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Bill Moyers Journal has had several programs on the financial crisis; the latest was this last week and is well worth watching (both the video and the transcript) link here.
Moyers interviews two writers for Mother Jones magazine, David Corn and Kevin Drum who have been investigating and reporting the scandal for some time. They detail how Wall Street money is fueling the political campaigns of both parties, is deeply embedded and enjoyed by the economic officials of the administration, and by Congress, not to mention the Washington think tanks. It pretty well dooms any meaningful financial sector reform; although the Obama White House has been leaking hopeful sounding trial balloons this week, holding one's breath is not to be recommended.
To predict the outcome, check what Wall Street is willing to accept and then read the fine print very carefully. And enjoy the video if you can.
This is a wonderful article announcing the opening of the Mises Institute's iTunes U:
The Mises Institute is pleased to announce that the multimedia content on Mises.org — many thousands of hours of audio and video — is now available through iTunes U, a dedicated area within the iTunes Store (www.itunes.com).
iTunes U carries lectures from top academic minds on every topic, freely available, elegantly organized, and beautifully presented. Users enjoy easy access to material ranging from ancient-language studies to particle physics.
This shows what can be done with the open-information vision and mentality. A few great quotes excerpted below. Not only that, the Mises Institute multimedia files on its iTunes U page include lectures criticizing intellectual property, and free-market material criticizing monopoly in general.
Also appearing on Mises Daily today is my article "Fifteen Minutes that Changed Libertarian Publishing," about the genesis of Libertarian Papers, another open-information project of the heroic Mises Institute.
Here are some choice quotes from the iTunes U article:
"We are seeing the future of education: straight from great minds to individual users around the world."
"With iTunes U, the entire body of scholarship accumulated in the minicivilization of Mises.org can enjoy the widest possible distribution."
"We are on the cutting edge of user-friendly educational technology."
"As more and more colleges experience digital media, many prestigious institutions have come to realize that universal distribution of their content is not a threat to their mission; it is the very fulfillment of the educational ideal. This is certainly the case with the Mises Institute, which is why the site has been made completely open source and completely free."
"Over the years, hundreds of appreciative emails and blog comments from fellow Mises.org listeners have let me know that I am among a vast multitude of Austrolibertarian audiophiles."
"Economists like Carl Menger, F.A. Hayek, and Ludwig von Mises were devoted to getting their ideas out. They accepted as many travel invitations as possible in the hope of reaching new audiences. Mises himself was particularly aware of the need to teach outside the academy. Rothbard's own desire to reach the multitudes by writing for every possible venue left us with an immense literary legacy."
"with digital media they now make the globe their lecture hall and anyone can be their student."
"Murray Rothbard died in 1995, just as web browsers were hitting the mainstream. He might not have imagined this possibility of global, instant distribution. But anyone who has listened to the hundreds of hours of audio on Mises.org can know for sure that Rothbard would be shouting for joy."
"including Doug French, president of the Mises Institute, who has encouraged and supported this venture, considering it essential to the future of liberty; under his leadership, we have joined the highest ideals with the most advanced technology."
A Swedish libertarian buddy, Johan Ridenfeldt, pointed me to this article (in Swedish), which describes libertarian (liberal) arguments against intellectual property, and also includes a review of the debate in Nyliberalen (The Neoliberal). He wrote, "I find this very positive. I'm involved (somewhat) in politics, and I have noticed that most of the libertarian young ones agree with us on IP [i.e., that it is problematic and unlibertarian]. This was not the case when I first started quoting you back when your Against IP article was in draft [in 2000 or so]. I used to post and recommend your working paper draft, and back then I was pretty alone in my views."
I have noticed a similar trend. The younger, Internet generation seems to be much more receptive to the notion that there are no property rights in information and ideas. Whether this is because they are more open minded, more libertarian, or anti-big-business, I am not sure. I have noticed that most of the older types are much more resistant to challenges to IP.Coda: Jim Newland writes:
Sheesh, Stephan. I'm an old fogey and even I know the answer to this one. It's because they've grown up in the digital era, with its easily traded and downloaded electronic files. The impossibility of actually owning an idea or anything else nonmaterial is brought into sharp focus with the ubiquity of the internet. For instance, in the case of videogame pirates, they ask how they can be accused of stealing something when the original product remains with its original owner. This starts them thinking about the whole idea of intellectual property and the notion that one can somehow own something as ephemeral as a thought.
And a college student writes,
The reason is actually pretty simple. The RIAA just sued my roommate and about 10 other kids here at [my college]. The younger generation is anti-IP because we love free file sharing and hate getting sued.
In a previous post, I noted the arbitrariness of copyright law in prohibiting editing a DVD to take out objectionable scenes, when presumably it would be legal to accomplish the same thing by other means-e.g., as I pointed out in a legal forum, by providing instructions to users to use to program a special DVD player that edits out the bad scenes "on the fly" in the user's home.
Turns out there is such a service: Clear Play (thanks to Tom Woods for the link). You buy one of their DVD players, and load into it "filters" which you can download from the web with a subscription to their service. Amazingly, there was apparently some doubt about the right of consumers to do this, even for private use, so the Family Entertainment and Copyright Act of 2005 was passed last year to amend the Copyright Act to make it clear that it is not a copyright infringement to use technological means (such as ClearPlay's DVD player and filter service) to skip objectionable material, such as profanity, violence, or other adult material, in the audio/video works that they legally purchased.
Gee, Congress, we're so grateful, so very grateful, that you are permitting us to fast forward and skip nudity, gore, and profanity, or other scenes we don't want to show, in our own homes, using our own DVD players. How generous of you. Is it okay if I skip commercials too, please? (Apparently, an earlier version of this bill contained "language that might make users and manufacturers of ad-skipping technology automatically liable for copyright infringement".)
Tom, I too (as an IP attorney) find the copyright decision to be somewhat bizarre. In Clean Flicks v. Steven Soderbergh, a "federal district court in Utah held that companies that "sanitize" … motion pictures by removing sex, profanity, and violence, violate the motion picture studios' copyright."
The court thought it was an easy case, apparently. So does this law professor, who said "This case was about as straightforward a copyright case as there can be, and the court's determination is plainly correct".
As the court wrote:
CleanFlicks first obtains an original copy of the movie from its customer or by its own purchase from an authorized retailer. It then makes a digital copy of the entire movie onto the hard drive of a computer, overcoming such technology as a digital content scrambling protection system in the acquired DVD, that is designed to prevent copying. After using software to make the edits, the company downloads from the computer an edited master copy which is then used to create a new recordable DVDR to be sold to the public, directly or indirectly through a retailer. Thus, the content of the authorized DVD has been changed and the encryption removed. The DVDR bears the CleanFlicks trademark. CleanFlicks makes direct sales and rentals to consumers online through its website requiring the purchaser to buy both the authorized and edited copies. CleanFlicks purchases an authorized copy of each edited copy it rents. CleanFlicks stops selling to any retailer that makes unauthorized copies of an edited movie. … CleanFilms maintains an inventory of the unedited versions of the copies it rents or sells to its members in a one-to-one ratio. [italics added]
Note that CleanFilms buys one copy for every edited (sanitized) copy they rent. It seems to me, therefore, that this is just the digital version of physically removing parts of an analog movie on videotape. For example, suppose CleanFilms bought 1000 VHS tape versions of a movie, and physically removed lengths of tape that had nudity, then spliced it back together. Or, what if they just put white tape over the nudity-section of the film, or "erased" those lenghts of tape, then re-sold the VHS tape. Or what if technology were developed that let them shoot a laser into the DVD and basically just blot out the sections of video that contained nudity? Could it be argued that any of this is is copying or reproducing the movie? If not, why is the digital version of this any different? The fact that copyright law treats them differently shows how arbitrary and unjust it is.
From my comment on Jeff Tucker's post, A Theory of Open:
Jeff: "Mainly, I think, this comes from an exaggerated reliance on IP and a belief that it is the key to success."
MIchael: "Do IP advocates understand that the system may very well make it a better bet to produce patents than products? Why go through the hassle of producing products for finicky customers when you can wait for someone to go through the trouble of making a successful product and threaten to sue them?"
I am not sure if non-practitioners realize exactly what goes on in patenting. Quite often medium to large sized companies hold "patent mining" sessions. They are usually not trying to come up with ideas that they might use in their business. What you do is you get 5-10 engineers to sit around a coffee table, and they are led by a "facilitor" (often a patent attorney). They talk about what they've been working on, and try to find little twists or aspects of a design that they can file a patent on. Or, they'll sift thru a bunch of patents in an area that competitors are practicing in, and just brainstorm, thinking of things they can file patents on. Not because they intend to use these ideas. But just to build up a thicket of patents that they can use against another company, either defensively (i.e., a countersuit if the competitor sues them); or to extract royalties or to squelch competition.
For example, the attorney shows a powerpoint with diagrams from a bunch of patents or product designs. The engineers throw ideas out there. Most of them are ridiculous. Someone is taking notes. One of them might say, "How about if we had two channels of information there, in parallel, instead of one? Do you think competitor B might some day do that? After all, dual-channels are becoming popular right now; they'll probably have to do this some day." The patent attorney says, "Say that sounds alright. What's your name? Bob? Okay, you're 'an inventor'. Anyone else contribute to this? Jim, didn't I hear you say something like, 'yeah, that might work?' Okay, you're the second inventor. Let's file a patent on this puppy. You each get a $3,000 bonus."
So, for about 3 minutes of brainstorming, a patent emerges. Maybe a dozen patent applications are filed from that meeting. These are not flashes of genius. They are not sweat of the brow. It's just a bunch of engineers torn away from their actual design work to brainstorm ways to hamper their competition. So maybe half the patents are abandoned half-way through "prosecution," a couple years later, after it's clear even to the bumbling patent office that they are sh*t. Of course about $20-30k was spent on each of the now-abandoned applications, or about $150k. No matter. PTO employees and patent lawyers have to put food on the table.
The other half might finally issue as patents. Most or all of them are probably sh*t too, but now they are issued, and have a "presumption of validity." Now we're up to $30-40k or so per issued patent. Got to recoup those expenses and justify the patent budget, eh? And say, it sure looks like company B's products are ... kinda close to the claims in 2 or 3 of the patents. Let's send them a friendly cease and desist letter.
Company B's patent attorney is then called into action. He's hired to draft 3 or 4 "non-infringement opinions" for, say, $30k each. Why? Just in case B is sued, and loses... so that they can at least plead that the infringement was not "wilful". They still have to pay damages (or stop selling the accused product), but it won't be trebled... if the judge believes the opinions were "sincere" and "relied on" by the defendant so that, although they were infringing, it was not "wilful" since they were after all following a lawyer's advice.. .the lawyer they paid $120k to tell them that ... they are not infringing ... even though it later turned out that they were. No matter, The $6 million B has to pay in damages is at least not trebled $18 million, so that the measly $120k spent on the patent opinions, plus the $1 million spent on patent litigators, was well worth the $12 million saved! B is better off (well, except for the $6 million verdict), its patent attorneys are better off. As for the patentee company, well, their few hundred grand in patent acquisition fees yielded them $6 million, and reduced competition! A win for everyone... right?
This abomination is what pro-patent libertarians thing is just? They think this is compatible with rights and liberty? They think this is productive, innovative behavior? Give me a break.
A friend of mine is going to be a panelist at this event, World's Fair Use Day, which
is a free, all-day celebration of the doctrine of fair use: the legal right that allows innovators and creators to make particular uses of copyrighted materials. WFUD will take place at the Newseum in Washington D.C. on Tuesday January 12, 2010, and will be organized by Public Knowledge (PK), a Washington D.C.-based non-profit, consumer-advocacy group. PK works to ensure that communications and intellectual property policies encourage creativity, further free expression and discourse and provide universal access to knowledge. As part of its campaign to return balance to copyright law, PK hopes to use WFUD to educate the public about the importance of fair use in an information society.
Enhancing the fair use exception is all to the good, but it does not go far enough. Fair use is a vague, ad hoc, utilitarian legislative exception designed to blunt some of the edges of copyright law so as to help masque its manifest injustice. An analog would be a slavery law that permitted a judge to allow the slave a month of temporary freedom if he can demonstrate to the judge that his master has been mistreating him according to a balance test in which the judge weighs four "factors" to make this determination. Or an exception to tax law that says a judge can reduce your tax rate by 1% for one year, if you can persuade him of a "hardship" as proved by weighing four legislatively enshrined "factors." If the law is unjust and needs its edges blunted by ad hoc, unprincipled exceptions--the law itself is the problem and should be abolished.
This event is produced by the group Public Knowledge, which appears to be generally IP-skeptical ("Our first priority is promote innovation and the rights of consumers, while working to stop any bad legislation from passing that would slow technology innovation, shrink the public domain, or prevent fair use"; and they seem to be appropriately skeptical of the horrible DMCA), although their approach is somewhat ad hoc and unprincipled, and intermixed with the standard pro-democracy (and pro-Democrat), pro-"consumer," pro-network neutrality (see my A Libertarian Take on Net Neutrality) sentiments, and so on. Still, another ally in the fight against pattern privilege and intellectual monopoly.
There are various ways to explain what is wrong with IP. You can explain that IP requires a state, and legislation, which are both necessarily illegitimate. You can point out that there is no proof that IP increases innovation, much less adds "net value" to society. You can note that IP grants rights in non-scarce things, which rights are necessarily enforced by physical force, against physical, scarce things, thus supplanting already-existing rights in scarce resources. (See, e.g., my Against Intellectual Property, "The Case Against IP: A Concise Guide" and other material here.)
Another way, I think, to see the error in treating information, ideas, patterns as ownable property is to consider IP in the context of the structure of human action. Mises explains in his wonderful book Ultimate Foundations of Economic Science that "To act means: to strive after ends, that is, to choose a goal and to resort to means in order to attain the goal sought." Or, as Pat Tinsley and I noted in "Causation and Aggression," "Action is an individual's intentional intervention in the physical world, via certain selected means, with the purpose of attaining a state of affairs that is preferable to the conditions that would prevail in the absence of the action."
Obviously, the means selected must therefore be causally efficacious if the desired end is to be attained. Thus, as Mises observes, if there were no causality, men "could not contrive any means for the attainment of any ends". Knowledge and information play a key role in action as well: it guides action. The actor is guided by his knowledge, information, and values when he selects his ends and his means. Bad information--say, reliance on a flawed physics hypothesis--leads to the selection of unsuitable means that do not attain the end sought; it leads to unsuccessful action, to loss. Or, as Mises puts it,
Action is purposive conduct. It is not simply behavior, but behavior begot by judgments of value, aiming at a definite end and guided by ideas concerning the suitability or unsuitability of definite means.
Causally efficacious means are real things in the world that help to change what would have been, to achieve the ends sought. Means are scarce resources. As Mises writes in Human Action, "Means are necessarily always limited, i.e., scarce with regard to the services for which man wants to use them."
To have successful action, then, one must have knowledge about causal laws to know which means to employ, and one must have the ability to employ the means suitable for the goal sought. The scarce resources employed as means need to be owned by the actor, because by their nature as scarce resources only one person may use them. Notice, however, that this is not true of the ideas, knowledge and information that guides the choice of means. The actor need not "own" such information, since he can use this information even if thousands of other people also use this information to guide their own actions. As Professor Hoppe has observed, " in order to have a thought you must have property rights over your body. That doesn't imply that you own your thoughts. The thoughts can be used by anybody who is capable of understanding them."
In other words, if some other person is using a given means, I am unable to use that means to accomplish my desired goal. But if some other person is also informed by the same ideas that I have, I am not hindered in acting. This is the reason why it makes no sense for there to be property rights in information.
Material progress is made over time in human society because information is not scarce and can be infinitely multiplied, learned, taught, and built on. The more patterns, recipes, causal laws that are known add to the stock of knowledge available to actors, and acts as a greater and greater wealth multiplier by allowing actors to engage in ever more efficient and productive action. (It is a good thing that ideas are infinitely reproducible, not a bad thing; there is no need to impose artificial scarcity on these things to make them more like scarce resources; see IP and Artificial Scarcity.) As I wrote in "Intellectual Property and Libertarianism":
This is not to deny the importance of knowledge, or creation and innovation. Action, in addition to employing scarce owned means, may also be informed by technical knowledge of causal laws or other practical information. To be sure, creation is an important means of increasing wealth. As Hoppe has observed, "One can acquire and increase wealth either through homesteading, production and contractual exchange, or by expropriating and exploiting homesteaders, producers, or contractual exchangers. There are no other ways." While production or creation may be a means of gaining "wealth," it is not an independent source of ownership or rights. Production is not the creation of new matter; it is the transformation of things from one form to another the transformation of things someone already owns, either the producer or someone else.
Granting property rights in scarce resources, but not in ideas, is precisely what is needed to permit successful action as well as societal progress and prosperity.
This analysis is a good example of the necessity of Austrian economics--in particular, praxeology--in legal and libertarian theorizing (as Tinsley and I also attempt to do in "Causation and Aggression"). To move forward, libertarian and legal theory must rest on a sound economic footing. We must supplant the confused "Law and Economics" movement with Law and Austrian Economics.
"What's a Bailed-Out Banker Really Worth?" writes Steven Brill in his exploration of the ins and outs of setting executive salaries and benefits under the government's bailout of the too-big-to-fail banks and companies link here.
Started in response to the public anger over the financial mess, it is not likely to satisfy most people, based on this account. We are more likely to find our anger reignited, first by the level of compensation established and second by the behavior of the banks and their senior management, most of whom orally agreed to return their 2009 bonuses but then all but two failed to do so.
In some ways, this account is of a kabuki dance between special master for executive compensation Kenneth Feinberg on the one hand and the Wall Street banks where "by their account, all the bankers are above average and worth every penny of it", the Treasury Department, and the New York Fed on the other. The proof was the happiness of the bankers at what they got about 60 percent of the total compensation they had tried to justify.
Brill notes that the executives, their boards of directors, and the recruiters for board members are tightly meshed in their common interests in maximizing the levels of compensation, so that won't change.
Where the article fails is its lack of attention to overall financial reform. Executive compensation is a minor issue compared to the tens of billions that were earned by the banks and passed out to the Wall Street elite. The public is still waiting for that and hopefully will not be put off by minor cosmetic fixes such as are described here.
As we all know, the public is angry about the big Wall Street bank bailout and they have reason to be. Peter Goodman writes a "fair and balanced" piece quoting both critics and the banks on the government program to protect homeowners from foreclosure that is offering some palliatives but really only delaying the inevitable loss link here. At the same time, the banks seem to be making out very well. Goodman suggests with a few examples, that they are exploiting their superior bargaining position and knowledge to maximize their return.
The public is paying the banks in ways most people don't realize. They are of course aware that the government--i.e., the taxpayer--is on the hook for the direct payouts which must ultimately be covered by taxes. But that is a pain somewhere in the future, not today. But they are also paying in the form of reduced earnings on their savings as the FED continues its low interest rate policies. Low interest is essential for the banks to be able to get deposits or borrow in order to lend and "earn their way" back to solvency, but there it is again--the public pays, not the banks, or their stockholders or their management with their gigantic salaries, bonuses and benefits.
The public should also be asking about the reform they have been promised so that the same crisis doesn't occur again or is at least much less devastating. Instead, they hear about the successful lobbying of the financial industry to block it.
