StephanKinsella.com

An Objectivist IP Argument for Taxation

by Stephan Kinsella on February 24, 2010

Objectivists say they are against taxation; they say that you can fund a state by some kind of contract fee or lottery system. Obviously, you can’t, not without the state compelling membership or outlawing competitors, which permits them to charge monopoly prices which amounts to a tax.

But Objectivists are strongly pro-intellectual property (see Why Objectivists Hate Anarchy; IP: The Objectivists Strike Back!). They believe you deserve to be rewarded for creative, innovative, inventive action. But note that they also are extremely fond of the American Constitution and Founders; they believe the Constitution is a great achievement of the intellect—this corresponds with their belief that a proper state, such as the original American state, is a great value to man. Well, put two and two together: the Founders gave us a great creation: the Constitution, and our system of government. We all benefit from it. It’s only fair that the Founders charge us a royalty for our use of their creation—and naturally, the state itself is the agency as the natural successor to its parent-creators, the Framers and Founders, to inherit and manage this royalty-collecting right. Don’t call it a tax—call it a royalty.

See also the following post from the Mises Blog (Oct. 18, 2010)

A Thought Experiment about Patents and Taxes

In Reducing the Cost of IP Law, I argued that one improvement to the patent system (short of abolition) would be to eliminate injunctions and provie for a compulsory licensing system. As I noted there, the compulsory licensing approach is not new. Some countries impose compulsory licensing on patentees who do not adequately “work” the patent. I discussed provisions in US patent law that do permit compulsory licenses already in some situations. ¹ I was reminded of this when discussing with some friends a comment to this blogpost, Pirated Software Could Bring Down Predator Drones. The commentor stated: “Just declare the IP a state secret. The market value is then zero, as the company cant sell it legally. Buy it from the company for 1 cent. Then classify the contract as top secret. If the company complains, send the people to jail or gitmo.”

As I noted in the previous posts, the feds have the authority to license third parties to manufacture patented articles, without patent infringement liability; this was threatened in the Cipro anthrax drug a couple years ago. The feds then have to pay “compensation” to the patent holder. Something similar happens if the some federal agency issues a “secrecy order” for military or other reasons for a pending patent. ²

It occurs to me that the very notion of a compulsory license for IP can help to illustrate how IP is an obvious transfer of wealth. Consider: under current law, the state grants a patent monopoly to some applicant. Then, the state can declare a compulsory monopoly (or issue a secrecy order), and pay you some compensation for this “taking”. Obviously this payment comes from tax payers. So the IP step can be seen as just an intermediate step to justify transferring money from everyone else to the patentee. It’s as if you tell the state you have an idea and the state takes money from others and gives it to you. Come to think of it, this is exactly the idea behind proposals for tax-funded “innovation” awards–proposed even by some libertarians (!). ³ The point is that even when the state does not issue the compulsory license, they are simply deputizing the patentee to go out and extort the money himself; it’s like taxation.

(Incidentally, in An Objectivist IP Argument for Taxation, I provide another argument for why IP could be used to justify taxes.)

See Ciprofloxacin: the Dispute over Compulsory Licenses; Tom Jacobs, Bayer, U.S. Deal on Anthrax Drug, Motley Fool (Oct. 25, 2001); Compulsory Licensing in the US. See also Kinsella,Brazil and Compulsory Licenses, Mises Blog (June 8, 2007); Kinsella, Condemning Patents, Mises Blog (Feb. 27, 2005).[↩]
See The Secrecy Order Program in the United States Patent & Trademark Office; 35 USC ch. 17 §§ 181, 183.[↩]
See my posts Libertarian Favors $80 Billion Annual Tax-Funded “Medical Innovation Prize Fund”; “$30 Billion Taxfunded Innovation Contracts: The ‘Progressive-Libertarian’ Solution“; Re: Patents and Utilitarian Thinking Redux: Stiglitz on using Prizes to Stimulate Innovation, Mises Blog (Dec. 28, 2006) and Patents and Utilitarian Thinking Redux: Stiglitz on using Prizes to Stimulate Innovation (Sept. 19, 2006); .”[↩]

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Rockwell on IP and Emulation

by Stephan Kinsella on February 21, 2010

I confess that I hate self-promotion but I cannot resist reposting comments like the following from the single most important libertarian thinker and organizer of our generation:

Daily Bell: One of the hardest issues to resolve from a free-market point of view is ownership of intellectual property. Can you tell our readers where you come down on this difficult issue? In a free-market, would individuals be able to claim and enforce intellectual property rights with any prospect of success?

Rockwell: Rothbard condemned patents but not copyrights. Mises and Machlup saw patents as government grants of monopoly, but neither condemned them outright. Hayek was against copyrights and patents, but didn’t write about them much. It is digital media that have brought the issue into focus. The key thinker here is Stephan Kinsella. He and Jeffrey Tucker have done the heavy lifting and convinced most all of us that intellectual property is an artifice that has no place in a market economy. There are incredible implications to this insight. The infinite reproducibility of ideas means that we stand a great chance for success. The fact that ideas are not scarce goods means that they need not be controlled. This is a wonderful thing. There is much work left to do in this area. The whole history of invention needs revision, and our theory of markets needs to take better account of the central place of emulation in social progress.

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Invasive Government and the Destruction of Certainty

by Stephan Kinsella on February 18, 2010

Invasive Government and the Destruction of Certainty, by Ridgway K. Foley Jr., The Freeman (January 1988 • Volume: 38 • Issue: 1).

An oldie but a goodie. I cited it in my Legislation and the Discovery of Law in a Free Society, Journal of Libertarian Studies 11 (Summer 1995). I met Foley in 1995 or so on a trip to Portland to visit a patent client (Intel). We had a nice lunch together.

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Tyler Cowen on the VAT

by Stephan Kinsella on February 18, 2010

Tyler Cowen seems sympathetic to the idea of imposing a national sales tax (VAT) in his post Is there a case for a VAT? But as I noted in Say No To Tax Reform,

Calls for tax reform of a distraction (no offense, my naive, youthful advocacy of a national sales tax). For good material on this see: Rockwell, The Tax Reform Racket; Rockwell, Diversions; Rothbard, The Consumption Tax: A Critique; and The Fair Tax Fraud and Flat Tax Folly by Laurence Vance. In Power and Market, Rothbard lays out a taxonomy of the methods utilized by the state to confiscate private property and how each tax uniquely distorts the free market.

As Rockwell writes in The Tax Reform Racket:“

Is there a need to reform taxes? Most certainly. Always and everywhere. You can always make a strong case against all forms of taxation and all tax codes and all mechanisms by which a privileged elite attempts to extract wealth from the population. And this is always the first step in any tax reform: get the public seething about the tax code, and do it by way of preparation for step two, which is the proposed replacement system.

Of course, this is the stage at which you need to hold onto your wallet.

Further selected quotes in Say No To Tax Reform.

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Hoppe is my Homeboy Teeshirt

by Stephan Kinsella on February 17, 2010

‘Nuff said.

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Nina Paley’s “All Creative Work is Derivative”

by Stephan Kinsella on February 15, 2010

This is an amazing animation by Nina Paley, “America’s Best-Loved Unknown Cartoonist” (and creator of the amazing animated (and free online) film Sita Sings the Blues, given rave reviews including 4 stars by Roger Ebert). Entitled “All Creative Work Is Derivative” (and blogged here on her blog), and concluding “All creative work builds on what came before,” the video is built from images of of statues and paintings at the Metropolitan Museum of Art in New York. As she explains on All Creative Work Is Derivative (Minute Meme #2),

Copyright control extends not just to verbatim copies, but to “derivative works.” This has led to censorship on a grand scale. For example, the seminal German silent film “Nosferatu” was deemed a derivative work of “Dracula” and courts ordered all copies destroyed. Shortly before his death, author J.D. Salinger convinced U.S. courts to censor another author who transformed his characters. And so on.

The whole history of human culture evolves through copying, making tiny transformations (sometimes called “errors”) with each replication. Copying is the engine of cultural progress. It is not “stealing.” It is, in fact, quite beautiful, and leads to a cultural diversity that inspires awe.

I learned of Nina’s work when she sent me a nice email, an edited version of which follows:

Hello Stephan,

I recently read “Against Intellectual Property” and liked it very much. It reminded me of some things I’ve written: Intellectual Property is Slavery and Redefining Property: Lessons from American History; also My Official Position on Copyright.

I especially enjoyed your unique twist on Trademark, that trademark suits should be brought by consumers against frauds, rather than by trademark “owners.” I haven’t thought it all through to form my own solid opinion yet, but I like the novel approach.

Last year I released my feature film, Sita Sings the Blues, under a copyleft license (CC-BY-SA).

I’m now artist-in-residence at QuestionCopyright.org, and do what I can to promote alternatives to copyright. (Actually I’m a copyright abolitionist, but many find that identification unpalatable.)

Anyway, thanks for the good book, I’m recommending it to my Free Culture buddies.

Update: See also this amazing, fascinating short documentary with Nina Paley, The Revolution Will Be Animated:

The Revolution Will Be Animated from Marine Lormant Sebag on Vimeo.

See also her Copying Is Not Theft “Minute Meme”:

[Mises; AM]

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Antiwar Interview: Kinsella on Bill of Rights, Intellectual Property

by Stephan Kinsella on February 14, 2010

see

KOL 035 | Antiwar Interview: Federalism, Bill of Rights, Constitutional Sentimentalism, IP (2010)

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Will Wilkinson and Brink Lindsey Get the Finger

by Stephan Kinsella on February 13, 2010

Interesting when people are hoisted by their own petard–it’s terrible when those who oppose the leviathan are accused of being motivated by bigotry, ain’t it?

FEBRUARY 12, 2010

Will Wilkinson and Brink Lindsey Get the Finger
Arnold Kling

from Ed Kilgore, of the Progressive Policy Institute.

Certainly, few self-conscious libertarians have much tolerance for racism, but they are encouraging a point of view about “welfare” that has long been catnip to racists. And that’s a problem for liberals. How can an alliance last in a climate where a progressive think tanker has to look down the rostrum at that nice Cato Institute colleague and wonder if he or she privately thinks the poor are “looter scum”;

People like Wilkinson, Lindsey, and myself have indeed spoken out against “welfare” of the auto bailout and the “looter scum” of the bailed-out financial industry. On the other hand, when people criticize my pro-immigration stance on the grounds that we will be adding to the welfare burden and thereby enlarging the state, my reply is that welfare is not the state enlargement that I fear. What I fear is the state’s control of education, health care, the financial industry, and so on.Ed Kilgore exemplifies what Thomas Sowell calls “using the poor as mascots.” That is, when a libertarian opposes a statist agenda, Kilgore comes back and accuses us of being racists and hurting the poor.

I am disappointed but not at all surprised to see this attitude expressed. In fact, I am glad to see this rhetoric out in the open. If the rest of the Progressive movement wants to rally to this flag, it helps clarify the situation for libertarians.

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Ilya Somin on Secession

by Stephan Kinsella on February 13, 2010

Somin’s overall take on secession is reasonable, but notice how he doesn’t consider the 600,000 people killed in the Civil War, or the option of not fighting that war, when he says that Northern victory was a “far better outcome” than Southern victory would have been. Anyway, no offense, preening anti-secessionist, pro-Lincoln “libertarians” such as Tim Sandefur.

Why the Issue of Secession Isn’t “Settled”

Ilya Somin • February 10, 2010 9:58 pm

In a recent post, co-conspirator Eugene Volokh argues that the Civil War did not settle the issue of the constitutionality and moral defensibility of secession. I made a detailed argument to the same effect in this 2008 post.

I’m not going to restate all my analysis here. But I will say that I don’t think that secession is either clearly unconstitutional or always morally wrong. I agree with Eugene that secession at this particular moment in American history is probably both infeasible and likely to cause more harm than good. I don’t think, however, that that will necessary remain true indefinitely.

In many federal systems, secession is an important safeguard for minority groups and a guarantee against excessive concentrations of power in the central government. Historically, at least some secessions have done great good, such as the “Velvet Divorce” between the Czech Republic and Slovakia in 1993, Norway’s early 20th century secession from Sweden, Finland’s secession from the Russian Empire, and the Baltic States’ 1991 secession from the USSR. The American Revolution was, of course, a violent secession from the British empire, one that most Americans surely believe to have been justified.

Not all secession movements are defensible. As I see it, their merits depend crucially on the nature of the regime they are seeking to secede from and the quality of the one they are likely to establish. For this reason, I am one of the relatively few Americans sympathetic to the general idea of secession who also believes that the Confederate secession effort of 1861 was utterly indefensible. The Confederates seceded for the deeply unjust purpose of defending and perpetuating slavery, a point that I discuss in detail here and here. For that reason, among others, their defeat and the resulting abolition of slavery was a far better outcome than a Confederate victory would have been.

For those who may be interested, I discussed many issues related to the pros and cons of secession in this series of posts in 2008 and 2009. It may be an interesting way to pass the time for federalism buffs confined to their homes by the latest iteration of “Snowmageddon.”

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Libertarian Papers, vol. 2 (2010): Arts. 5-7

by Stephan Kinsella on February 10, 2010

5. “Two Concepts of Rationality”, by Danny Frederick

6. “Is There an ‘Anomalous’ Section of the Laffer Curve?”, by Walter E. Block

7. “How Anticommonism ‘Cemented’ the American Conservative Movement in a Liberal Age of Conformity, 1945–64″, by Lee Haddigan

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In Honor of David Gordon

by Stephan Kinsella on February 9, 2010

and my Cajun heritage, and apropos nothing in particular, here is the joke “Illegal Cock Fight”:

The Louisiana State Police received reports of illegal cock fights being held in the area around Lafayette, and duly dispatched the infamous detective Desormeaux to investigate. He reported to his sergeant the next morning. “Dey is tree main groups in dis cock fightin’” he began.

“Good work. Who are they?” the sergeant asked.

Desormeaux replied confidently, “De Aggies, de Cajuns, and de Mafia.”

Puzzled, the sergeant asked, “How did you find that out in one night?”

“Well,” Desormeaux replied, “I went down and done seen dat cock fight. I knowed the Aggies was involved when a duck was entered in the fight.”

The sergeant nodded, “I’ll buy that. But what about the others?”

Desormeaux intoned knowingly, “Well, I knowed de Cajuns was involved when summbody bet on de duck.”

“Ah,” sighed the sergeant, “And how did you deduce the Mafia was involved?”

“De duck won.”

[A little humor from an old LRC post]

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Jeff Tucker Free Talk Live Interview on Open Information and IP

by Stephan Kinsella on February 9, 2010

Jeff Tucker was interviewed yesterday by Mark Edge, as part of his “Edgington Post Interview Series,” for his Free Talk Live radio show, about the Mises Institute’s “open information” approach (see Jeff Tucker, A Theory of Open, B.K. Marcus, Mises.org on iTunes U, Doug French, The Intellectual Revolution Is in Process). The interview is lasts about 24 minutes, and starts at 2:52:07 in the Feb. 8, 2010 show. Tucker makes some great points, such as his idea that perhaps the antitrust law prevented movie studios from owning the theaters and thus may have made them less likely to be willing to consider online distribution models; and his example of how the Cantor-Cox book, which was released for free online months before the paper version, helped to create a ready-made audience for the paper book.

[Mises; AM]

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