Intellectual Property

Thank you, tvellalott, for accepting this challenge. I look forward to a good debate. Intellectual Property vs. Property Intellectual Property (IP) is not real property. To see why, look at what exactly property is. Normal property includes things like land, food, cars, etc. These things have one thing in common: they are scarce. (That is, the economic definition of scarce, meaning that there aren't enough of them for every person to have as much as they want) That's why air, for example, is not property, and cannot be bought and sold. Everyone can have as much air as they want without taking away anyone else's air. What does this have to do with IP? IP, since it is an idea rather than a physical good, also isn't scarce. Everyone can posses an idea without taking it from its creator. That's the difference between internet "piracy" and real theft: with theft, someone gains something by taking from someone else, but with "piracy," someone gains something without taking anything from anyone. [a] But then what is IP? It is property in name only. It's nothing but a coercive government-granted monopoly on the right to sell a certain good. [b] The government could grant GM the exclusive right to sell cars and label it a form of property if it wanted to. In fact, that was the origin of IP laws. In England, IP rights were originally considered the same form of monopoly as the East Indian Trading Company's monopoly on selling tea. The Economics of Intellectual Monopoly Of course, at a basic level, the economic consequences of intellectual monopolies are clear. As with any monopoly, it creates higher costs and lower quality and variety of goods for the consumer. But, supposedly, intellectual monopolies are special. They are supposed to be necessary for innovation. In this next section, I will briefly explain why this belief is false, and, in fact, the opposite is true. Books- Many people believe that IP rights are necessary to give authors incentives to write. After all, if anyone could just copy a book and then sell it themselves, authors wouldn't make any money, would they? They would. Books make 80% of their profits in the first 3 months [1], so someone taking the time to copy and re-sell the book wouldn't have time to distribute it before most of the profit is already earned. Authors could sell the initial manuscript of their book to a publisher, rather than selling the rights to the book. They wouldn't make as much money of course, but they would certainly be able to make a living. Well, that's all fine in theory, but what about in practice? How do I know that it would actually work the way I say? For most of history, IP laws did not exist. Authors managed to produce great works just fine. Take Shakespeare for example. Most of his plays are basically plagiarized from other stories. If those stories had been copyrighted, he wouldn't have had time to write all of the great plays he wrote with all the court battles he'd have to deal with. He also managed to have enough incentives to produce what are widely considered the greatest written works in the English language without requiring an intellectual monopoly. Not only that, but if he was given an intellectual monopoly, he would have spent a considerable amount of his time suing copyright infringers rather than producing plays. Another example is British authors during the 19th century. They enjoyed an intellectual monopoly on their works in Britain and did not in the U.S. But they still earned more profits from the U.S. market than from the British market. For a more modern example, look at the 9-11 Commission Report. It had no copyright restrictions on it; anyone could download it for free off of the internet or publish a copy themselves. But despite this lack of monopoly protection, Norton's edition (the first publisher to sell it) became a bestseller and made more than $1 million in profit. [2] A different publisher, St. Martin, released its own edition with additional analysis which also became a bestseller. [2] Innovation- Contrary to popular belief, IP hinders innovation rather than encourages it. Patents can increase the amount of revenue an inventor would receive for a given idea, but this greater incentive does not necessarily translate into more ideas. [c] Patents also discourage innovation by causing patent-holders to waste much of their time suing people who violate their monopoly rather than inventing. [d] Patents also discourage innovation by restricting the ability of people to improve on existing ideas. Look at the invention of the steam engine. James Watt thought of the idea in 1768, but production didn't really start until 1775, when his monopoly was secured until 1800. Production was slow during those 25 years, and exploded afterwards, and when a superior steam engine was developed, Watt spent most of the 1790s suing its inventor. [3] Because of Watt's monopoly, innovation stalled during those years, with fuel efficiency, for example, stagnating during Watt's patent, but increasing by a factor of five by 1835. [4] This delay of innovation had serious consequences, as the industrial revolution only took off in England after Watt's patent expired and the industry could thrive. But would Watt have had the incentive to invent the steam engine if patents didn't exist? Yes. He actually made most of his money after his patent expired. He was forced to constantly innovate to keep up with the competition, and, as a result, his steam engines were recognized as the best ones and thus the best-selling. What about pharmaceuticals? Don't we need patents for those? No. Historically, the pharmaceutical industry grew much faster in countries were patents were fewer and weaker. [5] And when countries did introduce patents, they saw no significant increase in innovation. [6] Sources: [1] Flint, E. (2002), "Prime Palavar #6," April 15. [2] Michele Boldrin and David K. Levine, Against Intellectual Monopoly (New York: Cambridge University Press, 2008), 25. [3] Carnegie, A. (1905), James Watt. Doubleday, Page & Co. [4] Lord, J. (1923), Capital and Steam Power. London: P.S. King & Son. [5] Michele Boldrin and David K. Levine, Against Intellectual Monopoly (New York: Cambridge University Press, 2008), 215. [6] Scherer, F. M (2003), "Global Welfare in Pharmaceutical Patenting," mimeo Haverford College, December. Cartoons: [a] http://ninapaley.com... [b] http://ninapaley.com... [c] http://ninapaley.com... [d] http://ninapaley.com...