This book series is devoted to studying the foundations of capitalism from a number of academic disciplines including, but not limited to, philosophy, political science, economics, law, literature, and history. Recognizing the expansion of the boundaries of economics, this series particularly welcomes proposals for monographs and edited collections that focus on topics from transdisciplinary, interdisciplinary, and multidisciplinary perspectives. Lexington Books will consider a wide range of conceptual, empirical, and methodological submissions, Works in this series will tend to synthesize and integrate knowledge and to build bridges within and between disciplines. They will be of vital concern to academicians, business people, and others in the debate about the proper role of capitalism, business, and business people in economic society.
This was my appearance on Michael Shanklin’s Voluntary Virtues Vodcast. We talked about the Stefan Molyneux vs. Zeitgeist guy “Peter Joseph” etc. Jeff Tucker made an impromptu entrance at the end, discombobulating everyone, as is his wont.
This is an interview I did with Kurt Wallace, of RARE radio, whom I met at the CCC. We discussed a variety of issues about bitcoin; the transcript is below. [continue reading…]
This is the audio (from my iPhone) of my talk “The History, Meaning, and Future of Legal Tender,” from the Crypto-Currency Conference: Bitcoin and the Future of Money (Atlanta, Oct. 5, 2013). Slides below. Video/professional audio to be released later. Pix here and here.
The purpose of the conference will be to connect monetary economists, legal theorists, banking pundits, code-slinging visionaries, miners, and payment-systems analysts to shed light on the rise of Bitcoin. As Bitcoin is not just a currency but a movement towards greater economic freedom the 2013 Crypto-Conference will address the following questions:
What does the success of Bitcoin imply for the theory, practice, and future of money and payment systems?
How can we account for the sheer implausibility of Bitcoin’s rise?
What does its emergence imply for the prospects of nationalized systems of money and the future of human liberty and commerce?
Will Bitcoin go the way of most innovations and fall prey to government’s dead hand of regulation and strangulation?
The Conference team hopes to shed light on how Bitcoin, in contrast to most currencies, has in fact increased in value over time. Over the past 100 years, the value of money has fallen to carry only about 5 of its purchasing power. As a decentralized, digital currency, Bitcoin is not beholden to a central bank and has emerged as a solution to bypass fiat money. The speed and ease of transaction makes the crypto-standard stronger than the gold standards.
The Conference will open with a Friday night reception at the office of BitPay, Inc., one of the lead Bitcoin payment processing companies, where guests will hear from musician Tatiana Moroz who as a guitarist and songwriter sings about human liberty. On Saturday morning, Jeffrey Tucker will provide the keynote address, “A New Currency for the Digital Age,” at the The Twelve Hotel in Atlantic Station, a post-industrial hub of Atlanta. Panels will include discussions of Money and Freedom, Cryptography and Contracts, Merchantcraft, and Future Development.
Speakers include Tony Gallippi (CEO, BitPay) and Stephen Pair (CTO, BitPay), Stephen Kinsella (Executive Editor, Libertarian Papers), Doug French (Senior Editor, Laissez Faire Club), Michael Goldstein (Co-Founder, The Mises Circle), Peter Surda (Author, Economics of Bitcoin), Charlie Schrem (CEO, BitInstant), Charles Hoskinson (CEO, Invictus Innovations Incorporated), Daniel Larimer (CTO, Invictus Innovations Incorporated), Cathy Reisenwitz (Writer and Political Commentator, Reason Magazine), Adam B. Levine (Editor in Chief, Let’s Talk Bitcoin), Tuur Demeester (Author, MacroTrends), Daniel Krawisz (Libertarian Activist).
The evening will conclude with a cocktail reception featuring Austin Craig and Beccy Bingham’s story, “Life on Bitcoin.” Austin and Becky as newlyweds took the challenges of living for 90 days on Bitcoin alone and will share of their journey which is shortly coming to a close.
Crypto-Currency Conference – this conference will be more focused on philosophical issues than the others, with speakers like Laissez Faire Books’ Jeffrey Tucker, libertarian legal theorist Stephan Kinsella and the Mises Institute’s Doug French, as well as the Bitcoin economist Peter Surda, Adam Levine and BitPay’s Tony Gallippi. The conference will take place on October 5 in Atlanta.
***
Also: in the WSJ article Tax Plan May Hurt Bitcoin, the article notes that legal tender laws are, in fact, jeopardizing BTC. Bitcoins are now classified by the IRS as “property” “instead of” as legal tender money, meaning capital gains taxes are owed on transactions. I mentioned this danger in my talk; a similar problem afflicts the re-adoption of gold or silver as money. But as I noted in the Q&A to my talk, I am not persuaded that bitcoins are ownable resources—things subject to property rights. The IRS here assumes that something is either money or property. This is one danger of BTC advocates using the language of property rights to describe bitcoins. I would argue that bitcoins are not legally owned and thus capital gains taxes are not applicable—or at least, this is one argument the target of a government tax evasion suit might want to use.
Bitcoin Association Switzerland reports that, according to the Swiss Federal Tax Administration, no VAT applies to bitcoin in Switzerland. The transfer of bitcoin doesn’t constitute delivery of goods or services, and therefore it’s not subject to VAT.
“in the WSJ article Tax Plan May Hurt Bitcoin, the article notes that legal tender laws are, in fact, jeopardizing BTC. Bitcoins are now classified by the IRS as “property” “instead of” as legal tender money, meaning capital gains taxes are owed on transactions. I mentioned this danger in my talk; a similar problem afflicts the re-adoption of gold or silver as money. But as I noted in the Q&A to my talk, I am not persuaded that bitcoins are ownable resources—things subject to property rights. The IRS here assumes that something is either money or property. This is one danger of BTC advocates using the language of property rights to describe bitcoins. I would argue that bitcoins are not legally owned and thus capital gains taxes are not applicable—or at least, this is one argument the target of a government tax evasion suit might want to use.” KOL085 | The History, Meaning, and Future of Legal Tender ]
DOUG FRENCH: Our next speaker has done nothing less than pathbreaking work in the area of intellectual property. He probably could be considered the “Satoshi of IT” if you will. He’s an American intellectual property lawyer, a libertarian legal theorist. He’s created the website The Libertarian Standard. He’s created the academic journal, the Libertarian Papers. He’s written a number of books, including my favorite, Louisiana Civil Law Dictionary. But probably he is best known for a book called – that really turned the libertarian world on its ear. This argument continues on. It rages on. He continues to debate any and all comers online. But he is – well, this is the perfect time in the cyber world to have a lawyer in the house. And he is our lawyer in the house. Please help me welcome Stephan Kinsella.
00:01:17
[clapping]
00:01:23
STEPHAN KINSELLA: Thanks very much Doug, and I’m really glad to be here. I just flew in from Houston. I would really like to thank Jeff for giving me the chance to speak on a non-IP topic, which I do enjoy. So my topic today is on legal tender. I’m going to explain briefly how I recently got interested in this topic and then go into some background. When I was in law school, in 1989 or so, I was clerking at a firm in Baton Rouge. I was asked by the partner to research the question of whether it was legal or illegal to refuse to take a payment of cash under legal tender law.
00:02:01
So if you owe someone a million dollars and you bring them a briefcase full of cash, can they say, “I refuse to accept that offer. I want you to write me a check instead. So I started researching what is legal tender. If you look at your dollar bills, it will say this note is legal tender for all debts public and private. It’s sort of a mysterious meaning. What exactly does that mean? How much money do you have to pay to satisfy a debt?
00:02:25
So I started getting interested in it. A couple of years later, I was in graduate school in law in London, and I looked at the British pound notes and they have other language which says, Bank of England. I promise to pay the bearer on demand the sum of 5 pounds or 10 pounds or whatever the note is. So, like a smartass, I walk down to the Bank of England one day, in the middle of the financial district, with a backpack. I was dressed like a student, and I walked in the front door and I asked. I said, “Can I redeem this for five pounds of whatever it is it’s five pounds of?” And they said, “Do you have an appointment?” I said, “No”. So they sent me out, and they said you have to have an appointment to come into the Bank of England.
00:03:06
So they said you might want to visit the Bank of England Museum around the corner. So I walked around the corner. I went to the Bank of England Museum. I was the only guy there, and I started asking the curator these questions. And he went to the back, and he brought me a mimeographed—I think that’s photocopy—a mimeographed sheet of typewritten papers explaining why that language doesn’t mean that they really have to give you five pounds of silver or whatever it meant. They claimed it just means that if you have an old note that is out of circulation now, we’ll replace it. So a five pound note, you get a new five pound note for it. So that’s what that promise means. [See The Bank of England and Me]
00:03:39
So over the years, I have always been puzzled by this mysterious language which is omnipresent and yet nobody seems to understand what it means. So as Bitcoin started heating up, I started thinking more and more about it, and so Jeff and I talked, and we thought this might be a good topic. So to research this, I researched a good deal of things. Probably three of the primary things I relied on, and if you find this talk of interest, you might want to look at some of these.
00:04:04
Guido Hülsmann has a fantastic lecture on the economics of legal tender laws at the last Mises University. It is online. And I will post these slides on my website later, so StephanKinsella.com. So feel free to look it up there. Hoppe has a great article, which I rely on heavily in this talk. And also, I found a 1903 fantastic old treatise on Google Books on legal tender.
00:04:27
[See: Guido Hülsmann, The Economics of Legal Tender Laws, Mises University 2011 (Youtube; Mises.org); and idem, The Ethics of Money Production (2008), chs. 10–11; Hans-Hermann Hoppe, “Banking, Nation States, and International Politics: A Sociological Reconstruction of the Present Economic Order,” in The Economics & Ethics of Private Property; S.P. Breckenridge, Legal Tender: A Study in English and American Monetary History (Chicago, 1903; Amazon; online)]
00:04:29
Okay, so I’m going to back up for a second and try to put this legal tender issue in context before we get into the actual mechanics and issues of legal tender itself. And this is drawing on the work of Hans-Hermann Hoppe and others like Franz Oppenheimer. Franz Oppenheimer argued that there’s only two ways of creating wealth. One is the political means, and one is the economic means. One is cooperative and peaceful, and one is coercive and exploitative. [See The Nature of the State and Why Libertarians Hate It] And this is what Hoppe argues as well. He basically points out that there are only two ways to acquire wealth in the world that we live in.
00:05:01
One would be homesteading, production, and exchange. So you find or you appropriate a resource that is unknown in the world. You increase the sum total of the wealth of the world and your wealth. Production means transforming these resources into more valuable configurations. So that’s production. That is also a way of increasing wealth. And exchange is when two people exchange things that they own and they’re both better off after the transaction, so the sum total of wealth in the world increases that way as well.
00:05:26
And then the second way is expropriating producers, appropriator, and homesteaders and exchangers. So the first method gives rise to productive enterprises like firms and corporations and businesses. The second gives rise to governments and states. Now if you think about private enterprise, private industry, productive enterprises, their growth is constrained by a couple of things.
00:05:49
Number one, they have to have consumer demand for what they’re making. And there’s competition in the market. So that’s a constraint on the growth of private firms. But the growth of an exploiting firm, like the state, is constrained mostly by public opinion, and the reason is because by its nature it coerces people and creates victims. And by its nature, it’s a small portion of society, so you have a small minority dominating the larger majority. So the only they can get away with this is to somehow persuade the victims that the state is legitimate.
00:06:19
So what is the state’s goal? The state is a wealth maximizer, just like we are. It just doesn’t have any ethics. So its goal is to – and by the way, I don’t know if this crowd is entirely libertarian, and that is fine, but you are listening to one. And, in fact, I am of the anarchist variety that thinks the state should be totally abolished.
00:06:40
[clapping]
00:06:45
Libertarians here would know that already but just fair warning. So the state’s goal is to maximize its wealth that it can exploit from its victims, and it tries to do this by engaging in activities to increase its public legitimacy, so that it gets away with it. There are two main things the state does. It engages in ideological propaganda to try and persuade us that the world is not the way it really is, that taxes are really voluntary, that we would have chaos in the street without the state, etc.
00:07:11
And then the second thing the state does is it engages in a variety of redistribution measures by which it seeks to corrupt the people that it redistributes money to into supporting the state. Not just any redistribution will do. There are certain targeted types of redistribution that tend to work well for the state. Now, these include the monopolization of the production of law and security, police, defense, the courts, judicial system, also traffic and communication because the state can’t go around robbing people without control of the rivers, the roads, mail, telecommunications, the internet, also education, of course, which feeds back to the first purpose of ideological propaganda, so the state controls these things. And also the state redistributes state power itself, especially in the modern sense, in democracy. So the bureaucracy is open to anyone who wants to apply for a job.
00:08:02
So we’re potentially we’re all employees of the state. And then by democracy, the state lets us believe that we are really the owners of the state. The state really is us. You will hear this nonsense promoted by the state all the time, or if you complain that the government just put your brother-in-law in jail for smoking marijuana, people say, “Well, don’t complain. You are the government”. Thanks. Small consolation. The final piece is the monopolization, the seizure of control of money in banking, and in a way, this is the most important for the state, and this is where we’re going to get to legal tender. This is the easy way the state has to increase income. The state doesn’t control money in banking. It has to get loans. It has to tax people, and that is difficult.
00:08:43
00:08:47
Okay, so what does the state want in terms of control of money in banking? What it really wants is a pure fiat money, monopolistically controlled by the state so that all barriers to counterfeiting are removed so it can print as much money as it wants to. But the problem the state faces is that money arises in the free market without the state as a commodity, like gold or silver. And then counterfeiting of such money can be noticed by people. It won’t work. Even the state can’t get away with that. So the state really has to destroy the gold system, the silver and gold commodity money system, so that obstacles to counterfeiting are overcome or removed.
00:09:25
So how does the state do this? It systematically does this. First, the minting of coins gets monopolized by the state. And one thing this does psychologically is labels for money, like an ounce of gold or an ounce of silver, are replaced gradually with state labels like dollar, drachma, mark, whatever. So people stop associating what money is with an amount of a commodity. It’s a label that the state grants to money. And then the state encourages the use of money substitutes like paper backed up by legal tender laws, which I will get to in more detail in a moment.
00:10:04
Then the state monopolizes or cartelizes the banking system as we see in America in the Federal Reserve. Then it nationalizes gold as Roosevelt did in the ‘30s and then cuts the tie to gold as Nixon did, giving it unlimited counterfeiting power. But it’s not completely unlimited because there is more than one country in the world, more than one nation state. So all these countries have their own currencies and if any one state inflates too much, then there’s a flight to other currencies.
00:10:31
So the dominant state, namely the United States, has an interest in dominating and controlling the world’s international money system. And over time it will try to institute either a single world currency that it controls or that the central bank controls or some kind of subtle-but-hidden system of interlocking agreements under the UN or various treaties that gives it control of the world’s monetary system, which we see now. Hans-Hermann Hoppe has hypothesized that one day we will have a new UN currency dominated by the US called the Phoenix or something like that, so you can see this coming.
00:11:07
Okay, so now let’s go back to legal tender. You see the role it plays in this process of the state control of society and exploitation. So the word legal tender comes from the word tender which comes from the Latin tendere, meaning to stretch. Think of the word – like your tendons in your body, stretch, or the English word extend. So the word tender means to stretch out, to offer, to make an offer, like an offer to pay money. So the legal tender idea is a government rule or law that specifies that a given contractual obligation can be satisfied by the offer of a certain amount of money that the government declares to be legal tender even if the contract specifies otherwise.
00:11:50
So if you have a contract to be paid in Swiss francs, then the debtor can still pay in US dollars, if US dollars are legal tender. Now, the idea that you can pay a contractual obligation in money is not necessarily statist. In fact, it makes a lot of sense for administrative purposes. This was a better version of that. Under the Roman law two thousand years ago, obligations were held to be satisfied by a certain sum of money.
00:12:24
The idea is that every service or every item on the market has a market price. And even if you promise to give someone a goat or to sing at their kid’s birthday party, if you fail to live up to your obligations, then a certain sum of money could compensate the other party for that. That’s not too controversial. If they don’t you give the goat, then you can get enough money to go buy a goat, so it works out pretty well. This is the idea of restitution. Now, there are some exceptions to this: certain goods that are unique, like a piece of land. The idea is that a piece of land, you have to – the courts will enforce that kind of contract. They will make the land transfer to the guy that it was promised to because the land is unique in where it’s located, etc.
00:13:08
Okay, so there’s really not a big problem with the idea of paying off a debt in money. But then the question is how much money? And this is what legal tender laws almost always do. They specify fixed exchange rates. This is what the government is after. If the government merely said you can pay off any contract in dollars, so if you have a contract in Swiss francs, well, you are paid in dollars, but you’re paid in enough dollars that’s equal to that current value of Swiss francs. So you just buy the Swiss francs right after the deal is over. It’s just a little inconvenience. It’s not a big deal. Of course, that’s not what the government wants. The government wants to favor debtors, usually itself. Usually, the government is a big debtor.
00:13:49
So what they want to do is specify an exchange rate that lets you pay off the debt at overvalued legal tender money, so it’s a way of robbing the creditors. Now this gives rise to a phenomenon called Gresham’s law. I’m not going to do too much economics here, but raise your hands if you have never heard of Gresham’s law. Okay. I’m not going to ask the rest if you understand it. Gresham’s law is based upon the expression by, I think, Irving Fisher, an economist, who said, “Bad money drives out good money”. Now, this is a little counterintuitive because usually on the free market, good products drive out bad products, right? Like Blackberry is tanking now and the iPhone is doing well. That’s maybe one example.
00:14:36
And even in money, gold and silver arise as money instead of shells or leaves or cigarettes because they’re superior. They’re better money. So really on the free market we could expect good products and good money to drive out bad products and bad money. So really what Gresham’s law is – it’s really not that bad money drives out good money. It’s that the legally overvalued money drives out the legally undervalued money.
00:14:58
Let me give you an example of this. Imagine on the free market the ratio of silver and gold prices is 20 ounces of silver to 1 ounce of gold. So they’re roughly equivalent on the market. So if you’re offering to sell something for 20 ounces of silver, if the guy pays you an ounce of gold, you’ll take that because they’re roughly equivalent. Now, the government comes in and established legal tender and says that one ounce of gold is equal to 40 ounces of silver. So you can see that, in this case, what the government has done is they have made gold legally overvalued and silver legally undervalued.
00:15:30
So if I owe someone 20 ounces of silver, I can pay them 20 ounces of silver, which is worth an ounce of gold on the market, or I can take my ounce of gold and go take half of it and buy 20 ounces of silver and pay off the guy that way, so it lets me stiff the guy. So what this results in is no one is going to use silver anymore because they’re going to be stiffed by this provision. So it would drive out the good money which would be silver in this case. Now, in this particular example what would happen is that you would have a system where previously silver is used for small change and gold is used for big purchases.
00:16:04
But now silver disappears. You only have gold. So what do people start doing for small purchases? Well they start resorting to substitutes like tokens, coins, bank notes, etc. See where this is going? The government gets us used to paper money and things that don’t really have, I won’t say intrinsic value, but a commodity value of their own. So that’s Gresham’s law. This is one effect of legal tender laws.
00:16:26
Now, on the history of legal tender, let’s look at how it started being justified by the state, say, in England. So the crown would say, listen, if you’re coming to the state’s courts to enforce a contract, you’re seeking justice from the king’s courts, then you have to submit to conditions we want to place on you. So if we say, yeah, we’re going to help you enforce your contract, but we’re going to insist that you take payment in legal tender that we decree at a certain exchange ratio. Now actually, if you think about it, this is selling justice. The courts are using their – the government is using its courts to sell justice, to make a profit off of monopolizing the institution of justice and then selling this service, which actually is a violation of the Magna Carta from 1215.
00:17:12
In the Magna Carta, the crown agreed to the Magna Carta, which has a provision which says in Latin—I won’t read the Latin—but the translation is to no one will we sell; to no one will we refuse or delay right or justice. So they’re not supposed to sell justice, but they do it anyway with these legal tender laws, which is one danger of the government controlling the courts and the law and the justice system.
00:17:39
Now let’s turn to the U.S. now. In the colonies before the Revolution, coins were scarce. They couldn’t bring a lot of coins on the ships over with them. Maybe they didn’t have a lot of coins anyway. So they started using substitutes, and these were declared legal tender by the various state – the colonies, the colony governments. Some of you may have heard of wampum before. I never knew what wampum was, but wampum is the shell bead money that Native Americans used. Those were legal tender. Black was worth something. White was worth something else. It was bizarre.
00:18:11
Other things have been used for money, legal tender: corn, bullets, although you could only give someone so many bullets, force them to take so many bullets, tobacco, pitch, tar, pork and even country produce. You could pay your servants with country produce. In the year 1715, up to seventeen commodities were legal tender to pay taxes in the colonies. Now – I’ve got these a little bit out of order. In 1775, right before the Revolutionary War, Congress was planning for war. They knew war was coming. They needed to raise money. They knew that they didn’t have any credibility as a new government to raise money by loans. And they didn’t have taxing power. They couldn’t raise a lot of taxes anyway.
00:18:52
So what they did is they started issuing bills of credit, but they were declared to be payable by the states. So they expected the states to go out and raise taxes on their citizens with their taxing power, or the colonies I should say. Well, I guess they were states by then. And pay off the bills that way. But Massachusetts and other states refused to do this. They started issuing their own bills of credit and making them legal tender. And this language here is striking. It shows you how seriously the government takes its monopoly over money and these legal tender laws.
00:19:25
They said that if anyone refuses to these notes in payment for a debt, or even if you demand a premium, in other words you think gold is better than a note that’s denominated in gold, but they really can’t be redeemed in gold if you demand a premium, like you say I’ll take that note for a 10% discount because there’s a risk, that’s illegal too. And you would actually be deemed an enemy of the country. And other states, like Virginia and New Hampshire, Rhode Island had similar laws.
00:19:49
Now in 1781, returning to my top bullet there – so the Articles of Confederation were finally ratified. And it wasn’t clear that Congress was granted the power to define legal tender. It remained with the states. Turn forward a few years, after the war is over, the Constitution is ratified in 1789. Everything flips. The states are denied the power to coin money and Congress is granted the power to be the one in charge of legal tender, etc. Well, this was settled in Supreme Court cases later, but it is pretty clear now.
00:20:21
So right after this, Congress passes an act in 1792. All gold and silver coins which shall have been struck and issued from a mint shall be lawful tender in all payments, and then there’s a 1965 act which has similar provisions. So that’s where we are now. Now let’s turn to – I’ve already talked about this. Let’s turn to the use of gold and gold clauses. So how could the state, say the U.S., cut the tie to gold? Well, one way they could do it is they could set the exchange rate that is not market, like using Gresham’s law, as we mentioned before, which is the state did for a while. They keep changing the exchange rate of gold. It used to be $1 was a twentieth of an ounce of gold. Then it was 1/35th, and nowadays it’s a market rate. So we’ll just quickly go through the history of gold and gold clauses.
00:21:08
In 1933, Franklin Roosevelt issues an executive order criminalizing the possession of gold in the U.S., monetary gold. So gold was seized by the government and outlawed. And right after that, the Congress, under Roosevelt, outlawed gold clauses. A gold clause is a clause in a contract where, if you are afraid of inflation and the dollar, you could say you owe me a million dollars – well, you owe me whatever the current dollar amount of a hundred ounces of gold is in ten years or whatever the term of the deal is. That way, if there is inflation, you can get paid in dollars in the current – pegged to the price of gold. So they outlawed that, of course, because that’s one way to do an end run around the government’s legal tender system.
00:21:51
Now, in 1974, under President Ford, the ban on gold ownership was finally repealed. In 1977, under Carter, gold clauses were re-legalized for contracts entered after October 1977. And Nixon cut the tie to gold. So in this time all three things happened. The dollar is no longer redeemable in gold. There is no ratio anymore. So the question is do we still have legal tender in the U.S.? In a way, I think we do not have legal tender because you can have a gold clause. You can peg your contract in gold. It’s not illegal.
00:22:30
You can own gold. And the dollar doesn’t have any fixed ratio. It just fluctuates. So why isn’t it just a mere inconvenience now? Well, in a way, it is. So why hasn’t gold reemerged as money? Well, there are various possible reasons why it hasn’t. One might be that the dollar is not perceived by most people as being in a stage of hyperinflation, so there’s no big urgency to use gold clauses.
00:22:51
There is also Mises’ Regression Theorem which is the idea that money arises step by step and always has a history, so once something – it’s like a network effect, like Facebook is more popular than Google Plus right now, so it’s the same idea. Once something is money, people keep using it unless something terrible happens. Also, gold is subject to taxes, sales tax and other types of taxes, which money is not. Taxes have to be paid in dollars, too. That could be another reason.
00:23:16
And, finally, there could be fear of another state takeover. Like if gold clauses ever had an effect, the state wouldn’t let us use them. They only let us do things that don’t really threaten them. Okay, now so getting to Bitcoin here. What’s the implications for Bitcoin? Okay, first, let’s step back and think what gold causes are, and there are two types of monetary transactions that you can think about that are of relevance to legal tender.
00:23:44
One is what’s called an executed, or maybe a contemporaneous transaction. For example, I walk up to a merchant, and I say I’d like to buy that newspaper. He says give me a dollar and I make the deal. It’s done right there. There are no future obligations on either party. A second type is an executory contract, sometimes called executory contract. That’s one where there is an obligation in the future. So we have a contract now. I want you to build a house for me. And when you’re done building the house, I will pay you $500,000. That is an executory contract.
00:24:19
If, at the end of the contract, the work done by the service provider, if he is not paid, he can sue in court to get the money he’s owed. And legal tender law kicks in only there because the obligation to pay him can be satisfied in whatever money the government declares to be legal tender. So legal tender laws never have much of an effect on contemporaneous transactions because if you walk up to some guy and he wants the artificial price for his goods, you just refuse to pay it and you walk away. You don’t do the deal. So legal tender laws only affect the second type of contract.
00:24:50
Now, as far as I’m aware, I think Bitcoin, from what I’ve seen, is used mostly for the first type of contract right now. I’m not even aware of a lot of gold clause contracts much less than am I aware of the practice of people entering into long-term, significant contracts with Bitcoin clauses or denominated in Bitcoins. [See Bitcoin Confiscation vs. Gold Confiscation.] So not even an employment contract but a longer-term contract, like let’s say a loan. I loan you a thousand Bitcoins. You need to repay me 1100 Bitcoins in a year, something like that.
00:25:21
For Bitcoin to emerge as a full-fledged money, it seems to me, it needs to start being used for the second type of monetary transaction as well, and I suspect that it will as it gains steam. And when it does, the relevance of this legal tender discussion is that the state can do what it has done before with gold clauses. It could outlaw Bitcoin clauses. They would have to find a way to define it so that it covers Litecoin and others as well, any kind of electronic currency. And they’d probably re-illegalize (outlaw) gold clauses while they’re at it. And then the other way with it.
00:25:58
They could declare a fiat exchange rate. They could say one dollar is equal to one Bitcoin. They could do something like that. They would legally overvalue the dollar; legally undervalue bitcoin. So this is – I’ll conclude here. This is the relevance of legal tender law. This is where I think it could be heading. And the Bitcoin community needs to be aware of this and try to keep an eye on the government. Thank you very much.
00:26:23
[clapping]
00:26:31
M: Can you take a couple questions?
00:26:34
STEPHAN KINSELLA: I’d be happy to.
00:26:37
00:26:39
M: Some time ago, Idaho was trying to have gold and silver recognized as legal tender. I think South Carolina and some others. Whatever happened to that?
00:26:51
00:26:54
STEPHAN KINSELLA: I’m not aware of that, but I think it would probably be unconstitutional under the Constitution’s prohibition of states interfering in that, or it would at least be illegal because the government has preempted the field by determining what legal tender is. I can’t imagine that it would survive a challenge in the federal courts.
00:27:12
M: The state we’re in right now I know does not tax gold and silver, so obviously coin shops offering along the Georgia border have residents from Tennessee that come across to convert your fiat into gold and silver for savings. The venders in Georgia have that advantage. I remember that’s one thing you spoke about is some of the states are taxing the sale of gold and silver, and that’s something we’re looking at pushing back against in the state of Tennessee to get that fixed.
00:27:55
STEPHAN KINSELLA: Well, I do think for gold, say, to ever become money again, we have to remove these obstacles. Tax is one. Of course, there’s still federal capital gains tax, which would apply, and who knows? Maybe the government is going to start trying to tax the states that gold sales might start trying to tax Bitcoin sales. I’m not sure.
00:28:17
STEVEN: My name is Steven. I think it’s very interesting, this question of legal tender laws because fundamentally it’s all irrelevant if you’re dependent on the state for enforce contracts. It’s completely irrelevant if you no longer are dependent on the state for the enforcement of contracts. So I guess it’s not so much a question as it is something – food for thought. What does happen when we’re no longer dependent on the state for the enforcement of contracts?
00:28:48
STEPHAN KINSELLA: I absolutely agree, and I think if we can come up with private arbitration measures or even some kind of anonymous contract enforcement system, that would be one way to severely hamper the government’s ability to impose legal tender because, as I said, they do it primarily through these executory contracts, enforcement. A lot of the, of course, larger, more established, bigger companies play it very safe and very conservative, and they’re going to be very reluctant to opt out of the state’s system at the current time I think. So that’s going to slow the adoption rate, but I agree. That’s our hope is that we can go to alternative systems. There’s a group called judge.me, which I’m signed up to be an arbitrator for, which we’re trying to do things like that, but it’s still in the infancy, and it’s still uncertain of course.
00:29:30
00:29:35
M: So at the beginning you mentioned if somebody’s got a contract and paid for a million dollars, you said can I refuse a million dollars in cash, and I don’t think you answered that very complete. So if somebody wants to pay you a million dollars in cash and you say no [indiscernible_00:29:50].
00:29:51
STEPHAN KINSELLA: I actually was unable to find an answer when I did it back 24 years ago. But since then I’ve researched it, and my understanding is that you can. It’s hard to find – the problem is – well, not the problem. The good thing about a relatively free society is that we don’t live by permission. We don’t live like in the Soviet Union where everything that is – everything that’s not permitted is forbidden.
00:30:12
It’s supposed to be the other way around. We have islands of restrictions in an ocean of liberty, and we’re supposed to have that. So you can’t find a restriction in the law of some activity, then the presumption is you’re free to do it. And I couldn’t find a restriction, but you never know if you’ve exhaustively looked at every one of the 17 shelf feet of federal register rules. So I couldn’t find a restriction, so my conclusion was I think you can do this. But in the meantime, I’ve researched it, and it looks like it’s pretty clear that you can.
00:30:35
You can refuse a mode of payment. If it’s too dangerous to receive a briefcase of cash, you’re not really refusing dollars. You’re just refusing the mode of payment. So I believe that you can refuse it. Of course, you can specify in the contract ahead of time you have to pay me some regular safe method of cashier’s check or wire transfer. I mean when you close on a house, quite often they’ll insist on a cashier’s check. If you show up with a personal check, they won’t take it. That’s not really a violation of legal tender law.
00:31:02
M: Hi. I wanted to ask you a question that I heard you ask recently at the Property and Freedom Society about the Rothbardian conception of property rights in which all rights are property rights, and all crimes are violations of property rights because it seems like in the Bitcoin space, either a passive observer of a Bitcoin user, a careless Bitcoin user or else some really smart mathematician can transpose someone’s Bitcoins involuntarily. Would you describe this as stealing? And do we need to rethink our version of property rights since it’s something that has more to do with societal norms?
00:31:37
STEPHAN KINSELLA: So this is my amateur opinion on this, my layman’s opinion. I know there are experts on how Bitcoin works, its standards, the code, more than I am. From what I’ve been told by people that know a lot more about Bitcoin than I do like you, it’s actually not a violation of the rules of Bitcoin to somehow discover someone’s private key and use that to take Bitcoins from their account. For it to be against the rules, you would have to have clicked on the terms of service or something like you do, but that’s contrary to the purpose of Bitcoin being pseudonymous.
00:32:14
So I don’t believe there’s any terms of service anyone agrees to, so it’s actually not prohibited by any sort of rules that anyone agrees to. And it’s not a property right because a Bitcoin is not a scarce resource. It’s a ledger entry. It’s a distributed system that people agree to, to use because it’s useful. And it basically associates some accounts with others, and that could be useful. So I don’t believe there’s a property right in it.
00:32:36
I think it’s analogous to property rights in the way it works, and it may be even better than some property rights the way it works in terms of practical reliability on it. So whether norms that arise that people point their finger and they – at people that somehow were able to do that, because it’s so secure, the only way I could think of doing it would be some kind of social engineering anyway. I don’t know how they’re going to guess someone’s private key or get it.
00:33:03
Now, if you break into someone’s computer, you hack their computer, or you break into their home to get their keys, then that should be a crime because you’re trespassing against their actual owned property in order to get the information. And then what you do with the information would be a measure of the damages that’s owed to the victim of the trespass. But I don’t view Bitcoin as property – a property right, but I don’t mean that as a criticism. I don’t think that’s a negative thing or a bad thing.
00:33:28
[clapping]
00:33:37
M: So as we head to lunch, a couple of things to think about. You need to take anything that’s valuable with you—computers, Bitcoin. Take it with you. The hotel here has a wonderful restaurant, and I highly recommend the tomato soup. If you are alone for lunch and you’re sad about that, just turn to the person next to you and invite yourself. I guarantee you there is no one in this room who is uninteresting, so you’ll have a wonderful time. Thank you. See you at 1:30. Peter Surda is coming.
This is from Episode 415 of the Bad Quaker podcast, with Ben Stone. We talked about a variety of matters, including the legitimacy of the state, intellectual property, and related matters.
Stephen Kinsella. Not me. This is the EU Competition lawyer guy.
Over the years I on occasion get mistaken for other Kinsella’s. Our name is rare in the US. Usually when I sign a bill people say “hey like that guy Ray Kinsella from Field of Dreams, right?” That is my claim to fame.
Unclean head. Dirty head. That’s what Kinsella means. Not King of the Islands.
Stephan vs. Stephen vs. Steven vs. Stefan. Jesus. Not to mention, vs. Steffond.
People are stupid. They never say “Stevenie” when they see Stephanie. But “Stephan” is a mental leap for these morons. Why can’t they pronounce and spell Stephan right. Why.
That’s why I often go by my first name: Norman.
Stephen Kinsella, the dirty-headed economist journalist. Also not me.
One Stephen Kinsella (twitter) is was a competition (antitrust) lawyer in Europe. Another is some lefty journalist at the University of Limerick in Ireland (twitter). Hell, someone said he’s a leftish journalist. I dunno. I doubt we have much in common, other than unclean heads. On occasion, if memory serves, we have each been mistaken for the other, and sometimes forward those mistaken emails to the right Kinsella. What can I say. Kinsellas stick together. Like unclean mud.
This was my appearance on Daniel Rothschild’s youtube channel on Sept. 27, 2013; we discussed a variety of topics, including “Intellectual Property, Government, National Defense, and Other Scams”.
This is from the Sunday, Aug. 21, 2011 FreeTalkLive in which I was a guest, discussing intellectual property with Sunday hosts Mark Edge and Stephanie. We talked for about an hour and a half, from 7pm-830pm EDT and had a good, wide-ranging discussion. A few callers called in near the end. This was the FTL debut on XM satellite radio’s “Extreme Talk”, XM 165. This episode is also available on the show’s podcast feed here.
Ths is from a previous appearance on the Adam vs. the Man show at the RT Network, Episode #28 (May 19, 2011), discussing IP and related matters. As the show’s notes describe the episode:
Episode #28: Faith & healthcare, Intellectual property rights
Tonight on ADAM VS THE MAN with Adam Kokesh: Adam has some good news for you tonight: you are not a pirate. In fact, because it is morally wrong to use the force of government to impede the free flow of ideas, you have the RIGHT to copy music, movies, text, software, inventions, and IDEAS! Speaking of ideas worth copying, Adam has best-selling author and President of Sojourners Jim Wallis in studio and Stephan Kinsella, intellectual property rights attorney, joins Adam from Houston Texas to tell you how to beat back the twisted logic of intellectual property. But that won’t stop the government from imposing a twisted morality of stifling innovation on you to make you feel bad for copying things that big corporations don’t want you to copy. Well tough! Because the internet is here to the rescue!
– See more here
This debate was part of the “John Templeton Foundation’s Big Questions Debate series on Intellectual Property and Wealth Creation”; I debated patent attorney and adjunct IP law professor Steve Grant, who represented the pro-IP side.
A video was taken with a videocamera, but it was not direct mic’d so the quality is only so-so. The podcast version here is from my iPhone recording, which I often make during speeches as a backup, in case of low quality of the official version. My iPhone version is better quality, for my own remarks, than the audio from the camera (the audio file from the camera’s recording is here). Professor Grant did his best, but didn’t have a solid argument for IP other than the standard “I think we should reform IP but not get rid of it.”
My opening speech is about 15 minutes and has decent audio quality, and is a summary of a hard-hitting version of the basic libertarian case against IP law (here is the powerpoint presentation I used; embedded version below). Grant’s speech is audible but I was not very close to him; but his conventional and unsystematic, more empiricist and positivist than libertarian and principled remarks will be of only mild interest to libertarians. For my 10 or so minute rebuttal to him, I left my iPhone at the table but it’s still audible; for the Q&A period, it was in front of me so it’s decent again for that part.
My host was Aman Sharma, a very staunch libertarian law student and head of the student chapter of the Federalist Society. When I was involved with the Federalist Society (lawyers chapters) in Philadelphia and Houston they were populated with mainly Newt Gingrich loving neocons; good to see some Austro-libertarians infiltrating their ranks. Sharma told me “I had a lot of fellow students approach me after the event with questions showing a new-found interest in the Mises/Austrian worldview.” That is cool and gratifying.
While in Ohio, I met my friend Jacob Huebert and other local libertarians/Federalist Society people—including Katelyn Horn and Maurice Thompson, of the 1851 Center, for dinner at Barrio Tapas. A fun trip, and great people.
TRANSCRIPT (from Youtube)
0:02
good afternoon president of the federal
0:07
society on behalf of more federal society and I get lost inside here more so I welcome you to today’s event
0:14
entitled isn’t Alexa property he relevant anymore proud to have the John Templeton
0:19
Foundation sponsors for this event they’ve got excellent catered food we hope you’re enjoying I wanna mention
0:26
just a few things before we get going the first is that elections with minimal water out of Schneider come out at the
0:31
end of this month we an email out on the twin deserves so if you’re on plan and you’re on our site will be able to get
0:38
the updates for that the boudin and whatever on that sort of thing next I’ll explain the format and then
0:44
I’ll get started with the brief introduction of speakers and we’ll get going here first the format as usual it is going to
0:50
allow for debate so we’re gonna have clothing productions by each speaker starting with our guest speaker
0:56
purchased upon detail and we’ll have a ten minute rebuttal in the same order on the Washington answer session with you
1:03
the members of the audience so let’s start with her grandmother Stephen grant
1:08
practices with assembly wall group in Dublin in the field intellectual property is most particular expertise as
1:14
the prosecution of us had an application that originated in and offices he’s been admitted to
1:20
practice before the ten years the US Patent and Trademark Office the Supreme Court of Ohio they go in there namaha a
1:25
federal district court and the Federal Circuit Court of Appeals he’s been frequent speaker continuing legal education courses as well as
1:32
general education presentations for adventures writers and artists he’s a regular contributor to the newsletter of
1:37
the Ohio State Bar Association intellectual property law section he said a number of laws around the country including at warrants and he’s their
1:44
first teaching ability and stephan kinsella is a registered patent attorney and general counsel for applied
1:50
optoelectronics already former partner with 20 more he’s pressed me to run into patent applications where i’ve had
1:56
clients ability intelligent and others this is Beach FL dental lumineer seasoned student editor of Liberty and a
2:02
pers and director at least ten indistinctly innovative freedom he’s published numerous articles and books on
2:08
IP long and as you know law and application of libertarian principles of equal topics including international
2:14
investment political risk and dispute resolution of practitioners di Louisiana’s civil law engineering and
2:20
proxy’s Institute in 2008 before my actual blood pressure stopped extra
2:26
policy logging currently teaches that the online leave is happening on intellectual property or libertarian legal theory with that please join me
2:33
motivate first time develop thanks much
3:12
okay got my talent one here it’s good to be here thank you come on I’m going to
3:18
start out with some sort of Austrian economics type observations human beings
3:26
in this world are largely dissatisfied creatures this is why we act humans
3:33
employ means that are causally efficacious at changing the state of affairs that would otherwise occur so if
3:39
to achieve ends they have to ameliorate their health uneasiness this is amaziing idea these means which
3:47
in our bodies are necessarily scarce or rivals this means that there’s a possibility of violent conflict when two
3:55
people struggle over a given scarce resource as the Austrian libertarian philosopher and economist of hunter
4:02
Mahatma says only because scarcity exists is there even a problem of formulating moral laws insofar as goods
4:10
are super abundant or free goods no conflict over the use of goods as possible and no action coordination is
4:16
needed hence it follows that any ethic correctly conceived must be formulated
4:21
as a theory of property ie a theory of the assignment of rights of exclusive control over scarce means because only
4:28
then does it become possible to avoid otherwise inescapable and irresolvable
4:34
conflict
4:41
so in other words what libertarians favor is peace cooperation and prosperity and therefore we favor the
4:48
assignment of property rights so there are resources that are scarce can be used peacefully and productively and
4:54
cooperatively and in particular what we favor is the assignment of property rights as follows each person owns his
5:02
own body and he also owns resources that he homesteads or that he acquires by
5:07
contract from a previous owner this is exactly why a growing number of
5:13
libertarians including myself oppose patent and copyright we view the grant of such artificial rights by the state
5:20
as statist socialist and theft this is because these rights grant to third
5:25
parties say inventors artists and creators of veto right over how owners use their own property in effect patent
5:34
and copyright makes innovators and creators a co-owner with the original owner of the owners property and this is
5:41
just theft is the redistribution of wealth it’s really that simple this is the problem of patent and copyright so
5:48
for example a patentee acquires partial ownership rights and other people’s property but he did not homestead the
5:56
property he has no contract with the owner and the owner has never committed any kind of tort or crime that justifies
6:02
weakening his property rights or redistributing them them to the to the patentee now the question arises how
6:10
contemporary into favor property rights and other advocates of capitalism in the
6:15
free market how could they have been bamboozled into thinking that an anti-competitive monopolist to grant of
6:20
state privilege by a criminal state be justified so let’s just take a quick look at the history of the sordid
6:27
origins of patenting copyright as a Eric Johnson a law professor writes in an
6:33
upcoming study the monopolies now understand his copyrights and patents were originally created by royal decree a
6:39
stowed it’s a form of favoritism and control as the power of the monarchy dwindled these charter anomalies were
6:45
reformed and essentially by default they wound up with the hands of authors and adventures so let’s just think about
6:51
copyright copyright in a modern sense originated when Queen Mary created the
6:57
stationers company 1557 which had the exclusive franchise over book publishing
7:02
so this was based upon the monarchies desire to control the press and to control this the use of the printing
7:09
press which is emerging into censor ideas and to have only approved ideas spread in 1710 was that to the ban
7:17
formalized this idea of copyright and gave authors a copyright and one reason
7:22
authors were happy to have its copyright was now they had the right to control their own works so in a way the the
7:28
reason that they approved and won a copyright was to remove the state’s control over their own works it wasn’t
7:35
to be able to extort money from people using their words as for patent excuse
7:43
me the English Parliament enacted the statute of monopolies in 1624 and this
7:48
was aimed at stopping the grants of letters patent by the Parliament by the crown which was being a notorious
7:56
notoriously misuse even it was used to authorize Sir Francis Drake to be an actual pirate on the season 1587 but
8:04
there was a carve out for Manhattan early banned in the statute of
8:09
monopolies except there was a carve out for for novel inventions so this is the origins of patent and copyright so it
8:16
ends up being included in the American Constitution and the patent and copyright Clause of 1789 nowadays some
8:23
people say that it’s a natural right to have patent copyright it was never regarded as this it was it was done for
8:28
purely utilitarian purposes to induce innovation and invention and creativity
8:33
John Locke was mildly favor of patenting copyright but never thought his
8:39
homesteading Theory covered it the founding fathers did also did not believe patent copy reverent natural rights it was put in there purely for
8:45
Prudential reasons to encourage innovation so basically it was based upon some assumption at the time that
8:51
it’s necessary or that it generates it’s necessary to generate wealth and
8:57
creativity the problem is studies since then have not been able to verify this utilitarian
9:02
assumption in 1958 fretts mclubbe a quasi Austrian economist was
9:08
commissioned by Congress to write a study on the IP system is one of them anyone who’s interested in this field
9:13
should really read his study he wrote in 1958 in a study to Congress no economist
9:21
on the basis of present knowledge could possibly stay with certainty that the patent system as it now operates
9:26
confers a net benefit or a net loss upon society the best he can do is famous sumption and make guesses about the
9:34
extent to which the reality corresponds to these assumptions if we did not have a patent system it would be
9:40
irresponsible on the basis of our present knowledge of its economic consequences to recommend instituting
9:46
one and I’ve done an estimate myself because you’ll find that the advocates of intellectual property who claimed
9:52
that this system is justified because it generates net wealth in the form of extra innovation they never bother queue
9:59
even attempt to try to figure out what’s what these numbers are so I’ve done it myself and I’ve come up
10:05
with a conservative estimate that the patent system in America alone just the patent system imposes a net loss on the
10:13
economy of at least 42 billion dollars that’s a complete net loss and it probably reduces innovation that on
10:21
the net in the bargain so when we lose money to have worse innovation the point is
10:28
the burden is on proponents of the IP system to justify it they need to tell
10:34
us what is the cost of the patent system what is the value of the extra innovation that it allegedly induces
10:39
what’s the cost of the innovation that it suppresses and what’s the net number I’d like to know and in my view because
10:48
of these empirical facts IP is arguably unconstitutional because the copyright
10:54
and patent Clause space it the purpose of the grant amount of this power to Congress is to promote the progress or
11:01
the size of the arts but there’s no showing that it actually does promote the progress of science in the arts so
11:07
what happens is in the meantime this idea of intellectual property becomes part of the fabric of Western capitalism
11:13
starts being called a property right this was done intentionally as Matt Guf says those who start using the word of
11:19
property in connection with inventions had a very definite purpose in mind they wanted to substitute a word with a
11:24
respectable connotation property for a word that had an unpleasant marine privileges
11:29
so basically intellectual propaganda as I call has been used to cover up the monopolistic character of these grants
11:36
so now you have people saying well my piece of natural right that just even
11:42
though its original purpose was monopoly censorship and control and then a utilitarian ground or they’ll say it’s
11:48
justifiable empirical ground but they never give any evidence for this in a way it’s similar to the minimum wage
11:53
which economists routinely and universally regard as being harmful to the economy and yet it’s hard
11:59
to kill politically it’s very similar with regard to intellectual property economists are pre uniform in their view
12:05
that there’s no proof that a patent system is worth it but what happens is
12:11
because it’s in the Constitution and part of the American system libertarians and proper Carians and others who came in the free market
12:16
now they’ve sort of bought into this mentality that well it’s a property right or favor of property rights so and
12:22
you know after all it’s in the Constitution right well I’m not so sure that being in the Constitution is a good
12:28
endorsement the Constitution was nothing but a centralizing power grabbing coup the Constitution also permitted or
12:34
condone slavery paper money and inflation the business cycle judicial supremacy taxation tariffs capital
12:41
punishment conscription war corruption domination drug prohibition mass murder war crimes torture Guantanamo Waco Ruby
12:49
raised the Eagle Abraham Lincoln suspension of habeas corpus imperialism eminent domain state enforced bigotry
12:56
racism and misogyny as Lysander Spooner the famous in Turkish said the
13:01
Constitution has either authorized such a government as we have had or it’s been powerless to prevent it
13:07
in either case is unfit to exist in my view of the Constitution is utterly unlimber carrion and we libertarians
13:13
have to wake up and stop worshiping the Constitution as quasi-libertarian in the early America it’s put a libertarian
13:18
they weren’t as fine ran might say wishing doesn’t make it so speaking of
13:24
Iran one reason I believe for the strong Pro IP view among libertarians until the
13:29
present day was her influence so she was part of the movement to help starting
13:35
describe patent and copyright his property rights she even said ridiculously patents on the heart and
13:40
core of property rights some of her modern acolytes say things like all property rights are
13:47
all property rights are property rights by the way line ran actually initially favored eminent
13:53
domain because it was in the Constitution that she changed her mind later when she thought about it so she had this constitution fetish in worship
13:59
because it was better than the Russia she came from the point is despite the
14:04
propaganda about classifying patenting copyright as property rights they’re still artificial state monopolies the
14:11
goal of the law and is justice and property rights not tweaking incentives by the state to produce innovation or
14:17
maximize wealth the purpose of property rights is the fairly assign owners to
14:22
scarce resources so they can use maybe use peacefully and productively instead of being fought over the purpose of
14:29
property rights is to reduce conflict and as I mentioned in the beginning human action uses scarce means to
14:36
achieve ends but it’s guided by ideas so the role of information and ideas is
14:42
different than the role of scarce resources it means in human action so
14:47
take imagine the idea of making a cake to them to make a cake you need a recipe but you also the scarce resources
14:54
ingredients a bowl and oven your body you and your neighbor can both make the
14:59
same type of cake at the same time as long as you have property rights and your own resources but you can use the
15:05
same recipe this is exactly why there are property rights with scarce resources but not in non scarce
15:11
resources like ideas and if you think about it this way patenting copyright
15:17
are always ultimately enforced against scarce resources money or body so for example if I assert my patent right
15:23
against you I take you to court I get the state court to issue state force against you to force you to cough up
15:29
some money from your bank account or to force you to physically stop under threat of an injunction using your body
15:36
in a certain way so it always comes down to control of spirit resources and these
15:42
in copyright laws serve as nothing but an excuse to assign resources from one
15:47
person to another they’re merely disguised transfers of wealth from owners to innovators and others who
15:52
receive a state privilege that protects them from competition so the prop with
15:58
IP is that it undermines legitimate property rights so the reason property Rian’s like me or anti IP is for the
16:05
same reason where gains taxes and redistribution of wealth in the first place one more way to think about it is this
16:11
how much time do I have in my okay one
16:17
more way to think about it assist the free market we live in a world of scarcity you can’t say this a bad thing
16:23
because it’s natural but it certainly is a challenge to living we all have to find resources that are efficacious and
16:29
just satisfy our needs food shelter tools and with a free market where
16:36
property rights are respected in competition is possible by the way competition requires emulation saying when someone’s doing
16:42
and emulating it or doing better or learning from the body of human knowledge when this is when this is
16:48
possible the free market generates amazing prosperity in the face of scarcity so you can think of scarcity is
16:54
the enemy that the free market is trying to overcome and does a good job of overcoming it and yet we already have
17:00
non scarcity in ideas the body of human knowledge grows over time this is what
17:06
makes progress possible we can always dip into the body of human knowledge and add to it and learn of new alternatives
17:13
things we can do for example I may know of two types of the pie chocolate pie
17:19
human pie so I choose one of those as my favorite and that I might know of two ways to achieve that pie I can cook it I can
17:27
hire someone or I can buy it or I can steal it well if I if I learn more information I might learn of a coconut
17:33
pie now my universe of ends has been expanded or I might learn of another technique another technique to make the
17:39
pie maybe I buy frozen pie so my Universal means is expanded so the more knowledge we have the Richards our
17:45
universe of information that we can use to guide our actions so it’s a good thing that the body of human knowledge
17:51
is always expanding learning is a good thing emulation is a good thing competition is a good thing and these
17:59
ideas are already luckily not scarce and infinitely reusable transmittable learn
18:04
about and to oppose artificial scarcity illness in the name of a free market and the name of property rights which
18:10
operates the fight scarcity in the physical realm is suicidal and absurd and frankly not obscene and I will stop
18:19
here [Applause]
18:52
[Music]
19:03
although the Constitution may not have
19:10
been written exactly today and the importance a Shinto
19:30
Congress and let me read one article 1
19:39
Clause 8 section 8 says it says that to promote the progress of science and
19:45
useful arts by securing for limited times and that’s the important word for
19:54
limited times to authors and inventors and those are really important words to
20:00
the exclusive right to their respective writings and discoveries yeah an author
20:09
or an invention has given us something that we didn’t have okay they’ve taken
20:21
goods when they thinking of view of the world and they put it through their mind
20:34
to give you a few examples [Music]
20:40
certainly we could all agree that if I’m ever to build that table I would have
20:48
the right to sell the table to someone who wants to okay but are we going to deny during the time
20:57
the top right Mel goes right to the character captain maybe I swear a bogey
21:03
deck story that isn’t exist before he put it down on paper would we deny
21:12
Harper Lee the story to tell about merge are we going to say that that book never
21:18
had an influence on anybody and that public domain and let everybody take
21:26
this copy in the area of patents would
21:36
we say that we’re not going to give some sort of compensation to the inventor of
21:43
pencil and the number of lives that were saved after Tennyson was introduced because a
21:52
piece inside previously said there wasn’t agree to get out the article I’ve
21:59
heard a lot of good things and some things I had I agree with with mystery-solving one of the things that I
22:07
have to point out to you is that in the
22:13
world today and we have a convention
22:19
international convention called the virgin be sure to the United States for the renegade for many years did not join
22:27
about 20 years ago but we have in the
22:33
United the world today we have 164 countries that are parties to the Berne
22:40
Convention in other words they have copyright system we have in the world
22:45
intellectual property organization and the ability to get to get priority on
22:52
your patent applications by finding in our own country we’ve got like 184 countries I don’t
23:00
know any developed country of the world that does not have a copyright and more
23:10
patent system and they have a wealth I don’t think that anybody would like to
23:17
be the first one to jettison their system it’s one of the things that has
23:24
happened and I certainly can agree with Professor with mr. Kinsella that we need
23:31
to maybe make some changes in the very specific language that we
23:36
have one of them being one of the problems that we all see with our copyright system for example is that the
23:44
term of copyright is much much longer than it is that originally the United States they
23:51
were about the same however it almost becomes a joke when I end up saying to
23:59
people I did last semester by hybrid class here if I was a lobbyist for a drug company I would be going down to
24:05
Congress and suggested they should be giving me 90 year passes for my drugs
24:11
the important thing is the way leading the courage innovation is to make people
24:19
innovative to basically put something out there right and at the end of that
24:29
and this is where the limited times comes in our system requires that again
24:37
at the term that invention belongs to the public okay there’s no way you can renew that
24:43
back there’s no way that you can redo that copyright forever at some point in
24:51
time the contribution the novel contribution is going to want to all of
24:58
us and what we need to do is to encourage that I’m not necessarily the
25:04
biggest supporter of President Obama but one of the things I hope you’ve heard it
25:09
is standing in a dress is the need to get American innovation
25:15
to start and to get it that is where we moved they had many other developing
25:23
countries were going to be we’re developing country one of the things we
25:28
can see today in China is a very strong effort in that country to encourage
25:36
innovation to their back system has made tremendous strides in the last twenty
25:42
years and so I think that we need to be
25:48
honest intellectual property protection and it is not yes you might have had
25:56
suggested to you a system that the government is involved in there is no
26:01
copyrighted police or there shouldn’t be there is a faculty police but if
26:08
somebody takes something I don’t like object I should have the opportunity good court and to stop taking and that’s
26:19
what our patent system provides provides a civil remedy to people and one of the
26:25
things that’s really important with the intellectual property system and this becomes real work when you deal with a
26:31
client if somebody trespasses by my real
26:37
property and I go to court nice to the poor trespass chances are extremely good
26:44
that when I walk out of that court whether I bid the trespass sooner mom I
26:50
was still over my house but that’s not true
26:57
because if I go to court and I say that somebody is infringing might have just
27:04
as much as that Court has the right to enjoin the other party from stopping her
27:12
folks from there to Friendship the court also has the ability to determine that if the Patent Office was
27:20
wrong in getting a patent because my invention is not useful or not audible
27:27
or it is obvious I may well leave that court with out of
27:33
the path I will walk in with property and we’ll walk out having the Caddy
27:39
taken away from and that is valuable harnesses I think that American progress
27:48
and progress around a lot of the world is attributable to patent copyright
27:53
systems and I think that we need to keep it in place is it totally perfect no is it better
28:03
though it would is it better to have it than to allow this you guess
28:09
[Applause]
28:21
okay thank you a few comments and reply you said that
28:27
inventors and innovators give us something we didn’t have before can copyright that’s somewhat true although
28:35
even Shakespeare borrowed from previous plays that works with others don’t think
28:41
so all creators borrowed from others and you want for you to do that you couldn’t have the creation in the first place and
28:48
as Benjamin’s / famous internist said if you want you to mention to yourself then keep it to yourself
28:55
nice for inventors I don’t think it’s true that in many cases they give us something that we wouldn’t otherwise have the history of patents is rightful
29:04
at the example of the simultaneous or near simultaneous invention in fact
29:10
wonder if he would support a independent inventor and in priorities of Defense and half of all which would help to
29:17
ameliorate this injustice in fact that you mentioned
29:23
pharmaceuticals I would commend everyone here take a look at the very good book the case
29:29
children the data ravine which is free online on my site C or casaya or the
29:36
resources page he’s got a great chapter in there they have a great chapter about pharmaceutical patents and they
29:41
basically explode every mythos trotted out over and over and show that pharmaceuticals in the strongest case
29:48
for patent protection most of the top ten women drugs of the
29:53
last century were not patented at all and he showed that almost all the common
30:01
assumptions comparable speaking about pharmaceuticals are just one would be false
30:07
that’s what being the first country not have a patent system well I mean the past controlled about two hundred years
30:12
old so countries had animation before then we had artistic creation for copyright law that Neverland and thus
30:18
which ones have 50 years seven-year period in 1800 they had impact protection and innovation variety
30:24
increased there’s a recent story of how Germany had almost no copyright protection for a period of time of
30:30
eighteen hundreds and during that period of time the publishing industry thrived
30:35
Oris magnitude more than the more control system is written so if you want to empirical studies there’s lots
30:41
of reasons believe that it’s just simply unnecessary and I’d like to know what is
30:48
the proof that the benefit I mean we all get admit that there’s a cost of the patent system in the copyright system it
30:55
clearly imposes costs on society the question is what’s the internet results
31:00
and is a greater than this cost I’d like to know how do we know that
31:06
this is to his worth engine asks for pretty promoting innovation it’s not the
31:12
job of the state they should the state does a terrible thing everything does except kill
31:18
destroyed and propagandize it does a bad job everything else one if you want to
31:26
improve innovation you know cost innovation strong system and property rights and wealth and this is what the
31:33
state ruins and undermines everyday taxes over half of our wealth ruins
31:39
another half another half of that half with the cost of regulations cost business cycles inflation imposes crazy
31:47
regulations on companies with the FDA pro-union legislation and a wage loss there are no regulations basically is
31:54
doing everything you can to kill private enterprise and the free market so if you
32:00
want to promote innovation can’t stay out of the way haven’t reduce the tax rate have introduced regulations don’t
32:07
go to this criminal penalizing monster that is hurting our lives and our
32:12
economy putting people in jail for for smoking marijuana telling people in Iraq don’t trust this thing that is
32:19
destroying our economy to add a monopoly right on top of it for people to make up
32:25
a little bit for the harm to the economy so if you want to if you want to promote
32:32
information reduce the size of the state drastically or eliminated one final comment as there be no contract police
32:39
well there was about 100 domain seizures a couple weeks ago by this organization
32:50
so there was a police
32:58
[Applause]
33:08
the words that I heard in the bottle
33:13
there were words like taxes monopolies in the copy regularly and let me start
33:21
with that last one I’m not living with the nice situation but in general and certainly on the back
33:30
side of things there is no criminal procedure in place and to the extent
33:38
that there is in copyright as I said I think the overall system is good at the
33:45
edges it has things that are wrong and in fact the criminal infringement notice
33:53
that you see at the beginning of the movie when you write a movie from Blockbuster and F Langstrom on these
33:58
places I’d like to see that go away – I mean again it’s assuming should be
34:05
accomplished it’s a personal property type issue it should be settled between
34:11
people taxes I would know that we impose
34:19
any taxes on you before the cut right path systems in the United States and in
34:25
fact my clients to go to bat rock this pay a considerable amount of money to
34:34
convince an examiner who is representing and watching an ex parte proceeding
34:42
between me and the examiner that he’s the Emperor state the rights of the American people we
34:49
don’t want to go back to somebody and take away an ability they have to do
34:57
something right now
35:06
but again this you know sort out those situations and on the word monopoly you
35:16
know the Constitution talks about an exclusive right meeting right to exclude
35:22
and in fact it’s been probably since the
35:28
late 1930s when the courts of stop talking about monopolies with regard to
35:34
Packers but the real economic finding has been in recent years and court
35:40
buildings is that in most cases a patent holder does not really have a monopoly
35:48
power okay we don’t get involved in antitrust issues in those situations
35:54
because there are enough non-infringing alternatives out there and in fact one
36:00
of the benefits of our system is that in getting the pet I have disclosed to you
36:08
how I do what I do and I to a set of plans and it is up to you if
36:16
you can design around that and move the progress line perfectly free to do so I
36:23
don’t see that we’ve got a problem and as I said I certainly don’t see any
36:28
country that has succeeded without having these protections as for Germany
36:36
in the 1800s and having very driving publishing industry that’s probably
36:42
correct because they could publish books that they didn’t have to pay royalties to be again we had problems in the
36:49
United States in that same time period we did not readily give a copyright
36:54
protection to authors from England for example and I cited because those people
37:00
were writing the English language what publishers in the United States were doing was they were printing to the
37:10
exclusion of American authors they were printing works by British authors
37:15
because they didn’t have to get a loyalty and although we had Henry Clay
37:22
gave a famous speech in the Senate talking about how Walter Scott Sir
37:28
Walter Scott was almost endless in Scotland because his books were being
37:33
ripped off by American publishers when does it be argued we have American
37:39
authors who are not getting their work out because a publisher published
37:47
you’d have to be a loyalty they’re going on in there they’re getting preference the first time you publish great so I
37:55
think that we have some distinct differences and we need to keep the
38:02
system in place fix it all right at this
38:18
time our speakers will take some questions from the audience
38:55
I wasn’t really using that as an argument my personal argument for a positive
39:01
argument to abolish copyright officer just rebutting the the comment by mr. grant that no countries had tried this
39:09
before I mean and just to show that there are counter examples that there are cases this is a pretty famous study
39:16
that came out I think six months ago if you search just search for German publishing or something like that on c4s
39:21
F dot org you’ll find the original newspaper article and the study and it goes into detail about how it worked but
39:28
I think basically what happened was it actually was not German publishers
39:33
publishing works from other countries I mean it was authors writing a lot of
39:39
books and they did it to make a profit or to create the to express themselves I mean you can sell a book even though you
39:44
don’t have a copyright in it it’s possible to do it you just sell it I mean this happens even right now a lot
39:51
of I mean the Mises Institute where I do a lot of work has in part because of the IP ideas opened up everything free they
39:59
published everything Creative Commons Attribution only not even a non-commercial thing and they say take it do whatever you want with it they get
40:05
put free PDFs and epub versus online and they and their their bookstore sales have tripled or quadrupled in the last
40:11
two years people read these books they learn about them and they want to buy the physical copy sometimes or they
40:18
donate more to the pieces too so I think the the incentive is to sell books for
40:23
profit just because there’s competition doesn’t mean it’s impossible
40:35
[Music]
40:43
yes well copyright law has a similar
40:55
feature already because if you if you happen to have independent creation then you’re not actually copying so you could
41:01
have no theory it almost never happens but it sometimes happens in software in
41:08
software there’s an approach called a cleanroom approach so what they’ll do is they will intentionally develop it’s not
41:14
being tellement with the guys dancing around in the in the suits it’s uh it just means they set up an environment
41:19
like a Chinese wall type thing where you can have proof from your procedures that these engineers had no access to the
41:26
software code of a competitor so that if there’s a similarity it had to have been an independent creation so if you added
41:33
this I mean it’s a if you think about it it’s a travesty that the patent law doesn’t have this because most people
41:38
don’t aren’t aware of this and I’d be curious if professor grant would be in favor of such a such a edition of change
41:45
to the patent law you you can even be the first inventor and still be stopped
41:51
okay so let’s say I have a chemical process where I’m a mixing process to
41:56
make a chemical it’s a novel process or a novel nozzle or something like that and I keep a secret for thirty years it’s a trade secret someone else
42:03
independently invents it they file a patent and they can sue me and actually stop me from using my own invention this
42:08
is true wrong is standard and copyright
42:23
is originality and so to the extent that you independently create the originality requirement the
42:31
requirement in patent law is novelty and
42:37
if the invention is known or used by others in this country for example for
42:45
more than a year before you applied for your patent that person would not be
42:51
entitled to a patentee what would probably happen if you’ve been using that process for 30 years and you get
42:59
sued you’re probably going to have a very good excuse because you’re going to show that if others knew the process and
43:07
you’ve used it for that long then the invention is in the public domain likewise the inventor who invents and
43:15
keeps it to himself as undertaken the
43:22
step that we ask for to get a patent you have to give us something you teach us
43:27
something we didn’t know how to do before ok ok so but if the if you’re
43:33
selling a product and the idea is embodied in the product then you’re right it would serve as a as a prior art
43:38
a statutory bar but if it’s in the case I gave it’s secret and if you’re selling just a regular chemical that has no
43:44
novelty in it but it’s just made by say this process which is trade secret it would not serve as a statutory bar and
43:50
you could be stopped even if it’s 30 years later furthermore if you independently invent something at the
43:56
same time or later but it’s you haven’t filed a patent for it you can also be stopped there so it seems to be only
44:02
fair that there should be an exception now someone asked about how you prove this well right now in the patent system
44:08
you have to be the inventor it has to be novel the invention has to be novel and
44:13
non-obvious but it also has to be your invention which means you are the inventor so that’s a statutory
44:19
requirement and so when you file a patent application you have to swear under oath that you are the inventor
44:24
which means you didn’t learn about someone else ok so if you had this defense than the person who was using
44:30
the defense could just make the same kind of proof he would have to prove that he was the inventor of it on its
44:35
own as well it would just be the same kind of standard of proof be used I want to make one comment about
44:41
the professor grant it’s correct that one of the stated purposes of the patent
44:46
system is to encourage disclosure and so that’s the bargain we call it right you in other words to get a patent monopoly
44:53
from the state and I realize it doesn’t make you a monopolist always in the in the antitrust sense although there is
44:58
always a tension between antitrust law and patent law but it is a monopoly grant that allows you to charge a
45:03
monopoly for a monopolistic price that’s the whole purpose is to let you charge a greater price because you can squelch
45:09
competition but you’re right that one alleged benefit is that we get this disclosure of ideas the the problem is
45:16
most of these things are idea that would have been disposed anyway because they’d be embodied the product and companies
45:22
we’re going to keep some things trade secret still that they don’t want to file a patent for so we’re gonna get disclosure of things that Larsen would
45:28
have been disclosed anyway and furthermore the other pernicious impact of this is the patent system is very
45:34
expensive and complicated and a lot of smaller companies and individuals cannot afford to file a patent application or
45:41
they don’t want to so they’re at risk of being shut down as I mentioned because the they were the first inventor so what
45:47
they do is they they engage in defensive patent publishing so they do they publish an article like in a journal you
45:53
have to pay a hundred dollars or something like this there’s websites to do this and they actually disclose their idea intentionally to set up a statutory
46:01
bar so no one else who patent it later so you’d have these poor people who are not trying to get a monopoly they just
46:07
want to practice their own invention and yet they’re forced to reveal what the otherwise would people have the right to keep as a trade secret in a in a free
46:13
society just to defend themselves from a potential patent suit so the disclosure
46:19
that the patent system encourages is not from the inventors who get the patents because they’re largely disclosing what
46:25
they would have had to disclose any way to market the product but it’s causing potential victims of the patent system
46:32
to disclose what they should have had the right to keep secret if they wanted to
47:28
okay so let me address those those points I mean I’m not making the
47:33
positive claim that there would be more innovation if you get rid of patent copyright although I think there would be but but my point is that the other
47:40
case has not been proven and I think it looks likely that the current system imposes a cost and overall in that cost
47:47
of at least forty two billion dollars one Society if you remove that cost alone then you make people wealthier
47:52
they have more money to engage in innovation by self my point was that if we want to improve innovation we have to
47:58
get rid of other government costs so that I wasn’t saying the copyright system is a tax although it is a tax what I was talking about was regular
48:05
taxes when the government takes 50% of the consumers wealth and taxes corporations and imposes all these costs
48:10
they basically reduce the amount of wealth that we have to use to engage in innovation and hire employees and things
48:16
like that so we would improve innovation by lowering the tax rate for example or in other government innovations that was
48:23
another point now when you ask basically you say and I don’t want to I’m not
48:29
trying to be cute here but you say you don’t see how excellent it would happen I mean a question or confusion is not an
48:35
argument right I mean it’s okay that you have a confusion or a question but that’s not an argument for an IP system
48:40
just because you don’t see how iso-ne would have what happened now there are there are reasonable suppositions or
48:47
ideas about how the the free society would operate but you know if you asked a denizen of Russia and Soviet Union in
48:54
1982 you told them we’re gonna abolish the state monopoly over making
49:00
toothpaste they might freak out and say oh my god who’s gonna make the toothpaste and if we have a free market in toothpaste how many flavors were
49:05
there being and how would I choose I mean it wouldn’t be fair to put the burden of proof on the person advocating
49:11
dismantling the oppressive state and the monopolistic communist system – do I
49:16
have to extrapolate and prove exactly what the new free markets gonna look like when we get rid of the state the
49:22
state has ruined things by distorting everything it’s hard to tell but I think we have some indications you would have
49:29
software made for profit and just like we have now in the in the and the open-source movement I mean this
49:34
goes on all the time what you have right now is you have all these interoperability problems between
49:41
technologies and standards precisely because as professor grant said when
49:47
you’re aware of a patent or a copyright of someone else you have to navigate around it or design around it so you
49:52
have companies putting all crazy coming up different interlocking
49:57
standards different connectors so you have all these standards that don’t mesh together right now so that’s a lot of
50:03
societal waste right there I think you could expect to see a lot more uniformity interoperability and
50:09
compatibility but any case I you know you can imagine any number of ways that
50:15
you could have software being generated look it’s hard to argue that you have no I don’t know anyone who would seriously
50:21
argue that in a copyright and patent free world you would have no innovation at all you can’t say there’ll be no
50:27
innovation you can’t say there being no software you cannot say there would be no artistic creativity novels movies etc
50:34
the only argument you can have is that there would be less but then how much less would there be and how do you know
50:40
that I mean how do you know that we have enough right now in fact there are some even libertarians who who say that well
50:47
the monopoly provided by copyright and patent is not enough extra incentive we still have a shortage of innovation so
50:53
we have to have an 80 billion dollar tax funded medical prize award that a panel
50:59
of government and industrial corporatist experts every year uses to hand out to two of the well deserving recipients
51:06
sort of government nobel prize so there’s no end of this maybe we could taxes we could have a trillion dollars in the pot we could increase the
51:12
penalties to a capital punishment and a million years of copyright term I mean where’s the end of this so basically
51:18
it’s a utilitarian idea that keeps piling on government controls to try to have a little bit more innovation
51:24
stimulated when you don’t even know how much it stimulates and there’s like I say there is no proof that that the
51:31
copyright in the patent system actually increases overall societal wealth
51:39
just like to point out that it’s too bad we don’t have the transcript here mr.
51:45
Kinsella just told us in the same answer that we need to get rid of the state but
51:50
we also need more standards of things have interoperability there’s a it was
52:41
it was a back-of-the-envelope calculation I mean I tried as best I could using data I could find and I’ve got a
52:47
blog post on it where I went through my numbers it’s if you search on my um I think it’s on my personal blog or some
52:52
the Mises blog I think it’s called revisiting the cost of the patent system something like that and I estimated
53:00
using some studies I found how much the cost of litigation is are the things like this and then so I came up with 31
53:08
billion actually it was a net with my first number and then about a year later an actual study came out a really
53:13
detailed study about the cost of patent litigation itself and this was based upon empirical studies of the number of
53:19
suits filed how much lawyers are paid and they concluded 31 billion dollars was the cost of patent litigation now in
53:26
my calculations I had assumed 20 billion so I was within an order of magnitude but I was off so they actually had 11
53:31
billion dollars more that’s why I added 11 to my 31 to make it 42 but yeah I tried to take into account everything I
53:37
can and I honestly think that’s a conservative number I mean I wouldn’t be surprised 100 billion
54:04
well well I’m just direct you to
54:09
seriously read the chapters a short chapel it’s not a short chapter but it’s a good chapter in bouldering Levine’s book it’s exactly on the pharmaceutical
54:16
ministry and their economists and their empiricists I’m not they go through this in detail and it’s really eye-opening
54:22
they just explode almost every single myth out there with hard numbers and they started writing their book to
54:28
defend IP and then they discovered all the evidence was the other way so they became ardent IP opponents so I would
54:34
take a look at that chapter and I think you’ll see that there’s really no support for these claims now you say they couldn’t sell it they
54:40
couldn’t make a profit that’s just an assumption that’s just an assertion I mean as a simple example we all go down
54:46
to the drug store right now and you see tylenol next to the generic acetaminophen and it’s about twice as
54:52
expensive some people buy the generic some people buy tylenol why is that they
54:57
pay twice as much for tylenol still and if your argument was correct then there would be no way tell them I’ll come make
55:03
a profit off of their their drug or they’d have to cut their cost down all the way down to the generic price in
55:08
other words they face competition and they have a reputation people
55:17
I mean I think a lot of your assertions
55:52
are just based upon they’re just false I mean I would just direct you’d also today or yesterday on the Mises blog
56:00
Hubert who’s here my friend Jacob Hubert his article his chapter from his book on libertarians and today his chapter on
56:07
intellectual property came out and he’s actually got a short summary of that ball turn will be in Chapter in a list
56:13
of all these wonder drugs that came about that had nothing to do with with patent protection so I think if you
56:20
actually see the facts you will see that a lot of the assumptions I mean I think you’re repeating this sort of common
56:25
wisdom and of course the pharmaceutical companies want protection from competition one reason they wanted is
56:31
because they’re hampered by the FDA process and they’re they’re harmed by taxes and regulations so they’re hoping
56:37
to make it up a little bit that way
57:33
well my solution to have a free market you respect property rights get the state out of the way and reduce taxes
57:56
well I’m an anarchist I think the state should be abolished of course and even if we don’t do that I think we should
58:01
have a minimal government like we had allegedly in the beginning of the country and I think the FDA is
58:06
completely unconstitutional as as is the DMCA aspect of copyright as is the
58:11
federal Lanham Act trademark law they are all they’re completely unconstitutional because they’re not authorizing the Constitution and this
58:17
this this idea that the Interstate Commerce Clause justified sit-ins the general police power is absurd ridiculous
58:29
yes yes it should be
58:35
just think about it this way approach it like this I mean I’ve had two 10-15 years to think about this hard so this
58:41
may seem shocking and radical but just think about it this way if you’re going
58:46
to propose the use of the state apparatus to establish this big
58:51
bureaucratic legislated system which clearly is causing some problems if
58:57
you’re going to come up with an argument like you just did about the pharmaceutical industry I mean your
59:02
argument is not good enough it’s just a it’s just short you know if you know or it seems to me I mean you really need to
59:08
have the burden of proof you mean if you want to argue that these patents are necessary then you need to come up with
59:15
some numbers and prove it and I mean from what I’ve seen the if you actually look at it hard like baldra and Levine
59:21
did you will actually see that all the assumptions are wrong it’s just wrong now if you start asking more than how
59:26
are they going to do this I mean you know it’s not the job of a political economist to tell you how to run your
59:31
business and how to make a profit you have to figure it out this is the cost this is what every entrepreneur faces
59:36
they face the fact that they need to have cost of exclusion right a movie a
59:42
drive-in movie theater if they have people that can watch the movie for free and listen to it for free because they
59:47
have loudspeakers and the screens outside I mean they could go lobby Congress for some kind of right to put
59:54
people in jail that are watching it for free or they can just put speakers in for each car like they did you know but
1:00:00
even a regular business that you have to have locks on the doors you have to have security guards you have to have a
1:00:06
receptionist at the movie you have to have someone that takes the ticket because if you don’t people just go in
1:00:11
and watch it for free so you have to envision a business and try to imagine
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if you can make a profit with some reasonable or maybe creative cost of exclusion and sometimes it’s a challenge
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sometimes you might have to bundle your intangible or your immaterial services
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that are hard to keep from being leaked out bundle it with something else reputation
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or vision of some kind of services something like that that’s the entrepreneurs job not mine the problem with this tweaking idea I
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mean there’s no stopping point I mean basically if your argument is that without patents we have X drugs and
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that’s not enough we could have X plus X plus y if we have a patent system ok so now we have X plus y allegedly although
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I think it’s X minus y but we have X plus y now well Y is X plus y enough we could have X plus y plus Z if we just
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strengthen the protections a little bit more or if we have this bonus system like I’m talking about I mean it’s only
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80 billion dollars maybe we get 300 billion a benefit out of having this 80 billion dollar prize I don’t know if
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your if your mindset is empirical and utilitarian there’s no reason to not propose that – well why not a trillion
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maybe we get two trillion of benefit out of that one trillion it where’s the stopping point it’s a completely unprincipled position and the way to
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make it principled is to stop making it seems to me arguments and thinking they’re conclusive I mean if you’re
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serious you have to make a real argument and get the data
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yeah yeah commented on that before what’s I mean it’s it shows the the
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complete economic and literacy of gene roddenberry and these guys I mean Hollywood I mean money is one of the
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best inventions of all time money is going to always be necessary for ich for
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rational economic calculation to occur and we will never reach a post-scarcity society because we live in a world of
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scarcity will always have scarcity in terms of scarcity doesn’t mean lack of abundance scarcity in this technical
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economic sense means a particular object can only be used by one person at a time
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used by me excludes your ability to use it so even if we had infinite bananas everywhere if I pick one you know this
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is a scarce banana and the only way you can use it is to take it from me we can’t both use it at the same time now
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in such a world you almost have lack of abundance type scarcity merging with the
1:02:51
economic idea of scarcity of a cuz in a world where there was infinite bananas and infinite food and everything even if
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each particular one scarce no one would really care if you’d they took if no one would care if your banana was stolen
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because you could just get another and in fact no one would steal it because they don’t need to steal it so in these
1:03:08
sort of hypothetical scenarios economics breaks down so I don’t think we’re ever
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going to reach a post-scarcity and to the extent we have scarcity at all we have to have money to rationally
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calculate economic activity so I think Star Trek was just measure the connection to IP but Star Trek was just
1:03:28
absurd there [Music] Oh
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well I think what you just said is it’s more like a research proposal with like it’s it’s um it’s observing sort of ad
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hoc some possible trends which would lead you to study it more seriously if
1:04:43
you wanted to really make that argument I mean I hear this argument all the time from patent lawyers they’ll say well you know America had a patent system since
1:04:50
1790 and we’ve been a great country ever since then but well we’ve also had
1:04:55
taxation and antitrust in war ever got every 15 years in this country so I mean do you want argue that’s the cause of
1:05:01
our prosperity I think probably what happens I mean it could be my personal
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losses all the way around I mean you’re you’re confusing correlation with causation I think that this idea of IP
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is entrenched and people have been sold the idea that is part of a capitalist property right system so when you start
1:05:19
having a country start having stronger property rights they of course increase their IP protection to because they
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think that’s part of it but the reason innovation is improving and increasing is because the country is getting richer
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because the property rights system is increasing at the same time so that would be my guess is what you would find if you actually looked into the details
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closely
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[Applause]
1:05:51
thank you
September 13, 2013
In this inaugural edition of the Lions of Liberty Podcast, host Marc Clair interviews libertarian legal scholar Stephan Kinsella about the concept of intellectual property and the libertarian framework.
Finally! The long-anticipated Lions of Liberty Podcast has arrived! In this first episode, I spoke with Stephan Kinsella regarding the subject of intellectual property within the libertarian framework. Kinsella is the author of Against Intellectual Property, and is one of the best-known voices in the libertarian community against the concept of intellectual property.
I found the conversation with Kinsella very interesting and I feel it will be helpful not only for those trying to sort out a stance on intellectual property, but also for those new to libertarian ideas in sorting out some of the finer details of a libertarian framework. Before launching into tirades about “private property” and “contracts”, it’s important to have a firm grasp on the definitions of these terms.
I first came to the IP debate through the “debate” between Kinsella and Robert Wenzel on the issue, which served more as car-crash entertainment than an intellectual study. But it did peak my interest in an area I had honestly not given much thought to before. After reading his book and speaking further with him on the issue, I find it difficult to present a case in favor of intellectual property, at least as we know the concept today.
The biggest problem I see with intellectual property is that it attempts to bind third parties, not privy to any sort of contract, and prohibit them from using their own property in a way they see fit. I tend to agree with Kinsella’s view that intellectual property is nothing more than the State’s granting of a monopoly on an idea or a pattern of ideas.
The biggest difference between Kinsella and myself is that I may see a private society, sans the State, as coming up with more ways to protect their works through contracts and/or user agreements, but ultimately that can only go so far. Any differences we may have on just how far private arrangements to protect the work of artists may go are largely moot. When it comes to forming a libertarian position on a subject, we should not be asking “how will this work?” but “what is right?”
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