StephanKinsella.com

My article, Beware the Trans-Pacific Partnership: It’s Not About Free Trade, was published yesterday at BAMSouth. Unfortunately, some free market thinkers seem to be in support of the TPP, e.g. Tyler Cowen, some people at Cato, etc. (see Cato vs. Public Citizen on IP and the TPP).

Reprinted at FEE.org.

Update: See Jeff Tucker, This Trade Treaty Got Better when the US Bailed

Related links:

• Longer copyright terms, stiffer copyright penalties coming, thanks to TPP and ACTA…
• Looking Beyond TPP: US & EU Planning More Bad IP Rules In ‘US-EU Free Trade Agreement’
• Intellectual Property Rights: A Critical History and US IP Imperialism
• KOL110 | Ed and Ethan Show: Trans-Pacific Partnership
• Tell Congress: Oppose Fast Track for the TPP (EFF)

Full text:

[continue reading…]

Kinsella on Liberty Podcast, Episode 182.

In January 2014, Stefan Molyneux (of FreeDomain Radio) and I had a discussion with Harrison Fischberg about the foundation of libertarian ethics. I just realized that I never put this on my podcast feed so—here it is.

Podcast (kinsella-on-liberty): Play in new window | Download (Duration: 55:19 — 67.4MB)

Some fun old LewRockwell.com posts from a while back—which I was reminded of by this recent article: Malta Offers Citizenship and All Its Perks for a Price: “But the residency requirements, meant to make the program more palatable, are only increasing the consternation among critics, who say the program has resulted in the sale of citizenship to the global 0.1 percent.”

Update: Trump says $5m ‘gold card’ immigration visas will ‘sell like crazy’; US Commerce Secretary claims many takers for $5 million Gold Cards, says 1,000 sold in a day; tweet

Immigration Idea (Sep. 22, 2004)

How about this compromise: we remove all barriers to immigration except one: we charge a fee. I propose we charge somewhere between $1 million and $10 million per family. That way you guarantee you get fairly decent (non-criminal, educated, successful, civil, etc.) quality immigrants.

[continue reading…]

I’ve explained part of my intellectual progress to libertarianism before. ¹ On occasion I’m asked about my views on philosophy, Ayn Rand/Objectivism, and religion. So a short précis is in order.

I was born in 1965 in Louisiana and attended private Catholic schools. I a good student, bookish, and loved philosophy and science. I was very interested in religion and was very devout; I was an altar boy for several years. For a while I was reading books on various occult or pseudoscientific topics, e.g. pyramid power, Nostradamus, Chariots of the Gods, how to cast spells, and the like. I never really believed it, I think (though I did try a few spells), but it stoked my imagination, just as Star Wars and sci-fi and novels and comics did. [continue reading…]

1.  How I Became A Libertarian, LewRockwell.com, December 18, 2002; published as “Being a Libertarian” in I Chose Liberty: Autobiographies of Contemporary Libertarians (compiled by Walter Block; Mises Institute 2010). See also The Greatest Libertarian Books. See also other biographical material. [↩]

My article New Rationalist Directions in Libertarian Rights Theory, originally published in the Journal of Libertarian Studies in 1996, ¹ [now appearing in updated form as “Dialogical Arguments for Libertarian Rights,” in Stephan Kinsella, Legal Foundations of a Free Society (Houston, Texas: Papinian Press, 2023)], which had previously been translated into Dutch, has now been translated, by João Marcos Theodoro (revisão de Marcos Paulo Silva do Nascimento), into Portuguese, as Novas Direções Racionalistas nas Teorias Libertárias do Direito. This article discusses and summarizes Hoppe’s argumentation ethics defense of libertarian rights, ² my complementary estoppel-based defense of rights, ³ and related ethical/normative theories. The article served as the initial basis for two Wikipedia pages: discourse ethics and argumentation ethics.

Nowadays, everyone knows me for my IP views, but this is my true interest and passion.

To date, my writing has been translated into fourteen languages.

1. Vol. 12, No. 2, Fall 1996, pp. 313–26.[↩]
2. See my Argumentation Ethics and Liberty: A Concise Guide.[↩]
3. See KOL181 | Tom Woods Show: It Is Impossible to Argue Against Libertarianism Without Contradiction and links collected there.[↩]

Kinsella on Liberty Podcast, Episode 181.

I discussed argumentation ethics with Tom Woods on his show today:

Ep. 370 It Is Impossible to Argue Against Libertarianism Without Contradiction

By Tom Woods / March 31, 2015 / Podcast

Stephan Kinsella discusses the argumentation ethics of Hans-Hermann Hoppe, who argues that only libertarian norms can be argumentatively.
READ MORE

Tom cleverly chose as the title for the episode a provocative one reminiscent of the bold title of Hoppe’s Liberty article,  “The Ultimate Justification of the Private Property Ethic” (September 1988).

See also Tom Woods on the Origin of Rights and Hoppe’s Argumentation Ethic

I’ve discussed it several times in the past in audio and text. See, e.g.:

• Kinsella, “Argumentation Ethics and Liberty: A Concise Guide,” Mises Daily (May 27, 2011)
• Kinsella, “A Libertarian Theory of Punishment and Rights,” “Dialogical Arguments for Libertarian Rights,” and “Defending Argumentation Ethics: Reply to Murphy & Callahan,” all in Legal Foundations of a Free Society (Houston, Texas: Papinian Press, 2023)
• “Hoppe’s Argumentation Ethics and Its Critics“
• “Revisiting Argumentation Ethics“;
• KOL155 | “The Social Theory of Hoppe: Lecture 3: Libertarian Rights and Argumentation Ethics”
• “Argumentation Ethics, Estoppel, and Libertarian Rights: Adam Smith Forum, Moscow”
• “Libertarian Legal Theory: Property, Conflict, and Society: Lecture 1: Libertarian Basics: Rights and Law”
• “Libertarian Legal Theory: Property, Conflict, and Society: Lecture 2: Libertarian Basics: Rights and Law-Continued”
• “Argumentation Ethics and the Philosophy of Freedom,” by Frank van Dun
• “Argumentation Ethics” (Wikipedia)
• The A priori of Argumention, video introduction by Hoppe

Update: response by Bob Murphy here: Stephan Kinsella Discusses Argumentation Ethics With Tom Woods. For more: see Defending Argumentation Ethics: Reply to Murphy & Callahan, Anti-state.com (Sept. 19, 2002) (wayback version) (reply to Bob Murphy and Gene Callahan, Hans-Hermann Hoppe’s Argumentation Ethic: A Critique, Anti-state.com (Sept. 19, 2002; wayback version; more recent version at JLS; Block’s rejoinder); debate discussed in this forum).

Podcast (kinsella-on-liberty): Play in new window | Download (Duration: 50:25 — 46.2MB)

Kinsella on Liberty Podcast, Episode 180.

Jeff Tucker and I discussed IP and my original Against Intellectual Property article. The video can be seen here, and it’s embedded below:

Spreecast is the social video platform that connects people.

Check out Liberty Classics: Against IP on Spreecast.

Podcast (kinsella-on-liberty): Play in new window | Download (Duration: 1:25:14 — 58.5MB)

Kinsella on Liberty Podcast, Episode 179.

Jeff Tucker and I discuss the recent copyright lawsuit over the “Blurred Lines” song by Robin Thicke and Pharrel.

Background and related:

From this post: “In the case of copyright, for example, J.D. Salinger, author of Catcher in the Rye, convinced U.S. courts to ban the publication of a novel called 60 Years Later: Coming Through the Rye.” And in Canada, when a grocery store in Canada mistakenly sold 14 copies of a new Harry Potter book a few days before its official release, a judge  “ordered customers not to talk about the book, copy it, sell it or even read it before it is officially released at 12:01 a.m. July 16″ (on both cases, see Atlas Hefts: The Sequel!).”

See also: The Patent, Copyright, Trademark, and Trade Secret Horror Files

• ‘Blurred Lines’ Jury Orders Pharrell, Robin Thicke to Pay $7.3 Million to Marvin Gaye Family
• ‘Blurred Lines’ verdict a blow to creative expression
• Did Robin Thicke steal ‘Blurred Lines’ from Marvin Gaye?
• GREAT, NOW “BLURRED LINES” HAS RUINED THE ENTIRE MUSIC INDUSTRY
• A Better Silence – John Cage and copyright
• Silent music dispute resolved
• Bob Dylan Makes the Case Against Today’s Copyright Climate
• Six songs, same tune? Mashup shows country’s similarities
• Tom Petty on Sam Smith Settlement: ‘No Hard Feelings. These Things Happen’

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Kinsella on Liberty Podcast, Episode 178.

I appeared on Emancipated Humans, with host Luis Fernando Mises (Feb. 24, 2015 episode).

Related Writing

“Corporate Personhood, Limited Liability, and Double Taxation”
“In Defense of the Corporation”
“Legitimizing the Corporation”
“Causation and Aggression” (with Patrick Tinsley)

See also:

• KOL170: Tom Woods Show: Are Corporations Unlibertarian?
• KOL115 | Mises Canada Austrian AV Club—Kinsella and the Corporation on Trial (2012)
• KOL100 | The Role of the Corporation and Limited Liability In a Free Society (PFS 2013)
• KOL 026 | FreeDomain Radio with Stefan Molyneux discussing Corporations and Limited Liability
• Left-Libertarianism on Corporations and Limited Liability
• Rothbard on Corporations and Limited Liability for Tort
• Comment on Knapp’s Big Government, Big Business — Conjoined Twins
• PILON ON CORPORATIONS: A DISCUSSION WITH KEVIN CARSON
• THIS REMINDS ME OF SOME LEFT-LIBERTARIAN CRITICISMS OF “BIG BUSINESS”
• Defending Corporations: Block and Huebert
• Run! Run! It’s a Business in a Box!
• Legitimizing the Corporation and Other Posts

Podcast (kinsella-on-liberty): Play in new window | Download (Duration: 1:06:28 — 91.3MB)

Kinsella on Liberty Podcast, Episode 177.

This is the final of six lectures of my 2011 Mises Academy course “Rethinking Intellectual Property: History, Theory, and Economics” (originally presented Tuesdays, Mar. 22-April 26, 2011). The first lecture may be found in KOL172.

GROK SUMMARY: In the sixth and final lecture of the 2011 Mises Academy course “Rethinking Intellectual Property: History, Theory, and Economics,” libertarian patent attorney Stephan Kinsella concludes his comprehensive critique of intellectual property (IP), focusing on the economic consequences of patents and copyrights and exploring reform possibilities from a libertarian perspective (0:00-10:00). Kinsella recaps the course’s arguments, emphasizing that IP creates artificial scarcity on non-scarce ideas, violating property rights and distorting markets, and uses examples like pharmaceutical patents to illustrate how IP raises costs and limits access (10:01-25:00). He critiques the economic rationale for IP, citing studies that show minimal innovation benefits and significant costs, such as litigation and barriers to competition, and argues that IP-free markets, like open-source software, demonstrate robust innovation through competition and first-mover advantages (25:01-40:00). Kinsella’s lecture, grounded in Austrian economics, frames IP as a statist intervention that impoverishes society.

Youtube, slides, transcript, and Grok detailed summary for the this lecture are provided below. The course and other matters are discussed in further detail at KOL172. The “suggested readings” for the entire course are provided in the notes for KOL172.

Lecture 6: THE FUTURE; INTEGRATING IP THEORY WITH AUSTRIAN ECONOMICS AND LIBERTARIAN THEORY; PROPOSED REFORMS; IMAGINING A POST-IP WORLD; THE FUTURE OF OPEN VS. CLOSED

GROK DETAILED SUMMARY

SUGGESTED READING MATERIAL

See the notes for KOL172.

❧

Transcript

Rethinking Intellectual Property: History, Theory, and Economics—Lecture 6: The Future; Integrating IP Theory With Austrian Economics and Libertarian Theory; Proposed Reforms; Imagining A Post-IP World; The Future of Open Vs. Closed

Stephan Kinsella

Mises Academy, April 12, 2011

00:00:01

STEPHAN KINSELLA: … last lecture for tonight.  I thought what I would do – I have several things planned for tonight to discuss.  Some of them are more optional than others, so I thought I would find out whether anyone has any questions.  And if there’s any questions from the lectures to date we could discuss those, say, in the first 10-15 minutes, and then I can adjust the rest of the lecture as necessary.  So if anyone has any questions you’d like to discuss now, I’d be happy to take them.  I’ll go ahead and start until I see any, and I’ll pause here in the first few minutes if anyone has any questions.  And if at any time the video has a problem or the sound has a problem, just let me know.

00:00:47

Okay, so tonight I’m going to do some review and cover a few things in a little bit more detail, and then we’ll go on to the sort of meat of the lecture in the last 30-45 minutes.  So a couple of pieces of news and some – just some news of the week.  Okay, so Jock does have a question.  I read in B&L – Boldrin and Levine – that’s the Against Intellectual Monopoly book – that financial instruments became patentable in the early ‘90s.  Is there any evidence that they contributed to the financial meltdown?

00:01:24

Oh, I think that’s a little bit beyond my expertise, Jock.  You mean the patentability of them or just the financial instruments?  I mean my view as an Austrian is that the financial meltdown was just the inevitable result of the Fed inflation-caused boom and that just something is going to pop it.  And I don’t think the financial instruments got more popular because of patents.  It was a pretty rarely used thing from what I understand.

00:01:54

Okay, so John, I agree with you.  John McGinnis, the Fed called it the meltdown.  And I don’t think – I haven’t seen much abuse from these financial patents.  I think people know they’re a little bit odd, and they would be hard to enforce, and they might not hold up.  Okay, if you have any others just type them in here.  Otherwise, let’s just go ahead and proceed.  And again, I would suggest you guys, if you want to keep up with this stuff on a daily basis or weekly basis, check out my C4SIF.org website.

00:02:31

And just in the last seven days alone I think I had 15 or so posts, some of which I’ve got here.  Some of these are actually older.  Let me just go through some of these, and if you’re curious about any of these you can click on these links or go to C4SIF and look at them in more detail.  So these are some older ones actually.  All the ones on this page are from about six months ago, five months ago maybe.

00:02:53

So there was one case where a Brazilian newspaper sued a parody blog for making fun of it.  So I mean that’s a little bit ironic that they’re being made fun of and then they get – then they actually sue them even though parody is typically protected by copyright.  So this just is an example of how absurd the results of some of these laws can be.

00:03:17

Now, this is – what I call an inverse outrage is kind of a poetic justice.  There were some copyright attorneys, and they were actually turned around and sued by the people that were accused of infringement.  So that was kind of nice justice there.  I actually don’t remember the details offhand, but I remember it was kind of a funny case.  There is something – I touched on it here, and I’d be happy to touch on it a little bit more.  I have a post from about six months ago where I talked about common misconceptions about plagiarism and patents and a call for an independent inventor defense.  What that’s about is just pointing out that most people don’t have a very good understanding of the way IP law works.

00:04:00

And they often confuse them, and copyright does require the infringer to actually copy or perform some of the action with access to the copyrighted work.  But patents do not actually.  Now, most people sort of think that it does require that, but it does not.  So they’ll call someone who is sued for patent infringement a plagiarist or they ripped off someone’s idea or a thief.

00:04:29

In pharma there may be a lot of attempts to knock off drugs.  It’s just not – the point is in most – it’s not required as the cause of action, as part of a patent infringement cause of action.  All the patent owner has to show is that the person they’re suing or targeting is actually making, using, or selling something that is described in the claims of the patent.  It doesn’t matter if they independently invented it, and it doesn’t matter if they invented it even first.  So the point is most patent lawsuits – there’s even no allegation of copying.  But you’ll see this described in blogs.

00:05:10

They’ll say Apple is suing Samsung for ripping off – or in fact I heard it on TWiT I think this week, This Week in Tech the guys were discussing.  And you could see these – you might want to take a listen to this week’s TWiT, T-W-I-T.tv.  It’s a podcast I listen to.  And these hosts are – you can see they’re clueless because they’re without any moorings whatsoever.  They confuse patent and copyright all the time, but they were talking about the Apple/Samsung lawsuits, which we’ll get to in a minute and how they’re kind of arguing whether or not Samsung had the right to copy Apple’s iPhone product.

00:05:49

And they’re kind of going back and forth.  Are the consumers defrauded?  They’re probably not.  But was it sufficiently different?  But the implicit assumption of their entire argument is that if it’s an exact copy there’s something wrong with that.  But I mean that’s what competition is, right?  You see someone making something, and you emulate what they’re doing.  So it’s funny to listen to them having no sort of principles to ground their – you see their intuitions are – what’s really wrong with this?  They never stop to think, well, copying is what the free market is about.  Emulation and learning is a good thing.

00:06:24

In any case, I thought that was kind of interesting.  There was an interesting post I had about some of these – I think it was a former federal judge, former patent judge was proposing ending the recession by a patent stimulus.  That’s funding the patent office and changing the standards to have a ton of patents issued because that would cause a bunch of innovation, which – and innovation leads to wealth and investment.  Of course it’s completely ridiculous.  Just the idea of inflation, if you print more money, the idea that you have more wealth, but of course you don’t.

00:06:59

I mean even if there was normally a correlation between innovation and patents, if you just increase the number of patents being granted by lowering the threshold, that doesn’t cause there to be more innovation.  It’s just ridiculous.  So click on those posts.  You’ll see some truly outrageous, absurd things some of these guys say.

00:07:18

I have a post from awhile back.  It collects some other posts.  I get accused all the time of being a hypocrite for being a patent attorney even though I’m anti-IP.  And of course the first reply to that is so what?  What’s the relevance of being a hypocrite?  I mean does it prove that I’m wrong?  I mean let’s say you prove I’m a hypocrite.  Is that the justification for patent law, that there’s a patent attorney in Houston, Texas who’s a hypocrite.  I mean that makes no sense whatsoever.  Does that mean before I was born, patent law wasn’t justified?

00:07:50

I mean it’s ridiculous.  And furthermore it’s not hypocritical anymore than it’s hypocritical to be a libertarian opposing roads and driving on the roads and living in most countries and opposing socialized medicine but utilizing it so you don’t die.  So you can take a look at that if you’re interested too.  Let’s go to some newer posts.

00:08:10

These are in the last few weeks.  By the way, I believe today is World Intellectual Property Day, which is strange because just a couple days ago it was – you’ll see the little symbol there.  It was World Book and Copyright Day.  So that’s the link in the middle of the page.  I’m on slide three now.  There’s a most – this is the most recent thing.  There’s a councilwoman I believe in New York City who’s proposing a law to make it a crime to buy knockoffs like knockoff purses and things like this.

00:08:45

And you can see that this – and actually she has this ridiculous argument that we need to target these activities because it’s correlated with terrorism and child labor abuse.  I mean it’s incredible that they’re trodding out the terrorism boogieman to justify enforcing intellectual property rights on behalf of the big purse makers and high-fashion companies.  It’s absurd.  But my point here is that most people will say it’s just trademark laws seizing all these knockoff purses and things like that.  It’s just trademark law, and that’s just to prevent consumer confusion, to prevent defrauding the public.

00:09:30

Well, here’s a case where you’re actually threatening to put someone in jail who buys a purse.  Now, if they’re being defrauded and they’re a victim of these horrible knockoff people, why would you put them in jail?  I mean obviously they’re not being defrauded.  That’s why you’re punishing them for doing something wrong.  So that just undermines that whole argument.  And our own Jock Coates had a great post, really well written.  Jock, you’re very eloquent, a great post on the Adam Smith blog.

00:09:57

I was curious, Jock, how you were invited to do that.  Do you have a connection to the Adam Smith blog or what?  It was a really good post, so click on that.  It’s called “Intellectual Property: An Unnecessary Evil.”  I haven’t checked it since it first came up this morning.  So I’m not sure if there’s been comments or if there’s – is there going to be a rebuttal blog post, Jock, or one taking the other side?  I didn’t see one on there this morning.  I’d be curious to see.

00:10:26

Okay.  I actually blogged just – I reprinted a comment in one of the threads on one of the Mises blog discussions by some guy named Nate M.  It’s just a really nice summary of the whole actual evil way that – I mean he says even if you’re not against IP in principle, look at the actual laws that are in place right now.  And he just goes through and summarizes all the horrible things that they’re doing.  That’s a nice summary.

00:10:56

One of the most recent things, I think this is copyright.  There’s some guy who invented some – I’m actually not a huge sports fan, so some of you may know this.  I bet you do, John, right?  John McGinnis, this da-da-da-da-da-da CHARGE thing that apparently they play at some sporting events in the US.  I figured so, John.  Anyway, so there’s some composer saying he composed this tune, and he’s going to sue all these sports teams to just play that.  It’s just ridiculous.

00:11:29

This – the last one on this page, “Copyrights as Incentives: Did We Just Imagine That?” by Diane Zimmerman.  She’s got some study which shows that, as just a practical matter of fact, most artists do not create artistic works because of copyright incentive.  I mean they have other reasons that they do these things.  I’m glad you liked it, Jock.  There was another one on incentives I blogged a few weeks ago, and it seemed to have similar arguments, but I don’t remember where that one is.  It was a different author I believe.  All right, I’m on slide four.

00:12:07

I also had a post, “Cordato and Kirzner on Intellectual Property.”  That’s Roy Cordato and Israel Kirzner.  The reason I posted that was – I’m trying to remember how I find out about it now.  Someone told me something about Cordato, and I checked and he has this book in 1992, and he has some fairly skeptical comments about the coherence from an Austrian point of view and a free market point of view of patent and copyright.  I mean he wasn’t too hardcore against it.  I spoke with him since this.  He admitted to me he’s gotten a little bit more radical since then, which is good.

00:12:42

Oh, I know.  He was the one on the panel, the APEE panel I mentioned, that Mossoff was at and Sheldon Richman and Roderick Long.  And I remember Sheldon mentioned to me that Roy Cordato had some searching questions of Adam Mossoff’s pro-IP views.  So I looked up Cordato, and sure enough, he’s anti-IP.  And then he had some comments about Kirzner, and I looked some of those up, and Kirzner never comes out on it exactly except he has one little comment that patents are a type of monopoly that derogates from the free market.  But a lot of his other reasoning about the structure of human action, the nature of means and ends, implies that he would be against IP as well if he had applied his theories to it.  So – and Cordato agreed with me on that, that interpretation of Kirzner.

00:13:31

So we have Hayek, Hoppe, Rothbard, even Mises was skeptical.  All the Austrians that have kind of looked at this are pretty much anti-IP.  Some of the others, like I’ve talked to Steve Horowitz, and they kind of seem not to want to – they say they haven’t thought about the issue, which is astounding to me.  But I think they’re skeptical, but they don’t want to say it for some reason.  That’s my guess.

00:13:56

I’ve blogged about this case before.  There’s a – Jock said Friedman is pro.  I assume you mean David Friedman.  I don’t remember.  He’s very utilitarian, but he’s an anarchist, so I would think he would be skeptical.  I think I’ve read some stuff from him before, but he approaches it like from incentives and all this stuff, so I don’t think he has a very hardcore, principled approach.  But he may be against it just because it’s legislation.

00:14:27

00:14:31

Okay, so there’s an upcoming – well, it was actually argued already I think.  There’s a Microsoft v. i4i case, and I blogged about this before.  My suspicion is Microsoft may win, and if they win, that means the Supreme Court of the US will change one of the standards for overturning a patent in court if you’re sued for infringing it.  So instead of having to prove that it shouldn’t have been granted, that is, that it’s invalid by clear and convincing evidence, which is hard to do, you just have to prove by preponderance.  So that’s sort of a symmetrical and rational and sort of equitable-seeming result, so I suspect they may do that.  So it would basically weaken patent law a little bit and make it a little bit easier to defend yourself from patents.

00:15:21

Now, there’s another case where I mentioned Apple has sued Samsung over the Galaxy products, which are like – they look similar to an iPod – or to an iPhone, excuse me.  And the interesting thing is Samsung supplies their – I believe their A4 and A5 processors, so they make it so they’re actually suing their own supplier.  But my understanding is that Samsung is one of these huge – is it Korean?  Huge sort of corporate structure with lots of divisions that are not really related to each other.  They buy parts from each other, and they bid it out, stuff like that.  So probably Apple sued one division that makes the phones where they can still keep buying their processors from the other division.

00:16:07

And so then Samsung turned around and they have now sued Apple in several countries I believe with ten patent infringement claims of their own.  And it’s just going to be a big mess, and first of all, this shows why it’s important unfortunately for companies to acquire an arsenal of patents.  If Samsung didn’t have their own patents, they would be defenseless now.  They would just have to give in.  Now probably what’s going to happen is they will – I suspect they’ll settle because it seems unlikely to me that all of the patents on either side are invalid.

00:16:43

I would assume that there are some patents on each side that have a good chance of holding up in court.  And probably if that happens, that would not be acceptable to either target of those patents.  So I suspect what they’ll do is they’ll end up settling, so they’ll make a settlement agreement, probably be confidential.  We won’t know what happens, and this is another example of how patents help to keep companies larger, help to establish effectively cartels and set up barriers to entry, which I think, Jock, you mentioned in your – something like that in your blog post today.  So I mean people wonder why companies are so big and it’s so hard to break into an established industry.  It’s largely patents are a reason.

00:17:33

Okay, 8:20, we’re doing all right.  Let’s just briefly go over the structure of the course, and if this jogs anyone’s memory, anyone has any questions, again feel free to ask me.  So we talked about in this course the history and the origins of IP law and the historical origins of grants of monopoly privilege and mercantilism and favoritism and censorship as well and thought control.  We talked about sort of the libertarian Austrian approach to property rights and the functioning of the market, how the purpose of property rights is to help allocate control rights to scarce goods that would otherwise be – you couldn’t use them productively as a means to successful action because you couldn’t be secure in your ownership of it because someone might fight with you over it.

00:18:27

So it’s a way of allowing peaceful, prosperous, cooperative, civilized, productive use of scarce resources but that ideas don’t have the feature of scarcity.  And they are not means of action, but they’re more like the general conditions or they are information that guides action.  And these things do not need to be owned because they can be used and taught and learned and communicated.  And as the body of knowledge in society grows, it benefits everyone.  We shouldn’t try to restrict it.  It makes no sense to do that.

00:19:05

We talked about the utilitarian case for IP and how there are flaws with the – just the ethical flaws and methodological flaws with this entire approach.  And they just simply don’t have any evidence to back up their claims, and all the evidence that we can see from sort of common sense and from studies and attempts to get at this pretty much overwhelmingly supports the idea that patent and copyright harm society on the whole or can’t be proved to help it.

00:19:42

00:19:51

So Jock says on the Adam Smith blog, one of the comments said intellectual property is the foremost property right because you can’t put real property to any good use without intellectual faculties.  And of course this is – sounds like the Randian argument.  This is pretty much what Mossoff says.  And Sheldon Richman and Roderick Long and I have replied to this guy.  That blog post is in the slides from last week, slide five, or just go to the C4SIF blog and search for the word Mossoff.  You’ll see a kind of summary there.

00:20:25

It’s a weird argument.  He says that all property is intellectual property.  And as best I can make out, his argument is that you need to use – excuse me – your intellect to homestead things.  I mean that makes no sense whatsoever to me.  I mean the mind is important, and these IP proponents act like we IP opponents don’t value the mind or intellectual creativity or even labor or work.  And of course that’s not true.  We just understand its role differently in human action.

00:20:58

00:21:02

And then we talked about the fundamental flaw of the more principled case for IP is that it doesn’t distinguish between the sources of property rights and the sources of wealth.  The source of property rights, the origin of property rights is someone having a claim to some scarce resource.  We don’t create these resources.  We appropriate them from nature, or we acquire them from a previous owner.

00:21:28

So that’s basically the only two ways you can come to own something.  You find an unowned thing and you make it yours, or you purchase or get it as a gift from someone who already owned.  That’s it.  Creation is not a source of wealth.  Producing is not – I’m sorry.  Creation is not a source of property rights.  Producing is not a source of property rights.  What – we don’t metaphysically create any object.  We transform them.  We don’t produce a new object.  We produce more valuable configurations of things.  We make them more valuable and more serviceable to us or to customers, which means we’ve increased wealth.  So that’s the role of creation and labor and intellect is to make your own things more valuable.

00:22:17

Eric has a follow-up question.  Continuing Jock’s discussion, do recipes become general conditions when they’re replicated and owned by every individual?  I think you could classify them that way or – I think you could.  Or you could call them a free good or a non-scarce good.  I wouldn’t say they’re owned by every individual, and I think I know what you mean.  They’re possessed by every individual or by so many people.  It’s generally known.  You have possession of the idea sufficient to use it, which means to consult it in your decisions and allow it to guide your action.

00:22:57

So if you want to call that owned, that’s fine, but owned sort of implies that you have a property right in some ownable thing.  And I would say that you don’t, that recipes are not ownable things in the first place.  And lecture five – I actually saved some of that for tonight, although we’ve kind of touched on most of these points already, integrating IP theory with Austrian economics and libertarian theory.  I think pretty much you’ve seen how we do that.

00:23:25

You’ve seen how all these things blend together and how a solid Austrian economics-informed understanding of the nature of means, that is, the nature of scarce resources in the world, gives rise to the need for property.  And the structure of human action distinguishes the role of ideas and the role of scarce means in human action.  And that has implications for which one has property rights and which one doesn’t.  So these things sort of all blend together.  Now, there are more concrete implications of this sort of view of things, which we can turn to in a minute, maybe next slide.  I forgot.

00:24:05

Let me go ahead.  And tonight we’ll also talk about topic six, some proposed reforms, what’s coming, laws that are coming, and how can you deal with the fact that piracy now or with an IP-free world in the future where there would be unlimited piracy but it wouldn’t be considered to be piracy.  It would just be free competition—emulation, copying, and competition.

00:24:29

00:24:36

Let’s talk – let’s look at the cartoon first because everyone is going to look at this first.  This was – some guy is in a library.  He’s looking at book.  He says he thinks he’s going to buy it, so he’s reading it.  A little bit of time passes, and he says, oops, I read the whole thing, so I’ll just put it back on the shelf and go.  So he walks out of the exit of the library or bookstore, and there’s a sensor there which goes off, says beep, beep.  Hey, your brain set off a sensor.  And he says, I.  It says you have a book in there don’t you?  And the guy says crap.  I mean it shows that if you have copyright, it really would amount to slavery in a sense.

00:25:14

You would have to have the right to own other people’s bodies, their heads, their brains, because it would have content in it.  And if they just say, well, we wouldn’t apply copyright laws that way, well, then there’s an artificial, arbitrary distinction that makes no sense.  This is what IP advocates do.  They will make ad hoc exceptions to the application of their rules when the result would be especially obviously heinous or unjust or ridiculous.  So it’s like there’s this thing they’ve created, which has these sharp edges, and they just file the sharp edges down so that it’s less objectionable.  But they can keep the censored part that is not as obviously objectionable, although the whole thing is the same principle.  So they’re trying to hide the fact that they have a built-in reductio ad absurdum.

00:26:09

Now, I think I’ve touched on this already, but let me just quickly mention this.  I did touch on this, but I’ll just – the first point here on slide six: perversity of artificial scarcity of information and knowledge.  This is just the perverse idea that the market is always seeking to help us produce in abundance material goods that we need to live and to have good lives.  It basically tries to fight scarcity.  It deals with the fact of scarcity and tries to create abundance despite the difficulty of doing so because of scarcity.

00:26:46

And luckily we have information, which is already this sort of free good, and IP laws would seek to impose scarcity on that to make it more like the scarce things that the market is trying to make less scarce.  We should want these scarce things to become less scarce, and we should want already non-scarce things to stay non-scarce, and that’s a good thing.  It’s not a bad thing.  So it’s just perverse.  You could also think of this analogy.  Advocates of IP, they’ll say, well, I’m in favor of property rights, but I’m also in favor of intellectual property rights.

00:27:22

I’m in favor of it all.  David Kelley explicitly says this in a little debate with me in 1995.  It’s on my website.  It’s a letter to IOS. It’s on StephanKinsella.com/publications.  It’s somewhere on that page under the IP section.  But in any case, he says scarcity is one reason we need to have property rights, but it’s not the only reason.  If you create something of value or create a value, then you can own that too.  But you can’t just own that too.  This is just – this is very similar to the arguments of socialists and lefties who advocate all these positive rights like a right to welfare or a right to a job or a right to social security or a right to healthcare or a right to an education.  They just – they say, well, we’re just adding rights, the more rights, the better.

00:28:13

But of course every one of these rights is enforced in terms of the physical world by taking someone else’s physical money or property from them or forcing them to work to support this.  So all these rights always come at the expense of real rights in scarce resources, so they can’t have it both ways.  They have to choose, and I’m afraid they’re choosing when they say all rights are – all property rights are intellectual property rights.  They’re choosing the IP side, and that way madness lies.  You have people like Galambos who say that’s the primary property.  If they have their way and they would extend property rights on every aspect of every idea, all information, and it was made perpetual, then none of us could move.  We would just all die.  We would all starve to death.  We would strangle the world in a nettle of IP sort of tendrils or something.

00:29:05

An analogy – the Four Freedoms on here I think is Roosevelt’s Four Freedoms, Franklin Roosevelt’s Four Freedoms where he talks about freedom from fear, freedom from want.  So these are not freedoms.  These are positive rights, which mean positive obligations on the part of your fellow citizens to provide you with this right you have supposedly.  It’s similar to inflating the money supply by just printing more dollars.  When you inflate the money supply, you dilute the value of existing dollars.  Similarly, if you create more rights, you weaken – excuse me – the existing property rights in scarce resources.

00:29:43

All right let’s go on – excuse me – to slide seven.  So let’s talk about some implications of this approach for libertarianism and Austrian economics.  Oh, there’s a question here from Karl Fielding.  Wouldn’t you say that the issue isn’t scarcity of ideas as such but the non-contractual nature of the scarcity?  Well, I would say that because ideas are scarce, you actually can – you simply cannot have a property right in ideas.  I mean you – if the legislature said someone owns the number four or owns circles, that you actually cannot own these things.

00:30:27

So really it’s a disguised way of declaring ownership of existing real property.  So the fact of – the fact that ideas are not scarce means that attempts to protect them really result in transfer of ownership of scarce things.  There’s just no other way to do it.  I’m not sure what you mean by the non-contractual nature of the scarcity.  You say we can contractually limit access to ideas.  Yeah, you could contractually limit – well, okay, so one way to contractually limit access to ideas would be to impose some kind of non-copying obligation or even a nondisclosure agreement like a trade secret type relationship on people you deal with like if you sold someone a book.

00:31:15

Theoretically you could have an agreement with them where they agree not to copy it or sell it or disclose it to anyone else, and if they breach that, then they would have to pay you some money.  And that’s perfectly fine, although I don’t think people would spend $15 on a book if it’s going to possibly make them liable for a million dollars of damages.  They would just go to another book – another author who didn’t have such crazy terms for the same reason that iTunes dropped DRM on its songs a couple years ago, and Amazon did too.

00:31:54

People just don’t want DRM.  They also don’t want a million-dollar liability hanging over their head for just a little small book.  It’s ridiculous.  And Jock has a good point.  Why would you read a book if you couldn’t tell someone about it?  I mean the purpose of a book presumably is to learn from it, and the purpose of learning is to acquire information that you want to use.  And why should you be limited to how you can use it?  I mean there’s any number of ways knowledge can be integrated with other knowledge in your head and applied to action.  So I just think it’s contrary to the whole purpose.  Now, a trade secret is a different matter.

00:32:32

You could have a company that has secret methods and ways of doing things or maybe a list of customers or – and you could impose obligations on the employees to keep this secret.  It’s sort of the nature of this company.  There’s nothing wrong with privacy in that regard.  There’s a limit to it.  But the point is, if the information becomes known somehow, like if someone independently invents your technique, they’re free to use it.  Or if someone figures out what you’re doing by reverse engineering your products and this information becomes known, again, the knowledge has been acquired by people at large.   It can be used.  The knowledge itself is not ownable.  There is no contract with society at large.

00:33:11

00:33:16

I think monitoring is not only difficult.  I think it’s – you have two classes of people, one that’s contractually obligated and one that’s not.  So among the second set, they’re free to do what they want with information that they somehow got.  And I just think by some kind of competition effect that that second class would grow larger and swamp the first one because people wouldn’t want to be in the first group.  So they wouldn’t buy a movie ticket from the movie chain that made me agree to join this contractual regime, this IP regime for life.  I mean I just – it’s not worth the $7 ticket or $15 ticket to see a movie to restrict my freedom or obligate me to pay damages in the millions of dollars for the rest of my life.  So I think these things are unworkable, these contractual schemes.  People want to try them, that’s fine with me.

00:34:05

Now, let’s talk about some of the implications of the view of IP we worked out in the course for Austrian economics.  Okay, I do have some links here to sort of what Mises thought about it, what Hayek said about it.  Hayek was very skeptical of it.  Mises sort of tried to be value-free and not really say.  He just said there’s externalities, and if you don’t protect this property, ideas as property, recipes, inventions, then it’s going to be harder to make a profit because you’re going to be competing with people.  So you see he sort of glimpsed that it’s really a derogation of the market, but it was an existing type of property right at the time he wrote.  So I think he was trying to incorporate it and deal with it.

00:34:54

00:34:57

Now, Rothbard has a view in his “Knowledge, True and False” chapter in The Ethics if Liberty about, for example, reputation rights.  And his reasoning there is very good.  He basically rejects the idea of reputation rights, and those are enforced by defamation law.  That’s libel and slander law.  You maybe should remember that too.  Defamation is a general thing, this harming someone’s reputation with a falsehood.  And the written form is libel, that is, if you do it in a writing.  But if you do it orally in speaking with other people, that’s slander.

00:35:38

So slander and libel are the two types of defamation, and as I’ve noticed – as I’ve mentioned in the course here, I regard reputation rights as just another type of IP.  Like patent, copyright, trademark, trade secret, reputation rights are one as well because it’s based on the same idea that you created something that has value, and therefore you own it.  But as Rothbard points out, what that means is you would have the property right in other people’s heads like in that cartoon a couple slides ago because a reputation is just what other people think about you.

00:36:11

How can you have a right that they think certain things about you? So Rothbard was right here.  And if he had applied that same reasoning to the case of patent and copyright, he would have realized that his sort of halting attempt to find some way to justify sort of one narrow type of contractual copyright, that couldn’t work either.  We’ll get to that in a minute.  Also, this helps you envision three essential aspects of the free market.

00:36:40

So one would be cooperation, people cooperating with each other.  Having property rights in scarce resources permits this.  And since people have different abilities and different circumstances and different property rights, it would lead to the division and specialization of labor.  So there’s cooperation.  There’s also competition, which is an aspect of the free market.  People compete with each other for customers.

00:37:04

But competition requires and involves emulation and also learning.  You have to acquire knowledge.  That’s part of human action.  That’s part of the goal of human action is to acquire knowledge because it’s useful.  It helps to guide action.  So this shows the importance – as I’ve mentioned already, it shows the importance of recipes and knowledge as guides to action.  So basically it helps clarify how to look at the structure of human action, which is an important concept in praxeology and economics, Austrian economics.

00:37:39

Now, what about libertarianism?  Well, as I mentioned, you should view reputation rights as a type of IP.  In fact, Jeff Tucker called me last night, and he wanted to know if I agreed with him that money, modern money, could be viewed as a type of IP because the state you can see is cracking down.  Well, they already will put you in jail if you counterfeit or copy their money, but even if you try to come up with another kind of money, they’ll penalize you.

00:38:05

So it’s similar to IP in that the state is saying only we can print more of these dollars, but if you print more dollars, we’ll put you in jail for counterfeiting.  So they’re claiming like an IP-type copyright or monopoly right to print this pattern that’s similar.  So you can see this stuff everywhere, sort of like the little kid in The Sixth Sense where he says – is it called The Sixth Sense?  That Bruce Willis movie, the M. Night Shyamalan movie where the little kid says I see dead people everywhere.  So sometimes I say I see IP everywhere because it’s just all around us.

00:38:48

Anyway, so – oh interesting, Jock.  Jock says Selgin said the money monopoly was the only one excluded from the 1624 Act.  Well, and also inventions, right?  You’re talking about the Statute of Monopolies?  1623-24?  I didn’t remember that he excluded money monopoly, but that’s a good point.  I remember it specifically excluded inventions, which is why we still have patents on inventions.  It excluded the other types of patents because they were being abused.  Maybe you could email me later, Jock, where he said that, where Selgin said that.  I’m curious.

00:39:29

But let’s go on here for a second.  So I’ve mentioned that a careful understanding of Rothbard’s concept of the title-transfer theory of contract.  And you have to work it out this way to understand why the contract idea he wants to use for copyright doesn’t work.  Once you clear up all this, then it has implications.  I’m probably not going to go into them here too much.  This is more general libertarianism, but it does have implications for this debate among libertarians about inalienability, which is basically whether you could sign yourself away into slavery.

00:40:04

Now, if you view contract as a transfer of title to property and not a binding promise, then it’s not an enforceable promise if you agree to perform a service or if you agree to be someone’s slave.  But then the question is, well, what about your body?  Can you sell your body?  And my view is the body is a categorically different type of property thing that you own.  It’s a scarce resource, but it’s different than other things that you acquire.  I talk about this in my article, “How We Come to Own Ourselves,” which is on my site, but that’s a little bit far afield.  It also has implications for debtor’s prison, but let’s skip that here because it’s not too directly relevant to IP.

00:40:50

But I think a clear understanding of IP and a clear understanding of the structure of human action, the nature of contracts and property rights helps clear up these issues is what I’m saying.  Let me just quickly go through this slide nine—other implications for libertarianism.  Well, as I mentioned already, it clears up the nature of homesteading and distinguishes it from acquisition of wealth, so we’ve talked about this already.

00:41:20

It also shows the danger of metaphors.  People are way too sloppy when they say stealing and labor is owned, and mixing your labor.  It shows the importance of keeping in mind the fundamental rights and their consequences.  So if you have the right to control – if you have the right to your body and to homestead property, that leads to the practical ability to, say, print a book, which is called freedom of speech, freedom of the press or to move your mouth and say things to other people, to communicate.  That’s called freedom of speech, but these are not independent rights.  They’re just consequences of owning your body.

00:42:04

And if you call it an independent right, then you’re sort of double counting, and it can lead to confusion as it does in Locke’s understanding of his homesteading argument where he says we own ourselves.  Therefore, we own our labor.  Therefore, we own things we mix it with.  And this leads to this creationist view that, well, therefore, you own anything you mix your labor with when you create something of value or valuable.

00:42:27

And so you un-anchor the idea of what you’re owning from the idea that property rights have to do with the need to solve – will help avoid conflict over things that are conflictable, which means things that are scarce.  And they just start saying that you own the product of your actions.  Well, what’s a product?  That’s a vague term.  It’s almost metaphorical, and it’s used in an equivocating way because if you mean by product I shape this piece of metal into a sword and that’s the product, okay, I own it.  But I already owned the metal, so you’re double counting again, and this double counting leads you to count the creation of a poem as a separately ownable thing.  So we have to be careful about metaphors and about double counting in rights.

00:43:20

00:43:26

Slide ten.  I’ve already gone over this.  You can read these quotes later, but Rothbard, Rand, Mises, Hoppe, they all are explicit, and they recognize, even Rand.  They recognize that we create wealth by rearranging things that we own already, and we don’t create property.  We don’t create things.  We rearrange them.  We transform them.

00:43:48

00:43:52

Okay, slide 11.  Here’s a Mises quote, Mises saying the same thing.  Look at the last sentence. “No human act of production amounts to more than altering the position of things in space and leaving the rest to nature.”  You see, this is perfectly compatible with this view I’m laying out here of the significance of the structure of human action and the different roles that ideas play and scarce resources play.  So he’s talking about things in space and altering them.  Altering is using physical means, manipulating physical things in space, this three-dimensional space.  This is the real world.

00:44:27

Leaving the rest to nature, that means relying upon causal laws, and your knowledge of them is what guides your actions to do that.  So he’s presupposing that you must own the things already, so production is not what creates property rights.  That’s an important point

00:44:51

Jock says Georgists also say you don’t mix labor with land; you expend it on it.  I’d be curious to see the context.  That’s interesting, Jock.  If you couldn’t mind, maybe you could send me something and see if it’s kind of compatible with this, what implications it has.  I’d be curious to look at it.

00:45:11

00:45:14

Okay, can anyone remind me?  Have we talked in detail yet about exactly what Rothbard’s argument is for contractual copyright with the mousetrap example?  I think we did.  I don’t know if I need to go over it in a lot of detail here.  But basically let me just summarize.  He’s good on patents.  He’s good on state copyright.  He’s good on contract theory.  But he kind of had this idea that you could use some – he called something common law copyright.

00:45:44

There’s no such thing as common law copyright anymore, and that’s not what he’s talking about anyway, so I don’t know what he means.  I think he means just some kind of common law right to contract, and so he thinks that if A sells B a mousetrap but tells him you don’t have the right to copy this, that’s really a contractual restriction.  But Rothbard used it as a bundle of rights.  He sort of used this mousetrap as sort of having – the way I picture it is this.

00:46:19

He thinks of a mousetrap, and there’s a little compartment in it which has the right to copy.  But the owner opened that compartment, took out the right to copy, and held onto it, and then sold the mousetrap to someone minus the right to copy.  If you want to use that weird metaphorical, almost mystical idea to visualize why the buyer is contractually bound to not copy it, okay, fine.  But then he says if a third person I guess sees the mousetrap and learns how to make it, then he can’t make it either because he can’t get any right from the buyer that the buyer didn’t have.

00:47:02

So he’s using the idea in property law that when you sell something, it’s encumbered by, if it’s owned by someone else, you can’t transfer rights that you don’t have.  But the problem is this third party doesn’t need any rights to be transferred from the buyer to be able to use information he has to make his own mousetrap.  It just doesn’t make any sense.  The only way to say that would be to presuppose that knowledge is part of the bundle of rights and is separately ownable.  But if that’s true, then patent and copyright are justified because that’s what they’re based upon, the idea that knowledge is an ownable thing.

00:47:35

So – but that would be circular and question-begging if nothing else because you can’t presuppose knowledge is ownable.  And the attempt to prove a certain type of copyright would be justified because that’s just – if knowledge is ownable, then copyright is justified.  So he accidentally I believe suddenly snuck in the implicit assumption that knowledge is ownable in his argument, which is a mistake.  He wasn’t trying to prove that copyright and patent are valid.  He just thought you could use your contract in a creative way.  And I think his only mistake was in assuming that it could be extended to third parties, and I think it clearly cannot be, and I think that’s clearly implied by the rest of Rothbard’s social theory and economic theory.

00:48:22

00:48:28

Briefly, in my Against Intellectual Property, there’s a section – I’m sorry.  It’s not.  It’s another article, “Reply to Van Dun,” and it’s linked here.  We’re on slide 13.  Frank Van Dun, who’s a great guy, but he’s a friend of mine.  He’s a great libertarian legal thinker.  But he’s European, and he’s very mired in sort of conventional legal rules that have grown up into positive law.  And he’s very reluctant to get rid of some of those.  I think he’s for blackmail law, and he’s for trademark law.  And he had some objections saying that – you can read this later, but he had some objections saying that my narrow defense of one type of trademark, which was that it’s fraudulent, I couldn’t even defend that based on my theories because there’s no right to identity or no right to names.

00:49:19

So when someone defrauds the customer by pretending to be a competing seller, like in this case, if this guy named Lockman sells a Rothbard Burger and calls it a Rothbard Burger, I mean he’s free to say what he wants, right?  That’s Frank’s argument, Frank Van Dun.  But as I responded, I think his argument doesn’t follow.  I mean what it basically amounts to, his argument – his argument basically amounts to the claim that without intellectual property rights or without trademark, you can’t communicate.

00:49:55

That is, humans can’t communicate, which is obviously false.  I mean so clearly a customer wanting a Rothbard Burger, that has a certain meaning.  And he could find a way to communicate that with the Lockman Burger guy, and if he has to, he could say, are you the Rothbard Burger that was started in 1951 on this address, on Mulberry Drive?  And I mean you could specify it if you had to, but we don’t need to because there’s context in communication.

00:50:24

I mean look.  Some people have the same names, right?  There’s probably several Tom Cruises out there in the world.  And people manage to distinguish them from each other even though they have the same name.  And there’s no law saying that everyone has to have a different name, so anyway, I think that’s a bad, fallacious criticism.

00:50:42

Okay, why don’t we – now we get to the final meat of the lecture, the final topic.  We’ll talk about proposed reforms, coming laws, and some other ideas about how we could expect people to respond to an IP-free world.  So why don’t we just – it’s 8:54 my time.  Let’s take a break until the top of the hour, five-six minutes.  And we will pick it up there, and if anyone wants to type any questions in, I could address them when I get back.

00:51:19

00:51:23

I know Hoppe pretty well.  He’s actually not that personally socially conservative.  I mean his PFS meetings in Bodrum, which I’m going to next month by the way, Property and Freedom Society meetings, full of a pretty diverse cast of characters.  In any case, let me ask one other question here.  So far from what we’ve presented in the course, is there anyone here who sort of has serious disagreements about any of the key points here?  I mean I don’t mean minor things or emphasis or little things.  So is there anyone here who has – and I’m not trying to argue.  I’m just curious.  I know, Gwen, you do.  Anyone else, or are most people here pretty anti-IP given this presentation or given your pre-existing views?

00:52:13

00:52:19

Webex hasn’t crashed a single time yet.  I don’t know why the video is so jerky.  That does bug me.  I wish that was better.  Good man.  Okay, well, let’s – yeah, I mean I almost feel like I’m sometimes too much on IP.  At first I resisted being Mr. IP, but it’s got so many tie-ins to other things and it’s such a growing important issue.  I just can’t resist talking about this stuff, and it is an increasingly important thing.  I’ve got friends who think it’s going to be one of the single-worse things the government does, and they can use this to excuse a lot of things they do.  But let’s go on to talk about some coming reforms.  I have a lot of these here.

00:53:22

So these are reforms I think we should make.  I think we should make, and you can click on this article of mine—I’m on slide 14 now—“Reducing the Cost of IP Law,” for a more elaborate explanation of these changes.  I’m not going to go through all these here because they’re sort of detailed and technical, and we’re just talking about changing the legislation.  Now, I would like to abolish it but let’s say we can’t abolish it.  What kind of reforms would be significant improvements?

00:53:54

And the top two or three or four there are the big ones, maybe the first five.  We should reduce the term, first and foremost, from 17 years to five years or seven years.  That would be a huge improvement in patent law because patents would disappear more quickly and any competitive effect would be weeded out more quickly.  I mean when you see a patent that your company might infringe, even though you didn’t copy the idea from this competitor or this patentee and it lasts for 12 more years, you’re like, well, what am I going to do?  I have to wait 12 years frickin’ years to do this?  It’s ridiculous.

00:54:33

Patent injunctions should be removed, and that would mean that the patentee could only ask for royalties, just say you’ve got to pay me some money, but you can keep competing with me.  So it would act like a tax, but at least it would be better than actually getting shut down.  And let’s go to the fifth one.  A big improvement would be if you provide a prior use and an independent inventor defense.  These are slightly different things.  Prior use would be – well, prior use is necessarily independent inventor because if you were using it before someone else later reinvents and patents it, then you independently invented or someone else did.

00:55:12

An independent inventor defense would be if someone later invents it but they do it without copying, so basically it would import a copying requirement into patent law similar to what’s in copyright law.  And one reason I think that reform could have some legs would be, as I said, most people are under the mistaken assumption that when someone infringes a patent, they’re ripping off or stealing from or copying the ideas of the patentee, which is just not true.  It doesn’t have to be alleged, and it’s usually not true.  But if people think that patent law is justified because that’s how they envision it, well, then let’s make patent law require that.  Of course, that would be fought tooth and nail by the patent bar.

00:55:56

Now, there is a pending patent reform act.  It’s called the America Invents Act.  And it’s been threatened – something like that has been threatened for 10-15 years, and it’s all – it’s never passed, but I think it might pass this year because Obama and the Democrats and Republicans are kind of all together on this.  But I want to say that not a single thing – and I’ve blogged on this too.  If you go to C4SIF.org, search for America Invent Act I think, and I think it’s Senator Leahy.  Anyway, not a single reform in there is a major reform anywhere on the level of the ones I’ve got proposed here, not a single one.  They’re all pretty minor or arbitrary changes.  So these are reforms I would like.  None of them are coming.

00:56:43

Copyrights – again, reduce the term.  Make it 10 years or 14 years like it used to be instead of 70 – life plus 70.  It’s ridiculous.  Take software out.  Software is functional.  It’s not expressive.  I’m talking about the code.  Software code is not artistic.  It shouldn’t be considered to be an artistic work, and it wasn’t at one point.  Ethan, I’ll answer your question in just a second.

00:57:09

Also, a big improvement would be requiring active registration.  That is, instead of having copyright be automatic, make someone apply for it, pay a little fee, and then re-register it every 10 years until they have no right to do it anymore.  That would solve the problem of orphan works.  Okay, I’ll skip the rest of these too because you can read these yourself.

00:57:32

Ethan asks, can something valid resembling an IP rights claim exist when it comes about from a genuine rights violation; someone breaks in and steals my invention diagram or something?  Well, I mean code could be artistic, but it’s also functional, and it’s protected by patent already, or it could be.  So you don’t want to have – these laws are not supposed to overlap.  I’m not trying to denigrate coding, but it’s not done to be read by someone like a book is or to be viewed.  It’s got a functional purpose and utilitarian purpose.

00:58:09

But I want to be clear I’m not denigrating software.  I just don’t think it’s appropriate to be covered by copyright, and it used to not be is the point.  It’s a fairly recent idea.  I mean the court had to make that decision at one point, and they can un-make it.  But I think that it wouldn’t be an IP rights claim, but I know what you’re asking, Ethan.  So here’s what I believe.  This is more of a libertarian question, but – so let’s say someone breaks into your house.

00:58:38

And when they do that, they access information they otherwise wouldn’t have, private information.  It doesn’t have to be the manuscript to a novel.  It could just be some – it could be a fact about you.  Maybe it’s the fact that you’ve been married three times and no one knows this, some embarrassing social fact, maybe that you have a mole on your left underarm.  I don’t know.  They learn some fact about you or some fact they wouldn’t have otherwise known.

00:59:04

Now the way I view that is property is still – information like that I still not ownable, but this guy committed an act of trespass, and he’s harmed you and he can be punished, or you can seek restitution or something.  There’s some kind of legal remedy against this guy, and the extent of the damages he has caused you can be taken into account based upon his leaking information that the world wouldn’t have known.  Now, that doesn’t mean the world can’t use this information.

00:59:33

So if someone is secretly – I don’t know, secretly a UFO nut, and they never tell anyone because it would be embarrassing and some trespasser breaks in and figures out that you’re a UFO nut and runs off and tells a newspaper reporter, and the newspaper reporter reports this and soon the whole world knows, well, I mean I think that the trespasser –  let’s say you have a role in a movie coming up that you’re going to make $20 million and now you lose the role because you’re a laughingstock because you’re a UFO nut.

01:00:11

Well, I think that the $20 million you lost – it’s owed to you by the trespasser.  Of course he’s not going to have it because most of these trespassers are low-lives.  But still, theoretically he owes you that.  The extent of damages is measured by that.  But did the movie producer or the movie production company violate your rights by not hiring you, by acting on the knowledge?  I don’t think so because the knowledge is not owned, and people that have it who didn’t commit a tort are free to use it as they want.

01:00:42

01:00:47

Donald says what should happen or will happen to software licensing if software is removed from copyright coverage?  This kind of goes to the third topic of this lecture, but let’s go ahead and talk about it now.  I don’t understand your question about threat.  Maybe you can reword it if you want me to address it.

01:01:07

But anyway – well, I don’t know what software companies would do.  I think that you’d have a lot of companies would be paid to design custom software for companies that need it to be done to be a service.  Maybe they would give away their little stuff for free, just like we have now.  There’s light versions of apps and programs that are free.  And if you want the full thing, you would unlock it.  I think that you would have a lot of – the really high-level stuff would be so customized, and it would need so much support from the company that you’d just make a deal with the customer and you have a contract, a support contract.  I think you’d have what you have now.  You’d have a lot of these software programs.

01:01:50

They routinely check over the internet to make sure they’re a licensed copy, or there’s so many updates issued all the time you’d have to prove you’re a legitimate customer to get the update on the service support.  There would be enough customers who would pay you a fee that you could make a profit.  Would there be some pirating?  Maybe.  I mean there is now already – there’s already pirating of movies and music and software.  And so companies that make these things now deal with this fact already, and they just have to find enough customers to buy it to make a profit.

01:02:28

01:02:37

Jock says on software you had an interesting discussion with someone after the Adam Smith blog post.  He said the FOSS people would not like to lose a copyright since they couldn’t enforce a GPL-type license.  Yeah, I go back and forth on that.  I mean one thing I don’t like about copyleft and share-alike and GPL-type licenses is they sort of worm their way into things, and they actually restrict the use of things.  And they’re based on copyright, and you couldn’t have a license without copyright in that sense.  But you wouldn’t need one.  I mean the purpose of GPL and share-alike is I think to require people to not encumber the work or derivative works based upon it with more restrictive copyright.

01:03:26

But in a copyright-free world, they couldn’t anyway, so I don’t know.  Jock says the incentives of having others fix code and so on would probably balance out.  I think so.  I think it would.  I think certainly the industry would change, but that’s just a sign that the industry is distorted now.  We talked last class about all the ways that IP distorts the market and the industry and the fashion industry.  But to think it would remain the same is false, but it shouldn’t remain the same.  So it’s hard to predict exactly, but I think a variety of measures like that.

01:04:06

Trademark – we should, number one, make it harder to prove consumer confusion.  It should have to really be something that can defraud.  We should get rid of antidilution protection.  And I think we should actually abolish the federal law in the US, which is called the Lanham Act, and let the states handle it like they do now and like they used to because it’s unconstitutional.

01:04:29

01:04:32

Now, some reforms that are coming up, let’s talk about those.  I actually should have updated the bottom of this slide 17.  I have a more recent post about the America Invent Act somewhere on the page.  This is from last year, the bottom thing.  So about a year ago or six months ago, it was announced that the UK copyright laws are going to be reviewed.  But again, they’re only going to be reformed to a minor degree.  There are several court cases pending in the CAFC or the Supreme Court, and it’s possible they’re going to move in a better direction, slightly weakening IP protection.  But none of this stuff is radical or major.  This one here is this exact thing I talked about earlier, the Microsoft v. i4i case.

01:05:32

This is the thing about lowering the threshold to invalidate a patent.  They might do that.  I hope they do.  That would probably be the most significant change, but it’s still not that great.  It won’t stop all the abuses and all the problems of patents.  It won’t stop the cartelization I talked about.  It won’t stop the barriers to entry.  It won’t stop the waste.  It won’t stop the lawsuits.

01:05:54

In trademark, I think there was an upcoming case.  This might have been decided already—I need to look into this—about whether eBay, which was selling jewelry, whether it’s their responsibility to make sure that what an independent seller on eBay is selling is counterfeit or not.  But there have been some bad results too, some extremely crazy, mostly copyright because copyright statute is insane.

01:06:22

I don’t know if you guys saw this.  I don’t know if I have a blog post on here about it.  There was a lawsuit or a threatened lawsuit against one of these kind of defunct Napster-like companies.  And the Recording Industry Association or whoever the plaintiff was claimed something like $75 trillion in damages.  And they’re probably correct because they just added up all these offenses and multiplied it by the statutory damages, which is insane.  I mean it’s thousands of dollars – LimeWire, exactly.  So some of them were going the wrong directions.

01:07:03

The ACTA, the Anti-Counterfeiting Trade Agreement that I mentioned earlier, did get improved largely because Michael Geist, a copyright – I’m sorry, a law professor, IP law professor in Canada – actually I’m not sure if he’s an IP.  He’s a law professor.  I don’t know what his specialty is.  But anyway, he blogs a lot about IP.  And he – someone leaked to him the text of a current draft of the ACTA treaty, and he leaked it on his site.

01:07:32

And so because of all the storm that caused, some of the more egregious provisions were removed.  So if it passes, which I suspect it still will, it will still be bad, but it won’t be as bad as it could have been, and this was – again, this last post here.  It’s possible, but you can see there’s an – Jock says we can campaign for countries not to ratify it, and that might be worth doing because we might have a chance actually.  There’s almost no chance to get them to repeal existing IP laws anymore than they repeal welfare programs.  But when they’re being proposed and there’s all this sort of mixed feeling about freedom on the internet and everything, maybe we can get it stopped.  I don’t know.

01:08:16

The bottom post just talks about the pending patent reform, but I have a more recent one on my site about the America Invents Act and what that’s going to do.  And I kind of went through all the provisions, and I mentioned whether they’re good or bad, but they’re all minor except for some of the bad ones are not that minor.  So some of the reforms that are coming, the ACTA like I mentioned.  COICA, that’s a US federal law, counterfeiting – I forgot what it stands for, but it’s going to be horrible.

01:08:46

Canada is talking about having a new copyright bill with a DRM clause, digital rights management clause, similar to what the US has in the DMCA, the thing that outlaws DRM-circumvention technology.  There’s also, as I mentioned, always agitation to add IP protection to areas that are currently not covered like bartenders’ recipes or food recipes or fashion designs.  I’m afraid that fashion thing might pass.  I mean you get these lobbyists from these industries, and they come in and they just bribe some congressman to get it done.  It’s horrible.  Once it gets done, it gets entrenched like the vessel-hole design thing we talked about earlier.

01:09:34

Okay, now we talked about some of this already: innovation in a post-IP world, and for the people that are concerned about this, like Gwen and others, I would – so just look at some of these posts.  They have a lot of examples and discussion about how creative people can be, but as a general matter, I want to say that unless you’re a complete utilitarian or consequentialist, the primary thing in my view is to have a principled libertarian perspective on individual rights and property rights.

01:10:10

And just like Ayn Rand argued I think well or maybe it was Greenspan when he was still good, the primary defense or the primary opposition, for example, to antitrust law is that companies have a right or individuals have a right to collude with each other.  They have a right to get together and try to set prices.  They have a right to price discriminate.  Companies have a right to be a monopoly if they can do it in the market.  So the primary opposition to antitrust law is not the economic argument that, well, you don’t really need it because it’s unlikely, etc.

01:10:49

01:10:54

That’s a bolstering argument.  It’s a secondary argument.  It helps to explain, but the primary argument has to be principled, same with IP I believe.  I mean IP clearly couldn’t exist without legislation, at least patent and copyright couldn’t.  It couldn’t exist without the state.  Clearly it interferes with people’s liberties and freedoms to use their bodies and to use their property.  It clearly interferes with the process of learning and the process of competition.  They are explicitly anti-competitive.

01:11:25

That’s the purpose is to reduce the competition faced by the monopoly owner.  They’re clearly monopolies granted by the state.  And they clearly, in practice, have an increasing number of egregious abuses and outrageous results even if you’re in favor of the idea in principle in theory.  In practice, it’s going to be horrible, so the prima facie case is against it, and you also have to view the role of the entrepreneur as it’s his job to figure out how to make a profit.

01:12:04

I mean there’s always going to be a combination of useful products that you sell that are useful because of their configuration and ones that have more to do with the information or pattern in them where it’s a little bit harder to make a profit on them.  There’s always going to be a free-rider issue for some types of businesses.  There’s always the problem of excluding these free riders or excluding others.  I mean this is the cost of doing business.  A movie theater – why do they have to put locks on their doors?

01:12:44

Why do – because they want to sell seats in there, and if they just leave the doors open, people will just wander in and watch the movie for free, and they wouldn’t pay them.  So they find a way to exclude people who are not paying so they can make a profit off the ones that are willing to pay, and this is costly.  There is a cost of exclusion.  This is what every entrepreneur faces.  Every human faces this.

01:13:11

We extend cost on protecting ourselves, etc. that we wouldn’t have to do if we could just trust everyone to do what we wanted them to do.  But they don’t always because they have different interests than us.  When it comes to intellectual creativity, there’s just an infinite number of ways and reasons people engage in it.  Some can be monetarily profitable, some not, some more so than others.  This is the way life is and always will be.  Even in today’s IP world, there are areas of intellectual innovation, which are not protected by IP law, and people still do them, or maybe they don’t do them as much as they would, but that’s just the consequence of the fact that knowledge is infinitely transmissible and duplicable.  It’s learnable.  So sometimes you can’t make a profit off of coming up with an idea.

01:14:04

If you can’t think of a way to do it, don’t do it.  But there’s all kinds of bundling things you can do.  There’s selling of services.  There’s reputation effects.  There are any number of ways that – we already see some of them emerging.  Artists, musicians – it works well for musicians.  They might give away their songs because they want to get a following.

01:14:26

Authors may give their first book away and get a fan base, and then they don’t sell their second book until they get a subscription of 100,000 people.  Or maybe you sell your book for $3 on Amazon Kindle, and people buy it because it’s not worth it to pirate it.  It’s cheap enough to do it, and you can still make enough money to make a living.  Maybe it builds up your reputation so you can use it to get a job as a consultant or as an employee with someone.  You show someone your portfolio of paintings and they hire you to paint a portrait of their daughter.  People are going to have to figure this out. It’s fundamentally the entrepreneur’s job.

01:15:12

01:15:17

This is just some examples.  I mean people blog on blogs almost all of them do it for free.  Some get a little advertising, but that’s an example of how you can make some money.  You get advertising.  You draw eyeballs, and advertisers will pay to be in front of those eyeballs.  Scholars write articles all the time for no money because it helps their career.  It helps their employment prospects, helps them network, helps them get a reputation, etc.  Why do people come up with dance routines and choreography?  Because they can put on a show that other people might want to come see.

01:15:52

But that’s not copyrighted either.  People do it because it makes sense at the time, and if it adds a little bit of culture to the world that others can build on and learn from later, that’s a good thing, not a bad thing.  Why do people write open-source software?  Why do they contribute to Wikipedia articles?  I mean Wikipedia is putting Encyclopedia Britannica and World Book out of business I believe.  Why do physicists investigate the causal laws of nature?  Why do mathematicians come up with algorithms and proofs?

01:16:20

Why do perfume companies make and sell perfume when they can be knocked off and they are knocked off?  I mean what would you rather give to your girlfriend on Valentine’s Day?  A nice Chanel perfume or a $5 one from the drugstore that smells just like Chanel and says it smells like Chanel, what would you rather give her?  I mean there’s a reason people are going to pay for these things.  Why do fashion designers come up with new clothing designs, and why do chefs come up with new recipes all the time?

01:16:47

I’m asking these questions because this is what you should be asking if you’re wondering how people would possibly write software or make videogames or write novels or paint paintings or come up with inventions if you don’t have a state-granted monopoly because there are so many aspects of life where this goes on already without the state granting monopolies.  So just ask yourself why people do this because it’s obvious that they do, and just try to think about, well, why do they do it?  And some of the same reasons would apply to these other areas of innovation and creativity.

01:17:25

01:17:29

So I mean one of the most famous recognized works of literary – literature in human history are Shakespeare’s plays, all of which I understand were basically retreads of existing plots known to people.  But he didn’t have copyright either.  Would he have written more plays if he had a copyright?  Or maybe he would have written only half because he could have relied upon royalties.  Classical music was before copyright.

01:18:02

01:18:13

Jock said something about Islam says inventions are from Allah and not available, and therefore should be available for all.  Someone asked about the status of IP in Muslim countries, and I didn’t know the answer.  I’d be curious.  I think they do have modern patent laws, so I’d be curious what your source for that is or if you could send me something.  I’m curious to see that.  In any case, why did publishing flourish under Germany when they had no copyright law more than in England which had copyright law?  I mean these are case studies.  You have to look at these things.  You’ll see how people adapt in a freer society.

01:18:56

Yeah, there’s more competition, but that’s not necessarily bad.  The Grateful Dead – they allowed bootlegging.  It doesn’t hurt them.  You can have ads for some types of activities.  TV shows have always broadcast for free.  Newspapers, they so far have been free on the internet because of ads.  I’ve already mentioned some of these things.  There’s reputation effects.  There’s networking.  There’s gratification.  There’s ads.  Singers – this could be advertising for concerts.  For the novelist, I’ve already mentioned this.

01:19:35

One other idea I had, I don’t know how realistic it is.  It’s just one idea I had, and I wouldn’t be surprised if some novelist would try this.  Let’s suppose you’re a novelist, and there’s no copyright.  So that means someone can make a movie based upon your novel.  You can’t stop them, but if they want to make an authorized version of the movie, then they have to get your permission to say it’s authorized because it’s just – it’s fraudulent otherwise.  So you could sell your authorization.  Or they might hire you to be a consultant, and then they could say in their advertising Atlas Shrugged, the Authorized Version, produced in consultation with Ayn Rand.  And they might pay her a million dollars because they will sell that many more tickets, more so than Atlas Shrugged versions 2 and 3, which are being made down the street by knockoff artists.

01:20:29

So I think there’s all kinds of ways you could profit from, say, a novel.  Inventions certainly, I have no doubt.  I mean I’m in the technical industry.  There’s first-mover advantage.  There’s reputation and goodwill.  I mean why do Tylenol and Black & Decker and other well-known brands sell more than generic versions of the same thing, maybe twice as much sometimes?  For individuals, it could help you get a job, help you learn, help your reputation.

01:21:01

Eric says I’m somewhat sympathetic to pharmaceutical IP, but isn’t the bigger problem with the FDA forcing them to make their products public knowledge?  Well, I think the big problem is the FDA imposing costs on them, which then they feel the need to recoup by charging a monopoly price.  But if you actually read the chapter on pharmaceutical IP, I agree that that sort of intuitively seems like the strongest empirical case for IP, for patents.  But if you actually read the chapter on pharmaceutical patents in the Boldrin and Levine book, they empirically explode almost every myth about this.  I mean it looks like it’s actually just a complete myth.  It is not true that patents are necessary for the pharmaceutical industry to make a profit.  It’s just simply not true.  I mean you could say it seems like it, but it’s – the evidence shows that it’s not.

01:21:53

Anyway, I’ve already talked about some of these other ideas on page 22.  Nina Paley, who’s a friend of mine and an anti-IP artist, she had the idea – and Karl Fogel – of the Creator-Endorsed Mark.  In fact, one of my books has already been published with that.  There was a translation in Italian of my Against IP, which came out just a couple months ago, which has the – let me see if I can get it, which has the Creator-Endorsed Mark on it.  And the idea – this is the book.  And if you – well, you won’t be able to see it.  It’s very small.

01:22:39

But right here, you can see the Creator-Endorsed Mark is one of those marks.  Now, the idea – I asked them to do that.  So the idea is that fans of a given author or artist would be more willing to buy from one that’s officially endorsed by the artist both because they think some of the proceeds are going to the artist because they’re more trusting that it’s the most recent one or the authorized version or whatever.

01:23:10

Movie theaters can still sell tickets even in the face of downloaded movies and DVDs.  They can innovate and add things like 3D or better experiences that are not possible in other environments.  I mean of course movies are still popular all these years.  They’ve been whining about it for years.  By the way, we’re a little bit over now.  I’m about to wrap it up because – I’m willing to stay later, but I know a lot of people get tired after 90 minutes.

01:23:38

And take a look at this Kickstarter idea too.  It’s a way to fund ideas.  It’s like you get people to commit ahead of time.  You can do the same thing, subscriptions to novels and things like that to release your next novel.  So there’s lots of ways to profit off of your ideas.  Oh, these are other versions, other things similar to Kickstarter, IndieGoGo, which lets projects be funded like low-budget documentaries and quirky social project development.  The micropledging service, The Point, which I’m thinking about using for something myself, lets people pledge.

01:24:14

And so actually I need to update this.  So Bob Murphy, who’s an Austrian, has challenged Paul Krugman to a debate and is trying to get $100,000 pledged to shame Krugman into debating him, $100,000 that could go to some charity.  I’ve pledged too.  I’m hoping it comes through.

01:24:32

Anyway, we are done.  I finished it on time, so I’m pretty happy about that.  I am happy to answer any questions, whatever anybody wants.  We can sign off if everybody is tired and ready to go.  The final exam will be up soon.  Don’t feel compelled to take it, but don’t be afraid to take it either.  It doesn’t matter how you do.  It’s fun and kind of going to remind you of some of the things in the course.

01:25:02

So any final comments or questions?  Thank you guys.  I enjoyed it too.  And thank you, Gwen, for tolerating some heretical-sounding ideas.  And if there’s any questions that occur to anyone now or people that are listening on the recorded lecture, feel free to post them in the questions forum.  I’ll be happy to address them in writing.  I guess we’ll sign off now, but I enjoyed the course a lot.  Thank you all for being a good class.  I kind of enjoyed the smaller, intimate class here.  Thanks Donald.  Thanks everybody.

01:26:11

Podcast (kinsella-on-liberty): Play in new window | Download (Duration: 1:32:06 — 84.3MB)

Kinsella on Liberty Podcast, Episode 176.

This is the fifth of six lectures of my 2011 Mises Academy course “Rethinking Intellectual Property: History, Theory, and Economics” (originally presented Tuesdays, Mar. 22-April 26, 2011). The first lecture may be found in KOL172.

GROK SHOWNOTES: In the fifth and final lecture of the 2011 Mises Academy course “Rethinking Intellectual Property: History, Theory, and Economics,” libertarian patent attorney Stephan Kinsella examines rights-based arguments for intellectual property (IP), particularly patents and copyrights, arguing they fundamentally conflict with libertarian property rights by imposing artificial scarcity on non-scarce ideas (0:00-10:00). Kinsella recaps the course’s prior lectures, emphasizing that property rights apply only to scarce, rivalrous resources to resolve conflicts, and critiques rights-based justifications—natural rights, labor/desert, and creation-based claims—using examples like a patented mousetrap to show how IP restricts owners’ use of their physical property (10:01-25:00). He argues that IP is a state-enforced monopoly that redistributes property rights, stifling innovation and competition, and contrasts this with the free market’s reliance on emulation and knowledge sharing (25:01-40:00). Kinsella’s lecture, rooted in Austrian economics, frames IP as a philosophical and practical violation of liberty.

Youtube and slides for this lecture are provided below. The course and other matters are discussed in further detail at KOL172. The “suggested readings” for the entire course are provided in the notes for KOL172.

Transcript and Grok detailed shownotes below.

Lecture 5: PROPERTY, SCARCITY, AND IDEAS; EXAMINING RIGHTS-BASED ARGUMENTS FOR IP

GROK DETAILED SUMMARY

SUGGESTED READING MATERIAL

See  the notes for KOL172.

❧

Transcript

Rethinking Intellectual Property: History, Theory, and Economics—Lecture 5: Property, Scarcity and Ideas; Examining Rights-Based Arguments for IP

Stephan Kinsella

Mises Academy, April 12, 2011

00:00:00

STEPHAN KINSELLA: … like he usually does.  How is everybody doing tonight?  Is everyone – is it night for everyone?  Do we have any foreigners here online yet?  I don’t see a way – Gwen wants to know about popping the media to your panel.  I don’t see a way to do it, so what we’re going to do is I’m going to share my desktop later when I get to that video, so that’s down the line.  So let’s get going.  I spent actually a couple of hours today on a blog post, which we’ll get to shortly.

00:00:43

So today we’re going to focus on sort of the libertarian Austrian framework that you need to have to look at all this stuff the right way.  We’ve kind of gone through the conventional views, the sort of confused natural rights views for IP, the utilitarian views.  But now let’s approach it from the ground up the way it makes more sense.  Oh, I didn’t change the date on this slide.  It’s not December 10, but everything else has changed.  Sorry about that.  Okay, I’m going to go through a few posts I did on C4SIF in the last seven days, and also I left a few in from the last version of this course because they were pretty substantive, meaty posts that make good material.

00:01:30

What I’ve been doing actually is I listen the day before these lectures to the one I gave on the same day last course to kind of remind myself of what I covered that wasn’t planned.  And that way I can gradually improve these.  But anyway, and I decided to leave some of the things in, but we’ll get to those in a second.  So the post I spent a lot of time on today was this one here, the first one, “Mossoff: Why Business Leaders Should Care About Intellectual Property.”

00:01:58

This is on slide two.  By the way, can everyone see and hear me okay?  Anyone – anyone?  Sound okay?  Too loud?  Too quiet?  Or is it all right?  Fine, good.  This is the shirt, by the way, I was given when I went to Austin and gave a speech on IP.  Norman Horn gave me this and Coke paid for it so I’m happy about that.

00:02:24

00:02:27

So Adam Mossoff is a law professor at GMU.  He’s an objectivist.  He’s one of the few people still trying to come up with a way to justify intellectual property and in particular from the objectivists or Ayn Rand’s point of view.  So if you want to read that post, I kind of go through a lot of problems with his speech.  He gave a long lecture, and it’s just full of confusions and errors, and I think most of you just from taking this course, you can see a lot of the mistakes he makes.

00:02:58

He makes the mistake of basically assuming there’s a property in value and also of assuming that you create a thing called value that you have a property right in without recognizing that what you really do when you create or produce is you transform with your effort owned property that you already own, and you make it more valuable.  So property rights don’t really factor into the new wealth that you created.  The wealth is just the more valuable configuration of your property that you’ve transformed with your effort.  So there’s a lot of other just one mistake after the other in his talk, so take a look at that.

00:03:43

Someone emailed me today and said why are you wasting your time on this guy?  And I said, well, there’s not many more people left to debunk.  There’s really not many good arguments for IP, as I think we’ve seen in this course and as we’ll continue to see throughout the rest of tonight’s lecture.  Kevin Carson, who’s a mutualist left libertarian, had a kind of provocative little post comparing the arguments for intellectual property to the arguments for slavery.  And I think he’s got a good point.  I mean they both involve owning – telling other people what to do with their bodies and their property.  Take a look at that.

00:04:22

My good friend, Jacob Huebert, who wrote the great book Libertarianism Today – it’s a fairly recent book.  And he’s got a great chapter on IP in there.  It’s a great overview and synthesis.  Well, he just did a debate himself at Whittier Law School.  He actually got me invited to Ohio, where he’s from, a couple of months ago to speak before the Federalist Society on IP at Ohio State Law School.  And he just did his own debate at Whittier Law School, and he does a really good, excellent 15-minute presentation.  So if you just listen to that.  His approach is a little different than mine, but we agree completely.

00:05:00

He’s very solid.  He’s a really good speaker.  And just like when I debated someone, his opponent was I mean just pathetic.  His opponent was better than mine actually.  His opponent at least tried to come up with an argument.  But he’s just another lawyer software guy and doesn’t really have much of an argument.  In fact, in the middle of it, he even says I don’t really believe everything I’m arguing here, so he’s just trying to come up with arguments.  My opponent was just an amiable, nice patent lawyer who really had no arguments whatsoever except I think we should reform it but not get rid of it.  I mean that was his argument.

00:05:35

So I haven’t posted on Atlas Shrugged, the movie.  Many of you might have heard of that.  I haven’t seen it yet.  I don’t know.  Has anyone here seen the movie, Atlas Shrugged, by the way?  I’m curious.  Gwen says she’s seen it.  Well, thumbs up, thumbs down?  How many stars out of four would you give it, Gwen?  I’m curious.  Wow, 4/4.  It’s getting polarized reactions.  My wife wanted to see it this weekend with me because I pumped her up about it.  But then I read some of the negative reviews, and I thought I might wait for the video because I didn’t want to take her there and have her disappointed.  She’s not as much gung-ho as I am.  Anyway, there was an interesting thing about this movie.

00:06:15

Some of you may or may not know.  So this movie has been sort of back and forth for years about whether it was going to be made.  Gwen says it was excellent given the limitations they had to overcome.  That’s what I wanted to talk about is the – why did they have limitations?  They had limitations because I think Leonard Peikoff had licensed the movie rights to the novel to some producer, and they were about to expire because they actually had a big movie deal at one point with Angelina Jolie and others, but it fell apart.

00:06:46

So the movie rights were about to expire, and unless he started production on a given day, they would expire.  So I think he contacted Peikoff and he said can I have an extension.  Peikoff said no because Peikioff’s a typical objectivist and surly and not cooperative with people.  And so he denied him permission, so the guy had no choice but to start production last minute, so it was kind of a rushed production, lower budget than normal, bunch of no-name stars.  That might have helped it in some ways, but anyway, if it suffers because it was rushed, it’s because of IP, because without IP, the movie would have been made a long time ago.  And it wouldn’t have been a rush.  In fact, many versions may have been made by now.  So it’s kind of ironic that Ayn Rand’s movie, the movie version of her beloved novel, may have been hampered or at least diminished because of IP, which she supported.

00:07:42

This is just a little quote I came across from doing some reading, a case – a district court – a federal case from 1995.  And this is just common wisdom.  Everyone knows this except libertarians who argue for IP and claim that it could arise in a common law system.  Unlike – I’m going to quote here.  “Unlike contracts, copyrights and rights flowing therefrom are entirely creatures of statute…”  Well, that’s what I’ve been arguing the whole time.  Patent and copyright are creatures of statute.

00:08:09

They could not exist without legislation unlike contract rights and property rights and inheritance rights and marital rights and even crime and punishment, which arise naturally in a decentralized legal system.  Gwen says I think Atlas was more limited by the ideological barriers from Hollywood fighting against it than its IP limitations.  Could be, could be right.

00:08:33

Okay, next page.  Oh, this was one.  “Google to sentence YouTube violators to ‘copyright school.’”  So now Google is – and they’re doing this reactively.  They’re trying to stay out of trouble, but anyone who’s charged with YouTube – posting YouTube videos that violate copyright, they have to take a copyright education class.  And I think it’s just horrible.  It reminded me of one of my favorite quotes by C.S. Lewis, one of my favorite authors.

00:09:06

And he criticizes this sort of rehabilitation mentality we have in society now.  It’s one thing to punish someone for committing a crime, but to try to reform him can be monstrous.  And I’ll just read a bit of this quote here.  You can read the rest later.   “Of all tyrannies, a tyranny sincerely exercised with the good of its victims may be the most oppressive.  It would be better to live under robber barons than under omnipotent moral busybodies.  The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated, but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

00:09:46

Anyway, so that’s a great quote, and it sort of reminded me of this Orwellian education mentality.  I also spent a good deal of time using some of the material I’ve developed in this course, which you’ve already learned most of, to develop sort of looking at the four sort of historical periods or phases of IP abolitionism, all the arguments.

00:10:13

And take a look at that, but most of it will be familiar.  The first phase would have been the one that Machlup outlined in the late 1870s.  Remember we talked about how there was a lot of agitation against IP, arguments back and forth similar to the ones we’re having nowadays, until that panic of 1873 caused the free traders and their opposition to patent and copyright and their opposition to protectionism to be in disfavor.  And when that happened, the opposition to patent and copyright sort of crumbled.

00:10:45

Thank you, Danny.  The second phase of IP abolitionism you can – I would say it would be this vigorous period of debate by these left individualist anarchists like Benjamin Tucker and his crowd around his magazine called Liberty in the late 1800s.  So there was a vigorous set of debates there, and Benjamin Tucker was excellent on this stuff.  It’s amazing how good he was so far back.  He was better than all the rest, better than Spooner, better than Tak Kak, and the other guys.

00:11:20

And then I’d say the third phase would have been the sort of modern renaissance in the 1950s to the, let’s say, 1980s of free market economists and libertarians like Murray Rothbard, Wendy McElroy, Tom Palmer, and then economists like Fritz Machlup and Arnold Plant, pretty much all coming to the conclusion – Hayek, by the way, arguing against IP.  But they kind of made comments, and then they’d disappear because IP wasn’t that pressing of an issue.

00:11:52

And then finally I think we reach our current age, which you can mark as starting around 1995 for three reasons.  Number one, ’95 is when you can kind of say the internet started its current dominance, and when the internet started and digital copying and digital information became more ascendant, then the problems caused by IP—copyright and event patent—became more obvious and exacerbated.  And then also ’95, I wrote my first article against IP, and I’m sort of in the new generation of anti-IP writers, and so did Roderick Long who’s got some great stuff on that.  So ’95 you could say, and then it started picking up steam around 2000-2003.

00:12:35

So I’d say the last seven or five years has been really the full flowering of a strong movement against IP.  Most libertarians you might now that are principled and Austrian-related or anarchist, they’re pretty much – and the young people on the left, the left libertarians, the amount of IP opposition is just astounding and awareness too.  I mean you hear sophisticated arguments from all these commenters on the blogs.  Now, they’re all reading all this stuff, my stuff and Roderick’s stuff and all the stuff out there.

00:13:09

I mean the case is not that hard to understand, but it’s complicated, but it’s – I think really the defenders of IP are on the ropes, and I think they know it, at least among libertarians.  These are some older posts from my last incarnation of the course.  The first one, you might want to take a look at the first link.  I’m on slide four now.  By the way, I have posted these slides.  Danny, they are all in the course materials.

00:13:39

I don’t know if anyone wants a Google Docs version of them to link to, but these slides are on the course page.  Sorry, I should have mentioned that earlier.  So the first post here is “Property Title Records and Insurance in a Free Society.”  And I wrote that, and take a look at it if you’re interested in that.  I kind of went into some detail about the history of – and the libertarian theory of how – what property title means, how it would be recognized, and what the state’s relationship to it is.  And the reason I wrote this is in the IP context is that quite often IP proponents will say, well, you don’t need legislation to have IP.  It would just evolve naturally.

00:14:28

And quite often they’ll say, well, people would just have a private title registry, and they would register their title to this invention or to this copyrightable work.  And I went into this to show that that’s such an unworkable idea, and that’s not how property works.  I mean originally property works by visible or observable, physical boundaries or borders.  I mean people would actually put stones down.  They still do sometimes, markers down to mark where their land is, and if someone has a coat or a stick, you can actually see that they have that.  You can see what its borders are.

00:15:07

When society gets more sophisticated, certain things like immovables or land, real property some people call it, you tend to register that.  And the law develops where I can sell you a moveable, that is, just like a personal object like a cow or a watch.  I can sell that to you manually by handing it over, or we could even have a verbal contract – I’m sorry, an oral contract about it and that suffices.

00:15:43

But certain formalities and rules have arisen, which are understandably so, for things like land.  So you have to have a contract to transfer land in writing.  So the only way someone’s going to get title to land now from a previous owner would be either something in writing or if they squat on it and basically – for 30 years or something or 20 years or 10 years, whatever the period is in that jurisdiction without the owner objecting, and then they would own it by prescription or statute of limitations.

00:16:14

By the way, just as an aside, I mentioned this before in another class, and I hope I haven’t mentioned it here already.  If I have, just stop me.  But I mentioned the oral contract before.  You will always hear people say oral contracts, but it’s actually the wrong terminology.  Well, actually, oral is correct.  They say verbal.  They’ll say a verbal contract, but verb just means a word, right?  All contracts except manual contracts where I hand you a dollar and you hand me a candy bar, there’s nothing exchanged.  It’s just meaning is exchanged, but most contracts are verbal in that words are used.  Now, the words can be spoken, or they can be written.  If they’re written, it’s a written contract.  If they’re spoken, it’s just an oral contract or an oral understanding.

00:17:00

Okay, the other thing I mentioned was I called land immovable.  This may be helpful for you to know.  It’s not too relevant to the IP course, but it’s a good thing for libertarians and people interested in legal theory to know.  There are two major legal systems in the world today.  There’s a couple of others.  There’s Islamic law, and then there’s Jewish law and Asian law, which is kind of based upon one of these two main types, which is civil law.

00:17:29

So the two main types of law in the world today are common law and civil law, sometimes called continental law.  So the common law is the current version of the law in England, the United Kingdom, and the commonwealth countries that arose from England—US, Canada, Australia.  Now, there are some exceptions actually.  In the UK, which is Great Britain and Northern Ireland, so Northern Ireland is one country, and then Great Britain has three sub-countries—England, Wales, and Scotland.

00:18:09

Scotland is actually a hybrid regime.  It’s sort of a civil law regime.  So is Louisiana in the US, and so is, I think, Quebec in Canada and so is Puerto Rico because Puerto Rico is from the Spanish – so South America, Latin America, and most of Europe are all civil law.  So you have common law countries and civil law countries.  The civil law countries basically come from codifications about 200 years ago of the current European customary law, which was based upon principles of Roman law.

00:18:47

Now, the Roman law was in place in Rome obviously for about 1000 year and is older than the English common law.  But actually the Roman law is similar to the English law in that they were both sort of decentralized legal systems, decentralized legal systems, Roman law and common law.  In fact, the Roman law influenced some of the common law.  If you see Blackstone’s treatises, you’ll see that it’s organized along the lines of one of the famous Roman scholars, Gaius, in his Institutes.

00:19:20

Anyway – but the difference nowadays between the civil law and the common law is that the civil law took the Roman law rules, which were similar to the common law rules except they had different names, different words, and different concepts but similar in substance.  Contracts would be respected.  Property is to be respected.  There’s rules for marriage and divorce, all this kind of stuff.  And civil law took these rules and codified them, and then the legislature adopted them and made legislation the prime source of law.

00:19:57

So the key hallmark of civil law, continental law, half of the modern or the western world today, is that it’s legal positivism, legislative supremacy.  The idea is that the legislature is supreme and that case law was to be minimized.  So at first it was a big difference in sort of philosophy of these two systems.  But in the last couple hundred years what’s happened is the common law in England and America and other western common law countries has gradually been supplanted by legislation as well.

00:20:29

Congress passes tons of laws every year.  State legislatures in the US pass lots of laws.  And they gradually encroach upon the domain of the common law, that is, a judge-made law, so that these – in a way, those two systems are converging.  The civil law systems and the common law systems are converging.

00:20:47

Anyway, that’s just a side note, but the reason I brought it up was because property is called immovable property in the civil law.  But a real property—that’s land I’m talking about—in the common law and personalty in the common law or immovable property in the civil law.  Anyway, just a little digression there.

00:21:05

Actually, there’s a way to classify intellectual property by this scheme.  Intellectual property is – I think they call it an incorporeal – in the civil law an incorporeal moveable.  Now, I don’t know how you know that intellectual property is moveable.  I guess because it’s not land.  So I think it’s strange to classify something that has no body, but they call it incorporeal, which means no corpus, no body.

00:21:31

This is an older post too, but I like some of the quotes I collected in it.  Take a look at the quotes from Reichman.  Now, these are conventional, mainstream, regular scholars, and they’re in favor of IP.  They’re not trying to hide it unlike some libertarians like objectivists who try to fight this.  They try to say it’s a natural right, etc.  It doesn’t have utilitarian basis.  Almost everyone that’s in favor of this recognizes this.

00:22:00

Here’s a guy named Reichman.  I think it’s Jerome Reichman.  “Governments adopt intellectual property laws in the” – I’m on slide four.  I’m reading this quote here.  “Governments adopt intellectual property laws in the belief that a privileged monopolistic domain operating on the margins of the free market economy promotes long-term cultural and technological progress better than a regime of unbridled competition.”

00:22:26

So he’s explicitly admitting this is the major justification given nowadays for these laws, and you could see he’s describing accurately what it does.  Basically, it limits competition.  It protects people from competition.  Now, usually capitalists and libertarians are not ones that complain about competition.

00:22:47

In fact, as I mentioned on that blog post today I did, on the Mossoff blog post, in Atlas Shrugged you will see Ayn Rand putting into words of the villains like the dog-eat-dog competition law.  I mean this is what the bad guys do.  They criticize dog-eat-dog or unbridled competition.  But this is what IP laws are designed to do to stop or to limit, to put limits on unbridled competition, so it’s just another form of protectionism.

00:23:16

Here’s another one.  Oh, I must have cut off her name.  I think it’s a – let me go to slide five and see if I’ve got her name here.  Oh, I think that’s more from Reichman, sorry.  I’ll just skip that quote.  Go to the next page, slide five.  Here’s Alan Devlin, another scholar.  “The patent bargain is an easily understood concept.  Awarding the inventor 20 years exclusivity naturally entails considerable social cost.”  See, so he’s admitting that there’s a big cost to this.  “A cost that rises in direct proportion to the value of the covered invention.  In certain cases—those where the patented technology is so useful that there are no substitutes—the award of a patent creates a complete economic monopoly.”  He’s admitting it, so he’s admitting that there’s a cost, that these things are monopolistic sometimes leading to a complete monopoly.  This is, of course, true.

00:24:13

New York Law School Professor Beth Noveck, she said, “A patent is a pretty significant monopoly, so we want to make sure we’re giving it to the right people.”  Now, this is just horrific to the libertarian to hear these conventional mainstream people talking like this about manipulating people’s lives and their rights and using the government to tweak things left and right.  But this is how they think about it, and this is the nature of these monopolies.  And for libertarians to defend it, I think they have a lot to reckon with to – because they’re on the same side as these people.

00:24:46

00:24:52

These are some older ones.  These are older posts we can skip now so I’ll have time to get to the other stuff for today.  This is an older post I wanted to point to.  I think I’ve mentioned it before, and we’ll talk about this next class when we talk about a future world, future IP-free world.  But I do have a post collecting some ideas about ways you can fund innovation today, and maybe you could extend this to an IP-free world.

00:25:24

So there – just take a look at these.  There’s micropledging services.  There are – Kickstarter is a way you can get people to contribute or agree to fund a project ahead of time.  Also, this is an older post as well, but it’s interesting.  You might want to click on this link and take a look at it.  I got this from the book called The Master Switch by Tim Wu.  He’s the guy that invented the term net neutrality apparently.  He’s just another conventional law professor, tech kind of guy.  He’s a little bit skeptical of patents and copyright.  He’s not completely opposed to it, but he would like to reform it, and he sees a lot of problems with it.

00:26:05

And there was another post I think I linked in here too, but it’s fascinating to see how patent and copyright, especially patent, had a huge impact on the current movie industry that we have today in the US, the Hollywood movie industry, how they – some of these studies have actually moved to Hollywood to escape the patent influence they were suffering from in New York and other places, and then how they’ve organized themselves the way they’re organized now, again because of patents.

00:26:41

It’s fascinating to see what a distorting effect that IP has had on society and culture.  And if you remember, I talked in a previous lecture about – the one about the Omega watch decision and about – I think I have a post on my C4SIF.org blog called “Leveraging IP.”  But the point there was I was given the example of how Omega could not stop Costco from buying its watches in – was it Argentina?  Some South American country, which were cheaper there, and reselling them in the US, engaging in price arbitrage.

00:27:27

They couldn’t stop them from doing that legally because they weren’t doing anything wrong.  So they put a copyrightable design on the back of the watch and then accused Costco of violating copyright.  Costco said, well, there’s the first-sale doctrine, which says that once you buy something protected by copyright, you can resell it.  Costco said ah, ah, ah, you bought it outside the US, and the first-sale doctrine only sort of gets started once you have it in the US.  So they use some technicality in the law there.

00:27:55

And I also mentioned how, in the field of fashion design, a lot of designers use their trademark logos as part of the fashion design itself, part of shoes, part of purses, part of luggage, part of clothing because they have no other way to stop knockoff companies from copying their designs.  So they actually strangely embed their trademarks in the design itself, and that’s become a theme of high fashion now.

00:28:26

I’m not saying I don’t like it, but I don’t think this would have happened if not for trademark law.  If trademark law were restricted just to cases of fraud, then it would have done no good to put that logo on there because, for example, a knockoff Chanel purse, which embedded the same logo in the purse fabric, as long as the seller doesn’t defraud the buyer and the buyer knows they’re buying a knockoff, there’s no fraud, and there would be no trademark action.

00:28:5

So if trademark action were not statist and distorted as it is now, then fashion designers would have – they wouldn’t have had copyright protection like they don’t.  They wouldn’t have had patent protection, and they wouldn’t have been able – it wouldn’t have done them any good to put the trademark as part of the design.  So they wouldn’t have done that either.  I don’t think they would have done it.  I think they did it for these reasons.  So the entire fashion industry would look different now.  So that’s another way that IP can distort culture, distorted Hollywood, distorted the way movies are distributed.  It distorted fashion.

00:29:30

It distorts innovation because, for example, when you – when patent law protects some things but not others, then people are going to tend to engage in innovation in the areas where they can get protection in, practical gizmos, things that are about to be invented, not things down the road, not more long-term R&D.  So then the government has to come in with government funding of research and development.  After all, there’s not enough of it going on.  So you see, the government creates a problem and solves it by more intervention and more taxes.

00:30:03

Another way that it distorts R&D is a lot of smaller companies are unable to enter into an arena because of barriers to entry caused by the large patent holdings of bigger companies, or they see a crowded field, a field crowded with lots of patents, and they are – they’re reluctant to go into that area, so they go into another area.  So they don’t even innovate.  They don’t even try to innovate in the protected area.  That distorts the market.

00:30:34

And as I mentioned, a lot of companies do crazy things like the way that HP laser printers are designed to have chips, sort of chips and circuitry and mating devices half built into the laser printer body, half into the cartridge, so that any infringer that makes a knockoff of the cartridge like a cheaper laser ink cartridge is infringing a patent.  So they basically arrange their products just so that they can cause people to be infringing if they make a copy.  So that’s distorted the way industry and technology in the market have developed as well.  Any questions about that so far?  Is that clear?  Hello?  Am I live?  Hello?  John, you there?  Good.

00:31:38

Okay, before we get to the main part of the lecture, for those of you who are interested in Hoppe, I bring this up because there’s a lot of – I mean I think Hoppe is the greatest living libertarian theorist and probably the greatest libertarian theorist ever, greater than Rothbard because he built on Rothbard and Mises, and I think his theories are just amazing.  In fact, I intend to give a course on Hoppe’s political economy later this year.

00:32:06

So a lot of people ask, well – that are Hoppe fans that don’t like my IP idea say, well, are you – what was Hoppe’s view on IP?  And he never wrote a lot about it.  I always knew he agreed with me because he encouraged me to write on this stuff, and my stuff is based upon his property theories.  I mean it’s a natural implication of what he’s developed.  And I know he’s in favored, but he doesn’t have a lot in writing about it because he hasn’t concentrated on that, but he did have something in 1988, which I’ve pointed people to.

00:32:40

He was on a panel, David Gordon and others, and someone asked Hoppe: Does the idea of personal sovereignty extend to knowledge?  Am I sovereign over my thoughts, ideas, and theories?  And Hoppe said, “In order to have a thought, you must have property rights over your body.  That doesn’t imply that you own your thoughts.  The thoughts can be used by anybody who’s capable of understanding them.  So you can see he’s sort of with us on this, but he didn’t go very far with it.

00:33:09

But he was interviewed earlier this year just a couple months ago by the Daily Bell, and someone asked him explicitly if he agreed with my stuff, and I won’t read the quote, but – well, I’ll read part of it.  They asked him if he agreed with the anti-IP view that I have, and he said, yeah, it’s not just wrong but confused and dangerous.  Ideas, recipes, algorithms, theorems, etc. are goods unless they’re bads”—and we’ll get to this later in today’s lecture, by the way—“but they’re not scarce goods.  Once they’re thought and expressed, they’re free, exhaustible goods.

00:33:45

Imagine I’ve been granted a property right in my melody or poem such that I can prohibit you from copying it or demanding a royalty from you if you do.  Doesn’t that imply absurdly that I in turn must pay royalties to the person or his heirs who invented whistling and writing and so on and further on to those who invented sound-making and language and so on?”  And of course he’s right.  He’s taking it – he’s showing that the idea of IP is absurd and would basically lead to a stand-still of human life if it were applied stringently, consistently, and in a principled way.  I mean there’s a reason these rights expire after a finite amount of time.  I think people that advocate them realize that it would be unworkable if they let them last for too long.  It would strangle human life.  I’m on slide ten.  I’m going to switch to slide 11 now.

00:34:36

Oh, let me just go on.  Hoppe says, “Second, in preventing you from making – preventing you from or making you pay for whistling my melody or reciting my poem, I’m actually made a partial owner of you, of your physical body, your vocal chords, your paper, your pencil, etc. because you did not use anything but your own property when you copied me.

00:34:58

If you can no longer copy me, this means that I, the IP owner, have expropriated you and your real property, which shows that IP rights and real property rights are incompatible, and the promotion of IP must be seen as a most dangerous attack on the idea of real property and scarce goods.”  Anyway, I don’t want to appeal to authority, but I just want to mention that because Hoppe is an influential thinker, and he’s clearly with us on this, as are all modern Austrian libertarians that I’m aware of.

00:35:27

00:35:30

This is from the last time, and I thought I would leave it in here.  One of these students had a question about trade secrets, and in case anyone here had any questions about trade secrets because I didn’t go spend too much time on trade secrets.  So I was going to go through this if anyone wanted me to.  Karl says – Karl Fielding writes, “Without IP, secrecy would develop a more pleasant odor.”  Well, I think it would.  I think that right now, like as I mentioned before, the IP law, the patent law attempts to basically bribe inventors to reveal their secrets.

00:36:10

You give them a monopoly in exchange for them publishing or disclosing in a patent application their invention.  But as I mentioned, it doesn’t really – that doesn’t result in too many more disclosures because most people that patent their ideas would have disclosed them anyway when they sold a product.  But other people that are not going to patent their stuff—they can’t afford to or they don’t want to—they’re under the constant threat that they would be sued by someone who later independently invents the same idea and patents it.

00:36:44

So some of them engage in defensive patent publishing, and they disclose what they would otherwise have the right to keep secret in a trade secret.  So the entire field of secrecy is distorted by patent law.  I tell you what.  That’s slide 12.  Let me skip this.  If anyone has any questions about that, I’d be happy to go into it, but I’ll skip it for now because it’s not a systematic part of this lecture.

00:37:07

00:37:10

Okay, so where we left off.  Last time, we talked about the two basic arguments for IP.  Basically, people say we need it because we need – we won’t have any innovation or enough innovation without it or at least that it encourages innovation, and we get a lot of bang for our buck.  That’s sort of the less-principled view.  That’s more the tinkering policy view, the wealth maximization view.

00:37:38

The sort of principled view or the rights-based view, which a lot of libertarians gravitate towards and Randians pretend they gravitate towards, is based upon the idea that the inventor has a right.  See, the other idea says the inventor – doesn’t say the inventor has a right.  In fact, if you think about it, the Constitution, which is type two here on slide 13, wealth-maximization based, utilitarian, the Constitution is that way because it says Congress has the power to grant – to authorize, to pass a law that grants these patent and copyright monopolies.  It doesn’t say they have to.  It just gives them the authority to.

00:38:15

Congress could abolish the patent and copyright law tomorrow, and it wouldn’t bother the Constitution.  So the Constitution doesn’t see this as a right of authors or inventors.  It just sees it as a policy tool the government might want to use for its own ends to encourage disclosure, to encourage innovation and artistic creation, etc.

00:38:36

So the other argument is that inventors and creators have a right.  That is, they deserve some kind of legal protection, basically protection from competition in the sale of their creations whether it’s an original work in the case of copyright or whether it’s an inventive machine or process or something like that in the case of a patent.  So those are the two basic arguments for IP.

00:39:07

00:39:12

And I think I’ve – as I went along, I tried to explain a lot of the problems with their arguments, but what I want to develop is sort of the from-scratch libertarian perspective on this, just the right way to view this whole area.  And once you see that, it becomes easy to see what’s wrong with these other arguments and what’s wrong with IP in general.  But just to summarize, the main problem with the wealth-maximization view in addition to the fact that value is not measurable and is not interpersonally comparable and that, even if you could do that, it would be unjust to take from A and give to B just because the value of what you took from A is less than the value that it means to B.

00:40:00

In addition to those problems with it, the primary problem is that these guys say that – the advocates of IP that say they’re in favor of it because you need it and because it generates net wealth in the form of innovation, they never prove it.  They never have any arguments.  They never have any data.  They don’t even have any guesses.  So – and in fact, all the studies or the predominant bulk of the studies are either extremely skeptical or conclude – they study another area and they’ll say it looks like patents are hurting innovation here.  It looks like patents are not necessary here in this historical period.

00:40:38

I mean all the data points against having a patent or copyright system at all, so if you really were a sincere utilitarian, you would go with the data, which says let’s don’t have these laws, at least until we can prove it.  So that’s the primary problem with utilitarians.  The primary problem with the rights-based arguments is that they – number one, they don’t comprehend the role of learning and information in action and its distinction from the role of property as being scarce.  They do not distinguish between value and wealth on the one hand and between property rights on the other.  And they also have been sort of fooled by this entire labor theory of value and the labor theory of rights that’s built into Locke’s theory, so we’ll get to that in a minute.

00:41:44

00:41:52

So this is what we’re going to talk about today in the rest of the lecture, so let me just go and get right to it.  Now, let’s step back and think what it means to be a libertarian or even to be sort of a free-market economic liberal in the good sense, someone who generally believes in prosperity, who believes in cooperation, who believes in economic efficiency, civilization, societal cooperation, peace.  Why are we libertarians, those of us who are, and what does it mean to have – to be in favor of property rights, and why do we need property?

00:42:37

I mean the basic libertarian rule in my conception is sometimes we say it’s the non-aggression principle.  That’s sort of the encapsulation.  I think this is not the – this is more of a second-order or derivative consequence of our basic rule because non-aggression means you don’t commit aggression against someone else or their property, which means you don’t use their property without their permission.  Or another way to put it is you don’t invade the borders.  You don’t invade their property, or you don’t alter the physical integrity of their property without their permission.

00:43:18

But what is their property?  You see, it’s only aggression if the thing that you’re trying to use is owned by the other person.  In that case, you need their permission, and if you don’t get it, then you’re committing aggression.  But what is property?  What rights do they have, and what things do they have property rights in?  So aggression is sort of a derivative result or conclusion once you have an idea of what there are property rights in.  So then the question is what is the libertarian view of property rights.

00:43:55

And in my view, the libertarian view of property rights is simply the way we assign property rights is in accordance with the Lockian homesteading principle, which is basically finder’s keepers.  The first person to appropriate something that was – a resource that was previously unowned is its user.  Now, I’m not trying to defend that view here, although there’s hints of that in a minute, but I’m just trying to lay it out.

00:44:25

This is what the libertarian view is.  So the libertarian view is a set of rules that help us identify who owners are.  And then once you know who the owner is, then aggression is just invasion of the property rights of those owners.  So aggression is not primary.  I would say aggression is secondary.  Property rights are primary.

00:44:48

So why do we need property?  Now, Hoppe starts out in his writing.  I think it’s chapter two – chapters one and two of his Theory of Socialism and Capitalism, which I highly, highly recommend with sort of a thought experiment, which is similar to what Rothbard does in the – in economics in the evenly rotating economy.  I don’t know if some of you – some of you may have heard of this, but Rothbard uses the mental sort of construct of the evenly rotating economy, not something we could ever accomplish in the real world.

00:45:24

The real world is dynamic and always changing, but it’s sort of a way to isolate certain features of the way economics works to understand certain features of economics in general.  So just like Rothbard has this ERE, or evenly rotating economy idea, even though it’s unrealistic, Mises has that too, or Mises has something similar.  I’m trying to remember what it is.  Does anyone remember what Mises calls the evenly rotating economy or what his version is?  Maybe it’s the same.  I’m thinking it’s Rothbard’s though.  Anyway, maybe John knows.  Maybe they both called it that.  Maybe so.

00:46:01

In any case – okay, so it’s Mises.  Thanks.  So Hoppe talks about – and also Robbins – or, I’m sorry, another similarity is in economics and in Rothbard’s social theory, there’s something called Crusoe economics.  So they also envision – now, this is not unrealistic.  It’s just not exactly common today, but they imagine Crusoe on a desert island, and then they imagine how economics would work there and also how social relations would work or how rights would work, whether they make any sense.

00:46:42

And then one day Friday comes onto the scene.  There’s two people there.  Can they cooperate?  Can there be a division of labor?  There could be trade.  There can be – and then socially there can be violence or cooperation, etc.  So they also introduced the Crusoe economic state.

00:46:58

So Hoppe talks about the Garden of Eden.  There is actually another word for this in German, which he uses in his recent paper in my journal Libertarian Papers.  I’m trying to remember.  It’s some German word, which is kind of cool.  Anyway, it means the Garden of Eden, a place of land and plenty or something like that.  So if you imagine this hypothetical construct of a Garden of Eden where – now, we’re assuming we still have human bodies, but basically there’s no scarcity at all if you can imagine that.  There’s no conflict.

00:47:31

If there’s no scarcity, there would be no conflict.  There could be conflict over bodies, so you would still need property rules to decide who gets to use this body, but let’s forget about that for a second.  Let’s just assume a world of scarcity.  You would have no need for rationing, no need for production.  Property rights would be completely meaningless and unnecessary.  So let’s just take an example that we have a world where there are either so many banana trees everywhere.  They’re super abundant.  They’re just everywhere.

00:48:07

You can just reach up your hand no matter where you are, and you can grab a nice banana, and let’s say they’re all the same.  They’re all healthy.  They’re all delicious.  They’re all great.  In this kind of world – now, remember, let me mention one thing.  As economists, we use the word scarcity in a technical way, and what we mean is basically rivalrous.  So scarcity means the property of a given thing such that conflict over it is possible.  This is very important.

00:48:38

I know Mises used the Land of Cockaigne, Danny.  But Hoppe has this German term like – maybe someone can look it up.  It’s one of the last one or two articles published in this year’s volume of Libertarian Papers and he’s got this term.  In any case, it’s not important.  So in this – so scarcity is sometimes used in two ways, and you have to be careful which way you’re meaning it because you’ll be – sometimes IP advocates will equivocate, which means they’ll use a word in two different senses to make a false argument.

00:49:16

So they will use the word scarcity in the common way to mean like rare or not very abundant.  So they’ll say something like, well, good ideas aren’t very scarce.  I mean good ideas are pretty scarce, but they don’t mean that they’re scarce in the sense that we mean.  What they mean is they’re not easy to come by.  There’s not many of them.

00:49:40

By the way, Karl says free goods aren’t objects of action, but scarce goods are.  I’m going to get to that at the end of the course – or the lecture today with a kind of break down.  But I would say that – well, that’s the sort of Misesian/Rothbardian – right, that’s the Misesian/Rothbardian/Hoppian idea of a background condition.  That’s correct.  It is not a means of action.  It’s not a means of action.  It’s a background condition.

00:50:08

Okay, now, whether you want to consider ideas and knowledge to be a background condition or a free good I think is just terminological, but like you say here, Mises calls free goods conditions of existence.  So in a way they’re the same thing.  But let’s get back to our banana example.  So let’s say we have a world – a physical world but a world where there’s just a superabundance of bananas.

00:50:37

Now, in this world, if I picked a banana and I held it in my hands, we could say that’s a scarce banana because it is a rivalrous banana.  Conflict over it could be possible.  If someone tried to grab that banana, only one of us could have that banana, and we would fight over it, and violence would be the result.  But, and here we get to the problem with these unrealistic examples.  Realistically in such a world, would I really even regard the banana as owned?  I mean would I even care if I was just possessing it or owning it?

00:51:16

I don’t think I would care if I owned it, which means having a right to have it because if someone took it from me, I would just grab another banana, and that would be fine.  I wouldn’t care.  And by the same token, no one would take it from me in the first place because they don’t need to.  They can just grab their own bananas from up in the air.  So you could see that sort of like if you think about the mathematical concept of the limit, which is used in the calculus, the conventional or the colloquial idea of scarcity as being lack of abundance converges with the economic concept of scarcity because, at the limit when there’s just superabundance, then we would say there’s no conventional scarcity of bananas…

00:52:04

And we also might say there’s no real scarcity either because no one – we have to regard these things as scarce goods.  So these things converge in this way.  Actually now – I was going to play this video later, but now might be a good time to play it.  I’m going to play the Nina Paley video because it plays into something I’m going to bring up next, so give me a second.  I’m going to play this from my desktop, and I hope that the sound is okay, so give me just a second.  Okay.

00:52:41

00:53:44

Okay, I’m back now.  How did that work?  Did it work okay?  I couldn’t see.  Could everyone see and hear that?  I could do it in the video window.  Let me try the first half in the video window here and see how this works for everybody.  Give me a second.  Okay, here we go.

00:54:16

00:54:55

Okay, I’ll stop it here.  Give me a second.  Let me turn this thing off.  Okay, now the reason I wanted to show that – is everyone back?  Let’s see.  Hold on a second.  I messed up.  Give me a second.  I’ll get it straight.  Okay, all right, now – am I back now?  It’s only a minute.  I don’t know if everyone could see the full thing.  I can’t in mine, but anyway it’s only a minute.  It’s called a minute meme.  It’s on QuestionCopyright.org.  It’s one of several videos by Nina Paley who’s a friend of mine, and she’s great.

00:55:53

She’s an artist, but the part I like in that is where they show the bicycle, like you just kind of touch someone’s bicycle and you pull your hand out and you create another one.  Now, that’s obviously not our world.  But in such a world, I mean basically we’re like mini gods.  We can all just conjure up what we want any minute.  In such a world, you wouldn’t need rationing.  So the point is, the purpose of property is for people who want peace and they want cooperation and they don’t want violence, which is what you have to have when people fight over these rivalrous things.  That’s what rivalry means.  You have rivals fighting over them.

00:56:33

If you want people to be able to use resources as means of action productively for long-term projects, to make crops and to use their house in confidence to have a long-term time horizon, to have low time preference, to have civilized society, then you’re going to want to allocate the right to use these things to individual people.  That way people can see who owns it, and they can avoid trespassing or using it, and everyone can use their own things peacefully and productively.  So this is the idea, the libertarian idea is to assign these property rights to people.  But now, every system assigns property rights to individual owners, even Soviet Russia, even China.

00:57:22

Someone has control over every resource.  The legal system designates an owner in every case, so what makes libertarianism different?  It’s our particular property assignment rule, which I hinted at already.  It’s the Lockian idea.  It’s the idea that basically the person who’s the owner is the person who is the first one – well, in the case of our bodies, it’s each individual person.

00:57:48

In the case of external objects, of scarce resources in the world, it’s the person who first acquired and used that property.  The reason is this person has a better claim than anyone else because everyone else that comes after is called a late-comer, and if you’re going to let a late-comer take property from a guy who had it earlier, then who’s going to – what rule can you come up with that keeps a second late-comer from taking it from him?

00:58:16

In other words, if you allow late-comers to take property from someone who had a prior claim to the property, then you don’t have property at all.  All you have is possession, which is basically a world where there’s no property rights.  It’s a world of might makes right, which is back to the original situation where we have conflict over resources.

00:58:39

Okay, so this – the libertarian position is really the only one that makes any sense.  As Hoppe writes, and some of this makes sense now that I mention this – sorry.  My alarm clock is going off.  I mean my cuckoo clock.  Anyway, Hoppe writes, “only because scarcity exists is there even a problem of formulating moral laws; insofar as goods are superabundant.”  By the way, I’m going to take a break after this, so everybody relax.

00:59:13

00:59:19

“Insofar as goods are superabundant (or free goods) no conflict over the use of goods is possible and no action-coordination is needed.  Thus it follows that any ethic—now, by ethic he means an interpersonal ethic, a political ethic—if correctly conceived, must be formulated as a theory of property, in other words, a theory of the assignment of rights of exclusive control over scarce means.  Because only then does it become possible to avoid otherwise inescapable and unresolvable conflict.”

00:59:50

Why don’t we take a five-minute break?  It’s 9:01 my time, so why don’t we come back at 6 past the hour?  And we will resume.

00:59:59

[break]

01:00:32

Sorry.  I took two minutes extra, didn’t realize that.  Okay, I would like to mention something here.  A lot of the modern opponents of – sorry, proponents of IP will say that scarcity is not important for property rights, and like I said they’ll do this equivocation thing where they’ll say good ideas are pretty scarce, something like that.  I think Neil Schulman who’s an IP advocate, neo-objectivist – excuse me – IP advocate, he had a comment the other day.

01:01:12

If my novel – something like if good novels aren’t scarce, why don’t you try to write your own, or something like that.  And I told him; I said, well, why don’t you substitute the word rivalrous and see if that makes any sense.  If good novels aren’t rivalrous, why don’t you write your own, and you can see it makes no sense whatsoever.  But this has been – this idea has been around for a long time.  I mean David Hume back in 1751, he emphasized the importance of scarcity for the – what the definition of what property is.

01:01:44

So did Benjamin Tucker in the 1890s, the economist Arnold Plant, 1934.  I have links here on slide 17 to blog posts I did discussing all these things.  Rothbard talks about it too, and of course so does Hoppe, which I just mentioned.  And now, Jeff Tucker and I have an article we wrote six months ago or so trying to figure all this out and trying to diagram.

01:02:14

I mean we went through Menger and Mises and Rothbard and Hoppe and some other Austrians and some other thinkers.  And they’re usually just a little bit different, and no one thought about some things a lot, so they didn’t take the time to carefully classify these non-scarce goods too closely.  You find hints of – you can find hints of insights in what they wrote, but we kind of had to just start from – try to redo it basically.

01:02:45

So let’s see where we are on this lecture here.  Anyway, the point is, as I mentioned earlier, that we do have scarcity.  This is the real world, and the implication is that we’re going to have conflict, and we’re going to have conflict unless we have property rights over these things, things that have exclusive use in that only one person can use it at a time.  We say exclusive because if I’m using it, it excludes your use and vice versa.  That’s what rivalrousness means basically.

01:03:19

Now, something that we should consider here—I’m on slide 18 now—this has a lot of implications for economics and the understanding of human action and interaction.  Now, I’m going to talk about what Mises called praxeology.  Some of you may be very familiar with this.  Some of you may know it a little bit.  Some may not.  For those who don’t, don’t be put off by the word praxeology.  I was for a long time.  It took me a long time to kind of start grokking Mises.  He’s got a strange terminology in some ways.

01:03:54

Praxeology is just – praxis means action or something like that, and –logy means, of course, logic or study of something.  So he just meant the study of human action or the science of human action.  And the reason he meant that was because he had a dualist view of science.  And I agree with it and so does Hoppe, and Rothbard in his own sense does too, in his own fashion.  Rothbard was more of an Aristotelian but still – and sorry – Mises was more of a Kantian and so was Hoppe but not in the subjectivist way or the idealist way that the objectivists rightly criticize.  They’re both realist.  Mises is a realist.  I’m a realist.  Hoppe is a realist.  Rothbard certainly was a realist.

01:04:41

Kantianism in this more European realist sense is not idealist and subjectivist in the sense that the Randians criticize.  I can give more information on this if anyone wants it, but that’s a fascinating topic, but it’s a little bit off topic.  But my point is Mises has a certain view of two realms of knowledge, and by the way, I would highly recommend that if you haven’t read a lot of Mises, do not start with Human Action but read his – I don’t know if it’s his last book, but it’s one of his last books.  I believe he wrote it when he was in his 90s.

01:05:18

01:05:23

Well, okay, Karl is interested, so let me just say here.  I’ll try to post something later with some links.  But what I would recommend, and this is in line with that, start with Mises’ book called The Ultimate Foundation of Economic Science.  It’s a short book.  It’s about epistemology and methodology, and it is just fantastic.  In a way, it’s sort of a reprise of his earlier book, Epistemological Problems of Economics, but it’s shorter, and it’s just fantastic.  It’s a – and I will send a link out, but the other ones I would recommend would be Hoppe’s short pamphlet.  It’s on his site, HansHoppe.com.  It’s called “Austrian Science in the – Economic Science and the Austrian Method.”  And also he’s got a chapter in the book, Theory of Socialism and Capitalism.  I think it’s chapter six criticizing positivism, logical positivism.

01:06:18

Oh cool, Danny.  Danny, is it by Mises?  Who is the article by?  The Mises Daily coming out tomorrow on Mises epistemology.  Anyway, I’ll wait for his answer on there.  Anyway, but let me just summarize.  What he does is he says, look, if you want to understand causal phenomena, that is, cause and effect and how we select the means that are going to be efficacious to achieve what we want to achieve, then you have the sort of natural sciences, empirical sciences.

01:06:56

We try to figure out laws of cause and effect, but if you want to understand what humans are doing, we’re motivated by – we have free – we’re understood to have free will or free choice, and we have goals that we pursue.  So when you try to understand your friends or other people that you observe, you think of them as being like you in that you’re both human actors.  You make choices, and you assume this guy is a certain character and he’s got a certain framework of action that he’s engaged in.

01:07:24

He’s trying to do something that will achieve some goal, and then you try to figure out what those goals are from empirical facts and from understanding from experience and from understanding other humans.  But the point is economics is about this second category.  It’s about teleology.  It’s about understanding the implications of human action.  And praxeology just means we think about the bare fact that we know that there are human actors out there, that is, intelligent, goal-seeking, choosing beings and that they act.  And just knowing this thing we can learn a lot about the structure of human action.  So, for example, at the bottom of 18, I’ve got some of these categories.

01:08:08

Now, that’s a Kantian idea, the categories.  It’s sort of the breakdown of undeniable truths or concepts, and by the way, this is not incompatible in my view with Aristotelian or Randian ideas.  They also had similar proofs, proving by contradiction, showing that denying something leads to a contradiction like the law of identity, the law of causality itself, the law of non-contradiction, the fact that there is existence, the fact that there’s consciousness.

01:08:43

I mean you have to be conscious to deny it, which is the essence of Descartes’ cogito, ergo sum: I think.  Therefore, I am, which doesn’t mean that you exist because you think.  It means that because you know that you think, you know that you must exist because only an existing being can think.   In any case, this is just a type of proof that these things are, so we know that they’re a subjective value.  That means the subject, the person himself, is the one that values.  We know that he makes choices.  This is implied in the idea that we act.

01:09:15

Karl says Kant thought categories were organic characteristics of the human mind.  I mean that is one interpretation.  My understanding is that that is the American idealist interpretation of Kant, but there is a more realist interpretation of Kant on the European continent.  But I will say that Kant was probably so murky that he leant himself to different interpretations.  But in any case, I and others are only in favor of a realist interpretation of this approach.  I think Mises was also a realist.

01:09:50

In any case, it also implies demonstrated preference, which means that we demonstrate what we value when we act, which also implies opportunity costs because whatever I’m trying to achieve, I’m demonstrating by acting to achieve it that I value that higher than any other thing I could have chosen to pursue.  And those other things are the second and third most highly ranked things, which are the opportunity costs of my action.  That’s the cost of my action, the thing I couldn’t pursue when I was pursuing this thing.

01:10:29

It also presupposes causality because if you didn’t believe there was a regular sort of concatenation of events, some kind of connection between your choice and use of a given physical means and your action to try to achieve some result, you wouldn’t even engage in action.  You have to believe there’s some kind of causality that would connect your action to the result you’re trying to achieve.  It also distinguishes means and ends.  The mean is what you use to achieve your end, and also the concept of profit and loss.

01:11:01

A profit would be not necessarily a monetary profit but a psychic profit.  That is you – the idea is that Mises says humans have felt uneasiness, and we act to try to alleviate or reduce that uneasiness.  And the uneasiness is always future-oriented, like I envision a future state of affairs, even if it’s a second from now, that will occur if I don’t act and that I don’t want to happen.  I would prefer some other state of affairs, so I intervene in the course of affairs to change what’s going to come in the future because I think I would prefer that.

01:11:38

Now, when you get there and let’s say you succeed in achieving what you had planned at achieving, but then you’re not satisfied, well, you could say there’s a loss.  You misunderstood what you really wanted, or let’s say the means you chose was not successful in helping you achieve what you were trying to achieve.  Again, you would have a loss.  So that’s where profit and loss come from, so all these categories are implied in the very concept of human action.

01:12:06

01:12:10

This is chapter 19 now.  Now, this is something I think is important to recognize.  We only have about ten minutes left.  Let me just finish talking about this.  I would have room for questions.  I don’t know if there will be a lot of questions because there’s just 12 of you online right now.  If there’s any questions, I’d be happy to stay late, but I think it’s late for a lot of people, so I’d like to stop close to on time.

01:12:34

I’ll go to – I’ll go ten minutes past if I need to or even further but not too much longer.  So if there’s questions, let’s save those for even next time or for the written course question page on the site over the next week.  So this is really important to recognize.  Given this understanding of human action that I’ve just laid out, there is a difference in scarce resources and knowledge, and I’m using knowledge in a general sense to refer to information, ideas, beliefs, recipes, techniques, what have you.

01:13:14

Now, some IP advocates will say that IP doesn’t protect ideas.  It only protects the expression of ideas or certain types of ideas.  I think that’s quibbling and it’s just petty fogging and irrelevant.  I mean IP does protect some types of ideas, not all of them, but it does protect some, and the question is should it.  Are there property rights in any ideas or any information or any type of information or knowledge?

01:13:37

Okay, so the function of the market and the function of action relates around the structure of human action.  So, as we mentioned, every action involves some means that you employ to achieve your goal.  But what’s the role of knowledge?  Knowledge stays in your mind or in your brain you could say, but knowledge is just information you have about the way the world works.  Typically it’s causal-related information, or it’s empirical data.

01:14:11

So the information might be knowing what means will achieve a given end, what possible means there are.  It might be knowledge of the cost of these means.  It might be knowledge of your own preferences, what kind of thing you prefer.  It might be knowledge of the possible ends that you could aim at.  It might be knowledge of the ends you’re giving up.  So knowledge plays a role when you make your decision.  Knowledge is a guide to action.  This is what Mises says and what other Austrians say.  They don’t emphasize it a lot because they sort of take it for granted, but I think it’s extremely crucial.

01:14:49

So let’s take an example.  Let’s say you would like to bake – let’s say you’re hungry, so you have a felt uneasiness.  You know that you’re hungry.  You’re going to get hungrier, and you’d like to do something to alleviate that hunger in the next hour or so.  So you might consult the knowledge you have, and you have knowledge of what resources you have on hand.  You have knowledge of your preferences of what abilities you have to do something about it, what other pressing needs you have for your time in the next hour two.  And you may say, well, listen.  I think I’d like a cake, and I can make a chocolate cake or I can make a lemon cake, and I know how to make both.

01:15:33

I have the recipe ingredients for both.  So you choose to do one of those.  Now, you use your information in your head, in your mind, your knowledge of how to make the cake to do it, to guide your arm, to guide your selection of resources.  But you use a mixing bowl and a spoon and an egg and the batter and an oven to bake the cake.  Now, you and your neighbor can do the exact same thing at the same time.  You can both be baking a chocolate cake using the same recipe.  You don’t need ownership of that recipe to use it.  You just need to have it, but a million people could have it and they could be using it at once.

01:16:17

But only you can use your bowl.  Only you can use your eggs.  That’s why these scarce things need to be owned for there to be successful, conflict-free, productive, cooperative action.  But ideas do not be.  And this is basically the reason why there’s confusion among the IP advocates about property rights and ideas.  They don’t stop to think about the role of information and knowledge and the role of means of action in action.

01:16:49

01:16:54

Let’s go to slide 20.  And another way to look at it is to step back and think that the way the universe is, the way our universe is, the way our world is, is we are faced with a world of scarcity.  This is the reality we face.  We are physical, mortal beings.  We’re fallible.  We’re frail.  We’re fragile.  The environment is hostile and dangerous.  It doesn’t maybe seem so now because we’ve come so far, but the world is a difficult place to survive in.

01:17:27

We have to constantly acquire food, protection, and fight against erosion and the weather and the animals and pestilence and sickness and scarcity and drought, and the world is a dangerous place.  But these two ingredients to successful action is the secure property rights and ownership of scarce resources and knowledge.  Now, over time, the body of human knowledge can grow and has grown, and every time someone discovers something, it can be added to the body of human knowledge.

01:18:08

Sometimes it’s lost, but over time, the more valuable bits get replicated and improved on and taught.  This is what learning is about.  This is what education is about.  This is why people teach each other.  This is what language is for in part, right?  This is why parents teach their kids and mentors teach their – what do you call the opposite of a mentor?  The protégés.  You take a job, you learn something from the job, and then you move on.  You go to a higher job, and this is what emulation is about on the market.

01:18:42

This is what competition is.  When one person is making a product that serves a consumer, other people see that he’s successful, and they might emulate him.  They might start making the same type of horseshoes he’s making, or maybe they’ll improve on his horseshoes.  In this way, the consumer is always benefited.  There’s always a ceaseless striving for improving processes, satisfying the customer, etc.

01:19:09

Competition and emulation in learning and the transmission of knowledge and the general use of the general body of human knowledge are actually good things.  They’re not bad things.  And one way to see this is to consider what the function of the market is with respect to scarce resources.  So the market is sort of the interaction of humans dealing with scarcity of things.  But the market with the division of labor in an advanced economy where there’s money, where there’s capitalism, where there’s industry, or where there’s division and specialization of labor, where there’s a lot of people, life spans increase.  Abundance is increased.  Scarcity is fought back.

01:20:00

The entire purpose of the market is to fight scarcity, to overcome scarcity, to make more things even though it’s difficult, to give us plenty and abundance in these scarce means, which are otherwise rare and scarce and non-abundant and rivalrous.  And yet we already have this for knowledge.  Knowledge is already non-scarce.  So the market is trying to overcome the problem of scarcity in the realm of scarce things.  And luckily knowledge, which is the second key ingredient to human action, is already non-scarce.

01:20:40

And IP law comes in and seeks to impose scarcity rules on knowledge and to make it artificially scarce.  The advocates of IP explicitly admit this.  They will say.  I’ve quoted some of them.  They say that we’re trying to reduce competition.  They say that we’re trying to slow down the spread of knowledge.  I mean they don’t deny this.  Well, to my mind, this is suicidal and insane and completely unjustified, and I think I sort of explained why by now.

01:21:14

Okay, we’re on the last slide; 21 is the last slide, and we’ll go on to the next lecture next time, so let me just talk about it here.  This is sort of a breakdown derived from the article I did with Jeff Tucker, and it’s just sort of a way of looking – by the way, this cartoon is also Nina Paley’s.  This is her Mimi & Eunice.  You can see – I don’t know which one is Mimi.  Let’s say Mimi says, “If I steal your copy, you don’t have it anymore.”

01:21:41

So she takes a CD.  And then Eunice sees that they both have a copy of the same one.  “If I make a new copy, we both have one.”  So she’s distinguishing between theft and between copying.  And then Eunice says, “If you compete with my monopoly, I don’t have it anymore.”  So it’s just showing the violence, the naked violence that the state helps copyright holders use.  Anyway, let me just go through this diagram.  Then we can be done for the night, although I’d be happy to take questions.

01:22:07

Now that we’ve finished on time I don’t mind taking questions, so anyone who wants to leave can leave when I’m done with this slide.  So it’s just a four-quadrant sort of chart, breaking goods down into either good or non-good and scarce or non-scarce – or, not goods, breaking things down into this.  So a scarce good would be something like a bagel, a factory, a desk, something that’s useful and that’s scarce, a scarce resource, that is, a rivalrous, conflictable resource.

01:22:41

Now, a non-scarce good, which you could also call a free good or the general conditions of action, would be something useful that plays a role in successful human action but that is not a scarce resource.  This could include recipes, ideas, information, images, tunes, skills, which are like abilities, and fire.  Even fire can spread.  Thomas Jefferson famously said that IP was unjustified as a natural right because it’s like a fire, and just as you can light your candle or taper, he called it, from someone else, you both have a fire now.  No one is diminished by this, and everyone is lit by this.  It’s a good thing.

01:23:21

Now, you could also think of some things as being non-goods.  To be honest, it’s really not that relevant for our purposes.  Maybe this is not the right categorization, but we were just trying to think of examples, and a non-good would be like a mud pie or poison soup, something you just don’t want.  It’s scarce, but no one wants it.  It’s not useful.  It has no value.  No one values it.

01:23:44

And a non-good that’s a non-scarce non-good, I don’t know if such a thing really exists, but maybe a terrible sound or a bad idea.  I mean a bad idea is not scarce, but it’s really a good because it doesn’t play a useful role in human action, although some people might think it does at the time by subjective preference.  So I don’t know if this category is completely rigorous, but the first two are.  The two good categories are: scarce and non-scarce goods.  So property rights and scarce goods – there should be no property rights in non-scarce goods.

01:24:16

And one more point, the basic reason for that is that assigning property rights in these non-scarce goods, remember property rights in the law are always enforced with physical force by physical people by real courts in the real world against a real scarce-resource property of the victim of this law.  So there’s really no such thing as property in non-scarce goods.  It’s just a pretense or a disguised form of assigning rights to existing material goods.

01:24:50

So, for example, if you sue me for copying your technique, your patented technique, and you win, the court takes some of my money and gives it to you.  So it was all just a ruse for you to get some of my money, but I owned my money, and I did nothing – I committed no tort.  I engaged in no contract with you.  You didn’t homestead it.  There’s no libertarian legal justification for you to take this property.  The pretense is this IP idea.

01:25:25

So I’ll stop here.  I might tie up some loose ends next time and then go on to an IP-free world.  And I’m happy to take questions now, or we can stop here if everyone is tired.  I’m perfectly malleable.  I’m sorry, Gwen.  Maybe you should get some sleep.  Thank you.  No questions.  John?  Thanks Karl, enjoyed it too.  Good night, Kevin, ‘night, Brett.

01:26:28

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