’s support for it. However, he found her arguments unpersuasive—especially the fact that patents and copyrights expire while physical property like land and cars does not. When he became both a patent attorney and a libertarian scholar, he set out to develop a strong defense of IP but ultimately concluded the system is deeply flawed and should be abolished. He reached this view around 1994, shortly after passing the patent bar, and initially kept quiet while practicing, later speaking openly once he realized his professional peers were indifferent to his opinions.

~03:28 – Talk Overview and Recommended Readings

The presentation is titled “The Economics and Ethics of Intellectual Property,” deliberately echoing Hans-Hermann Hoppe’s The Economics and Ethics of Private Property. Kinsella plans to speak for roughly 30–40 minutes, leaving ample time for questions. He acknowledges the topic’s breadth—having previously taught a six-week online Mises Academy course on it in 2011—and notes his deep interest in legal theory, IP theory, Louisiana civil law (where he authored a civil law dictionary), and international law, all interconnected through an economic lens. He recommends his own published works (shown on a slide) as primary sources, along with Michele Boldrin and David K. Levine’s empirical book Against Intellectual Monopoly for further reading.

~05:02 – Defining Intellectual Property and Scope of Critique

Intellectual property refers to legal protections for “products of the mind.” The two primary statutory forms are patents and copyrights, which are legislated monopolies rather than common-law institutions. Other types that emerged from common law include trademarks, trade secrets, and defamation (which Kinsella argues belongs in the IP category because reputation rights protected by defamation law suffer from the same conceptual flaws as trademark rights). More recent or special-interest forms include boat-hull designs, semiconductor mask works, personality/name/image/likeness rights (now prominent for college athletes), moral rights, and database rights. Proposals to expand IP continue in areas such as fashion, hyperlinks, and newspaper headlines. The talk focuses primarily on patents and copyrights as the most prominent and damaging forms.

~06:26 – Constitutional Foundation and Historical Origins

In the United States, patents and copyrights derive from the 1789 IP Clause (Article I, Section 8), which empowers Congress “to promote the Progress of Science and useful Arts” by granting exclusive rights to authors and inventors for limited times. In 1789 terminology, “Science” referred to systematic bodies of knowledge (including literary arts), while “useful Arts” meant artisan inventions—meanings essentially reversed from today. Congress acted quickly, enacting the first modern patent and copyright statutes in 1790. The following year (1791), the Bill of Rights was added; the First Amendment’s protection of freedom of the press creates an obvious tension with copyright enforcement (e.g., judicial blocks on publishing copies of Harry Potter), though courts have not recognized an irreconcilable conflict. Historically, patents began as royal monopoly letters in Europe granting exclusive privileges to court favorites, leading to abuses that prompted England’s 1623 Statute of Monopolies (which curtailed most monopolies but preserved them for new inventions). Copyright arose from the printing press threatening state and church control of information, resulting in the Stationers’ Company monopoly and, after its expiration, the 1710 Statute of Anne, which shifted rights to authors. Both systems originated in protectionism, mercantilism, and control of thought.

~10:40 – Early American View: Monopolies, Not Natural Property

The framers treated patents and copyrights as temporary monopoly privileges, not natural property rights—a fact often misrepresented by modern proponents (e.g., Objectivists such as Adam Mossoff). Thomas Jefferson, writing to James Madison during the Bill of Rights drafting process, expressed concern about the IP Clause and suggested constitutional language limiting such monopolies to short, fixed terms—language that, if adopted, would have prevented today’s extensions (e.g., life of the author plus 70 years). The purpose was narrowly pragmatic: temporary incentives for arts and sciences, not recognition of inherent ownership.

~12:37 – The 19th-Century Anti-Patent Movement

By the 1850s, amid expanding world trade and the industrial revolution, free-market economists increasingly criticized patents and copyrights as anticompetitive government monopolies inconsistent with free trade. A global anti-patent movement gained momentum; some countries repealed or refrained from enacting patent laws. The push collapsed after the 1873 Long Depression (a prolonged worldwide recession then called “the great depression”), which soured public opinion on free trade and allowed the patent system to persist—representing a missed historical opportunity to eliminate it.

~14:01 – Contemporary Arguments For and Against IP

Today’s defenses of IP fall into two main categories: utilitarian/consequentialist (economic/empirical) and deontological/principled (rights-based), with a lesser-known Hegelian personality theory occasionally invoked. Common myths include claims that IP protects the “little guy,” forces disclosure of secret inventions, constitutes a natural or founder-intended property right, explains Western wealth, or is essential for books, art, and inventions—none of which hold up historically or empirically. Euphemisms such as “stealing,” “piracy,” and “theft” obscure that infringement differs fundamentally from physical theft.

~16:10 – Absurd and Weak Pro-IP Arguments

Kinsella dismisses several particularly weak claims: a patent attorney’s assertion that the Swiss patent office indirectly enabled Einstein’s theory of relativity; William Shughart’s argument that lack of international copyright forced Charles Dickens to tour the U.S., catch a cold, and die; and hyperbolic equivalences of anti-IP views to support for pedophilia, stage collapses, baby-stealing, or slavery. He also notes confusion over intangibles (e.g., fiat money is intangible, but gold-based money was not).

~18:18 – The Utilitarian/Economic Case Examined

Proponents argue that without IP, markets would underproduce creative works and inventions because copiers free-ride on expensive R&D, so temporary monopolies allow cost recovery via monopoly pricing. Some acknowledge this slows idea diffusion but claim it ultimately produces more ideas overall. Yet empirical evidence is lacking: Fritz Machlup’s 1958 Senate-commissioned study found no certainty of net social benefit and deemed it irresponsible to create a patent system from scratch; George Priest (1986) stated economists know almost nothing about patents’ welfare effects; 2004 French economists said cost-benefit analysis remains impossible; and Boldrin & Levine (2013) concluded there is no empirical support for the claim that patents increase innovation or productivity, advocating abolition.

~22:52 – Common-Sense and Practical Critique

Granting monopoly rights reduces incentives to innovate further (patent holders rest on laurels; competitors are blocked even from improvements). The system distorts research priorities and likely lowers overall innovation (as noted by Milton Friedman and Murray Rothbard). Copyright, originally a censorship tool, continues to enable thought control, speech suppression, cultural distortion, internet takedowns, and now threatens AI development by restricting training data. Patents delay life-saving technologies, contributing to what Kinsella calls a “patent holocaust” of preventable deaths. Humanity’s rising wealth stems from accumulating and disseminating knowledge (Hayek’s “fund of experience”), which IP impedes.

~25:41 – Methodological and Ethical Flaws in Utilitarianism

Austrian economics holds that subjective values cannot be aggregated interpersonally or cardinally, rendering utilitarian welfare calculations impossible. Utilitarianism itself permits monstrous acts (e.g., forced organ redistribution for net happiness gain). Law’s proper purpose, per Roman jurist Ulpian, is justice—rendering each his due through defined and protected property rights—not engineering innovation or correcting supposed market failures.

~28:17 – Labor-Desert Argument and Its Fallacy

The principled case rests on the intuition that it is unfair for others to profit from one’s labor or effort (the “desert” or “sweat of the brow” view). This traces to John Locke’s homesteading theory, where self-ownership extends to one’s labor, which is “mixed” with unowned resources to create ownership. Hume later identified the labor-mixing step as unnecessary; labor is merely action, not a ownable substance. The metaphor influenced the labor theory of value (Smith → Ricardo → Marx’s surplus-value theft claim) and modern copyright doctrines protecting non-original works based on effort alone.

~34:05 – Praxeology, Scarcity, and True Property Rules

Mises’ praxeology analyzes human action: purposeful behavior using scarce means guided by knowledge to alleviate uneasiness. In Crusoe scenarios (single-agent economics), there is possession but no conflict or need for property norms. In society, property rights emerge to secure possession against interference. Legitimate acquisition occurs via self-ownership, original appropriation (first use/homesteading), or voluntary contract. Creation increases wealth by rearranging already-owned scarce resources but is not a source of new property rights.

~39:27 – Knowledge vs. Scarce Means; Impossibility of Property in Ideas

Human action requires two distinct elements: scarce, rivalrous physical means (over which conflict arises and property rights apply) and non-scarce, non-rivalrous knowledge (which guides action and accumulates over generations, making humanity richer). Property rights are enforceable only against physical things via physical force (Rothbard). IP is therefore impossible as “property in ideas”; it functions instead as a government-granted, non-consensual negative servitude or easement over others’ physical property (e.g., factories, printing presses). Such grants constitute takings and amount to institutionalized theft.

~47:20 – Q&A Highlights

Audience questions probe several points: creation as a source of rights (clarified as a source of wealth, not ownership; adding it as a third rule erodes legitimate homesteading/contract-based rights); whether Walter Block’s views on labor theory justify IP (no—metaphors are not literal, and no appropriation from nature occurs with ideas); potential reduction in output under low-barrier copying (possible in some fields, but no current shortage exists despite widespread piracy; business models adapt—e.g., JK Rowling could use pre-sales, consulting, authorized adaptations); trademark, trade secret, and defamation law (flawed extensions of reputation/value rights; modern trademark requires only likelihood of confusion, not fraud; trade secrets impose injunctions on non-contracting parties); and alternatives for protecting inventions/creations (none needed legally—IP violates rights; markets would adapt via reputation, first-mover advantages, employment, touring, etc.; analogy to “who will pick the cotton?” under slavery abolition).

Closing (~1:09:48)

Kinsella thanks the audience and the event concludes.

Full audio and related materials available via stephankinsella.com (KOL 483 episode).

Transcript (Youtube/Grok)

Introduction and Welcome

[00:00]

Leo Krasnozhon:

Okay. So, uh, welcome to the Economics Club. We have an outstanding speaker today. Despite the boil advisory, we all were able to come here today. Stephan Kinsella is a lawyer. He’s a retired patent lawyer. Stephan went to LSU for his law school as well as his undergrad. Stephan knows Dr. Block really well; they were affiliated with the Mises Institute in the past, and today we are lucky to have Stephan present to give a talk about intellectual property rights. I look forward to this talk because I don’t know anything about intellectual property. Now Tyler, who is the president of the Economics Club—now I’m going to ask Tyler to start the event officially.

I just want to mention that we are co-sponsoring this event with Omicron Delta Epsilon, the international honor society in economics. Emily Tion is here; she’s president of Omicron Delta Epsilon. So Tyler, please start.

Omicron Delta Epsilon Representative:

[01:25]

But um yeah, so give them a welcome and we’ll have questions like Q&A afterwards.

Stephan Kinsella – Opening Remarks and Background

[01:35]

Stephan Kinsella:

All right, everybody, and thank you. Thank you, Omicron Delta Epsilon and the Loyola Economics Club and Walter and Leo for the invite. I have known Walter quite a while. Walter, you used to be a senior fellow at Mises, right? Me too. Used to be. It’s been a long time that I’ve known Walter.

I am a retired patent attorney. I was an attorney for a while. I did go to LSU for law school and for undergrad, and I started practicing law around 1992 in Houston and then moved to Philadelphia for a while and back home. I started in oil and gas law, but then I moved to intellectual property law shortly after that. So I’ve been a patent attorney for quite a while.

And right around the time, I’ve also been a longtime libertarian and Austrian and an anarchist libertarian, and I was interested also in legal theory and libertarian theory, property rights theory. I always assumed intellectual property was a legitimate type of property, right? Because Ayn Rand was in favor of it. But her arguments never made sense to me because patents expire after a certain amount of time and copyrights expire, but you know, cars and land don’t expire. So I thought something was wrong.

So I figured when I became a patent attorney and a libertarian scholar, I would figure this out myself. I would come up with a good argument for IP. And I finally failed. And so right around the time I passed the patent bar in 1994, I decided that intellectual property was a horrible system and should be abolished.

So I kind of kept my mouth shut while I practiced for a while. But eventually I noticed that my fellow clients and lawyers didn’t care what my opinions were. So I was free to speak my mind and oppose the system that I made money off of the whole time.

Leo said he doesn’t know much about the system. A lot of people don’t know a lot about intellectual property, but they seem to have a lot of opinions on it anyway.

Overview of Talk and Publications

[around 03:28]

My talk is entitled “The Economics and Ethics of Intellectual Property,” modeled after sort of the title of Hans-Hermann Hoppe’s book The Economics and Ethics of Private Property. My plan is to speak today around hopefully 30–40 minutes and then leave time for a Q&A.

This is a huge topic. I could speak a whole week on it, which I have in the past. I did a Mises course, this six-week course online Mises Academy in 2011 on this one topic. So it’s hard to squeeze it all in in a short amount of time.

I have been deeply interested in legal theory and in intellectual property theory. So I published on that. That’s what this slide shows. And also Louisiana itself. I’ve written a Louisiana civil law dictionary and I’ve written on international law which I’m also interested in. All these things sort of go together in my mind because they reinforce each other. I’ve learned things from one field that feedback on the other, primarily economics.

The key works in this field are really my works, and I have them listed here. So you’re free to read up on these if you’re interested in what we talk about today. And one other work by Boldrin and Levine which is an empirical work Against Intellectual Monopoly. So this is sort of the key text that you could read up on to understand this topic better after my talk today if this isn’t enough for you.

What is Intellectual Property?

[around 05:02]

Okay, overview: intellectual property—what is it? What’s the term? There are types of law which protect rights having to do with products of the mind, intellectual products of the mind. There are two main types: patent and copyright, which are products of legislation. And then others arose on the common law like trademark and trade secret and defamation, which is not considered to be normally a type of IP right, but I think it should be because the reputation rights protected by defamation law are very similar to the trademark rights protected under trademark law, and they all suffer from the same flaws or defects.

There are other special-interest types of more recent types of intellectual property like boat hull designs and semiconductor mask works and personality, name, image, and likeness like the college athletes have now, moral rights, database rights. And then there’s always people trying to expand IP protection to areas that it doesn’t cover very much now like fashion and hyperlinks and newspaper headlines.

Now in my view, and I’m going to focus here today on this, the two most prominent and the two most damaging forms of intellectual property are patent and copyright. And they’re both statutory, that is artificial law. They didn’t arise on the common law.

Constitutional Basis and Historical Origins

[around 06:26]

The basis of patent and copyright in the United States is the Constitution’s copyright clause in the 1789 Constitution which gives Congress the power to protect the works of authors and inventors. And one curious thing about this: if you read the text of this clause, Congress has power to promote the progress. So this is the reason that Congress can enact patent and copyright law: to promote people to make artistic and innovative works in the science and the useful arts.

Now most people might think science means what physicists do and engineers do and useful arts is what authors do. But this is actually not what this meant back in 1789; these terms meant the opposite because science is a general word like the word conscience or a science. It just means a systematic body of knowledge. So science meant the literary arts. And inventions were what artisans made. You know, like a farmer might make a new device to plow his field. He was an artisan. So that’s an art, a useful art. So that’s what we would call an invention.

In any case, the very next year, 1790, Congress enacted the very first modern patent and copyright statutes. So they right away took advantage of their permission to make these laws and they did so and we have them still today.

The very next year by the way in 1791 was the next Congress in the United States and the Congress then enacted the Bill of Rights. It wasn’t part of the Constitution originally. So a second Congress enacted the Bill of Rights which had 10 amendments (there were actually 12). So when you hear someone say the First Amendment is the first amendment for a reason, they don’t know what they’re talking about because the First Amendment was really the third. The first two were not ratified so they dropped off the list. In 1992 the one of those two was finally ratified. It became the 27th amendment to the Constitution.

In any case, the Bill of Rights was ratified and added in 1791. And you notice the First Amendment says Congress shall make no law abridging freedom of the press. Now what happens if you try to publish a copy of Harry Potter tomorrow? You would be prevented by a judge from publishing that. So some have argued that that means that the copyright law is incompatible with the First Amendment, which I agree with, but the court doesn’t seem to.

Historical Origins of Patents and Copyrights

[around 08:58]

The origin of patents and copyrights were that patents were granted in Europe by kings to protect court favorites from competition. So the word patent or patente is a Latin term meaning open. So it was just a letter written by the king to someone saying here you can show this to anyone. I have decreed that you have the exclusive right to sell sheepskin in this town. So then you could sell it for whatever price you wanted and you could sell it at a monopoly price and no one could compete with you or they would get arrested or killed by the king’s goons.

Now that led to abuses because the king was just granting these patents left and right. So the Parliament enacted in 1623 in England the Statute of Monopolies to limit the ability of the king to grant these monopoly grants. But they retained the right to grant them for inventions. So that’s the origin of modern patent law.

Copyright originated when the printing press threatened the state and the church’s monopoly or control of what could be printed by the scribes and what books the people could read. And so the government chartered this thing called the Stationers’ Company for about a hundred years to have a monopoly on printing. But when that monopoly expired, the Statute of Anne was enacted in 1710 which set up the right of authors to be the ones that held the copyright.

So the origin of patent and copyright are in protection from competition, mercantilism, and control of thought. So then in 1789 the United States had the first modern patent copyright laws based upon this idea.

Original View as Monopolies, Not Property Rights

[around 10:40]

Originally these were viewed as monopoly privileges. They were not called property rights. So it is said now by proponents like Objectivists like Adam Mossoff and these guys, it is said that Locke and Jefferson and the framers all really believed the patent was a natural property right even though it expired after 14 years or 17 years or whatever it was at the time, which makes no sense. Of course that’s complete rewriting of history.

They did not. Locke and Jefferson might have been in favor of patent and copyright law as a temporary measure to stimulate the arts or inventions, but they never thought it was a natural property right or property right at all. In fact, they didn’t call it a property right.

Interestingly, Jefferson was not part of the framing of the Constitution. He did write the Declaration, but he wasn’t part of the drafting of the Constitution. He was off in France, but he was writing letters. He wrote a letter to James Madison, who was in charge of drafting the Bill of Rights. Remember this is after the Constitution ratified in 1789 but before the Bill of Rights was ratified two years later in 1791.

And he wrote a letter to Madison saying, you know, I think you might want to include the following in the Bill of Rights because the Constitution already authorized Congress to enact patent and copyright laws. Jefferson was worried about that. So he says monopolies may be allowed for inventions and literature patent copyright only for a term not exceeding blank years.

So he was trying to put a time limit in there saying Congress cannot exceed x years. At the time copyrights were 14 years extendable once. Now they’re the life of the author plus 70. They’ve crept up over the ensuing decades. If that had been put into the Bill of Rights then Mickey Mouse would have entered the public domain a long time ago.

In any case, the purpose of these rights was to stimulate so-called to promote arts and sciences.

19th Century Anti-Patent Movement and Decline

[around 12:37]

Now what happened was they were relatively new at the time in a statutory sense and in a formalized institutionalized sense. So in the 1850s there started being a lot of world trade. This is the beginning of the industrial revolution and there’s a lot of trade between the US and Europe and between European countries. And a lot of these free market economists started saying what the hell are we doing having the governments grant these monopolies like patent and copyright that restrict competition? That’s against the logic of free trade and competition.

So a movement started to abolish patents around the world and it started gaining steam. Some countries started abolishing their patent laws, some other countries hesitated enacting them. This is in the mid-1850s. But then in 1873 there was something called the great depression. We now know the other great depression but at the time this was called the great depression. So we renamed this one now the long depression.

There was something called the long depression now in 1873 which was a worldwide recession that lasted many years. And this turned public sentiment against the idea of free trade. So the anti-patent movement which was rooted in pro-free trade ideas just collapsed and then the patent system kept going. So our one chance to kill the patent system failed.

Main Arguments For IP Today

[around 14:01]

Now there are two main arguments given in favor of intellectual property today. Utilitarian or empirical consequentialist and deontological or principled like a rights-based argument. There is a third one which almost no one understands or talks about: Hegel’s idea of personality property theory which I’m going to skip here.

I’m sure people have thought of others too which are also equally confused and flawed.

Now there are lots of myths you hear this all the time about intellectual property. The reason we have it is it exists to protect the little guy which is nonsense. Or it encourages you to disclose an invention that you would otherwise keep secret. Or it’s a property right; that’s just propaganda. It’s a natural right, a natural property right or that the founders believed it was. That’s all false.

Or that America in the West is rich because we had the patent system right around the founding of the country and we became so rich. So you know that must be the cause of it. Of course that’s the causation and correlation fallacy.

Then without IP there would be no books, no art, no inventions which is obviously false because before patent and copyright we had books and arts and inventions.

The other claim of utilitarian economists is that without IP there would be an underproduction of creative works. Okay, so that’s a positive claim. They need evidence for that.

Myths and Euphemisms

[around 15:19]

Some people say, “Well, IP has certainly gotten out of hand. The copyright system’s gotten out of hand. Patents have gotten out of hand, but we need some. We can’t get rid of it.” That’s wrong. It hasn’t gotten out of hand. It’s doing exactly what it’s supposed to do.

IP is required by the Constitution. It’s not required. Congress is authorized to enact patent copyright. It would be perfectly constitutional for Congress to abolish patent and copyright.

Also, you’ll hear euphemisms all the time. Instead of calling infringement of patent or copyright infringement, which is what it is, they call it stealing, piracy, theft, knocking off, ripping off, plagiarism, fraud, breach of contract, dishonesty, lying, or immoral. All those things are completely different things, and these are all just ways to confuse the issue.

Absurd Arguments for IP

[around 16:10]

Now there are some absurd arguments for intellectual property in addition to the main utilitarian arguments and the creation arguments. One patent attorney I know who’s kind of a buffoon said thank goodness the Swiss had a patent office because that’s where Einstein worked during his time as a patent examiner and came up with the theory of relativity. I mean this is not how you argue.

Anyway there’s other arguments too. One is by William Shughart who’s a Mississippi economist. He’s allegedly a free market economist that he wrote this for the Independent Institute which is supposed to be a libertarian group in the US.

He had this argument for intellectual property. He said Charles Dickens’s heavy schedule of public performances in the US because at the time when Dickens was around the US copyright only protected the copyrights of American authors. It didn’t protect that of foreigners. So Dickens got angry that his work was so-called pirated here. He couldn’t make a profit off of royalties. So he had to come here and tour to give speeches. That’s how he made his money. But when he did that he got a cold and died. So the lack of copyright is blamed for Dickens’s death.

And there’s other ridiculous arguments that, you know, if you’re not for intellectual property, you must be in favor of pedophilia, or it causes stage collapses at concerts, or it’s okay to steal people’s babies if you don’t believe in property, or it’s the same thing as slavery or Ayn Rand said that patents are the heart and core of property rights. I mean, Jesus, it’s okay to be pro-IP, but you know, tone down the IP level a little.

Some people think you can’t have money because money is an intangible thing and you couldn’t have money. Of course it is intangible now because fiat dollars are not tangible. It used to be tangible when it was gold. And then anyway, so these are some more absurd arguments for IP. They’re hard to take seriously.

Utilitarian/Economic Arguments for IP

[around 18:18]

Now when we turn to the empirical or the utilitarian or the economic arguments for intellectual property essentially it’s an argument that it’s a market failure argument. Basically their argument is that the market is not perfect. We need a free market but sometimes there’s failure and the government can step in and correct it and make us all richer than we would be.

So what we need to do is in a free market there would be an underproduction of inventions and artistic works because you spend money making a product and researching it and as soon as you sell it someone can copy you and compete with you and then it’s hard to recoup your cost. So you would never engage in this in the first place.

So you need to have a protection from competition for 17 years so you can recoup your costs so you can charge monopoly prices in the meantime. So they’re pretty explicit. The whole purpose of patent law is and copyright law too is to permit the holder of that right to charge a monopoly price. And yet they call this a property right and a free market system.

Now there’s a lot of naive ideas about this. This is another so-called libertarian Tim Lee from Reason and Cato. He said copyright and patent protections have existed since the beginning of the republic but if properly calibrated they can promote the progress of science and the useful arts. So yeah, it’s a mess right now, but if we just properly calibrate it, everything’s going to be fine.

And again, here back to Shughart, this Independent Institute libertarian economist, he said that granting a temporary monopoly gives the inventor the opportunity to earn profit on the investment. And he paraphrases another economist, a mainstream economist, Joan Robinson. Patent and copyrights slow down the diffusion of new ideas for a reason: to ensure there will be more new ideas to diffuse.

Now the second clause is just there’s no basis for that. But at least they’re admitting that they want to use patent law to slow down the spread of new ideas. It’s crazy. They’re I don’t think they know what they’re admitting. So they want to slow down the diffusion of new ideas. At least they have a reason. I don’t know.

Lack of Empirical Evidence

[around 20:15]

Now there was an Austrian economist named Fritz Machlup and he was actually commissioned in 1958 to do an exhaustive study by the Senate subcommittee on patents about do we really need a patent system? Should we have one? He did this exhaustive study and he finally concluded and nothing has surpassed this. This is all 50+ years ago. No economist on the basis of present knowledge can state with certainty the patent system confers a net benefit or a net loss on society. If we didn’t have a patent system, it would be irresponsible to recommend instituting one.

This is what the government’s own economist said. 1986, fairly recently, George Priest, an economist and professor at Yale, said in the current state of knowledge, economists know almost nothing about the effect on social welfare of the patent system.

Now the thing is everyone who’s in favor of patents and copyrights say that, oh, we need it because it stimulates innovation. And yet the economists have no evidence that this is the case.

Some economists in 2004 in France said that determining whether doing an analysis of the costs and benefits of IP to see if it’s worth it, the system is no more within our reach today this is 2004 than it was in Machlup’s day in the 1950s. So the economists still don’t have any evidence.

And in 2013, fairly recently, the economists Boldrin and Levine, who wrote the book Against Intellectual Monopoly, they started this book, they’re mainstream economists, they started this book trying to come up with reasons and examples defending intellectual property. But in the end they concluded that the whole system should be abolished because there’s no evidence to support the claims in favor of it.

And they said that the case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity.

Okay. So the point is that the stated purpose of patent and copyright from the utilitarian or the consequentialist point of view is to promote the progress of science in the arts. Otherwise, it’s unconstitutional because the law has to satisfy the goal of promoting the progress.

So you would think that in the last 220+ years since the patent law and copyright law were enacted the economists could have figured this out by now. They had a hunch at first. Oh maybe we need to have this right. Maybe it would stimulate innovation. But as Machlup in the 50s and economists to this day have shown we just don’t know. There’s no evidence supporting this at all.

Common Sense Against IP

[around 22:52]

Now in my view this is just common sense. It’s only common sense that if you grant a right, a patent right that protects an inventor from competition, they’re going to have a reduced incentive to innovate. Okay? Because why would you keep innovating once you make a product that you have a patent on? Because you can sell it at a monopoly price and you can rest on your laurels for 17 years until the patent expires.

And your competitors can’t make a competing product even if it’s an improvement because it would still infringe the patent. So they have no incentive to engage in R&D that would come up with new ideas. So they innovate less too. So all it does is—Milton Friedman and Rothbard even wrote about it—patent law just distorts and skews the field of research that people engage in and probably lowers it too. And I think it does lower it.

And as far as copyright is, is it any surprise that a system that was originally designed to censor and control thought and freedom of the press would today lead to censorship and thought control, which is what it does?

So the true fact is that patents don’t stimulate innovation, they kill people and it impoverishes humanity. I’ve got a post on this called the patent holocaust where I’ve estimated how many people are dead now that would have lived if we had more technology.

Because the reason the human race is richer now is not because we’re smarter than the Romans. It’s because we’ve accumulated more knowledge. Hayek called this a fund of experience. Every year, every day, people come up with ideas and they spread them and they emulate them. They learn from them. And the human race gets this stock of knowledge that grows over time. ²

So our stock of technological knowledge and scientific knowledge is greater now than it was in the Roman days. That’s why we could have spaceships and plumbing and indoor plumbing. All the Romans had plumbing, but they didn’t have PVC pipes and things like that.

So every time you have a government barrier to the discovery and the dissemination and the development of knowledge, then you’re impoverishing the human race because that’s how we get richer. That’s how we survive.

And copyright is censoring speech. It distorts culture. It threatens internet freedom, which is a big thing. We need a free internet so we can criticize the government. But yet copyright is used to take down websites in the name of stopping piracy.

And actually now we’re seeing a tension or a conflict between artificial intelligence which is another potentially useful tool for humanity but it’s being stifled and gimped by copyright because it trains on data which copies other existing works much of which are under copyright protection.

So everyone knows this. They know that copyright is a threat to AI, but because they can’t give up the belief in IP, they want to have both. But you can’t have both.

Methodological and Ethical Problems with Utilitarian Case

[around 25:41]

Now, there’s in addition to these empirical problems with the utilitarian case for IP, there’s other problems. There’s a methodological problem, and that is the Austrian view that recognizes that values are subjective and they can’t be compared interpersonally or cardinally. You can’t sum up values. You could never have an economist come up with a number saying this is the value of the patent system to the economy because you can’t compare these things anyway.

So they could never prove their case. Despite David Friedman a utilitarian economist who claims that von Neumann has proved that you can compare values interpersonally and cardinally which is I think is ridiculous. Bob Murphy has already debunked that.

And there’s ethical problems too. Utilitarianism is a horribly monstrous ethical idea. Just to take a quick example, if we came up with a technology that would allow you to take an eye from a sighted person and put it into the head of a blind person and give them vision, then the logic of utilitarianism would say, well, that’s permissible because yeah, the sighted person is going to suffer, but he still gets to see. But the blind person goes from zero to good vision.

So that’s a net plus for the human race, right? So that would justify monstrous acts like literally holding someone down and removing their eye.

And the other problem is when you hear this argument that people say, well, if you don’t have patent law, how are people going to have the incentive to make a new drug or something like that? They’re asking a loaded question because they’re presupposing that the purpose of law is to run around hunting for market failures and having wise legislators calibrate the system and come in and nudge it and make us better off by fixing these little market failures.

But this is not the purpose of law. The purpose of law is as Ulpian said at the end of the Roman Empire to do justice to render under each man his due. Right? It’s the constant and perpetual wish to render everyone his due to live honestly to hurt no one and to give everyone his due.

Now to know what someone’s due is you need to know what their property rights are. So that’s why you need property rights. So the whole purpose of law is to do justice by protecting and defining property rights. Not to maximize innovation or politeness or whatever or landing on the moon, whatever your artificial governmental goal is. That’s not the purpose of law.

Deontological/Principled Arguments: Labor Theory of Property

[around 28:17]

Now the second set of arguments for intellectual property in addition to the utilitarian or economic arguments is called the deontological. I call it principled or propertarian. It’s the idea that it’s the desert argument. The idea that it’s not fair that if you labor on something to make something useful, it’s not fair if you can’t profit from it.

So if I spend a lot of time writing a book or coming up with a light bulb design and people can just compete with me, they can make copies of my book or they can compete with me and make similar light bulbs. It’s not fair. Right? So that’s the idea there.

Now that argument is based upon an intuition we have and it’s based upon a fallacy I think that was started by Locke. John Locke in the 1600s had a defense of homesteading. He was trying to defend the idea of monarchs having absolute power. So John Locke’s argument was well there’s natural rights that God gave the earth to Adam and Eve and to the human race. Yeah, the monarchs have some power, but they’re really stewards of the earth, the earth that we all own. And God gave every human being ownership of their body.

So he was trying to argue why that you have a right the government can’t take and if there’s unowned things in the world God gave us this world full of bountiful things right unowned resources in the world animals and land and food we are free to go start using that stuff right use it as means of our action that’s called occupation or homesteading right.

So Locke was trying to justify the right to own yourself to be free from arbitrary government power and the right to own things that you’re the first one to start using or that you got from someone else by contract like that. So that’s the core of modern property rights.

But Locke’s argument, he was trying to appeal to religious people at the time and to people that were still devoted to the king. So he had to kind of thread the needle. So his argument got a little metaphorical and he made a mistake and his mistake was the reason you have the right to homestead a piece of unowned land is because you own your body and therefore you own what you do with it which he called labor which really it’s just an action right.

There’s two types of action there’s labor and leisure. Every if I do so just like there’s two types of goods there’s consumer goods and capital goods right intermediate means and consumption means there’s two types of action there’s labor and leisure. Leisure is things you do for their own sake. Relaxing, going on vacation. Labor is things you do for the sake of acquiring things that you can consume.

Anyway, Locke focused on labor, one subset of action. And he said because you own your body, which you do, therefore you own what you do with it, which is your actions or your labor. And because you own your labor, it’s this kind of substance. And if you mix it with the soil of an unowned tract of land and you establish a border or a boundary and you thereby homestead it now you’re the owner of it.

He’s right about that. But he said the reason you own it is because you own the labor and you’ve mixed the labor with the soil and now it’s kind of mixed in with it. And if you don’t maintain ownership of that piece of land, you lose your labor and you can’t lose your labor because God wanted you to have it.

So but you don’t need to. So but that mistaken extreme step which Hume later realized oh he didn’t need to say that in his argument. His argument works if you take that step out because you just say well the reason I own the land is I own my body and the land is unowned so no one has a claim to it. So when I’m the first one to claim it I establish a better claim to it. Not because I own my labor. You can’t own labor. Labor is an action. It doesn’t make any sense to own it.

So but because he used that metaphor and it stuck, right? Everyone now thinks that you own your labor. In fact, that labor theory of property, it eventually ended up tainting and morphing into the labor theory of value of Adam Smith and then Ricardo and then guess who? Karl Marx. Big comm.

I mean, what’s communism’s criticism of capitalism is that the employee owns his labor just like Locke said. And if the employer makes a profit, the employer must have stolen some of the surplus labor value of the employee. I mean, socialism and communism come from this mistake that Locke made long ago.

And this has led to this idea that you know if you work on something you’re entitled there’s a doctrine in copyright law called sweat of the brow. So labor theory is the idea that you should have a copyright in something even if it’s not that original like a database or a map or a telephone book listing because usually copyright applies to original works of authorship you know like a sculpture or a painting.

But what if you spent a lot of time making a map? A map is just a reflection of a fact about the world, the way the world’s arranged, right? And a database is just a phone book is just a listing of the people who live in New York City or something like that. So it takes a lot of work to do it.

So there were some early cases where they said well the sweat of the brow doctrine says if you put a lot of effort into it then you should have a protectable copyright in it even though it’s not original. I mean so this idea of this labor metaphor has infected everyone.

Human Action, Property, and Scarcity

[around 34:05]

Now what we need to understand is this human action in the world applies to everyone and it applies even to Crusoe on his island. There’s something called Robinson Crusoe economics or Crusoe economics where you analyze human action in a simple form. A guy on an island. He has no one to trade with. There’s no such thing as money. But he still acts and he still has profit and loss. It’s just not monetary terms, right? He has successful action. He has means things he uses. You know, if you want to catch fish, the end of your action is catching the fish and stopping your hunger.

Your action is guided by your knowledge of how to do this or how to make a net. And you employ like a pole to catch the fish. So that’s your scarce means. So that’s what human action is on an island. It doesn’t involve anything like property rights at all because there’s no possibility of conflict with other people.

But there is possession. There’s use of resources. Now in society now we can trade with other people but they also can steal from us. So now we have these resources we want to use but there’s a danger that other people might steal from us. So property rights emerge as like a normative support for the right for the ability to possess. So they go hand in hand.

Economics talks about the analysis of human action. It’s a descriptive thing. It’s how we use resources. Law says there are certain norms. You have a property right in this thing. So you can think of property rights as a legal right to possess or use something. Whereas economics talks about actually using possessing something.

So the point is this. When these property rights emerge, they emerge to support what people actually do when they act. And what they do when they act is they employ scarce resources. They find an unused thing and they start using it. That’s appropriation. Or they get it from someone else from exchange or trade. That’s contract, right?

And so the law has property rights that protect that. That’s what property rights are. Property rights are the normative support for possession. And because it’s trying to protect what people do, the fundamental property rights rules are number one, you own your body. You’re a self-owner. That’s why slavery is not permissible, right? You’re a self-owner.

But for all other things in the world that were unowned, the owner could be identified with two simple rules. Number one, who was the first one to start using it? Because someone has to be the first one to start using it for it to be the subject of a dispute. That’s homesteading or occupation or original appropriation. Or did you get it by contract from someone else, right?

So there’s only two ways. There is a third, but it’s just if there’s a tort and you have to pay someone damages, but that’s still like a type of transfer. So basically, how do I know how can I prove I own this water? Okay, because Leo gave it to me. So I’m assuming he was the owner. So he gave it to me by contract. So I can trace my ownership to a previous owner.

Now if he let’s say he went out and found the plastic and got the water from a stream, he made the thing from unknown sources. He got ownership that way. So you can always identify the owner of a resource by asking two questions. Who had it first? Who contractually transferred it? Right?

Now notice that nothing in that set of rules has anything to do with creation or labor ownership. Nothing. Which is the mistake that has crept into property theory because of John Locke and his labor theory and his labor mistake.

So people think that creation is a source of property rights. So they’ll say something like well yeah I agree that you own the car or you own the field that you homesteaded but you also own a useful idea like a new way to make a light bulb let’s say or because you created it like well when did creation become a source of property rights? It was never, we just talked about it.

The source of property rights is the first one to start using something unowned or to get it by contract. Creation has nothing to do with it. So what they’re doing is they’re making a mistake between the source of wealth and the source of property rights.

Wealth simply means a more useful resource, right? Something that’s more useful to the holder. So if I have a bunch of wood, it’s useful to me, but if I spend my effort and labor and I rearrange it into the shape of a log cabin, now it’s a lot more valuable to me. But I haven’t acquired new ownership of anything. I’ve just taken my logs and made them into a better shape. So my wealth has increased, right?

Likewise, if two people exchange something like I hand you an apple, you hand me your banana. Nothing has been created. But we’re both better off as we know from Austrian economics because ex ante the only reason we engage in the trade is because we’re both better off. So simply by making a free exchange the net sum of wealth in the world increases just by contract by exchange but nothing’s been created.

So this is the fundamental mistake of the IP idea is that creation is a source of property rights. It’s not a source of property rights. It’s a source of wealth, which simply means that if you are the owner of a resource, you have the right to manipulate it and rearrange it into a more valuable configuration or a worse one. You can make it worse. You can ruin it and you can ruin your property.

Hume’s Critique and Praxeology

[around 39:27]

I’m going to skip over this. Hume pointed out that Locke’s labor theory was a needless step in his argument.

So let’s go back to Crusoe’s island or just a regular human in society. Mises talked about human action. I don’t know if Walter’s talked to you guys about this. We call this praxeology. It’s the study of the logic or the implications of human action based upon what its nature is. And its nature is human beings are intentional actors and they have uneasiness about the future they see coming.

All action is directed at the future and they have some memory of the past and they’re aware of their present. They’re aware of the world they’re in. They’re aware that something is coming they don’t like and they want to do something about it. They want to intervene in the course of affairs causally. That means they want to change things.

So they have to use some means that will a tool that they can intervene and make the world the future world different than it otherwise would be. So they grab these means these scarce means of action these resources these tools things that they can manipulate and wield.

But they also have to have a mind to do this. You can’t have no memory, no mind, no understanding of anything. You wouldn’t know what to do. You wouldn’t have any uneasiness. Right? So the second ingredient of so one ingredient of all action and all successful action is the availability of means that you can manipulate and use scarce means of action or resources and preferably they’re owned in an advanced society so people don’t disturb you and your use of those means.

The second one is knowledge that guides your action. Now this is categorically distinct from scarce means of action because the knowledge is not a tangible thing that you own. It’s not something there could be conflict over. It’s not something someone can steal from you.

In fact, as I noted earlier, this is why we’re richer as a human race because the amount of this knowledge accumulates and accretes over time and we’re richer now because of it. The range of recipes as Rothbard called them that we can dive into the fund of experience of Hayek that we can consult to decide what ends do I want to pursue.

You know in the old days I might want to pursue ends A B and C now I know oh I could do C D E and F there’s other things I could pursue because there’s other things available to me because I have knowledge about this and before I might be able to travel using a horse or walking. Now I can use a car or an airplane or a rocket ship.

So there’s more and more means available, more ways of doing things. So the more knowledge we have, the more efficient our actions will be, the more wealth we will have, right? But the point is these are two separate aspects of human action: knowledge which guides human action and available scarce resources which are necessary to change the world but over which there could be conflict and over which we need property rights.

So the property rights obviously apply only to scarce physical means of action not to the knowledge. The knowledge is not scarce. Two people can use the same idea a million people can use the same idea at the same time. The same recipe for baking cake. They can all do the same thing if they have their own mixing bowls. It’s the mixing bowls that are the scarce part that property rights apply to, right?

And if you think about it, all resources are physical. Our bodies are physical. They’re corporeal, as we say in the civil law. They have to do with touching, with manipulating, with grasping, with handling things, right? When we talk about force, we really mean force. Physical force. Force times distance.

You can’t get something done unless you use your hands and you touch something else that touches something else that gets something done. This is a physical thing. This is in the real world.

And because of this, all property rights have to be rights to control physical resources. The word enforce is in there. It’s an enforceable right. Why is the word force in there? Right? So you can see that it’s not only that intellectual property rights are illegitimate and that there shouldn’t be property rights in ideas is that there can’t be property rights in ideas. It’s literally impossible.

As Rothbard pointed out, all rights literally are property rights because the only way to violate a right is by physical force. And physical force can only be applied to physical things. Right? You can’t steal someone’s idea from their head with physical force.

But I can steal their ear. I can punch them. I can kill their body with a knife or a gun. Right? So what this means is when we have a law like a patent right or a copyright, people call it a property right as a propaganda move to defend it, but it’s not really a property right in ideas because those are impossible. It’s really a disguised property right in physical things because all property rights are rights in physical things.

So what is it? It’s what I call a non-consensual negative servitude or easement. Right? Now in the law there is such a thing as an easement. An easement is a partial property right like a right to walk over someone’s property or a negative easement would be when you agree with your neighbor say not to build your house not to paint your house orange. This is part of restrictive covenants in homeowner associations. It’s a voluntary agreement and it’s perfectly fine because it’s consented to just like kissing your girlfriend is fine if she consents, but if she doesn’t, it’s called assault and battery, right? Consent makes all the difference to things that look otherwise the same.

The government by granting a patent to an applicant for a patent or the inventor who applies for a patent or the author who creates an original work of authorship under copyright. The government grants them this certificate, this right which gives them the right to go to court and get the court to make a decision using directing its agents to employ physical force against the assets of the other party if they don’t comply.

Right? Like so if I’m Apple, I can stop someone from making a smartphone with rounded corners because I have a patent on that. And if someone tries to do it, then I get to take their money by physical force or I get to issue an injunction and put them in prison if they don’t listen to it and they make something in their factory.

Right? So you can and same with copyright. I can stop you by using my copyright by asserting it. I can stop you from using your own factory, your own printing press, your own ink to print a copy of my book.

So these are really non-consensual negative servitudes which means they amount to takings of private property rights. This is ultimately the problem with patent and copyright and all forms of intellectual property. They’re non-consensual negative servitudes or easements.

So intellectual property is theft. Intellectual property is death. I’m going to conclude here and I welcome any questions. Any questions? Eat stupid questions a lot.

Q&A Session

[47:20]

Audience Member 1:

Is anyone not convinced? Yeah. I would like your clarification on creation is not a source of property rights on slide 28. Yeah. Um I’m just a little confused. You said that creation is like Can you go back to me? Yeah. I just want to know your I just want to hear another clarification like you said creation is a source of wealth but creation source of property rights. Right.

Stephan Kinsella:

So people I think people get used to the idea that if you work hard you tend to be successful, right? Which is true. So, but it doesn’t mean you’re entitled to it, right? Lots of people start a business and it fails. They’re not entitled to their effort, right? Sometimes it’s a loss. Like if I push on this, I’m not doing any work if I’m not moving it through a distance.

People in their minds they think that because you spent effort like hard work tilling your field and so you’re successful because of that that by the same token so they start thinking that effort is the source of property rights right so they sort of think that that’s why they’ll say that you’re like the fruits of your labors.

And because Locke said that you own yourself and you own your labor and that’s the reason why you own property land you mix it with they think that you own this labor that you this part of what your body does. So they’ll say something like well if I write a if I come up with a new mouse trap design I’ve created something that didn’t exist before in the world and because I created it if I’m not the owner who should be the owner.

So they’re assuming that everything you can name, put a word to should have an owner, right? But ideas can’t be owned as I already mentioned. So they’re skipping the step of asking is this the type of thing that there can be a property right in the first place.

So you have to first ask what types of things can there be property rights in? And that answer is scarce resources, things that people use as means of action over which there’s conflict. Okay. Then the question is well then how do we know who the owner is? So the answer is person who had it first from homesteading or the person who got it by contract from a previous owner. That’s it.

That answers the question and then it’s just a factual question to David. The question of creation never comes into it. So the mistake is in thinking that creation is like another source of property rights and they’re just wrong because they think that is it’s like the left thinks that property rights are good. What we call negative rights like all rights are negative you have the right you don’t have the right to welfare payments right or housing or education but you have the right not to attack your body or to attack your stuff so all rights are negative and the leftist says well okay I can deal with that but let’s just add some more on to that let’s have positive rights and negative rights so let’s in addition to having the right to be secure in your home you have the right to have a home paid for by the taxpayer.

They think you can have it all. What they don’t understand is that nothing is for free, right? It’s just like money. Like, why don’t we just make everyone rich by printing more money? Because it would cause inflation and then we would be poor. You can’t have it both, right? So printing more money reduces the value of money. Having more property rights having positive rights erodes negative rights because they have to come at someone’s expense.

If you have the right to a house or to welfare, it has to be paid for by robbing me of my stuff. So you can’t have them both. Either you have secure property rights or someone has a positive right. It’s the same thing with creation as a source of rights. If you make creation a third source of rights, the first two sources of rights are homesteading and contract. If you have a third, oh, if you create something, you also own it. Well, because property rights can only apply to physical things, but those physical things are already owned according to the first two principles.

You’re coming up with an exception. You’re saying, well, you don’t own that house. You don’t own that factory. Cuz normally, you would say you own the factory if you were the one who built it or you bought it from the previous owner. But now, the question is, well, actually, the guy that got a patent in the patent office is a part owner because he has a negative easement over it. He can stop him from using it the way he wants because the government just gave it to him because he created a useful idea.

So this is the mistake and it’s hard to sort out but that’s the problem.

Audience Member 2:

Yeah. Yes. Uh more um I don’t think uh Block labor theory of property metaphorically implied um the uh any justification of intellectual property because if I recall correctly Block says when that um a person becomes an owner of coffee they make their liquor with unowned natural resources they appropriate from nature I think you could believe in the labor property and offer to reject IP on the basis that you can’t you’re not removing anything from nature when you’re developing particular ideas.

Stephan Kinsella:

I agree completely. But the thing is lots of intellectual property they’re desperate to find some justification for IP but people have they have made that argument of course they said well Locke theory implies that we you can own this. I mean so but they try to extend it. Locke himself I agree Locke didn’t Locke himself didn’t I think Locke just did that. He was trying to come up with his best argument to counteract Filmer and the power of kings and things like that.

I don’t blame him for it. I think you just if as long as you’re careful to realize that sometimes metaphors are used in talk and just don’t take them too seriously. So it’s not literally true that you have the right to the fruits of your labor. It’s not literally true that you own your labor, right? It’s not even literally true that you own Bitcoin, for example, as I pointed out to my Bitcoin friends because Bitcoin is an intangible thing. It’s on a ledger that’s stored on computers owned by people around the world.

So you can’t own the Bitcoin. But I know what they mean when they say they own Bitcoin. What they mean is they’re the ones who have the keys and they have control of it. So people use these words, they use the word ownership in a sloppy way sometimes. As long as you’re careful with it, I agree with you.

I don’t think Locke himself believed in although Locke also did say that he was okay. He had some copyrights, okay, in some of his work. So he liked the idea of copyright on credential grounds, but he didn’t think his theory applied it. I agree with you. Ryan McDanel is an anarchist philosopher who has argued this contrary to the pro-IP Objectivists like Adam Mossoff and these guys who are desperate to enlist Locke on their side say oh Locke believed in IP as a natural property right who has no access to Rand controls otherwise.

Audience Member 3:

Anyone yes I would relieve on citizen parts of like IP competing garnens like paintings I can’t bank on Picasso so it makes no sense the very patent on Picasso or new artis or a drug I don’t have the knowledge or skill set or any capital in the drug field so therefore it makes no sense for drugs to be um copyright just because it requires an insanely high barrier of entry but then when you get into like write it If you posted your writing somewhere, then my barrier for entry of copy of your writing, if there’s no protection, is zero. You know, 70% of the world could go copy exactly what you said and then post it. So, from that standpoint, I feel like with super low, it would inherently reduce on people who wanted to write. Maybe we’d get better writing. Yeah. Because knowledge, you know, you would be wanting to create for the uh basis of creating more knowledge instead of profit. But I think there would be inherently a reduction in certain aspects where there’s a very low barrier of entry for copying under visa.

Stephan Kinsella:

Um I think it’s logically possible there would be less authorship in original writing. Um I don’t see why that’s a problem. We do not have a shortage of that right now. Um I don’t think there’s any reason to believe that though because number one the best bulk of writing is done now is done not for money or by authors who are pretend making money don’t make any money. It’s always been hard to make money writing. So most people don’t write for money anyway.

So I don’t the fact that someone can talk to you. Number two the fact is that copyright is largely unenforceable today because of torrenting and the internet encryption. So right now as you all know we can easily go find in five minutes any movie any song any book right now. So it’s illegal. So it’s underground but you can still do it.

So even though copying is massive so-called piracy is widespread um and the copyright system is almost impossible to enforce which means there is no copyright yet. We don’t have a shortage even now of any of this stuff right and number three um so you I think in a few rare cases you can see that it would change the business model that the authors have to engage in so Harry Potter is a good example JK Rowling first of all she wrote that she didn’t think she even know she would become a billionaire right she was just writing a book on the train it was her passion um she didn’t know it would sell a lot when it sold so she was thrilled but it sold a lot.

So, let’s suppose there was a copyright free world and JK Rowling publishes self-publishes her book on Amazon Kindle or something like that or Amazon KDP. Um, and all of a sudden it’s it starts being popular right away. People are going to pirate, right? Because they can sell copies too. Um, although that’s another point about this. There’s so much work out there. The pirates don’t copy everything right away because they can take money. They have to wait and see what’s worth copying and pirating. And that window of time, the first guy can make sort of a killing for a while, right? Selling at a high price for a while.

So you can always sell for a while until the pirates start catching up with you, which let’s say so let’s say for after 3 months people start noticing, oh, there’s a lot of fans of Harry Potter. So the pirate books come by the way so that her sales drop. Okay. So she makes, I don’t know, $50,000. And she figured that’s pretty good. Just a welfare mom riding the trains in England.

Um, but then she knows she’s got a built-in base of loyal fans around the world. Millions. Millions. So, she writes, she what she writes, seven books. She writes book number two. She keeps it secret. She prints on a website. She says, “I’ve got number two written. As soon as I get 10 million people to buy it for 10 bucks each, I’ll release it.”

All right. So, she’s going to get that, right? So now she’s got I’m kind of the math is 50 million whatever. Okay. So she does that rent watch and repeat. Now she’s worth half a billion dollars already without copyright and then someone wants to make a movie of book number one and they don’t have to get her permission because so they might have three different companies making the Harry Potter movie without her permission.

So because they don’t have to give her any they don’t have to give her any percentage of the ticket sales during that. But one of them goes you know what if we get JK Rowling to consult on this and to authorize it we will sell more tickets to our fans because they rather go to the author they’d rather go see the authorized movie and they’ll probably better. So we’ll cut her in. We’ll give her 10% of gross profits.

So let’s be honest she makes another $100 million. I mean there’s ways to make a profit without relying on government enforced monopoly laws.

Audience Member 4:

Thank you guys. You mentioned um trademark and trade secret trademark liel liable defamation. You mention trademark and libel. Sure. So trademark um did arise in the common law and a lot of libertarians who even the ones that are skeptical of patent and copyright because it’s legislated and because it’s obviously got a lot of flaws they’ll say well trademark is justified because it came up on the common law and its purpose is to stop fraud and we’re against fraud, we’re against misrepresentation or you’re against fraud juris.

Stephan Kinsella:

Um the problem is that number one in the US modern trademark law has been preempted largely by the federal government even though the copyright clause which I mentioned earlier in the Constitution talks about patents and copyrights authors and inventors doesn’t mention trademarks so in my view the entire Lanham Act which is passed in the 40s which is the federal version of state trademark law is totally unconstitutional the government justified it on the interstate commerce clause which they used to justify everything.

Now, in any case, um and now that the law is legislated, it’s not just about stopping fraud. It’s also about stopping um what’s called dilution, which gets back to this idea I mentioned earlier about property rights are rights only in physical resources, not in their value. Why was a source of rights?

Um the idea of it’s saying it’s the same idea of defamation law. So defamation law says as a cause of action you sue someone for defamation and two parts of defamation are libel and slander libel is the written form and slander is the oral form. Um which means you make a public statement that injures someone’s reputation that implies they own a reputation and it implies it has a value.

Um so and as the same argument behind anti-dilution rights of trademark. So the idea is that you have these property rights in the value of things. But as Rothbard pointed out in his critique of defamation law um your reputation is just what other people think about you. And if you believe they own their bodies, they own their brains, they have the right to whatever opinions they want about you, you can’t have a property right in reputation. So the entire basis of defamation law is flawed.

Um and I think the basis of trademark law is flawed too because to the extent it has this anti-dilution rights, it’s very similar to the reputation right in defamation law. The other part of trademark law is this idea that um you shouldn’t defraud your customers. But the problem is trademark law doesn’t require a showing of fraud. It only requires a showing of likelihood of consumer confusion.

So the way a typical trademark action works is I sell a product with a brand name on it or a mark on it to distinguish it from my competitors like let’s say a Chanel purse and someone wants to make a company and they call it I don’t know Chanelli purses you could argue that the name is too similar and they’re trying to confuse the consumers.

Um, now if that’s true and this happened Bitcoin by the way after Bitcoin Cash came out, you had a lot of confusion because Roger Ver was running around saying Bitcoin Cash is Bitcoin. And so some people didn’t know the difference. They bought Bitcoin Cash. They thought they were buying Bitcoin. So you can see how if you muddy the truth about what you’re selling, you can confuse consumers.

In that case, the consumer ought to have an action for either contract breach or fraud. But who’s the one with the action? It’s the consumer who is defrauded. They should be able to sue the guy. Trademark law gives the right to sue to the owner of the trademark even though they’re not the ones hurt. It’s the customers that are allegedly hurt.

Number two, trademark law doesn’t require you to show fraud. It only requires you show confusion. I don’t know of any property right that’s infringed by confusing people. Uh and number two, it doesn’t require you to show confusion. It requires you show likelihood of confusion. Which is why if someone tries to sell knockoff Rolex watches or knockoff Chanel purses for $25 like in an alley in New York City, the cops will roll in and they’ll seize the merchandise and destroy it under the guise of protecting trademark rights.

But who’s being defrauded or confused here? Not a single person on earth who buying a $25 Rolex thinks it’s a real Rolex. They know they’re getting a fake Rolex. The reason they’re buying a $25 Rolex or some guy in an alley is because they want the fake Rolex. So they can’t afford the real one. So there’s no consumer confusion at all. But trademark law protects the property right in the reputation or the value of that right because of the mistake that Locke made there.

So, that’s the problem with trademark law. So I would abolish it too because if you got rid of trademark law you still have contract law and fraud law which is sufficient so you give consumers right to sue.

Um there’s another one called trade secret law. Everyone think well how can you have trade secret law because what’s wrong with keeping something secret? There’s nothing wrong with keeping something secret but you don’t need a law for that. All you have to do is keep your mouth shut right.

What trade secret law does is it says if you keep something secret and it gives you a competitive advantage in the marketplace and if someone if it gets leaked by an employee who violates their non-disclosure agreement then you can go to court and you can prevent the leak from spreading if it’s not too late if this secret is spreading and you can get an injunction aimed not only to the employee you signed the non-disclosure agreement which your contract theory would permit but you can get it at the other employer that is hiring your old employee.

You can get an injunction against them saying you guys can’t use this knowledge either because it’s a trade secret. It’s a property right of the first guy because he tried to keep it secret and so even though this other competitor doesn’t have a contract with the first trade secret holder. So that’s the problem with trade secret law. So every single type of IP law is flawed in one way or the other.

Audience Member 5:

Yes. Um so for you is there another resolution we were wondering with inventions or creations or do you think they shouldn’t be protected at all?

Stephan Kinsella:

Well, I don’t think they should be protected by a legal right in this way. Um it yeah, so there’s sort of a snarky answer and like a more serious answer. The snarky answer would be like I wrote I had a speech one time in Turkey and it’s called something about IP or who would pick your cotton. You know, it’s like during the days of slavery, incub slavery 1850. If someone says we have to abolish slavery because it’s just so immoral, it’s just wrong. And if someone says, “Okay, I hear you, but who’s going to pick the cotton?” It’s like that’s a nonresponsive question.

It’s like if you’re telling me that the most important thing in the world is if the cotton gets picked and if I can’t guarantee that it’s going to get picked the right kind of way, then we’re going to keep slavery until I do, then obviously we have a different set of values. You know what I mean? So it’s the same thing with intellectual property.

Um because if you recognize that it violates property rights, then that’s really the end of the question. And then if someone says, “But how would you guarantee there’s enough incentive to do this?” How would someone make a profit off of their ideas? If they’re asking a genuine question, which there are genuine questions, that’s one thing. But if they’re using it as a well, unless you can prove to me that people would, you know, it’s like welfare.

When we say we should get rid of welfare and rely on private charity, your average mainstream person will say something like, “Well, can you guarantee that there will be welfare in your society? Will there be enough charity?” And if they say, “I can’t guarantee it.” They’ll say, “Well, then I’m going to keep it like, so if I can’t guarantee it. I can’t guarantee it. I can’t but we have some ideas.”

Now, we know that the existence of intellectual property has totally distorted the way people do business. So they’ve come to rely upon these methods. So if you’re a novelist, you just rely on your copyright to stop pirates, right? Um if you come up with a new iPhone or new pharmaceutical, you’re going to file a patent and you’re going to file lawsuits.

So people have come to rely they’ve got used to these tactics and these methods because that’s the system we live in. If they didn’t have that, they would have to come up with other things and like the example I gave with the Harry Potter with JK Rowling is one idea of what she would probably do in that kind of world.

As we see in today’s world, um there was a golden age of LPs and then CDs where a lot of artists like Madonna, Sting, they made a lot of money selling CDs. That day is over, right? Those people don’t buy CDs anymore. So now they’ve gone back to touring. They make money touring. That’s just a natural business model response to the changing nature of the market, right?

And the same thing would happen if they were selling CDs for they could be pirated. They would still have to rely upon other sources. Now, as a matter of fact, so what let’s suppose you’re a novelist and you’re popular for selling good novels, but people keep knocking you off. And by the way, they don’t most of them don’t make any money anyway. But let’s say you are. Well, you’re famous as a writer now. So you might get hired by an advertising company to write their jingles or maybe you use that on your resume to get a job teaching English at Baylor, you know, or something like that.

Um, you can use these things in different ways to advance your career. People just have to be creative and figure it out. Uh, with inventors, it’s the same thing. You know, uh, if I come up with a useful idea, um, I might get hired by Apple, you know, because they know I’m a genius. It’s not because I own the patent. It’s because they know that I invented something useful.

Thank you guys. Thank you.

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1. Leo Krasnozhon, “Walter Block on Externality, Public Goods, and Voluntary Government“ (pp. 391–399). [↩]
2. See Stephan Kinsella, “Mises, Rothbard, Hoppe: An Indispensable Framework,”  Rothbard at 100: A Tribute and Assessment, Stephan Kinsella and Hans-Hermann Hoppe, eds. (Houston: Papinian Press and Property and Freedom Society, 2026) (section “Excursus: The Role of Ideas in Human Action”: “Knowledge is a core aspect of action, equally important to scarce means of action, but it receives somewhat short shrift from economists, who (understandably) tend to focus on production of consumer goods and the use of means in a world of scarcity.”); Libertarian and Lockean Creationism: Creation As a Source of Wealth, not Property Rights; Hayek’s “Fund of Experience”; the Distinction Between Scarce Means and Knowledge as Guides to Action; Hayek’s Views on Intellectual Property; Intellectual Property and the Structure of Human Action; Saifedean Ammous, “316. Principles of Economics Lecture 7: Technology,” The Bitcoin Standard Podcast (Youtube, March 10, 2026). [↩]