The Christian Science Monitor published this response to David and Michele's op-ed (sorry if it's already been posted):

Reform, but don't destroy, patent law

In their commentary, "The patent system: End it, don't mend it," David K. Levine and Michael Boldrin propose wiping out centuries of Anglo-American legal heritage in intellectual property (IP) rights because they don't like some features of the current American patent system. This radical proposal is based on an erroneous understanding of patent law's history and the economics of innovation. It would be akin to tearing down a house because the hot water heater broke.

The Founders explicitly recognized the advantages of using intellectual property rights national in scope to replace the state-granted rights that existed under the Articles of Confederation. As James Madison wrote in Federalist No. 43 "[t]he utility of [the IP clause] will scarcely be questioned. The copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law. The right to useful inventions seems with equal reason to belong to the inventors. The public good fully coincides in both cases with the claims of individuals."

There is no question that patent law provides critical incentives for innovation. Without the potential economic rewards and ability to facilitate commercialization patents provide, who would invest the millions of dollars needed for the development of new drugs, medical equipment, and medical devices? It is thus patent-driven innovation that creates the drugs that Messrs. Levine and Boldrin claim are locked away from the world's poor. It would be sadly ironic if an effort to provide access to essential medicines by eliminating patent rights destroyed the system whose incentives yielded those medications.

Levine and Boldrin also misunderstand the point of the Constitution's IP Clause. The issue the IP Clause settled was not whether there should be patents and copyrights, but which government would provide them. The expensive litigation the state IP system had spawned in the 1780s persuaded the Founders to adopt a national system. Even Thomas Jefferson, initially the Founder most skeptical about intellectual property, quickly changed his views and played a prominent role in the early development of American patent law. The system worked: Americans were inventing and patenting at a rate that astonished European observers within a few decades of the first patent act.

While the heart of the incentive provided by patents is restricting others from using an inventor's invention, this right to exclude is limited in time and scope. As a result, it balances rewarding early innovators and enabling later ones to create improvements. Patents' limited scope means they rarely provide their owners with an economic monopoly as there are almost always viable substitutes. Nor are patents "simply a ticket to lifelong litigation against a giant," as only 1.5 percent of patents are litigated.

Patents also provide more than incentives for innovation. Recent studies of start-up companies reveal that patents can play an important role in securing venture capital, capturing revenue through licensing, and enhancing reputational value. And patents serve as coordination tools among private parties, thus preventing many of the problems Levine and Boldrin identify.

For example, in information technology and life sciences, patent holders engage in considerable licensing activity, privately solving the problem of access. A recent National Academies of Science survey concluded that in both ‘‘the number of projects abandoned or delayed as a result of technology access difficulties is reported to be small" and that few investigators had to "revise their protocols to avoid intellectual property complications or pay high costs to obtain access to intellectual property.''

Patent law can undoubtedly be improved. But destroying widely held and valuable property rights in pursuit of short-term gains would truly be a case of killing the goose that lays the golden eggs. Neither the American economy nor the world's poor could afford such an ill-conceived up-rooting of rights deeply embedded in Anglo-American jurisprudence.

Craig A. Nard, Professor of Law, Case Western Reserve University Cleveland, Ohio

Andrew P. Morriss, Professor of Law & Business, University of Illinois, Urbana-Champaign Urbana, Ill.

It is clear to anyone who pays attention that IP is under assault--both institutionally, as digital copying, encryption, distributed information, the Internet, and the inherent impotence of IP policing make attempts to monopolize information patterns increasingly futile; and intellectually, as more and more people, especially libertarians--and especially younger libertarians--see the injustice of IP made manifest and obvious. There is a growing body of work that explodes the myths--moral and utilitarian, principled and empirical--of the IP proponents (see the works listed at the final section of "The Case Against IP: A Concise Guide"). There has been a noticeable and growing migration of libertarians toward the anti-IP position. I have lost count of the number of people who have personally told me they have seen the light on the IP cause in recent years. Among the radical and principled libertarians I know, there is a lot of debate about a lot of things--abortion, federalism, activism, "thickism," left- vs. right-, etc.--but on two issues there is a striking degree of agreement: these are anarchy, and intellectual property. That the state, and IP, are unjust, seem obvious to them after a little reflection. More and more libertarians are realizing that the case for IP being part of legitimate property rights is a hollow one that never needed to be accepted (see Have You Changed Your Mind About Intellectual Property?).

So it is no surprise that Objectivists would be distressed by this phenomenon. Not only are they among the most ardent modern advocates of intellectual property (in addition to Andrew J. Galambos [see Against Intellectual Property], and perhaps J. Neil Schulman), but Rand in a sense built her entire philosophical edifice on IP: to-wit, Rand incredibly said that "patents are the heart and core of property rights" and Objectivist law professor Adam Mossoff explicitly claims that "All Property is Intellectual Property" (see Objectivists: "All Property is Intellectual Property"). And so, realizing Rand's arguments for IP are deeply flawed, and that fewer and fewer people are buying it, they are starting to fight back.

Let's survey a few. I've already mentioned neo-Objectivist (?) J. Neil Schulman's logorights; I have pointed out problems I see in his view in On J. Neil Schulman's Logorights and Reply to Schulman on the State, IP, and Carson. I think some of the mistakes Schulman makes are echoed in the tentative IP views of Machan; a problem with both is that they seem to think that any conceptually identifiable "thing" is ownable. For more on this, see Rand on IP, Owning "Values", and "Rearrangement Rights"; my comments in the thread of the post Intellectual Products and the Right to Private Property; New Working Paper: Machan on IP; Owning Thoughts and Labor; this comment to "Trademark and Fraud"; Libertarian Creationism; also Elaborations on Randian IP and Objectivists on IP.

Another one was Objectivist IP attorney Murray Franck's defense of IP and his reply to my response in the IOS Journal, back in 1995 (I also discuss Franck's views in Inventors are Like Unto ...GODS... and Regret: The Glory of State Law). Here we can see glimmers of the idea that "all property is intellectual property"--or, at least, that IP is the most important type of right (just as Galambos held).

There is Greg Perkins's piece, Don't Steal This Article!", from 2006. I've noted deficiencies in his or similar arguments in various publications, such as Perkins on Pursuing Insufficiently Abundant Intangible "Values"; Against Intellectual Property; Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors; Elaborations on Randian IP; An Objectivist Recants on IP; "Intellectual Property and Libertarianism" (in particular see here and the section on Libertarian Creationism); Rand on IP, Owning "Values", and "Rearrangement Rights"; Libertarian Creationism; Inventors are Like Unto ...GODS...; Intellectual Products and the Right to Private Property; New Working Paper: Machan on IP; Owning Thoughts and Labor; and Objectivists on IP; and in media, I discuss problems with Rand's view at length on the Peter Mac show and at the Mises University this year; also The Intellectual Property Quagmire, or, The Perils of Libertarian Creationism.

Then there's Objectivist law professor Adam Mossoff who is writing a defense of IP, as mentioned in the Objectivist "Noodlefood" blog post An Objectivist Recants on IP??. Roderick Long informs us that "the Ayn Rand Society session at the APA is also devoted to intellectual property"--indeed it is, with the topic "The Normative Foundations of Intellectual Property: Two Perspectives," having as speakers Adam Mossoff and Eric R. Claeys, both of George Mason University Law School, and chaired by Allan Gotthelf (University of Pittsburgh), on Dec. 28, 2009 (sadly, I'll miss it, since I'm here skiing in Steamboat, Colorado. Wait, not so sadly). I'm eager to see Mossoff's paper (and curious to see what Claeys has to say), but suspect it will be built on the fallacies and errors noted in posts above such as this Objectivist blog post and Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors.

Also noted in Roderick Long's post is his upcoming Molinari Society IP symposium at the APA later this month (Dec. 29 , 2009), including Bob Schaefer's "Response to Kinsella: A Praxeological Look at Intellectual Property Rights." I've taken a look at Schaefer's piece, and it's not pretty. It's just a mess. Roderick Long ably dissects just a few of its glaring flaws here.

(Aside: Long's comments are really superb and insightful. A few comments. Discussing the IP comments of another author, Long writes, "a strong case can be made for thinking that Lockean principles must be substantially distorted in order to press them into service on behalf of IP". Long backs this up very ably. In the same article he makes an illuminating distinction between three conceptions of "capitalism" that helps to dispel the confusion among both right and left in addressing this issue.)

The Objectivist approach is mired in a number of problems. It anchors property rights to the idea of "creation"; it requires legislation, and the state; it believes in some intrinsic value and some property right in value; it advocates utterly arbitrary and/or unprincipled, utilitarian finite lengths for IP; it rests on an arbitrary distinction between discovery and innovation. In a world where we took the ideas of the IP advocates seriously patent and copyright would have to have infinite duration. And the gaps in coverage would be fixed, and the state's arbitrary exceptions fixed, such as the "fair use defense" to copyright. At present patent and copyright cover a statutory class of "inventions" and artistic works, respectively. Many logos, idea-patterns, "creations," values are not protected at present. These include: perfume smells, the fashion industry, food recipes, certain business methods, databases (unoriginal but useful collections of information), abstract ideas such as mathematical algorithms, proofs, and techniques and physical laws. Under the ideas of the IP fanatics, there is no reason not to grant state-monopolies to these patterns too. And the term should not expire in 20 or 100 years--does your property to your house expire after some time limit? And why the utilitarian fair use exception? No principled case for IP could tolerate it.

I would love to see libertarian IP advocates have to live in a world that truly implemented their IP views fully, consistently--it would be like a communist USSR stripped of its power to ape Western price structures, to ameliorate the effects of communism. They would either die out, as the material world was strangled by an impossible nettle of ghostly IP-rights tendrils, or they would cry uncle. Even today, one imagines the cognitive dissonance of Objectivists living in our digital age--cutting and pasting, linking, learning and reworking ideas of others--all the while maintaining that all the things they themselves cannot but help engage in are "immoral" or some such tedious nonsense. I think of modern do-gooder environmentalists--they must feel pangs of guilt while flying on a jumbo jet to a friend's wedding 2000 miles away, or to attend UN conference or job posting on another continent. They must wring their hangs in agonized guilt and indecision about whether to use styrofoam, paper, or a washable coffee cup. They must feel tremendous guilt whenever they discard a scrap of soiled napkin instead of recycling it. Environmentalist parents must feel terrible pangs of guilt at using disposable diapers (or they suffer by using cloth ones: either way, I am pleased by the thought of their discomfort). Likewise, when an Objectivist emails a vandalized picture of an apostate like Alan Greenspan to a friend they must be conflicted--wait, no, there's a fair use exception! Thank Rand for the State and its wise laws!

Addendum:

Book Essay: The strange world of Ayn Rand

Control freak

One striking feature of Objectivism is it outspoken support of intellectual property. A key scene in Atlas Shrugged is where metallurgist genius Hank Rearden is compelled by the government to hand over his intellectual rights to his innovative metal alloy, and Ayn Rand acted in kind. She passionately used the copyright on her works to bar people from forming "John Galt Societies", citing that the name John Galt is her creation and her intellectual property.

For a person bent on propagating her ideas to the maximum extent possible, this would seem eerily counterproductive. Stealing an object from someone is obviously depriving the original owner of his property, but copying it isn't. It may or may not be harmful to potential income, but that income remains potential, in the realm of the unprovable. This is a debate that incites extreme passion.

While Objectivists, libertarians and conservatives strongly agree on the principle of physical property rights, the picture is much more divided when it comes to 'intellectual property', a catch-all phrase for several different items, including patents, copyright and trademarks. In a landmark essay by Stephan Kinsella, Against Intellectual Property, argues that 'Intellectual property' is not only meaningless and harmful, it is in direct violation of the general principle of private property, and primarily constitutes a state-sanctioned creation of artificial scarcity, leading ultimately to poverty, not job creation and wealth.

The wider libertarian movement accepted the argument, put it into action (see www.mises.org/books) and moved on. Objectivists, on the other hand, maintain that what Ayn Rand spoke and practiced on the subject remains the unalterable truth.

(See also on this Jeff Tucker, If You Believe in IP, How Do You Teach Others?.

[Mises; SK]

I previously posted "On J. Neil Schulman's Logorights"; Schulman and I recently had an interesting exchange in the comments section of the cross-post on my blog. The original post and the exchange are appended below.

On GMO patent infestation, Kent Hastings comments on my IP views and those of J. Neil Schulman. Schulman responded:

My article "Informational Property: Logorights" begins by specifically disclaiming any state grants of monopoly. The concept stands or falls on its natural-property-rights arguments. Neither Samuel Edward Konkin III or Stephan Kinsella or anyone else has ever successfully answered the challenge I raised in my article, that without the identity of a thing being real enough to make it claimable as property, there would be nothing identifiable existing to be copied in the first place.

This is not arcane. It's just being pointedly ignored -- and Kinsella's attempts to change the subject don't make me forget what I wrote.

My response is as follows:

Neil, I said your term "logorights" is somewhat arcane, not your theory, and there was no disrespect implied.

I think you are just wrong to assume that "having an identity" is a sufficient condition for being subject to property rights.

Consider: one has no property right the value of one's property, as Hoppe and Rothbard have argued (see Sheldon Richman on Intellectual Property versus Liberty); and likewise, one has no property right in the "identity" of one's property.

The reason is that owning value, patterns, identify gives you an ownership right in others' already-owned property. Saying you own the "identity" of a thing you own is another way of saying you own the pattern by which it is arranged-which is a disguised way of saying you have ownership rights in things everyone else owns. The standard Lockean account of property accepted by most libertarians says that the person who appropriates a previously unowned scarce resource becomes its owner. The IP advocate, of which you are one, says that if A thinks of a unique way to use his property or a unique pattern to impose on his own property, this act of intellectual innovation magically gives him partial ownership rights in property already owned by others. It lets you tell B how he can use his own property, even though B is the appropriator and by Lockean principles only B should be the owner. Granting A an IP right just means some of B's rights of control are transferred to A-it's a transfer of wealth or property, and it's incompatible with libertarian property rights.

The mistake Rand made was thinking "anything you create" is property, without first asking if the thing created is the type of thing that is subject to property in the first place. In fact, creation is neither necessary nor sufficient since if you create some new pattern using others' property you are not its owner; and if you impose a new pattern on property you own, then you own the transformed thing since you already owned the stuff of which it's made. A focus on creation as a source of ownership is the mistake made here. Creation is a source of wealth, sure, but not of ownership, since you can only create using things you already own.

Tibor Machan makes a similar mistake to your "identify" view when he assumes that many "ontological" types of things can be property-the mistake is in assuming that the way we conceptually and terminologically understand the world has some metaphysical basis that translates into property rights. By this view any concept we come up with to "identify" things that is successful, has magically created a new class of property. I find the concept "poem" useful-it is conceptually valid.. poems "have" "identity"-voila, they must be property!

I don't agree with this way of making rights depend on what concepts we have or how we identify and understand things in the world. Just because we can call something by a word, or call it a "thing," does not mean it is ownable. In fact, all ownership rights are enforced in physical terms against scarce resources; which means that granting rights in anything else has to undermine and dilute real rights in real things.

For a further explanation of what is wrong with Schulman's "logorights" theory and why it is contrary to libertarian property rights, see text at notes 48-49 et pass. to my Against Intellectual Property; see also the following posts, which point out various errors in the Randian "creationist" approach to IP (and apply more or less to Schulman's logorights idea too):

Articles:

• "Intellectual Property and Libertarianism" (in particular see here and the section on Libertarian Creationism);
• also "The Case Against IP: A Concise Guide";
• for an alternative to the Randian approach to rights and politics, see What Libertarianism Is.

Media:

• I discuss problems with Rand's view at length on the Peter Mac show
• and at the Mises University this year;
• also The Intellectual Property Quagmire, or, The Perils of Libertarian Creationism.

Blog posts:

• An Objectivist Recants on IP
• Elaborations on Randian IP
• Rand on IP, Owning "Values", and "Rearrangement Rights";
• Libertarian Creationism;
• Objectivists: "All Property is Intellectual Property"
• Thoughts on Intellectual Property, Scarcity, Labor-ownership, Metaphors, and Lockean Homesteading;
• Renaming Intellectual Property;
• Perkins on Pursuing Insufficiently Abundant Intangible "Values"
• Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors;
• Inventors are Like Unto ...GODS....
• Also these blog posts: Intellectual Products and the Right to Private Property;
• New Working Paper: Machan on IP;
• Owning Thoughts and Labor;
• Objectivists on IP.

***

On GMO patent infestation, Kent Hastings comments on my IP views and those of J. Neil Schulman. Schulman responded:

My article "Informational Property: Logorights" begins by specifically disclaiming any state grants of monopoly. The concept stands or falls on its natural-property-rights arguments. Neither Samuel Edward Konkin III or Stephan Kinsella or anyone else has ever successfully answered the challenge I raised in my article, that without the identity of a thing being real enough to make it claimable as property, there would be nothing identifiable existing to be copied in the first place.

This is not arcane. It's just being pointedly ignored -- and Kinsella's attempts to change the subject don't make me forget what I wrote.

My response is as follows:

Neil, I said your term "logorights" is somewhat arcane, not your theory, and there was no disrespect implied.

I think you are just wrong to assume that "having an identity" is a sufficient condition for being subject to property rights.

Consider: one has no property right the value of one's property, as Hoppe and Rothbard have argued (see Sheldon Richman on Intellectual Property versus Liberty); and likewise, one has no property right in the "identity" of one's property.

The reason is that owning value, patterns, identify gives you an ownership right in others' already-owned property. Saying you own the "identity" of a thing you own is another way of saying you own the pattern by which it is arranged-which is a disguised way of saying you have ownership rights in things everyone else owns. The standard Lockean account of property accepted by most libertarians says that the person who appropriates a previously unowned scarce resource becomes its owner. The IP advocate, of which you are one, says that if A thinks of a unique way to use his property or a unique pattern to impose on his own property, this act of intellectual innovation magically gives him partial ownership rights in property already owned by others. It lets you tell B how he can use his own property, even though B is the appropriator and by Lockean principles only B should be the owner. Granting A an IP right just means some of B's rights of control are transferred to A-it's a transfer of wealth or property, and it's incompatible with libertarian property rights.

The mistake Rand made was thinking "anything you create" is property, without first asking if the thing created is the type of thing that is subject to property in the first place. In fact, creation is neither necessary nor sufficient since if you create some new pattern using others' property you are not its owner; and if you impose a new pattern on property you own, then you own the transformed thing since you already owned the stuff of which it's made. A focus on creation as a source of ownership is the mistake made here. Creation is a source of wealth, sure, but not of ownership, since you can only create using things you already own.

Tibor Machan makes a similar mistake to your "identify" view when he assumes that many "ontological" types of things can be property-the mistake is in assuming that the way we conceptually and terminologically understand the world has some metaphysical basis that translates into property rights. By this view any concept we come up with to "identify" things that is successful, has magically created a new class of property. I find the concept "poem" useful-it is conceptually valid.. poems "have" "identity"-voila, they must be property!

I don't agree with this way of making rights depend on what concepts we have or how we identify and understand things in the world. Just because we can call something by a word, or call it a "thing," does not mean it is ownable. In fact, all ownership rights are enforced in physical terms against scarce resources; which means that granting rights in anything else has to undermine and dilute real rights in real things.

For a further explanation of what is wrong with Schulman's "logorights" theory and why it is contrary to libertarian property rights, see text at notes 48-49 et pass. to my Against Intellectual Property; see also the following posts, which point out various errors in the Randian "creationist" approach to IP (and apply more or less to Schulman's logorights idea too):

Articles:

• "Intellectual Property and Libertarianism" (in particular see here and the section on Libertarian Creationism);
• also "The Case Against IP: A Concise Guide";
• for an alternative to the Randian approach to rights and politics, see What Libertarianism Is.

Media:

• I discuss problems with Rand's view at length on the Peter Mac show
• and at the Mises University this year;
• also The Intellectual Property Quagmire, or, The Perils of Libertarian Creationism.

Blog posts:

• An Objectivist Recants on IP
• Elaborations on Randian IP
• Rand on IP, Owning "Values", and "Rearrangement Rights";
• Libertarian Creationism;
• Objectivists: "All Property is Intellectual Property"
• Thoughts on Intellectual Property, Scarcity, Labor-ownership, Metaphors, and Lockean Homesteading;
• Renaming Intellectual Property;
• Perkins on Pursuing Insufficiently Abundant Intangible "Values"
• Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors;
• Inventors are Like Unto ...GODS....
• Also these blog posts: Intellectual Products and the Right to Private Property;
• New Working Paper: Machan on IP;
• Owning Thoughts and Labor;
• Objectivists on IP.

***

SCHULMAN'S REPLY:

Stephan,

Once again your reply to my Logorights argument is merely to assert that it's false without actually refuting any of the proofs I make. All you do is say "Well Locke said this" and "Tibor Machan said that." I don't care. I say outright that I'm offering a new theory of property rights -- and not once -- not ever -- have you ever dealt with it other than to say, "Well, that's not what [insert name here] wrote!"

1) You fail to answer my challenge that material identity IS property, and that without material identity the concept of property is meaningless.

Answer this challenge from my article:

" You go into a Waldenbooks and plunk down cash for a book that says on the cover "ATLAS SHRUGGED by Ayn Rand." You get it home ... and the first sentence is, "It was the best of times, it was the worst of times."

Now, what you bought is a book and this book has got everything that makes a book a book: a binding, hundreds of sheets of paper with printed ink impressions on it, and a cover. Let's even pretend that the book you took home has the same number of pages, the same dimensions and weight, the same binding and style of printing as the book with the composition called ATLAS SHRUGGED. Do you have any just cause of complaint if the composition of words inside the book turns out to be something other than what the cover says? If you answer no, then you got everything you paid for. But if you answer yes, then you are saying that the composition of words makes this book a different commodity from the book you thought you were buying, and therefore you are rightfully entitled to a copy of the composition of words labelled ATLAS SHRUGGED."

Does the difference in composition of words make an otherwise identical physical object a different thing -- yes or no?

Did the buyer who expected to get a copy of Atlas Shrugged and who got a copy of A Tale of Two Cities get what they paid for -- yes or no?

If the answer is yes to either of these questions, then you have conceded that the composition of words -- the logos -- is the sole differentia between two physical objects -- and therefore the logos is what makes it a different THING.

If the logos makes these two otherwise identical objects different things then that which makes them different things is what gives them their value -- and the property rights case for the logos is made.

Answer that. Answer that!!!!!!!!!

NSK RESPONSE:

Neil:

Once again your reply to my Logorights argument is merely to assert that it's false without actually refuting any of the proofs I make. All you do is say "Well Locke said this" and "Tibor Machan said that." I don't care. I say outright that I'm offering a new theory of property rights -- and not once -- not ever -- have you ever dealt with it other than to say, "Well, that's not what [insert name here] wrote!"

I think all your theories are the same: if you "create" "value," you have a "right" to it. This is just confused and groundless.

1) You fail to answer my challenge that material identity IS property, and that without material identity the concept of property is meaningless.

I think you are playing tricks with the Randian concept of "identity." Saying that "the value" of a CD (say) is "in" its "logos" and therefore that it is the same as a copy of the CD proves nothing. It doesn't prove that your discovery of a way of using or impatterning your property gives you all of a sudden a magical right to control how others use their property.

"You go into a Waldenbooks and plunk down cash for a book that says on the cover "ATLAS SHRUGGED by Ayn Rand." You get it home ... and the first sentence is, "It was the best of times, it was the worst of times."

Now, what you bought is a book and this book has got everything that makes a book a book: a binding, hundreds of sheets of paper with printed ink impressions on it, and a cover. Let's even pretend that the book you took home has the same number of pages, the same dimensions and weight, the same binding and style of printing as the book with the composition called ATLAS SHRUGGED. Do you have any just cause of complaint if the composition of words inside the book turns out to be something other than what the cover says? If you answer no, then you got everything you paid for. But if you answer yes, then you are saying that the composition of words makes this book a different commodity from the book you thought you were buying, and therefore you are rightfully entitled to a copy of the composition of words labelled ATLAS SHRUGGED."

Sure it's "different." Being "different" does not give you property rights in the difference. And sure, you didn't get what you paid for: you transferred title to the money on condition you received a certain book. You didn't get what you bargained for. IP of course has nothing to do with contract. So this is all irrelevant.

Does the difference in composition of words make an otherwise identical physical object a different thing -- yes or no?

Neil, of course--even if you have two "identical" copies of Atlas they are still "different things."

Did the buyer who expected to get a copy of Atlas Shrugged and who got a copy of A Tale of Two Cities get what they paid for -- yes or no?

Of course not.

If the answer is yes to either of these questions, then you have conceded that the composition of words -- the logos -- is the sole differentia between two physical objects -- and therefore the logos is what makes it a different THING.

First, I think you got your examples confused--I think you meant if I answer yes to the first or no to the second. In any event, you wrong: the two objects are "different things" even if they have the same look, pattern etc.

If the logos makes these two otherwise identical objects different things then that which makes them different things is what gives them their value -- and the property rights case for the logos is made.

What "gives them their value"? They don't "have" value. Value is not objective, or intrinsic, or some substance. Rather, people demonstrate that they value things in their actions. I assume you agree with this.

You seem to think it is extracting some huge concession of me to get me to admit that the reason a typical consumer values a book (say) is because of what pattern it has. I readily agree to this. I value a box of paperclips more than a hunk of metal of the same weight because of the way the metal is shaped in the case of the paperclips. So what? I value a new condom more than a ripped one because of its "logos," its material configuration. So what?

Same with a set of paints and a blank canvas. If I use my talent to apply the paint to the canvas--rearranging the logos of the paint-canvas matter into a new one--to result in a beautiful painting, I have made it more valuable--in that I can sell it for a higher price. Sure. Why? Because the buyer would prefer it to the blank canvas. Who has ever denied that transforming--rearranging--the patterns of your work makes it more valuable--to you, or to others? But this does not mean you have property right in the logos, in the pattern. That doesn't follow.

Even Rand acknowledged most of this: as she once wrote:

The power to rearrange the combinations of natural elements is the only creative power man possesses. It is an enormous and glorious power--and it is the only meaning of the concept "creative." "Creation" does not (and metaphysically cannot) mean the power to bring something into existence out of nothing. "Creation" means the power to bring into existence an arrangement (or combination or integration) of natural elements that had not existed before.

Of course, there cannot be property rights in value since this would have to mean property rights in arrangements or patterns, which would then give the owner of the arrangement rights in other people’s already-owned property. If Rand had kept her focus on the fact that rearranging already-existing property can indeed make that property more valuable, she would have realized that creation (rearrangement) is not an independent source of property rights: if you rearrange your own property, even if this makes it more valuable, you already owned the property that you have rearranged (made more valuable). Yet this does not give you rights in other people’s property. You can re-word the Randian view as follows: if you make your property more valuable, it gives you additional property rights–the right to prevent other people from making their own property more valuable. And this makes it all the more obviously flawed.

This is where the Misesian approach to subjectivist value makes sense: things have value to a valuer; values do not exist independently as free-floating things that can themselves be owned. And again, Rand should have recognized this; e.g., she once wrote, “Material objects as such have neither value nor disvalue; they acquire value-significance only in regard to a living being--particularly, in regard to serving or hindering man's goals.” (For more on the compatibility between Objectivism and Austrian economics, see Mises and Rand (and Rothbard); Randian Hoppe(?), Austrian Rand(?).) So she should have realized that if rearranging owned property makes the owner or potential buyers value the object more, it does not mean there is any additional thing created for which we need to find an owner.

Answer that. Answer that!!!!!!!!!

I think I have. It gains you nothing. The fact remains that by giving people rights in "logos"--in patterns--you give them a right to control the already owned property of other people. It lets the re-homestead already-homesteaded property. This is transfer of wealth. It's theft.

SCHULMAN:

The real-world difference between two otherwise identical books -- one with the composed text of Atlas Shrugged and one with the composed text of A Tale of Two Cities -- is the composition of words. These are objective differentia that can be discovered by either human readers or even machine intelligence. The compositions, as information, have different mathematical values that can be calculated.

You jump around between objective and subjective -- between cognitive and normative -- in an attempt to hide the difference.

It is a true statement that there are minute differences in every single object that exists. But the word "duplicate" is a meaningful term in that the essential utility of a book is to be read (yes, I know books can be used by interior decorators and also be used to hold up a broken table leg or as a paper weight) but the essential quality of a book -- why human beings go to the trouble of manufacturing them -- is that they are convenient means of recording and transporting the printed words, symbols, and art work on the pages.

Atlas Shrugged is identified as a distinct commodity by its words, whether they exist printed in a hardcover book, or a paperback book, or read aloud as a recording, or as bits of data stored or transmitted digitally. The entity that is Atlas Shrugged is an information object -- a real-world thing -- separate, distinguishable by man or machine, and valued apart from the multiplicity of physical forms on which it may be recorded or performed.

The usefulness -- utility -- which human beings have for this objectively and observably distinct information object -- this thing -- is based on the presence, intactness, completeness, and availability -- of that objectively and observably distinctinformation object.

The subjective value which any human being will or will not assign to this objectively and observably distinct information object will be based on the objectively and observably distinct identity.

A human being will take action with respect to acquiring, using, keeping, or discarding that objectively and observably distinct information object because no matter how many different objects, forms, or transformations it goes through IT'S IDENTITY IS THE SAME AND THEREFORE IT IS THE SAME THING.

That which makes it a distinct thing -- that which gives it distinct utility -- that which makes it distinctly an object of desire by a human being's subjective perceptions and choice -- is its material identity.

That which makes it a thing makes it ownable.

He who creates it is its first owner.

Those who respect property rights must respect that if a thing can be identified as unique and different --and can be recognized as a thing created by someone -- that its creator owns it.

The rest of my logorights argument uses commonly accepted theories of ownership and history of property rights transactions in the real world -- to show how ownership rights in material identity can be claimed, recognized, traded, and protected -- just like all other naturally occurring property rights -- without the existence of the State.

At this point, Stephan Kinsella, I am writing only to your readers. I do not consider that you have any actual interest in understanding what I am writing and I think you are being what the Catholics refer to as invincibly ignorant on this topic.

Neil

NSK:

Neil,

The real-world difference between two otherwise identical books -- one with the composed text of Atlas Shrugged and one with the composed text of A Tale of Two Cities -- is the composition of words. These are objective differentia that can be discovered by either human readers or even machine intelligence. The compositions, as information, have different mathematical values that can be calculated.

They are not otherwise "identical"--they are two distinct books. A and B. Just as two "otherwise identical" gold coins are not the same coin. But sure, they have a similar configuration. I fail to see how this is relevant for property rights. If I see your log cabin and build an "identical one" I have stolen nothing from you. We each own our own log cabins--no matter how identical they appear or are shaped.

It is a true statement that there are minute differences in every single object that exists. But the word "duplicate" is a meaningful term in that the essential utility of a book is to be read

? I know this. I never denied this. You seem to think this is wresting some huge admission from me, as if it automatically leads to IP. It does not. So what if two objects can be described as similar or duplicates? They are still distinct things. And anyway, if having-a-duplicate somehow violated the rights of the owner-of-the-original, then .... this would cover only copyright, not patent, and it would cover only literal copying, not the bundle of copyright such as derivative works. And it would be hyper-copyright--it would never expire; and original creation would not be a defense (as it is in copyright law). And how would it cover patents? Take a method patent. There are now no similar objects. Just similar actions, say actions of one's body. If A moves his body in such-and-such-way, now he "owns" this pattern-of-moving, and can use force to stop B from moving his own body in that way (and remember, patents are not about copying at all--A can stop B even if B comes up with this sequence of steps indendently).

Yes yes, I know you'll say you don't support modern patent and copyright law. You only support logorights, which is even more extreme. And though you won't endorse patent and copyright law, you'll condemn those who want to abolish it.

the essential quality of a book -- why human beings go to the trouble of manufacturing them -- is that they are convenient means of recording and transporting the printed words, symbols, and art work on the pages.

Of course.

Atlas Shrugged is identified as a distinct commodity by its words, whether they exist printed in a hardcover book, or a paperback book, or read aloud as a recording, or as bits of data stored or transmitted digitally. The entity that is Atlas Shrugged is an information object -- a real-world thing -- separate, distinguishable by man or machine, and valued apart from the multiplicity of physical forms on which it may be recorded or performed.

Sure, you can conceptually identify the pattern of words that is Atlas Shrugged. (Not sure you can objectively identify works that violate the copyright sub-right to make "derivative works", or objectively justify and define "fair use" exceptions, those sorts of things.) So what? I can identify also the method of using fire to cook food, using animal hide to make clothes, using logs to make a log cabin, using a chiseled rock as a knife, and so on. So? Just because we can conceptually identify patterns does not give you ownership of these patterns.

The usefulness -- utility -- which human beings have for this objectively and observably distinct information object -- this thing -- is based on the presence, intactness, completeness, and availability -- of that objectively and observably distinctinformation object.

The subjective value which any human being will or will not assign to this objectively and observably distinct information object will be based on the objectively and observably distinct identity.

A human being will take action with respect to acquiring, using, keeping, or discarding that objectively and observably distinct information object because no matter how many different objects, forms, or transformations it goes through IT'S IDENTITY IS THE SAME AND THEREFORE IT IS THE SAME THING.

Sure, people value certain works of authorship because of the patterns. But your notion that objects A and B "are the same thing" is utterly bizarre. Putting it this way is really just a complicated way of begging the question. Consider: I invent the transistor. A month later you independently invent it. Soon you and I are both manufacturing and selling these cool transistors. They are both transistors. Sure. They both use the same idea that transistors are based on. The reason people value these things is because ... they are transistors. But your truck of transistors and my truck of transistors, even though they are all transistors--even if they have identical looks and characteristics--are not "the same". There's that truckload, and this truckload, just like you have a gold eagle and I have a gold eagle. And sure, you can say the transistors are all "the same" in some relevant sense--fine. So what? It doesn't give me the right to stop you from making your transistors.

That which makes it a distinct thing -- that which gives it distinct utility -- that which makes it distinctly an object of desire by a human being's subjective perceptions and choice -- is its material identity.

That which makes it a thing makes it ownable.

He who creates it is its first owner.

This is some wild metaphysical legerdemain here. So... I can use force against you to stop you from selling transistors... that you invented ... because ... "That which makes it a thing makes it ownable." and "He who creates it is its first owner." You can't be serious. What kind of reasoning is this?

In the transistor example above, you own your own body and various material. It already has an owner. As its owner, you have the right to use it. I don't gain some veto-right over your use of your own property merely by thinking of a way to use my own property.

You seem to think that if we can conceptually identify a "thing," then "it" can have an "owner". Only ownable things can have an owner. Ownership specifies who can use a given thing. The only purpose of such a rule is if the thing can only be used by one person at a time--if use by one person excludes use by another--if the thing is a scarce resource. The libertarian rule is that for such things, to avoid conflict the right to own is assigned to the homesteader--the first user, the one who appropriates it out of the state of nature. Your rule would underming the Lockean homesteading rule by allowing "ownership" of any "thing" that you can conceptually give "identity" to... but of course, though you grant all these conceptual entities existential status, though you say they are just as real, just as ownable as material things, you of course want to enforce rights in these ephemeral ontological ownable things in the real, physical world. If I "steal" your "ideal object" or "informational object" by ... using my own property in certain ways, then you want to use physical, real force (not merely "informational force") against my real, tangible body or my real, tangible property (say, my money) to stop me or penalize me. When the rubber hits the road, IP advocates always turn to the real world of scarce things and real force to enforce their rights to the "informational objects" floating around up there in the Platonic realms.

Those who respect property rights must respect that if a thing can be identified as unique and different -and can be recognized as a thing created by someone -- that its creator owns it.

Your mistake is in assuming that any "thing" can be owned. There are an infinite number of "things" out there--the human mind can conceptually understand the world in any number of ways. My love for my poodle "exists". The fact-that-the-earth-rotated-today exists. My ability-to-jog exists. Poems exist. Crime exists. There "are" facts. I "have" memories. Perfume scents "exist." Physics equations and mathematical algorithms "exist." The method of long division is a "thing". It is obviously ludicrous to assert that just because I can define or name or conceptualize a "thing" that it does, or even can, have an owner. We do not even get to the question of "who owns that thing?" unless the thing is an ownable thing. Not all things are ownable things. What is ownable? Only scarce resources. Information is not a scarce resource. You and I can both use the transistor-idea at the same time.

SCHULMAN:

I have already asked and answered every point you raise once again. You fail to address my challenges and attack straw men.

I leave it to your readers to read my article "Informational Property: Logorights" -- and all you can muster against it -- then decide for themselves.

I'm done exhausting myself re-answering the same refuted points endlessly.

[Mises cross-post]

GRETCHEN MORGENSON and LOUISE STORY add more detail to the story of the collapse of our financial system and how it was brought down by the gang of financial innovators at such respectable financiers at Goldman Sachs, Deutsche Bank and Morgan Stanley, as well as smaller firms like Tricadia Inc. link here

The article strongly suggests that the bankers knew what they were doing. They created bundles of mortgages and sold them off to credulous investors. Then they cranked up mortgage creators to market still more toxic mortgages on which to sell more credit default swaps (CDSs).

When that didn't satisfy the demand from investors, they came up with synthetic swaps. They knew the many of the mortgages were toxic and after selling them, bought swaps against their failing. When the demand for these grew too large, they created synthetic collateralized debt obligations (CDOs) and bet against them as well.

The mechanics of these transactions is a little complicated. First there is a bundle of mortgages. The investors who buy the package expect a steady flow of income. They are okay until the mortgages go bad.

In a totally separate transaction, banks bet against the mortgages by creating a synthetic collateralized debt obligation (CDO) made up of credit default swaps set up to pay when the mortgages fail. The banks pay a steady income to the sellers of CDSs until it goes under as the mortgages default. Then the bank collects from each CDS writer for each mortgage that defaults. The losers in these transactions are the ones who bought the CDSs. They may have no knowledge of the quality of the underlying mortgages that they are guaranteeing but are depending on the good faith of the seller.

The article notes, "Goldman used these securities initially to offset any potential losses stemming from its positive bets on mortgage securities. But Goldman and other firms eventually used the CDOs to place unusually large negative bets that were not mainly for hedging purposes, and investors and industry experts say that put the firms at odds with their own clients' interests."

These and other industry practices are now the focus of "investigators in Congress, at the Securities and Exchange Commission and at the Financial Industry Regulatory Authority, Wall Street's self-regulatory organization."

We are likely to see some indictments, if the sources quoted in the article can back up their assertions in court. There clearly was a conflict of interest between the firms and the buyers of these securities such that the firms appear not to have been acting in good faith. Former representatives of these firms now hold high positions in Washington.

Right now, one would have to question the sanity of anyone who trusts any of these firms with his money but so far they are still profiting greatly. From a purely economic point of view, these transactions are totally unproductive--the gains are matched by the losses on the other side. They only add to gross output to the extent of the net fees to the banks for creating and marketing the obligations and even that is of negative value to society--equivalent to that of services provided by casinos.

From BBC News:

Hacker cracks Kindle's copyright

An Israeli hacker claims to have broken the copyright protection on Amazon's Kindle e-reader, reports say.

The hack will allow the ebooks stored on the reader to be transferred as pdf files to any other device.

The hacker, known as Labba, responded to a challenge posted on Israeli hacking forum, hacking.org.

It is the latest in a series of Digital Rights Management hacks, the most famous being the reverse engineering of iTunes.

The Kindle e-book reader has been very successful since it was launched in the US in 2007.

Amazon hopes to have sold a million devices by the end of the year.

It leaves it to individual publishers whether they want to apply DRM but books in its main proprietary format .azw, cannot be transferred to other devices.

It did not immediately respond to the news but it is likely it will attempt to patch its DRM software.

DRM has long divided opinion. While rights holders regard it as a crucial tool to protect copyright, consumers tend to hate it because it limits what can be done with content.

"DRM is not an effective way of preventing copying nor is it a good way of making sales. There isn't a customer out there saying 'what I need is an electronic book that does less," novelist and co-editor of the Boing Boing blog Cory Doctorow told the BBC when the Kindle was launched.

As soon as a new DRM system is active, hackers begin to try and break it.

Most famously Jon Lech Johansen, known as DVD Jon, cracked the copy protection on DVDs in 1999.

He went on to break the copyright protection on iTunes, leading Apple to offer DRM-free music.

DVD Jon now runs a company with an application to take the pain out of moving different types of content between devices.

Open Access publishers charge author fees in order to make their work freely available to the public. While I think most of these author fees are much too high given the low cost of publishing online, Sciyo appears to go even further and distribute royalties for article downloads to authors. The economic motivation seems to be a bit odd at first glance: why pay authors who generate higher bandwidth costs? I think the true motivation is to attract better papers that will generate more downloads and thus a better reputation for the involved journals. Also remarkable: this publisher already has among the lowest author fees in the industry (well, except for those who do not have author fees).

HT: Open Access News

Via my WUSTL student Dirk Doebler, news of a video by an unknown Uruguayan producer Fede Alvarez. All $300 worth. Modern technology empowers the creative. If not for the dead-hand of the copyright lobby trying to keep everything ever made in the past under lock and key (think "sound track" or "mashup" or "sampling") this would be the age of golden creativity. With plenty of money for the Fede Alvarez's of the world too.

This is the true cost of copyright law: we have but a pale reflection of the golden age of creativity that we could have.

A nice post by Jeffrey Miron on drug reimportation. I don't think we have him completely convinced about patents yet, but we're getting there.

Just a remark on drug reimportation. There seems to be this naive view in Congress and by lobbying organizations that if we allow drug reimportation from Canada that means we get cheap drugs. Which is more likely: the pharmaceutical companies suffer a large drop in profits on the large US market, or that they just raise prices to Canadians?

One of the best empirical economists working on patents is Petra Moser of Stanford. She has an extraordinary ability to find unusual data that answers really hard questions. Her most recent paper Compulsory Licensing with Allessandra Voena does just that.

There is - a frankly rather ridiculous view, one held only by lawyers for whom the distinction between 10 ^ -6 and 10 ^ +6 is invisible - that somehow compulsory licensing in a country will reduce innovation because it will be every so much more attractive to "steal" all those great foreign inventions. In this view - which crops up in these pages occasionally in anecdotal form - the great thing about patents is that it increases innovation by forcing people to "invent around" patents.

The "Compulsory Licensing" paper attacks this question directly - looking at an episode where the US "stole" a bunch of inventions by compulsory licensing after World War I. The consequent effect on innovation in the areas covered by the licenses? It went up by 20%.

In my view debunking the rather silly view that compulsory licensing would diminish innovation is not this papers main contribution. We recognize that patents have two effects (ignoring "invent around" and "revealing secrets" both of which are of at best minuscule significance): increasing innovation by increasing incentives to innovate, and decreasing innovation by making it more costly to innovate. This paper gives us a pretty clean measure of the latter effect: the benefit of being able to access existing ideas without negotiation or licensing raises innovation by around 20%.

Binyamin Appelbaum and David Cho return to the problem of fixing America's credit system and of reforming the broken complex of supervisory authorities link here. The context is the reappointment of Ben Benanke to chair the FED and the push for regulatory reform which redefines the role of the FED, given the running failure of the regulators to protect consumers and the banking system from fraud or excess that produced the bubble and brought the economy down. The story has details that you probably haven't heard before and pins a fair amount of blame on Bernanke. In my mind, it raises a serious doubt about reappointing him in the absence of a prior major reassignment of regulatory duties, removing a number of them from the central role of the FED. The FED's primary duty remains using interest rates to control inflation and foster full employment. To argue as some do that the FED is ill-suited to preventing or popping bubbles doesn't persuade me that it shouldn't be done. The more deep seated issue is ending regulatory capture by Wall Street and that won't happen until we find a better way to finance politics.