Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

Copyright Notice: We don't think much of copyright, so you can do what you want with the content on this blog. Of course we are hungry for publicity, so we would be pleased if you avoided plagiarism and gave us credit for what we have written. We encourage you not to impose copyright restrictions on your "derivative" works, but we won't try to stop you. For the legally or statist minded, you can consider yourself subject to a Creative Commons Attribution License.

earlier posts

Yet another proof of the inutility of copyright.

For the third time in less than a decade, courtesy of the Congress of the United States, a natural experiment is being carried out (as we write) to prove one can make money by publishing books that are not copyright protected. Said otherwise, that one does not need copyright to make money printing and selling books worthy of at least the paper they are printed upon.

A few days ago, the Congress of the United States released the report of the Financial Crisis Inquiry Commission. Like all government documents, it can be downloaded for free here. It is also published by Public Affairs for $14.99. Obviously, you can find it at online bookstores for about half that price, and it seems to be SELLING pretty well (#412 in Amazon ranking of all books, when I last checked it).

The two previous experiments were, respectively, the report on 9/11 and the one on the invasion of Iraq. According to Amazon's ranking, they are currently selling less than AIM (:-)) but they are still selling copies after a few million ones were sold or downloaded when they were first circulated. No, we have not made the 1M number ... yet!

What do we pay our embassies for?

According to some of the documents posted on Wikileaks, to lobby, nudge, pressure, threaten ... (I let you pick the right one) foreign governments into adopting stricter "IP" laws, in order to "protect" our "strategic interests" in their countries.


Common law vs Statutory law

John Bennett post links to an interesting article on copyright as a way of infringing upon free speech. While I agree on the substantive conclusion (the power attributed to copyright holders does infringe on free speech nowadays) I am not sure that the issue can be addressed in a satisfactory way by simply advocating a Common Law (CL) approach instead of a Statutory one (SL). At the end, this seems the eternal debate between CL and SL and both evidence and logic leave the issue quite open. Until a judge does not exceed the established boundaries the CL approach tends to leave more to to fair use and less to its opposite. But once a judge rules otherwise ... well, we are up the old creek that John Belushi made so famous (did he have a copyright on the joke?)

The question is: how do you prove that something is not "fair" use? A statute, per-se, does not immediately make this an easier task (i.e. restricts fair use), or vice-versa. A statute establishes some criteria, and those criteria may be restrictive or not in the very same way that, under CL, a judicial interpretation may, or may not, establish new boundaries and new interpretations. The issue, at the end, boils down to: who has got the power to decide and rule?

I am afraid the answer always depends on the balance of the powers on the battlefield, and that balance tilted in the 1980s in a very clear direction. It did not tilt in the bad direction because SL took over CL, but because the political momentum (and the Reagan administration) pushed in that direction. The direction of change, until now at least, has kept steady and we are now in the situation we are. Until technological and economic changes will not tilt the opposite way (the same argument applies to patents) the current trend will persist because it is supported not by the majority of people but by the most organized and powerful lobbies.

That is the political problem. I am well aware I do not have an answer as to HOW we can tilt the political momentum in favor of free speech and against intellectual monopolies, but THAT is the problem we need to face. Free speech is a collateral damage(d) freedom in this battle, which is one of economic and social interests. Hence, it seems to me, the question we should ask is: how do you build and who can build a coalition of social and economic forces that will find intellectual and inventive freedom to be preferable to intellectual monopolies. At that point, either CL or SL may be useful to push back intellectual monopoly. I do not see, a-priori, why one system would yield better results than the other.

IP and Guard Labor

A very well done and insightful review of AIM.

Pointing out some connections between our work and that of Mr. Adam Smith, which we had somewhat missed.

On Rajiv Sethi's blog.

Straw men from the AEI

Nick Schulz, of the American Enterprise Institute, commented on a recent piece David and I published on the CSM.

I found the comment particularly misleading. Our suggestions and proposals are "wrong" and "impractical", Schulz writes, but he does not even try to explain why!

We also build straw men by writing things we are aware not to be true either in the literature or as a pure matter of logic - which is a convoluted way to say that we actually lie!

So, even if I seldom get into these debates (as my very rare contributions to this blog unfortunately prove), I just could not resist and wrote him the following mail.

Dear Mr. Schulz,

I just read your comment on our "straw men" and our impractical proposals.

A few questions came to my mind, which you may want to help me with.

1) Where in the literature is there an accessible explanation of the sense in which the word "property" in "Intellectual Property" denotes anything other than what it denotes in any other common usage of the word "property"? I would be curious to find one, given that you treat this as an obvious point. A couple of weeks ago, in a debate at the JFK Harvard School of Government, my counterpart (a very distinguished local academic) argued exactly that: absent patents it would be impossible to trade ideas and have a functioning market for technology transfer, as ideas would be nobody's "property" (in the VERY usual sense) and hence contracts could not be written.

2) I would also appreciate if you let me also learn in what sense the law of the land treats the two forms of "property" differently. That could be another proof that we are building straw men, and that you are right in asserting that everyone already knows the two things are different, no? I am under the strong impression that, when enforcing patents and copyright, the courts of the land we both live in are treating them just like ordinary property. But I may be wrong.

3) I am also curious as to how the difference between rivalrous and nonrivalrous goods has ANY bearing on this issue. If you had ever spent more than 5 minutes reading our technical work, but also our less technical book, you may have noticed we explain quite clearly why there is nothing "nonrivalrous" in actual copies of ideas that are, in our parlance, as rivalrous as your cup of coffee is. Could you therefore spend a few minutes explaining to me in what sense actual ideas, those in the head of people, are nonrivalrous? I have been wandering about that for 26 years now, since I first heard it in graduate school. And I am still wandering.

Open debate is very useful and, whenever you feel like, either of us would be very happy to have one, possibly in public, with you or anyone else willing to debate, to discuss how "impractical" and "extreme" our positions are vis a vis other, including yours.

In the meanwhile, though, why building straw men by claiming that other have built straw men when they have not?



Victoria Espinel

So, now we even have an IP-Czar (how about "Czarina", at least? Ah, the foreign languages ...).

Good, or bad? No idea. I looked around the web and could not figure out why Ms. Espinel is the appropriate person for this job. Visiting Assistant Professor at George Mason and Assistant U.S. Trade Representative for Intellectual Property is not exactly a lot, but one never knows ... Oh, right, she is also the president of some lobbying group working to empower Americans to obtain the full benefit of their creativity and ingenuity. That sounds like a program, indeed.

Anyone out there has any idea about her views, writings, previous actions taken, professional experience and knowledge of the matter?

Mine is just plain curiosity: a Czarina is supposed to be a very powerful person, after all, so it would be nice to have some track-record somewhere.


Russell Roberts and Michele Boldrin having a conversation about David's and my book.

MPAA against RealNetworks

My colleague John Nachbar pointed out the following interesting fact to me.

The big US case right now is the MPAA against RealNetworks

My understanding is that the ability to copy or rip a DVD for own use is a legal grey area. Actually stripping out the drm is supposedly illegal under the law as it now stands (a stupid law, in my view). But the RealNetworks software does *not* strip out the drm. This case is the anti-napster: RealNetworks is not being accused of facilitating the distribution of copyrighted material. They are being accused of giving the owners of DVDs a way to convert them into a more convenient form for their own use.

Nothing to add.

A little bit of good news from France

The French Parliament has rejected the bill, proposed by the Sarkozy's government, that would have lead to the cut of the internet connection for "individuals" (IP numbers? Internet provider's accounts? Not clear ...) "caught" using peer-to-peer software to download copyrighted files. The bill had been approved by the Senate in the morning and this seems to be just a temporary stall. The bill will go back to the Senate, which will change one comma, and then will be re-submitted to the Parliament on April 29th ...

The Sarkozy's government needs the support of actors, singers and other "artists" in the forthcoming elections for the European Parliament: "artists" being traditionally on the left, this would help the poor right-wing husband of a struggling leftist artist to win the elections.

For those very same reasons the Prime Minister of Spain, Luis Zapatero, reshuffled his own government last week, appointing Mrs. Ángeles González-Sinde to the post of Minister of Culture (yes, they have that in Spain, and in France, and Italy ...). Her previous job was being the President of the Spanish lobby for the movie industry (the official name is way more pompous), the founder of which was her ... father.

In Spain, as in France, Italy and all over Europe, local "artists" are very active on the anti-freedom of downloading campaign, attributing the bad economic performances of the European (respectively, Spanish, French, ...) movie industry to the use of P2P software and downloading. As everyone knows, before P2P appeared the European movie industries were thriving and their movies were dominanting the world market.

Sandro Brusco on the Bailout

My friend and colleague Sandro Brusco posted the following on noiseFromAmerika.

I am reporting it here because, personally, I believe the repeated, desperate and everyday more damaging efforts by this administration, the previous, and the Federal Reserve to "save" the American banks in their current form and keep their executives and managers where they are, i.e. to preserve the status quo, is the worst case of monopolistic power being exercised on the American people in very many decades. We will pay this dearly, and for a long time, where "we", here, refers to the average guy consumer/taxpayer.

It is an insanely bad exercise in political monopoly power and economic monopoly power. Its aim is to keep a few thousands incompetent super-rich monopolists where they are, which where they should not be.


The new plan to rescue banks, as described by the New York Times, looks a lot like all the older plans. The basic idea seems to be always the same: overpay the toxic assets using taxpayers' money. I don't really have much to add to what Paul Krugman has already said on the subject in a couple of posts in his blog. The approach is, quite simply, nonsensical. The relevant quote from the NYT article is the following:

Risk-taking institutional investors, like hedge funds and private equity funds, have refused to pay more than about 30 cents on the dollar for many bundles of mortgages, even if most of the borrowers are still current. But banks holding those mortgages, not wanting to book huge losses on their holdings, have often refused to sell for less than 60 cents on the dollar.

The approach of this administration, and of the previous one as well, seems to be that the investors are unreasonably risk averse, or irrational, or whatever, and they should buy the toxic assets at a price closer to what the banks want. Otherwise, you see, the banks would have to ''book huge losses''. Why the market is not working is left unexplained. The solution is simply to fill the gap between the 30 and the 60 cents with a huge public subsidy.

We can only hope that this approach will fail, the same way that it failed when it was first proposed in the fall of 2008. Yes, of course, we do need some sort of intervention. The point has been made by many, and I find this exposition by fellow game theorist Sandeep Baliga very clear. But there are many different ways to intervene. In a previous post I have tried to explain how to set up a better mechanism for price discovery of the toxic assets. Other ideas have been floated. Bulow and Klemperer, for example, have suggested a clever variation on the good bank / bad bank approach. As a minimum, if the administration is really unwilling to consider new ideas (but why?), it should at least consider some variant of the Swedish approach: let the banks fail, take them over, recapitalize and then resell them.

The plan instead is to use public money to help the creditors (other than depositors, already covered by FDIC insurance) and the shareholders of the banks. No explanation is given of why private investors are so reluctant to buy the toxic assets. What if the investors are correct in their assessment and these assets are really worth no more than 30 cents on the dollar? Why should the taxpayers bear all the risk? And what if the money is not enough and we keep having zombie banks? The whole thing is almost too depressing to contemplate.

earlier posts


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James Boyle's new book with his congenial IP views free to download

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1

French firm has patents on using computers to choose medical treatment 1