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Journal DumbSwede's Journal: Overhauling Intellectual Property Laws 9

Overhauling Intellectual Property Laws
Balancing Capitalism and Communism

A lot of conservatives see the end of the cold war and the de facto defeat of communism as a preordained thing. These things didn't look so obvious in the turbulent late 40's and early 50's. Many (most) see communism as a failed experiment whereas I see it as a balancing force that forced western style democracy to treat its workers with fairness and compassion. Am I glad democracy and capitalism came out on top in America? You-betcha. That isn't to say that we couldn't now be entering a new dark age of exploitation when it comes to intellectual property rights that communist like ideals might either be needed as a balancing factor to combat or as a preferable model for how to handle.

Markets arise naturally when dealing with capital and goods; they have proven again and again the most natural and efficient means for allocating resources. When it comes to intellectual property, markets begin to break down as a good model for maximizing resources to the most people for the most good. Until recently, intellectual properties were tightly bound to some media like books, records, or film that give it a capital like handle with which the markets could grab a hold of and distribute efficiently. To quote a common anthropomorphism "information wants to be free," but current owners of information certainly don't want this and are looking for better and better ways to lock information away and control its distribution. The American government to a great degree has supported this trend, largely because any way to extract money leads to more tax revenues. Corporations are addicted to profits, (which in and of itself is not a bad thing) and governments are addicted to taxes, regardless of how best resources could or should be allocated for the public good. Gambling (a form of entertainment tending to be government run monopolies in most cases) has been called a tax on people who can't do math. It could equally well be called a tax on the poor who spend a disproportionate amount of their small incomes on government lotteries; often exacerbating already impoverished circumstances. State and local governments rationalize these lotteries and other allowed gambling ventures based on how this money should help with X Y and Z programs, but often the money just goes into general deficit reduction and the poor get poorer.

Is spending billions of dollars on entertainment best for the Public? Probably not. Money spent on entertainment circulates money through economy to be sure, but that isn't to say the current levels of spending are healthy for society as a whole. If you look at the projections of any entertainment corporation all trend lines are up with money being extracted at a rate greater than inflation so that more and more money is always spent on entertainment. Don't get me wrong, I like to be entertained, but I don't think we have to commit ourselves to an ever larger and lager slices of life's pie being devoted to it, and here I am only speaking in a dollar sense. Since there are more than enough songs, movies, games, and TV shows to keep everyone entertained 24/7 for the rest of their lives. This is of course if you adjusted your expectations of what it means to be entertained, and don't insist that old is synonymous with bad, and that only ever bigger and better explosions mean better and better entertainment.

Makers of most durable goods compete tooth and nail to bring us the highest quality products at the lowest price. Entertainment providers like the sports industry are provided anti-trust monopoly exemptions, then plot how to bring us the exact same entertainment at higher and higher price points every year. CD distributors collude to keep CD prices artificially high then rail against an ungrateful public, which has moved on to find new ways of acquiring music, not all of which are piracy. Ironically the most shrill decriers of the public's new found appetite for possibly illegally obtained music fare are groups like Metallica who built their following with a largely anti-social message. Similarly many rap acts see fit to glamorize a gangsta life style, but then have hissy fits when fans share bootlegs. Evidently robbing Korean liquor stores at gunpoint is a forgivable offense while downloading rap mp3s is not.

Copyrights and patents were originally designed to maximize the efficiency with which discoveries and entertainment are brought to the public to elevate everyone's general state of well being. Now they are being extended so as to make them maximum revenue extractors. It would seem anytime anyone invents a new way to make money, the process of making money becomes a protected species in its own right. Subject to all the governmental regulation needed to protect it from the encroaching threats of new technologies which might compete with it, but in a less revenue generating (and thus less tax producing) fashions. Conservatives often insist that lowering taxes can increase revenues by allowing for a faster growing economy upon which to tax. This may actually be true as is demonstrated by the economic concept called the Laffer curve, however whether we are above or below the all important inflection point that would maximize revenues in the long run is debatable. I suspect a similar curve could be demonstrated for intellectual property rights. Some ideal amount of IP rights for consumers versus corporations generating the optimal amount of stimulus for the economy and wealth for the citizenry.

It is clear to me that giving media producers the keys (DRM) to my computer and complete records of my internet access is not a good thing for me. It would be necessary however if media producers are to retain their old revenue models and extend them. Not only do they need more control of my resources to maintain there moribund business model, but they wish to relieve me of any and all assumed rights I had with said media in the past. And as mentioned before, with government's addiction to taxes on entertainment they may well assist them in this all too obvious conspiracy against the consumer.

Movie and Music studios are spending millions (and in the future I expect this to be billions) on propaganda to "educate" the public on the evils of piracy and how it deprives hard working artist of a decent pay check. Yes, what a tragedy that some egotistical prima donna of a movie star or recording artist might not be able to afford another Lamborghini, when someone far lower on the socioeconomic ladder buying a legal CD or DVD for someone's Christmas day present might have to balance that purchase against getting some other trivialities like food or clothing. Even more unfair is that the lion's share of entertainment money goes into the pockets of middle men distributors -- distributors who are no longer needed in the internet age and make no true contribution to society as a whole (unless you include their shareholders as society).

Now imagine a world where all movies and music were free. Would Hollywood collapse? Probably not. It might cut back to one tenth its former revenue stream, give up hopes of growing faster than the economy as a whole, and have to rely and patrons instead of consumers. But it would go on in some fashion, and ironically it is not all the hard to see how artistically what gets produced might be ten times better without the pressure of the mass market buy in. Music? A new utopia of previously unappreciated artists now able to flourish in a garden that that isn't maintained with herbicides to maintain a monoculture stock.

The world might still resent us for our over representation in the arts in world markets, but they needn't hate us for trying to strong-arm them into to paying for non-essentials. Non-essentials that cost nothing to distribute and do little to improve quality of life of their citizenry in the long run. Far worse is the bully type tactics the US will have to engage in to force foreign markets to pay for American entertainment in the future. Yes, it is a revenue stream for now that helps balance trade, but the future is bleak for it continuing to do so. I doubt the world as a whole will willing adopt the new draconian DRM schemes needed to put the digital distribution genie back in its bottle. To continue with the current models will only purchase us enmity in long run. If America really wants to conquer the world with its culture, then it should give it away for free!

It is easy to see from a resource standpoint why we can't just give luxury cars to everyone rich and poor alike; not so with IP and entertainment. The rich can well afford to underwrite the entertainment industry and allow the poor to have at no cost that which costs nothing to reproduce. With the top 10% of our population holding the same in wealth as the bottom 90%, it seems the least the well-to-do can do for those not as well off. Some might even consider entertainment an addiction, in which case those in the media business begin to look like drug pushers, promoting a product that saps their clientele of what they need to survive rather than nourish. Does anyone think having profit as the largest single determining factor in what get produced enhances art and expression? Like the kings of yore, the billionaires of today could patron new masterpieces of expression that will last through the ages and be free to all of mankind, masterpieces that needn't have their central messages and themes watered down so as to be palatable to the lowest common denominator.

Remember that when you share an idea, you still have it and others can build on it at no charge to you -- and OK, in most cases no profit either. BUT, there is always a profit to society when ideas are being brought forth and developed upon. Don't let greed and government interference get in the way of the greater good that spreading and sharing ideas has. It is likely that had corporate business seen what personal computers and the internet would evolve into they would have tried to make it a for-profit service and ironically killed all the business that have sprung up that now depend on it and all the jobs and wealth thereby created. Free exchange of ideas is what made the internet explode. If someone had an attractive web interface all one had to do was look at the source code for the HTML to make something similar for oneself and millions of people and business did. Now business is attempting to reign in this practice by patenting every trivial idea that can be applied to the web and bringing the progress of the internet to a slow crawl. All this as they attempt to gain monopoly like powers by getting a large enough user base before others can use the same methods. Patents ill serve these types of service industries because once critical mass is achieved it is too hard to woo people away from a well-learned interface, time-tested relationships, and the low prices that come from economies of scale. Only other huge corporate entities can then stage reasonable business challenges, which in most cases then could be seen as "picking one's poison."

In a simplification of Karl Marx's communist ideas, Marx believed all goods should be shared equally, all workers should, could, and would perform to the best of their abilities so that everyone could have what they need. The trouble is that the smart and the hard working hardly see it is as fair when not everyone pulls the yoke with equal effort. At the bottom, those who would tend to be laggard only do the minimum to get their share; those at the top also under perform because they receive little more in incentive than those at the bottom. In old Soviet Russia the familiar refrain was, "they pretend to pay us, so we pretend to work." Only a truly fanatical cult of personality can drive a communist style system in the short run like Mao or Lenin, or in the slightly longer run an incredibly totalitarian one like Stalin's. Pure communism has to rely too much on the stick and not enough on the carrot.

Unlike goods and services however, ideas and entertainment will get produced whether they are paid for or not, thus work well with communist ideals. The best writers don't write to make money, they right to express themselves to their fellow men and for posterity. Scientists and engineers are largely driven by the thrill of discovery and are often undervalued in comparison to the managers and capitalists that use their discoveries to make a profit. Many programmers share code for free either to be part of a larger enterprise that they can benefit from in the form of a larger shared code base, or for the pride that comes from recognition by their peers. Actors will come forward willing to act just the for the love of acting and the adoration of their fans -- multi-million dollar movie deals unneeded. Many athletes will play for the shear love of the game, a game played all the better as a metaphor for striving for excellence for excellence sake. And make no mistake society will still find ways to reward those who excel in all these fields regardless if what they produce gets paid for directly.

Don't get me wrong, managers and capitalists are needed to keep the economy going, but it would be a more efficient economy if ideas and information where largely free allowing for lower barriers to entry for competition. Managers and capitalists should be rewarded for maintaining efficiency in bring goods and services to market -- not on how cleverly their full time staff of lawyers can lock out competitors.

Microsoft employs tens of thousands of programmers to produce products of questionable quality, while groups of a few tens to perhaps hundreds of individuals can create a reasonably competitive and, from a security perspective, superior products, the quintessential example the open source OS project Linux. One reason this happens is because Linux's source code is visible for all to see, learn from, criticize, and build on. Microsoft's coding skeletons remain hidden from view. Imagine if construction projects never had to have their architectural plans reviewed for public safety, or the finished product inspected for possible faults, flaws, and violations. And yet this is exactly the state private software is in, and make no mistake in many cases your safety does rely on this software, not to mention your entire financial existence.

For all these reasons and more IP laws need to be overhauled and largely repealed. China's economy surges ahead using capitalist ideas with regard to goods and services, but retaining communist ideals with regard to IP. I predict that the second half of the 21st century will belong to China if America fails to learn this lesson that ideas should indeed be free. Given China's inability to completely give up on censorship, we should actually be able to pull ahead of China in setting information free if we so choose. We shouldn't let the failures of applying Marx's ideas in the 20th century to goods and services blind us to the possibility that they possibly work well in the realm of ideas. How about we abandon capitalist dogma and embrace pragmatism they the way the Chinese have in abandoning pure communism? Totalitarianism was the only way to make communism work in the past when applied to goods and services, I fear totalitarianism will the be the only way to make capitalism work in the future when it comes to intellectual property. Niether communism nor capitalism are inherently evil despite the shrill debate the majority of the 20th century. What is needed now is a truce between capitalism and communism and an amalgam economic model to take the world the rest of the way through the 21st century and beyond.

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Overhauling Intellectual Property Laws

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  • Long time no see. And with quite an essay to boot. Happy holidays!
    • Good to be back.

      Originally my DumbSwede Journal was my blog, but this last year has been very busy with a newer blog project Bare Naked Larry [], which I shamelessly plug any chance I get. You were probably aware of this, and I have your journal listed as one of only 5 friends of BNL, I really should give you special extra credit as the first person to post a comment of any kind to any of my web projects. A couple of years has gone by now, I just got married, I had a close brush with mortality

      • Actually, I too had started blogging elsewhere but I haven't taken it too seriously. I picked up here only when another "friend" took me off his list because I hadn't been prolific enough lately to justify it.

        Sorry to hear about your scare but it sounds like things worked out.

  • Nicely written.

    How would a movie studio afford to produce a movie if the finished product were free (or available for only the cost of the durable goods it is packaged in, or the bandwidth used to download it, etc)?

    To what would they switch their revenue model? (I recognize that you acknowledge a severe reduction in revenue, but there must still be some revenue -- to make any movie requires people and goods, both limited-supply resources, thus requiring money in a capitalist system.)

    -- Cameron
  • It's nice to know some other people in the world get economics. Being an economist and having two hands, there are things I'd like to say about it.

    The 'communist ideal' argument is very interesting, and I'm not ready to disagree with it. There are some more technical problems with the 'free media' hypothesis, which are solveable. For example, under US IP law, if you fail to enforce your copyright, you lose your right to it. So, if you only wanted to sell a million CDs, and get someone else to 'illegal
  • I think this is a great start--but like many things, the devil is in the details!

    1.In a perfect world, how would you see this working? You say patrons--would the patrons only be the government or the superrich? Or would there be "communes" of artists, producing and receiving a stipend? How would you separate the "posers" (no talent/bad talent/lazy) from the true artists? How much would have to be produced to be eligible?

    2. Assuming that 1 is achievable, how would you transition our capitalistic society over
    • Sorry to reply to my own post, but my brain is still cranking...

      How do you see this IP communistic idea as being different than the current day alternatice licenses & the concept of "Public Domain"? Would this be achievable by simply enforcing the original idea for copyright and actually putting stuff into the public domain after a short period? (Think 2 yrs, not 20!)

      Is there any combination of hacks to the current system that might bring about this IP paradise? Or is a complete overhaul/restart in orde

The last thing one knows in constructing a work is what to put first. -- Blaise Pascal