StephanKinsella.com

High School Senior’s Questions about IP

by Stephan Kinsella on October 12, 2009

[From Mises blog, Dec. 7, 2007]

I received an impressive inquiry from a high school senior: “I am contacting you to ask if I can interview you for my senior project paper, which is a persuasive paper about why copyrights are invalid and impractical. I will have between 5-10 questions regarding intellectual property for you to answer.” I said sure; and she sent on her questions, which were:

1. What would you say is the most powerful argument against copyrights and patents?
2. What would you respond with to someone who argues that resources do not have to be finite or scarce in order to be allocated as property?
3. How would you respond to Lysander Spooner’s argument that property is wealth that is owned, and wealth includes ideas since they can be manifested into tangible wealth?
4. What about the argument that people own their minds, so they own the mental products?
5. Some anti-IP people believe in a right to first sell. Would you say that the original creators should have a right to sell the creation first? Why or why not?
6. What would you respond to someone who claims that if there were copies all around, the original inventor wouldn’t get as much profit as he should have?

My replies are below.

Question 1. What would you say is the most powerful argument against copyrights and patents?

As I elaborate in In Defense of Napster and Against the Second Homesteading Rule and Against Intellectual Property (both available here), humans need to use scarce or “rivalrous” resources — for example, tangible things like land or food or clothing — to survive. The nature of these things is that only one person can use or control the resource. Thus, there is a possibility of conflict over the use of these things. For people to live peacefully and productively in the world, we need to be able to find ways to use scarce resources without fighting over them. This means that each scarce good–each thing that might be the subject of conflict–is assigned one unique owner, someone with the exclusive right to control that resource. The rules for determining who is the owner have to be objective, fair, and just, in order to be generally accepted and serve the function of reducing conflict. It is for this reason that ownership is thus assigned to the person with the best claim to the thing in question–the most objective “link” to it. This is the libertarian-Lockean idea of “first use”–whoever first possesses or uses a thing–that is, establishes objective property “borders” with respect to the resource–is the owner. Any other rule is non-objective or arbitrary. For example, if the first user did not have the best claim to the resource, then whatever rule you use to assign property rights, property is not secure because some latecomer could just take it from the current owner. So any property assignment rule at all presupposes the first-user idea–the idea that an earlier user, ceteris paribus, has a better claim than any other user. Which implies the first user — the homesteader — has the best claim of all. Any other rule in effect violates the notion that latecomers have an inferior claim to earlier users. For example, a thief who steals property is in effect a latecomer. And mere verbal decree is not sufficient either, for one or two reasons: first, because (with respect to unowned resources), it’s not an objective use of the thing; it does not establish any visible link; and any number of people could make such a claim, in contradistinction to first possession, which can only be done by one person, and which is objective and visible; and second, because (with respect to already owned resources) this amounts to theft, or a latecomer ethic.

Now, given this understanding, we can see that any just and peaceful and prosperous society requires the assignment of ownership rights in scarce resources in accordance with the libertarian homesteading or “first use” principle. Now ideas — creative works protected by copyright or inventive designs or recipes or processes of patent law — are not scarce resources. Any number of people can have a copy of a song; or can use the same method or design, with their own bodies and property. To assign rights in such things–called “ideal objects”–means setting up enforceable claims in these intangible things–but force is a tangible, real thing that can only be applied to other real (scarce) things. In other words, because ideas are scarce, assigning rights in ideas necessarily is accomplished by assigning ownership rights in scarce resources. So, for example, the holder of a copyright to a novel has a partial ownership right over the bodies and tangible property of everyone else in the jurisdiction, because he can stop them from using their bodies or property in a certain way. The owner of the patent for a mousetrap can stop you from using your own body and wood and metal to make a mousetrap having a similar design to his patented design. But as we have seen above, recognizing such rights contradicts the only just and objective property assignment rule, since it overrides the ownership rights already established in already-owned things. I homestead property, and own it; then someone else acquires some rights to control my property merely by a decree of the state, in effect, merely by their thinking of a way to use their own property, which is not “first use” of the resources they now claim ownership of.

So, in short, the problem with patent and copyright is that it amounts to theft of rights to scarce resources.

Question 2. What would you respond with to someone who argues that resources do not have to be finite or scarce in order to be allocated as property?

Assigning rights to non-scarce things necessarily infringes on rights to scarce things, since IP rights are enforced with force, real force, in the real world, against real things. For example, the copyright holder can force the “infringer” to pay money to him; or can get an injunction forcing him to stop using his body and (scarce) property in a certain way. Assigning rights to non-scarce things acts much like inflation of the money supply does: the more you do it, the more you dilute and reduce the value of real property (money).

Question 3. How would you respond to Lysander Spooner’s argument that property is wealth that is owned, and wealth includes ideas since they can be manifested into tangible wealth?

Wealth is too nebulous a term to be used here and is unnecessary. It appears to mean value; but as Hoppe and Rothbard show, value is not ownable or owned. The owner of property has no property right in the object’s value, since its value lies in how others’ appraise it. (Hoppe argues this in his TSC, as I note in my Against IP article, at text at note 79.) See also Rothbard’s explanation for why there are no rights to one’s reputation–because a reputation is what others believe about you, and you don’t own their minds or opinions. (I think this is in Ethics of Liberty.)

Question 4. What about the argument that people own their minds, so they own the mental products?

This line of reasoning is based on the confusing notion that creation is an independent source of property rights. This error is similar to the confused idea that we own things we mix our labor with because we “own” our labor. We own — have the right to control — various scarce resources, such as our bodies and other scarce resources we homestead or acquire from previous homesteaders. We do not own “labor”; labor is just an action, an activity of the body. To be sure, when one first uses unowned property, and thereby homesteads it, he is engaging in a type of “labor”; but we do not need to rely on the confusing metaphor that we “own” our labor. By working to emborder or possess an unowned resource, one thereby establishes a visible link with the property, thus establishing a better claim than any latecomer, i.e. ownership. This chain of reasoning does not imply or rest on the idea that we “own” our labor.

As for creation, it is often maintained that one can acquire ownership of things by either finding (homesteading), contract (acquiring it from a previous owner), or by creating the thing. But this is confused: creation is not an independent source of ownership. In fact, a bit of reflection shows that it is neither necessary nor sufficient. If you own a resource and re-shape it into some new, more useful, more valuable configuration (say, you “create” a mousetrap using your wood and metal; or you “create” a statue by carving up your hunk of marble), then you own the resulting “creation” simply because you were already the owner of the material that constitutes it. So it is not necessary to think of creation as a “source” of ownership rights. Likewise, if you carve a statue into someone else’s property, then you do not own the resulting statue; rather, the owner of the marble is entitled to have his marble back, and perhaps damages for trespass. So creation is not sufficient for ownership either.

In fact, the only legitimate ways of acquiring title to a given scarce resource is to either homestead it from its unowned state, or to contractually acquire it from someone who already owns it and who can trace his title back to an original act of homesteading. This fully exhausts all ways of coming to own scarce things. This is because matter cannot be created by man, but only rearranged.

Now let me note one other thing. Rothbard explains in Ethics of Liberty why there is not really an independent right to free speech; there are only property rights. There is no “right” to free speech that gives you the right to speak on others’ property–you must have the consent of the owner. And if you own property, you can do whatever you want on it, including speak–not because you have a “right to free speech” but because you can do whatever you want with your own property so long as you do not invade others’ property rights.

So back to your question: we do not own the mental products of our mind for several reasons. First, owning one’s body, just as owning property gives you in effect a (derivative) right to speak on it, allows you to use it to do useful things, such as come up with ideas, or even sell your services, or labor. There is no need to engage in the confusing fiction or metaphor that you “own” your labor, or you “own” the “products” of your mind. Second, “products of the mind” is far too vague of a concept. It is so broad that if property rights were granted in them, they would swamp and override all real rights in real things. And finally, if the products of your mind are scarce, you presumably own them because they result from reworking material you already owned (if not, as in the stolen marble example, you do not own it at all, but someone else does). And if they are not scarce, they are not the subject of property, since granting property in them is impossible, and can only be accomplished by eroding property rights in others’ things.

Question 5. Some anti-IP people believe in a right to first sell. Would you say that the original creators should have a right to sell the creation first? Why or why not?

I believe you may be referring to the doctrine of common law copyright. As a practical matter, if you have an idea or manuscript, you can use this to leverage payment to reveal it. But if you are foolish enough to let the information become public, it is too late to do this. As Benjamin Tucker noted: “You want your invention to yourself? Then keep it to yourself.” (see on this Wendy McElroy, Copyright and Patent in Liberty).

Question 6. What would you respond to someone who claims that if there were copies all around, the original inventor wouldn’t get as much profit as he should have?

Austrian economics teaches us that values are subjective, and that the only way to determine an objective price is on the market. See on this Rothbard’s Utility and Welfare Economics, e.g. The only way to know how much profit someone “should” make is to see what people are willing to pay them for. Part of the market is the need to incur costs of exclusion. If you don’t put a lock on your business, people will steal it. If drive in movie theaters didn’t incur the cost of putting little speakers for each car, then people would free ride by watching it from outside. To decide whether a given endeavor is worthwhile, one must take all costs into account, including costs of exclusion. The more creative find ways to exclude that have a low enough cost and that exclude a sufficient number of free riders so that the business can be profitable. For those entrepreneurial plans that have too high a cost, they should not be engaged in. So we see people finding ways to profit from their ideas, given the free rider problem–so rock bands give away their music for free (it plays on the radio, e.g.) so they develop fans who will pay to see them play live in concert (but even here, there are costs of exclusion–the ticket selling and enforcement mechanism, say). Or television shows are broadcast for free and paid for by advertisting. And so on.

[Mises blog post; Against Monopoly cross-post]

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Google Digital Library Plan Opposed by German Chancellor

by Stephan Kinsella on October 11, 2009

Let me highlight a few excerpts from Google digital library plan opposed by Angela Merkel: German chancellor opposes the internet firm’s attempt to put every book ever written online:

German chancellor Angela Merkel yesterday waded into the row over Google’s plans to build a massive digital library.

The move was a remarkable intervention from a leading world politician in a growing dispute about the threat posed by the internet, and Google in particular, to publishing companies, authors and also newspapers.

In her weekly video podcast, before the opening of the Frankfurt Book Fair this week, Merkel appealed for more international co-operation on copyright protection and said her government opposed Google’s drive to create online libraries full of scanned books.

“The German government has a clear position: copyrights have to be protected on the internet,” Merkel said, adding that there were “considerable dangers” for copyright protection online.

Isn’t this astonishing? I thought “the goal” of copyright was to promote the spread and growth of human creativity. Now it appears “the goal” is to protect copyright itself. This reminds of government school advocates who say they “believe in public school”; who oppose any attempt to reform or privatize public school because it might threaten public schooling–when the goal of public schools is supposed to be education. Google’s “plan would make millions of out-of-print books available online and thus would not cannibalise existing sales, as those books were not readily available to buyers. Google argues that it is increasing access to works that would otherwise never see the light of the day.” But the state fears the unregulated behavior of free people. Who knows what people might do with this information? If you let people freely connect and communicate in a digital world, the state’s copyright and other regulations might not even reach them! And we can’t have that!

So these atavistic brutes want to kept information locked up in musty paper because of a fear that some people might learn things without dropping a nickel in the Galambosian box. If they don’t understand it, if they can’t control it–Hulk smash! Doesn’t this recall the heartless zeal of drug warriors who are willing to deny suffering people medical marijuana because the only way to effectively outlaw recreational marijuana use is to allow no exceptions. And we have to prevent recreational marijuana use… don’t we? We have to protect copyright, don’t we? We have to have government education, don’t we? I mean, who can imagine the horrors of a dystopian world where people were free to use marijana; where they had hundreds of millions of books available any time, at their fingertips; where states are not able to brainwash and propagandize students in their little loyalty-factories.

[LRC cross-post; AgainstMonopoly cross-post]

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Eben Moglen and Leftist Opposition to Intellectual Property

by Stephan Kinsella on October 10, 2009

Archived comments below.

In my post An Open Letter to Leftist Opponents of Intellectual Property: On IP and the Support of the State, I noted that both conservative and libertarian IP advocates, and leftist IP opponents, all accept the idea that IP is a type of property right. The leftists oppose IP for this reason–because they are opposed to private property rights; and the libertarians favor IP because they are proponets of property rights. I noted Richard Stallman and Eben Moglen as examples of the former.

I just listened to Moglen’s speech below (google video link). He’s smart and has some good insights and criticisms here and there. But, although some hail the speech as “absolutely brilliant,” Moglen seems has no coherent underlying or principled theory other than vague anti-corporatism and an inconsistent belief in “free speech” combined with the idea that in today’s age, this means free software, almost free hardware, and free, unlimited bandwidth–he says this is everyone’s “birthright” (as socialist Finland believes, too–it recently enacted legislation making broadband access a legal right). I didn’t jot down all the problems I noted when I listened to it, but, for example, he opposes regulating the EM spectrum as a property right–he seems to think it has been treated as private property since the federal government nationalized it decades ago, and he seems not to realize that despite technological advances there is of course still scarcity and thus the need for property rights; he seems to be in favor of copyright, and even some form of patent (if I did not misunderstand his comments); he speaks of upholding the Jeffersonian goals of the Constitution’s IP clauses, which is both naive and positivistic; he tosses off confused comments about how the nature of economics has changed. He is rightly extremely cynical about the corruption and incompetence of Congress, even though he does not seem to oppose the state on principle or even its IP law and its positivistic Constitution, and even though he seems to want to trust the same state to provide everyone with unlimited, free bandwidth as their “birthright”, and to use the power of the state to outlaw the charging of price for bandwidth services (in this he seems to go beyond even the net neutrality advocates goals).

If only the leftist opponents of IP would shore up their views with a more realistic view of politics and the nature of the state and a better appreciation for the indispensability of private property rights and Austrian economics.

(google video link)

[Mises cross-post; AgainstMonopoly cross-post]

Archived comments:

Comments (19)

filc

I must be missing something. I cannot get the source URL for the video. Can you provide a link please, I’d like to share this.

Published: October 10, 2009 6:31 PM
filc

On second thought I change my mind. I was going to send this to a left friend of mine but I don’t need to give him more ridiculous ammo. Though I would say there are some valuable points in this video.

Published: October 10, 2009 7:48 PM
Andrew_M_Garland

How can I have a right to bandwith? Is someone distributing bandwidth equally to everyone on earth?

Maybe Moglen means that I have a right to use a gun to threaten whomever I wish until they give me a certain amount of bandwidth. No, he couldn’t mean that.

Published: October 10, 2009 7:54 PM
Silas Barta

You’re … seriously surprised that someone else sees the IP and EM spectrum rights are closely related, and sink or swim together? You know, after I explained it to you nine or ten times?

Published: October 10, 2009 7:58 PM
newson

to stephan kinsella:
that fact that silas barta is fixated on the ip/em spectrum nexus should be a warning to you. wrong way, go back!

why on earth should i have a monopoly right to interference-free use of my transmitter to reach clients? If a neighbour uses his ham-radio on the same wavelength, does he cause me physical harm? no, he damages my business relationship with my listeners.

when the lone cobbler in town finds boots-are-us have opened in the mall, he is mightily pissed off. but has any aggression occurred to his person? or just his erstwhile cozy business model? there is no right to clients.

besides, this em scarcity thing seems contentious, even on a technical level. what about beaming signal via focused laser beam from one point to another? office-to-office streaming. this may not interfere with anyone else using the same frequency, unless they’re sharing the exact same corridor (and how many pencil-wide beams could you actually fit in a city?)

everybody is permitted to talk (audible transmission) at the same time by the law. good manners and etiquette dictate behaviour in group situations. no em laws needed, thank you very much. when my neighbour’s transmitter fries my gonads through his powerful transmission-tower (physical damage), i’ll see him in court to answer a plain-vanilla tort charge.

Published: October 10, 2009 9:41 PM
Silas Barta

Thanks, newson, exactly what I was hoping a Kinsella supporter would say.

I think my work here is done.

Published: October 11, 2009 12:17 AM
Stephan Kinsella

Silas, I’m glad to see that you are consistent and oppose both EM spectrum rights and IP rights.

Oh, wait–

Published: October 11, 2009 12:47 AM
newson

imagine i move to malibu beach (many years ago.) i buy a block some way back from the shoreline (mindful of spooky global climate change) and enjoy magnificent ocean views.

along come mickey rourke and kim basinger and build mansions in the beach strip in front of my house.

now i am really pissed off! the visible em spectrum that i was receiving from the breakers and the sand is now blocked by em transmission that i don’t want, mickey’s roof-tiles and kim’s air-con unit.

why didn’t i buy rights to the visible em spectrum before building? how could i have been so stupid? what folly! but i sure deserve compensation for the despoilment of my visible em reception. get my attorney on the phone, now!

Published: October 11, 2009 1:34 AM
Ribald

I find the IP debate interesting in many respects, such as the question of what form intellectual property takes in the free market.

For instance, a patent for “cars” is currently rejected because the idea is “too broad”, but is it any less worthy of protection just because it is broad? Should algorithms be patent-worthy? Living organisms? Is there a better way of determining who invented what than a government-created patent system? Is someone’s medical history or credit card number IP? How different does an invention have to be before it qualifies as distinct from someone else’s patent? Should it be a crime to illicitly copy and distribute IP, to profit from its use/sale, or both? Should IP exist only in the abstract, as something which we are willing to pay a price to protect, but which it is legal to acquire and share (free speech), regardless of who “owns” it, or should it exist in the same manner of property rights that cover tangible goods?

Do free market principles tell us the answers to these questions, or do we have to accept a mutual consensus?

Published: October 11, 2009 5:39 AM
Martin OB

In my opinion, the EM spectrum should be regulated as a form of acceptable noise levels, just like with sound.

Everyone should have the right to emit whatever EM frequencies he likes in his own property, and to receive a low enough EM radiation level from his neighbors. How low is enough? That’s analogous to the question of sonic noise levels. They’ll have to agree on some acceptable level.

Then, if you want to set up a radio station, you ask your neighbors for permission to “pollute” their property with your EM radiation. If your radio station is good, they may let you for free. Otherwise you may have to pay.

This should be the default procedure. Private fenced communities could, of course, have more conventional internal EM regulations.

So, I’m very close to newson’s last paragraph (EM is like talking), except I don’t see why you should have to wait until your neighbor “fries your gonads”.

If you have some very sensitive equipment and your neighbor sends a cute little EMP, even if it doesn’t harm your body, you arguably have a right to complain about the damage to your property. And what if he doesn’t actually destroy your equipment, but he renders it useless because of constant, massive EM noise? You have spent money in your equipment and now you can’t use it because of your EM-noisy neighbor sending his EM noise into your property.

On the other hand, it may be the case that you build an *extremely* sensitive piece of equipment with no EM insulation, and then you neighbor buys an electric lawnmower which damages your equipment. It may be reasonable for you to complain about that, but it’s also reasonable for him to claim he has a right to use an electric lawnmower in his property. So, tort law may be a solution, but only if jurisprudence or implicit agreement is already present about what EM noise levels are reasonable.

This is NOT the same as what happens with the lone cobbler, because in this case, as newson says, no property of his is damaged. His clients are not his property.

Notice, by the way, that it’s not the radio station owner who has a right to complain about interference; it’s the radio listeners. Why? because the radio station is not prevented from emitting its EM radiation; it’s the radio receivers who are prevented from using it. Of course, the radio station owner could buy a radio receiver and complain as a listener of himself, but he couldn’t seek reparations for his lost audience.

I think it’s pretty clear this is nothing like IP. It’s just a tricky aspect of (physical) property rights.

Published: October 11, 2009 6:24 PM
newson

i concur with martin ob, whose reply is more nuanced and articulated than mine.

Published: October 11, 2009 11:57 PM
NateS

As an electrical engineer and having taken many classes on electromagnetic communication, in my opinion the EM spectrum can transmit a nearly unlimited amount of information, far beyond any problems imposed in our current world.

If some jerk rings a gong, then in the future I will be more precise about the timing of my gongs. I will ring twice, I will ring in the note of E, I have a nearly infinite number of permutations for him to try and preempt. The interferer will always have to imitate a previous signal and thus will lack the ability to interpret the packet of information explaining when future gong will ring, how many times it will ring, at what tone, etc. etc.

Then you have the problem of determining the actual economic viability of interfering with someone else’s signal. The sophistication needed to beat even the most rudimentary encryption efforts would far outstrip any usefulness in a market.

The example of the EM spectrum seems like a worse than acceptable justification for IP.

Published: October 12, 2009 12:00 AM
Stephan Kinsella

NateS: “As an electrical engineer and having taken many classes on electromagnetic communication, in my opinion the EM spectrum can transmit a nearly unlimited amount of information, far beyond any problems imposed in our current world.”

As an electrical engineer also, I disagree. Of course the EM spectrum and bandwidth is finite. In any event, “nearly unlimited” is not unlimited, meaning there is scarcity.

but this is not about the EM spectrum. That is an independent problem. The IP issue is easy. EM spectrum rights are not so clear. I lean to the view that these rights are justified, as explained in “Why Airwaves (Electromagnetic Spectra) Are (Arguably) Property.”

Published: October 12, 2009 1:18 AM
NateS

What would stop me from homesteading the entire spectra?

You are essentially building a model for which someone could actually impede and block all development in the EM spectrum by claiming they were there first.

Easements are a result of imperfectly applied property rights, and public property, a weak justification for creating arbitrary property rights over things that are being given away (energy signals).

Published: October 12, 2009 1:28 AM
R.P. McCosker

“[B]oth conservative and libertarian IP advocates, and leftist IP opponents, all accept the idea that IP is a type of property right. The leftists oppose IP for this reason–because they are opposed to private property rights; and the libertarians favor IP because they are proponets of property rights.”

Interesting parallel here to anarchism: Some favor it as a way to abolish private property, and others favor it as a way to uphold property. (Which reminds me: Anarchism can only function within some kind of social framework. Surely that framework must be considered a political system of sorts.)

From a propertarian-libertarian perspective, IP is ethically wrong because, by definition, operates by confiscating certain uses of extant tangible property. And as time passes more and more uses of one’s extant property are seized by the coercive agency of government and redistributed to IP “holders.” Anti-IP collectivists don’t get that IP doesn’t create private property, but rather redistributes it, when what they really want to do is abolish it altogether.

Published: October 12, 2009 12:08 PM
Michael A. Clem

What would stop me from homesteading the entire spectra?

Well, for one thing, it would take a whole heck of a lot of transmission power to transmit over the entire spectra, unless you’re specifically limiting it to a very short range. What’s the economic incentive for doing that? How would it be profitable?

Published: October 12, 2009 1:39 PM
kmeisthax

I find it hilarious that we’re trying to justify property rights to emit something that violates other people’s property.

Better idea: you can emit what you want so long as no one else is harmed and complains.

If someone complains that your emissions are disabling their rightful use of their land, or them being able to hear other frequencies, they have a right to complain and you have a moral imperative to stop transmitting. Why? Because your emissions are trespassing -their- land.

If you are interfering with an active transmission of someone else’s, others are also allowed to complain about your interference, and you must attenuate your signal until it is no longer invading their land. It’s the same as dealing with regular noise pollution.

Published: October 12, 2009 4:58 PM
Martin OB

kmeisthax:
Welcome to the club. There’s at least three of us here 😀

Published: October 12, 2009 7:02 PM
Vanmind

“Anarchism can only function within some kind of social framework. Surely that framework must be considered a political system of sorts.”

I don’t think anarchic is meant to imply apolitical. Rather, I think it’s meant to imply that no pretense of rule-over-it-all is to be tolerated. Politics & disputes are still resolvable under anarchy, just in different ways that resort less to coercion by way of such rule-over-it-all pretense.

Published: October 12, 2009 9:51 PM

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Obama Administration Worse on IP Than Bush

by Stephan Kinsella on October 9, 2009

As noted in this alert by the law firm Fulbright & Jaworski, the U.S. Patent and Trademark Office (PTO) has announced that it is rescinding controversial rules promulgated in 2007 that have been ensnarled in litigation since then. The rules sought to limit the number of patent claims per patent application, and the number of continuing applications that could be filed. As I noted in Radical Patent Reform Is Not on the Way, these changes are not radical, as the patent privileges lobby paints them. But the very fact that they were so vociferously opposed by the organized patent bar, such as the AIPLA, indicates that these changes would probably have been in the right direction. Basically, anything the AIPLA is against, the libertarian should be for.

Following the rule that each President is worse than the last and eventually makes you nostalgic for his predecessor, here we have a case where the Obama administration is fighting one of the few halting, tentative efforts of the Bush administration to actually improve matters. As a PTO press release stated, the current PTO Director “has signed a new Final Rule rescinding highly controversial regulations, proposed by the previous administration, that patent applicants felt unduly restricted their capacity to protect intellectual property.” As Fulbright’s alert notes, “The exact scope of the PTO’s procedural rulemaking authority, a highly contested issue in this dispute, remains unresolved. The rescission of these rules may prove to be a tactical decision in a quest for greater PTO rulemaking authority. Despite the PTO’s emphasis that these rules were proposed by the previous administration, the current administration, via Secretary of Commerce Gary Locke, is actively lobbying for substantive rulemaking authority at the PTO.”

[LRC post; AM post]

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Obama Deserves the Nobel–or Two!

by Stephan Kinsella on October 9, 2009

Manuel, Lew, David — Yes, we should not be surprised at this. Hans Hoppe once noted that f you want to win the Nobel peace prize, it helps if you are a mass murderer; if you want to win the economics Nobel prize, it is always of advantage if you have contributed to ruining various countries’ economies or you have written completely irrelevant mathematical treatises that are of no concern to anyone whatsoever (he also notes that the economics prize is donated by the Swedish central bank and the committee members are life-long appointees and except for two years social democrats have run the show so that it is roughly predictable who can possibly win the prize; thus, James Buchanan has advocated a 100% inheritance tax and is hailed as a free marketeer, so he can win; Milton Friedman, a free marketeer who fought for paper money all his life, endorsed the negative income tax (guaranteed income), educational vouchers (like food stamps for education), can of course win. I.e., socialists can win and be presented to the public as free marketeers. See Hoppe’s Mises University 2001 lecture “Mises and the Foundation of Austrian Economics“, at about 1:10:20 to 1:12:. See also Hoppe’s ruminations on the Nobel in economics here.)

I can’t say I relish confronting even more smug, preening Obamaites, though. One solution would be to just award Obama the Nobel prize in economics too–that would help smash the credibility of both prizes.

Update: See Roderick Long’s post from 2003:

A lot of people were outraged when Yasser Arafat won the Nobel Peace Prize in 1994 – a choice which people are still protesting.

I’m no fan of Arafat, but look at the list of folks he shares that dubious honour with. There are certainly some good people on that list (including, I believe, the only libertarian: French economist Frédéric Passy, recipient of the very first prize in 1901, and perhaps the only person ever to accuse Gustave de Molinari of not being sufficiently libertarian!), but it also includes such pestilent warmongers as:

Theodore Roosevelt – 1906
Woodrow Wilson – 1919
Henry Kissinger – 1973
Mikhail Gorbachev – 1990As far as I’m concerned, the Nobel Peace Prize became meaningless as of 1906. Arafat is welcome to it.

[LRC]

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Ticket Me, Goddamnit!

by Stephan Kinsella on October 8, 2009

I published an article entitled “Ticket Me, Goddamnit!” in 1989 , when I was in law school, in an underground LSU ‘zine, The Wonderland Times (PDF; text below). I submitted it under the title “Radar Traps, Ticket-Fixing and White Trash,” but the editor added the colorful title at his own discretion. When I showed it to my mom, she freaked out. I was still being weaned off of Randianism–hence stock phrases like “Soviet Russia”–but I was a budding anarchist.

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Ticket Me, Goddamnit!

By N. Stephan Kinsella
October 23, 1989

The Wonderland Times

A few weeks ago, I was driving on the Interstate with my girlfriend, heading for Covington to attend a friend’s wedding. I was going at least 74 miles per hour. I wasn’t late or anything like that; I was just driving fast. I noticed a shape up ahead, then, realized it was a police car parked on the shoulder. Just as I passed him, slamming on my brakes in a desperate attempt to slow down, he zapped me with his radar gun. (My Cobra radar detector started buzzing like a mad hornet–helluva lot of good it did me.) [continue reading…]

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Interesting and Notable Words and Phrases of the Slate Podcast Literati: October 8, 2009

by Stephan Kinsella on October 8, 2009

Latest notable terms from this week’s Slate Culture Gabfest and Slate Political Gabfest (feel free to email me suggestions or leave them in the comments to the main page):

arrogate [PG10-9-09]
materiel [JD, PG10-9-09]
slattern [SM, CG10-7-09]
sui generis [SM, CG10-7-09]
totem [SM, CG10-7-09]
transom [DS, CG10-7-09]

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Simultaneous Invention and Carbon Paper

by Stephan Kinsella on October 7, 2009

Interesting post on Wired, Oct. 7, 1806: Do You Copy? Carbon Paper Patented, about Englishman Ralph Wedgwood, who received “the first patent for carbon paper.” But this case only shows that simultaneous invention is common, and that inventions usually come one way or the other. As the report notes, Wedgwood’s “work seems to duplicate that of Italian inventor Pellegrino Turri”:

Turri in Italy had by 1808 completed an early typewriting machine he had been working on for several years. It, too, was for use by the blind and relied on some form of carbon-impregnated paper. So, his work was more or less simultaneous with Wedgwood’s.

Also,

Scottish engineer James Watt, of steam-engine fame, had invented a tissue-copying process for business correspondence in 1779. But it required special inks and fluids and was a wet process for the user, so it didn’t catch on.

[AM cross-post]

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“F*ck you, Milton Friedman”

by Stephan Kinsella on October 7, 2009

Milton Friedman on Intolerance, Liberty, Mises, Etc.

Hey, I didn’t say it. This dude did:

F*ck you, Milton Friedman.

January 31, 2008 – 2:00 am Going forward, I shall refer to the day on which I prepare my family’s tax return, which this year falls on January 30, as F*ck Milton Friedman Day.

Friedman, for all of his great contributions to economic theory and advocacy of the free market, was also instrumental in developing the Federal government’s most efficient means of confiscating the income of Americans with a minimum of protest: the withholding tax. Prior to the 1940s, citizens paid taxes in a lump sum every March. The 1913 tax act, which was adopted following the ratification of the 16th Amendment, originally called for withholding as well, but taxpayers expressed great displeasure at money being taken out of their pay envelopes before they even received them. The withholding provision was struck a few years later.

The problem with annual lump-sum payments is that it proved very difficult for the IRS to ensure it received all of the revenue that citizens were obligated to pay. Furthermore, it hampered the government’s ability to fund operations throughout the year. Imagine getting just one paycheck every year, covering your entire annual salary. You would likely budget your money very carefully to ensure it covered your expenses throughout the year. On the other hand, it would also give you the opportunity to invest some of that money so it could earn interest until you needed it to pay later expenses. In retrospect, that’s probably not a bad way for government to operate as well.

The Feds seemed to realize this, so to raise revenue during the year it sold “tax anticipation notes” to taxpayers to generate interest to help pay their tax bill the following year. This allowed taxpayers to meet their tax liability using less money than if they paid out-of-pocket when the bill came due.

With the country’s entrance into World War II, the government was faced with skyrocketing expenditures. Congress adjusted the tax rates from a heavily progressive system that mostly impacted the rich into more moderate brackets that imposed obligations on nearly everyone. Within three years following the attack on Pearl Harbor, the number of tax returns received by the IRS increased more than four-fold. Had the lump-sum payments continued, the entire system would have collapsed under the effort of ensuring tax obligations were met with every return. Withholding taxes at the source—by conscripting employers to serve as the government’s revenue agents—was the most effective method to protect the government’s revenue stream. In 1942, Friedman, then working in the Treasury Department, devised a new withholding plan. But the challenge of selling it to a public which had roundly rejected the previous scheme remained.

And like any good bureaucrats and politicians, they used the time-honored trick of snake-oil salesmen everywhere: they lied about it.

The key strategies used to obtain support for income tax withholding in 1943 all entailed political transaction-cost augmentation. Government officials artfully employed national defense language, tax-cost information, and promises of “tax forgiveness” to engineer support for a withholding system at root designed to enhance and protect government revenue for all times to come. The above-noted conflict between the government’s actual objectives and its publicly promoted objectives formed only one part of a systematic pattern of transaction-cost manipulation . . .

Treasury officials repeatedly testified to Congress that such withholding of income taxes–current collection at the source–represented “no additional tax.” On dozens of occasions, Treasury official Randolph Paul and other government spokesmen testified:

This collection at the source mechanism is nothing but a mechanism for collection. It is not an additional tax. … It merely speeds up the collection (U.S. House Hearings 1942, vol. 1: 100).

It should be kept in mind that collection at the source does not in itself increase or decrease the tax liability of the taxpayer (U.S. House Hearings 1943: 11).

Given the expert witnesses’ knowledge of present value, statements so seriously misleading to Congress and the public could not have been inadvertent.

Because it replaced interest-bearing notes with a pay-as-you-go system, the withholding tax did represent an additional tax on the public, by taking money before it even reached taxpayers’ pockets to be used by the government. Only when taxpayers filed their returns could they determine if they paid too little (and thus would have to send even more money to the IRS) or too much (and thus receive a refund, although the Treasury did initially suggest that interest be paid on any money returned). And with future dollars worth less than the present value of the money taken by the government, taxpayers would lose even more each year.

The Treasury Department acknowledged all this in hearings before Congress, yet insisted that withholding would not only impose no additional tax burden, but was merely a convenience for patriotic Americans to meet their obligations and support the war effort. And these same obfuscations were parroted by members of Congress during floor debates. Oppose such a sensible scheme, and you allow the Huns and Japs to win.

Sixty-five years later the government still gets its loot via the withholding tax, and despite many proposals to eliminate or at least greatly simplify the process, it remains the single greatest enabler of an ever-expanding state. As Murray Rothbard wrote about Friedman in 1971:

Only the Friedmanite withholding tax has permitted the government to use every employer as an unpaid tax collector, extracting the tax quietly and silently from each paycheck. In many ways, we have Milton Friedman to thank for the present monster Leviathan State in America.

Friedman did later express his regrets at helping bring about the withholding tax, as evidenced in this interview with reason’s Brian Doherty in 1995:

It was a very interesting and very challenging intellectual task. I played a significant role, no question about it, in introducing withholding. I think it’s a great mistake for peacetime, but in 1941-43, all of us were concentrating on the war.

I have no apologies for it, but I really wish we hadn’t found it necessary and I wish there were some way of abolishing withholding now.

Yeah, me too. And while I stand to repatriate a significant chunk of my income from the Leviathan State this year, when I click the File button in TurboTax I’ll remember to honor the man who made it necessary in the first place: f*ck you, Milton Friedman.

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Kinsella Interviewed by YAL

by Stephan Kinsella on October 7, 2009

KOL015 | “Interview by Matt Cockerill of Young Americans for Liberty” (2009)

I was interviewed recently by Matt Cockerill of Young Americans for Liberty. Our interview covered several topics, such as minarchism vs. anarcho-libertarianism, the non-aggression principle, gay marriage, restitution vs. retribution, intellectual property, and pessimism and activism. Here are the audio file; the Youtube version is below:

[LRC cross-post]

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Hoppe on the Nobel Prize

by Stephan Kinsella on October 7, 2009

Jesse Walker’s Reason blog post, Memo to Stockholm, references Timothy (Wirkman) Virkkala’s suggestions to thoughts about the Bank of Sweden’s upcoming Nobel Memorial Prize for Economics. I posted a comment there: Hans-Hermann Hoppe notes in an interview:

among Austrian economists there has been some speculation why Hayek’s recognition came so late (in 1974). One highly plausible explanation is this: If the prize is awarded for the development of the Mises-Hayek business cycle, then as long as both Mises and Hayek are still alive you can hardly give the prize to Hayek without giving it also to Mises. Yet Mises was a life-long opponent of paper money (and a proponent of the classical gold standard) and of government central banking—and the prize money for the economics “Nobel” was “donated” by the Swedish National Bank. Mises, then, so to speak, was persona non grata for the “donors.” Only after Mises had died in 1973, then, was the way free to give the prize to Hayek, who, in contrast to his “intransigent” master and mentor, had shown himself sufficiently willing to compromise, “flexible,” and “reasonable.”

Hoppe notes in another interview

A&K: Supposing you sat on the Nobel Prize committee for economics, who would you consider deserves the Prize—please exclude yourself. HHH: Anyone of the leading lights associated with the Ludwig von Mises Institute. However, the nominating committee is filled with statists, and the prize itself has been established by the Swedish Central Bank, and so, given the fact that Misesian economists are uncompromising free-marketeers and oppose in particular any form of monetary socialism (central banks), their chance of ever winning the prize is virtually zero. A&K: Why would you nominate them? HHH: Because Misesian – Austro-libertarian – economists have the best grasp of the operation of free markets and of the detrimental effects of government (states) on the formation of wealth and general prosperity. This is illustrated by the fact that Mises, and those economists following in his footsteps, have by far the best record in predicting the outcome of socialism, of the modern redistributive welfare-state, and in particular of government-controlled paper-money regimes and of central banking.

Jesse Walker mentioned to me that Hayek didn’t publish The Denationalization of Money until after he won his Nobel, and wondered if Hayek really supported central banking at the time he collected the prize. Comments?

Update: A friend told me Friedman was in favor of Mises getting a Nobel; I expressed disbelief, so he quoted to me from p. 353 of Ebenstein’s Hayek bio:

Friedman has written in response to a query from Mark Skousen: “I believe Ludwig von Mises was certainly of a quality that would have made him an entirely appropriate recipient of a Nobel Prize” in Economics (Friedman letter to Mark Skousen, March 5, 1996).

I don’t get this. How can Friedman think this if Mises’s methodology was so much at variance with Friedman’s positivism? See, e.g. Friedman’s comments, as quoted on p. 273:

In 1995, Friedman made the following comments about Hayek’s and particularly Mises’ methodological positions:

I never could understand why they were so impressed [at LSE] with the lectures that ended up as Prices and Production, and I still can’t. As of that point, he [Hayek] had not freed himself from the methodological views of von Mises. And those methodological views have at their center that facts are not really relevant in determining, in testing, theories. They are relevant to illustrate theories, but not to test them, because we base economics on propositions that are self-evident. And they are self-evident because they are about human beings, and we’re human beings. So we have an internal source of final knowledge, and no tests can overrule that. Praxeology.

That methodological approach, I think, has very negative influences. It makes it very hard to build up a cumulative discipline of any kind. if you’re always going back to your internal, self-evident truths, how do people stand on one another’s shoulders? And the fact is that fifty, sixty years after von Mises issued his capital theory–which is what’s involved in Hayek’s capital theory–so-caled Austrian economists still stick by it. There hasn’t been an iota of progress.

It also tends to make people intolerant. If you and I are both praxeologists, and we disagree about whether some proposition or statement is correct, how do we resolve that disagreement? We can yell, we can argue, we can try to find a logical flaw in one another’s thing, but in the end we have no way to resolve it except by fighting, by saying you’re wrong and I’m right.

On the other hand, if you take more like a Karl Popperian approach, an approach which says what we do in science is to offer hypotheses about the consequences of certain events and, if we disagree, we test those by trying to seek empirical evidence that contradicts our predictions–if you and I disagree, we have another way to solve our problems, resolve our differences. I say to you, what facts can I find that will convince you I was right and you were wrong. You say to me, what facts can I find that will do the opposite. Then we go out and observe the facts. That’s how science progresses.

Now, as I said, I believe that Hayek started out as a strict Misesean, but he changed. The more tolerant atmosphere of Britain, then subsequently of the U.S., and his exposure to a wider range of scholars, led him to alter that position.

Does this sound like someone who would respect Mises enough to think he deserves a Nobel Prize?

[Mises cross-post]

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New Kindle Adds International Service Common Sense: Can Kindle

by Stephan Kinsella on October 7, 2009

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