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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.


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Finally...

the idea that "too big to fail" is just too big is gaining traction, with recent comments from Alan Greenspan, Paul Volker, and Mervyn King. Simon Johnson over at The Baseline Scenario has a good summary.

Sex can't possibly be IP, can it?

Apparently, it can. Link here. I'm glad I was young in the '70's.

Too Big to Fail

Simon Johnson has an important post up at the Baseline Scenario suggesting that Too Big To Fail financial institutions are not only too big, but counter-productive to the American economy. He supports this view by pointing to the amount of unproductive rent-seeking behavior these institutions engage in to ensure their own continued profitability. (This, of course, is precisely the problem that David and Michele have pointed up in their book.)

From Johnson's post:

Finance is rent-seeking. The sector has devoted great resources to tilting all playing fields in its direction. Consumers are taken advantage of; consumer protection is vehemently opposed. And great risks are taken, with the downside handed off to the government (and the consumers again, as taxpayers). This downside protection allows an overexpansion of debt-financed finance - reaching the preposterous levels seen in mid-2008 and now re-emerging.

Finance in its modern American form is not productive. It is not conducive to further sustained economic growth. The GDP accruing from these activities is illusory - most of finance is simply a tax on what is done by more productive members of society and a diversion of talent away from genuinely productivity-enhancing activities.

The rise of China does not necessarily imply slowdown or demise for the United States. But if they specialize in making things and we specialize in finance, they will eat our lunch.

Wolfram|Alpha

Via my colleague Michael Trick, Groklaw has an interesting post pointing out that the recently unveiled Wolfram|Alpha computation service makes some pretty strong claims if not to copyright, then to the right for attribution, for results the service returns.

For example, if you plug x^2*sin(x) into the search window, you will get back a graph of this function, as well as a number different series representations for the function. Wolfram|Alpha claims that these materials are protected. Individual use of them must be attributed, and any commercial use requires a specific commercial license. The problem with this, though, is that any table of mathematical formulas will provide both the graphs and series representations for this and many other functions. Furthermore, it could be reasonably argued that these are facts, which generally can't be copyrighted.

The Groklaw post contrasts this with Google's terms of service, which basically says you can't use the service to break the law.

I would also contrast Wolfram|Alpha's service with that of Economagic, which provides publicly available economic data, and, for subscribers, the ability to generate graphs, run regressions, download data to spreadsheets, and do other kinds of data analysis. None of these results are held to be protected, and Economagic requires no specific attribution. There are also no limitations or additional requirements for any commercial use of the service. The subscription fee is also easily within reach of any economics graduate student (which is the site's target audience).

So, I would have to agree with the Groklaw post that Wolfram|Alpha seems to be overreaching.

Pogue on Cellphone abuses

There's a great article in the NYT's Business section today by David Pogue on the various monopolistic practices of the cell phone industry. These range from the hidden subsidization of phone purchases, to double billing practices, to the fact that Verizon typically rakes in over $800 million each year by making customers waste 15 seconds listening to voice mail recording or retrieval instructions!

Well worth reading.

Health Care Monopoly

Paul Krugman has an interesting post on his blog this morning about the monopoly positions that large health insurance companies like Blue Cross/Blue Shield enjoy in states with small populations. He hypothesizes that the reason Senators from those states tend to oppose the public option in the health care reform legislation is a direct response to the rent-seeking activities of the incumbent monopoly providers in these states.

Copyright Irony

Apparently, the Fox network has won a copyright infringement law suit filed against them by the copyright owners of the Oscar-winning Disney song "When you wish upon a star," who claimed that Fox's TV show "Family Guy" had violated their copyright by parodying the song in one of their episodes (in which the song was entitled "I need a Jew"). When I spotted this headline in Google News, I thought "Wow, let's go hear this!" and clicked on the link. And sure enough, there was the embedded YouTube video of the episode's song. But, click on the link and fire up YouTube for the irony.

Too Big to Fail

Simon Johnson's appearance Friday evening on Bill Moyers Journal is generating considerable buzz in the econoblogosphere for pointing out that Too Big to Fail is simply too big. Johnson is a former chief economist for the International Monetary Fund, and continues in the interview by saying that the U.S. economy, with it's large, entrenched financial elites, reminds him more of the problems of oligarchy associated with developing economies that are frequent clients of the IMF.

I'm posting this here because one way to view the problems that our government (both under the prior admininstration, and, apparently, under the current one) is having with nationalizing the big, failed banks is precisely the inefficiency that David and Michele identify in their book: the entrenched elites, failures though they are in their own businesses, still have enough political clout and resources to lobby against direct federal take-overs of their failed institutions.

Johnson goes on to recommend increased antitrust scrutiny along the lines of Teddy Roosevelt's trust busting campaigns against the last century's robber barons. The interview is well worth watching.

Federal Court on Bilski

Big victory today at the CAFC! (Finally)

Via Slashdot, the Court of Appeals for the Federal Circuit, which reviews all patent disputes in the U.S. now, has ruled in the In Re Bilski case that the U.S. Patent Office's rule that patents must meet the "machine or transformation" test -- i.e. ideas must be embodied in an actual product (a machine) or engender an actual physical transformation (as, for example a chemical or biological process) -- in order to receive a patent.

In practice, what this means is that business method and software patents are probably done for.

Life, liberty and the pursuit of patents

Via Matt Yglesias, the following poster was what greeted delegates to the Republican convention at the Minneapolis airport this week:

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