Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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Straw men from the AEI

Nick Schulz, of the American Enterprise Institute, commented on a recent piece David and I published on the CSM.

I found the comment particularly misleading. Our suggestions and proposals are "wrong" and "impractical", Schulz writes, but he does not even try to explain why!

We also build straw men by writing things we are aware not to be true either in the literature or as a pure matter of logic - which is a convoluted way to say that we actually lie!

So, even if I seldom get into these debates (as my very rare contributions to this blog unfortunately prove), I just could not resist and wrote him the following mail.

Dear Mr. Schulz,

I just read your comment on our "straw men" and our impractical proposals.

A few questions came to my mind, which you may want to help me with.

1) Where in the literature is there an accessible explanation of the sense in which the word "property" in "Intellectual Property" denotes anything other than what it denotes in any other common usage of the word "property"? I would be curious to find one, given that you treat this as an obvious point. A couple of weeks ago, in a debate at the JFK Harvard School of Government, my counterpart (a very distinguished local academic) argued exactly that: absent patents it would be impossible to trade ideas and have a functioning market for technology transfer, as ideas would be nobody's "property" (in the VERY usual sense) and hence contracts could not be written.

2) I would also appreciate if you let me also learn in what sense the law of the land treats the two forms of "property" differently. That could be another proof that we are building straw men, and that you are right in asserting that everyone already knows the two things are different, no? I am under the strong impression that, when enforcing patents and copyright, the courts of the land we both live in are treating them just like ordinary property. But I may be wrong.

3) I am also curious as to how the difference between rivalrous and nonrivalrous goods has ANY bearing on this issue. If you had ever spent more than 5 minutes reading our technical work, but also our less technical book, you may have noticed we explain quite clearly why there is nothing "nonrivalrous" in actual copies of ideas that are, in our parlance, as rivalrous as your cup of coffee is. Could you therefore spend a few minutes explaining to me in what sense actual ideas, those in the head of people, are nonrivalrous? I have been wandering about that for 26 years now, since I first heard it in graduate school. And I am still wandering.

Open debate is very useful and, whenever you feel like, either of us would be very happy to have one, possibly in public, with you or anyone else willing to debate, to discuss how "impractical" and "extreme" our positions are vis a vis other, including yours.

In the meanwhile, though, why building straw men by claiming that other have built straw men when they have not?




When someone just asserts that we can't have "extremism," you know their argument is weak. Basically it means they are against consistency and principle.

He did not say that "we can't have extremism." What he said was that the answers to problems are not likely to be found in extreme views. From a historical perspective, that comment is quite accurate.

As for being "against consistency and principle," I do not think there is either a correlation or a causation between pointing out that extreme views are probably not the solution and your statement. If anything, your statement seems extreme.

2) usually the laws for real property and the laws for IP are in completely different parts of the law even though they have a lot of very similar basic effect, there are some differences, for example copyrights and patents expire the way real property does not. Also, in some countries you may use copyrighted works for special purposes (education, criticism etc). Another difference might be in my country where you can't transfer all the "author" rights from the author to someone else.

I suppose a lot of the confusion between IP and real property among common people is caused simply by an equivocation fallacy: an author might say that a work is "his" because he created it. In reality it is true that it is "his" *CREATION*, but nothing implies that it could be also "his" *PROPERTY*.

"copyrights and patents expire the way real property does not"

I am not so sure that is true. If you lease real property, then the real property is no longer yours at the end of the lease. A patent right is in effect a lease from the public.


Copyrights and patents definitely do expire in a way that real property does not, no ifs, ands, or buts about it.

You write:

If you lease real property, then the real property is no longer yours at the end of the lease. A patent right is in effect a lease from the public.

Actually, if you, a leasee, lease property from a property owner, a leasor, the property belongs to the owner even while you are renting it. So ownership doesn't revert back to the owner at the end of the lease, as you imply, because he owned it all along, contrary to what you seem to think.

Consider an apartment renter. During the term of his rental contract, he doesn't own it; ownership remains with the landlord. A property owner has a right to do anything he wants with his property, including destroying it, as long as such an act violates no one else's rights. An apartment renter has no right to destroy the apartment he rents, and would be liable to the owner for any destruction he caused to it. If you lease a car, you don't own it; ownership remains with the car leasing firm. Etc.

IANAL, but Stephan is, and I think would confirm my non-lawyer's interpretation of this. I assume this is property law 101.


Your comments indicate that intellectual property rights are more like property rights than I previously imagined, at least copyrights and patents are.

As you properly pointed out, by going to the patent office to file a patent application, you are giving ownership of your intellectual property to the people of the United States of America. However, if your invention is deemed novel, in exchange for giving ownership to the people you get a lease that extends for 20 years from the date of filing. Once your lease is up, then the property returns to the owner.

Thank you for clarifying the similarity.


Filing a patent application doesn't give ownership of "intellectual property" to the people of the USA. First, even under the patent rules, this wouldn't apply until the patent is granted, I think. More importantly, a lease is a contract and is consistent with the rule of law. Its time limit is contractually determined, not arbitrarily imposed by the State. A patent is a governnment-granted monopoly; when it expires, the property doesn't revert back to the owner, who in any event always owns his own copies of his invention, but in a free market legal system would have no right to control anyone else's copies of his property.

Contrary to your 12/15 comment, a patent "right" is not a lease from the public, either in effect or in actual fact. It's just a state grant of privilege, which violates the rights of non-holders of the privilege by preventing them from performing certain actions with their justly owned property.


You stuffed a whole lot of separate points into one comment. I will try to see if I can discuss each individually.

You state that "filing a patent application doesn't give ownership of 'intellectual property' to the people of the USA." That is a statement of position, and not a statement of fact. Of course, the entire point of the patent system was to get intellectual property revealed so that it would be the property of all people rather than the property of just one person. You may disagree with Thomas Jefferson's intent, but your statement is not in line with his thoughts.

You make a point that a patent would not be the property of the people until it is granted. Yes, that is a correct statement. I am unsure of exactly where you are going with that point, but I grant that statement is likely true.

Now, you next say that a lease is a contract and is consistent with the rule of law. Well, a patent is a contract with the people of the country of origin and within the rules of law established by that country, though all reasonable countries have similar laws at this point, so within the confines of planet earth, the rule of law is almost universal. I fail to see how you have distinguished intellectual property from any other property with this statement.

You state that a lease is contractually determined, not arbitrarily imposed by the state. Yes, a patent is a contract with the people and is established by a payment schedule for established periods of time, exactly like a lease. Once again, I fail to see how you have distinguished intellectual property from any other kind of property.

You next state that the time limits in a lease are not "arbitrarily imposed by the State." Well, that is not exactly true. There are many leases, such as property leases, that are in fact arbitrary and that are "imposed" by contract with the state. So, merely being "imposed" by the State seems to be irrelevant to your arguments.

Your next statements seems somewhat confusing to me. You state that a patent is a "government-granted monopoly." Okay, that is a true statement. But then you state that when intellectual property expires that the property "doesn't revert back to the owner, who in any event always owns his own copies of his invention, but in a free market legal system would have no right to control anyone else's copies of his property."

I consider this latter statement puzzling. If an inventor is granted an intellectual property right on his invention, and then sells a copy of his invention to a willing buyer, yes, that willing buyer owns a copy of that invention. That willing buyer may destroy his copy, sell to another person, not use it, use it, disassemble it, test it, throw it away, and many other things. That copy is the willing buyer's to do with as he would. A feature called patent exhaustion assures that the willing buyer is free to do with that copy what he will.

The ONLY thing an intellectual property right prohibits anyone from doing is to create a copy of the invention without the intellectual property right owner's permission. So, the current system does not prohibit anything anyone would do with their copy that a "free market legal system" would permit, though such a system does not exist and, to the best of my knowledge, has never existed, and likely never will. A "free market legal system" would permit someone to make new copies of that property, but a "free market legal system" might well permit other "arbitrary" prohibitions on the use of a copy, such as burning it (generally prohibited for many items), throwing it alongside the road (prohibited for all copies), and other similar, "arbitrarily" imposed restrictions. Once again, you have failed to distinguish a system of intellectual property rights from not having such rights.

It may be that my statement was somewhat unclear regarding the "property" being leased and reverting back to the people. Any justly obtained copy of an invention is owned by the buyer, and the buyer owns that copy forever. The inventor does not and cannot control that copy, unless through legal contractual means separate from the patent system. The ONLY thing the patent system controls is the design right for that invention, and that design right is what is leased back to the inventor for a limited period of time.

You final statement regarding an intellectual property right not being a lease from the public is an interesting statement of belief, but flies in the face of the logic used at the creation of the intellectual property system. The entire purpose of the system was to get people to reveal their knowledge to the people, essentially deeding that knowledge to all people. However, in exchange for revealing new inventions, the inventor was granted the opportunity to lease the exclusive rights to the invention back for intervals of time in exchange for a payment; effectively a lease of the design rights for the inventions. Once the lease expired, all design rights would revert back to the people forever. This system does not violate the rights of anyone justly obtaining a copy from the inventor from doing what they will with that copy, and your statements have failed to convince me otherwise.


You have the standard view of patents and property rights, which I think is quite wrong and inconsistent with both how property rights actually developed historically, and how the State interfaces with property rights. As Richard Pipes, Bruce Benson, and David Friedman (and others) pointed out in their work on property rights, they developed spontaneously, outside the purview of the State. As Jerry O'Driscoll pointed out this morning in a comment at The Austrian Economists blog (the discussion is about Hayekian vs. Rothbardian conceptions of anarchy), Pipes showed that under the Soviet regime, property rights and black market exchange grew up outside the purview of State rulers and bureaucrats. Bruce Benson and David Friedman showed how laws and legal institutions (such as the law merchant) evolved as property rights did, or at least in the wake of rudimentary property rights--before the State sprang up to steal from the private sector. After all, the State is a criminal gang, and gains all its property by theft, mainly taxation and inflation. Property must be privately produced before criminals, including the State and street muggers (who are morally superior to the State, because they don't wrap themselves in the flag, and invoke "national security" and the Keynesian multiplier to rationalize their crimes) can steal it. See also Franz Oppenheimer's classic book _The State_ for the distinction between the economic and political means of property acquisition. Here's a chicken and egg question: which came first? (The answer is above.) This is a bit of a long-winded way of saying that "intellectual property" is no such thing. In fact patents evolved out of statute law, namely the Statute of Monopolies (see Christine MacLeod's book _Inventing the Industrial Revolution: The English Patent System, 1660-1800_, in particular chap. 3). Patents did not evolve from common law, and were inconsistent with common law. They are a prime example of what Murray N. Rothbard called a triangular intervention (see his book _Power and Market: Government and the Economy_--the best book ever written on the economics of the State. He also covers autistic and binary interventions). This should make it crystal clear why a patent is not a contract, contrary to your opinion that it is. It should be clear by now that leases are not imposed by contract with the State, because the State, being a criminal gang in possession of nothing but stolen property, can no more enter into a contract than a street mugger can legally buy food with money he steals from his mugging victim.

So while the ostensible purpose of the patent system is to get inventors to reveal their secrets, this is still a crime against would-be copiers (and consumers, who pay higher, monopoly rent-engorged prices!) of their inventions during the period of the patent. Patents also impede innovation (see Michele Boldrin and David K. Levine, _Against Intellectual Monopoly). The knowledge is not deeded to the people, as you think.

An invention made with an expired patent doesn't become someone's property just because the patent expired; a person doesn't own it until he obtains a copy, usually by buying it. To think otherwise is mystical mumbo jumbo.


So, is it your position that the government is unnecessary for property to exist?

Yes, government is also the worst enemy of property rights, if not the only one. Who has killed more people in history than the State? Who has stolen more property? Who has created more monopolies?

Then you should do the right thing and give your property back to my people, and go back where you came from, since nearly all the property in the United States was acquired from the rightful owners by a combination of deceipt, war, genocide, and biological warfare.


I don't know who "your people" are or what you are talking about. If you are talking about Indians (i.e. Native Americans), it's true that some, but only some, of their property was stolen by European settlers. But it's also true that most Indian tribes had a communal land system, which would be antithetical to private property, and that they migrated from time to time and therefore ceded whatever tenuous "ownership" they might have had based on a homesteading conception of property rights.

I am not defending specific instances of theft of Indian property, as well as genocide, biological warfare, etc. However, at least some of the land Indians lived on was owned by no one who claimed clear and identifiable property rights, because these tribes were essentially land communists.

Rothbard has a discussion of a libertarian solution to unidentifiable land titles lost in the mists of history, in one of the later chapters of his book _The Ethics of Liberty_ (I think; it might also be covered in his essay "Justice and Property Rights," which I don't think is webbed; it originally appeared in _Property in a Humane Society_, ed. Louis Spadaro--I think he was the editor). You can read the chapter from _Ethics_ at the Mises Institute's website; they have a search engine, which will locate it. I can't look at it just now. In any event I have not stolen any land. My taxes paid have been used to kill people and destroy property, however.


Regardless of what you thought of the Native American system of land ownership, the land did "belong" to the Native Americans. Many Native Americans did not understand land ownership and "ownership" as we define it was antithetical to their religious beliefs, just as private ownership is part of your religious beliefs. Failure to believe in land ownership does not make the thoughts of Native Americans either better or worse, merely different.

In any case, ALL the land taken from Native Americans was taken by force. You can claim that it was supposedly "properly" deeded to the American government, but most such sales of property were down with some measure of deception and lack of understanding.

I return to my original statement. If you strongly believe that the actions of the government are improper, then give your land back. You only have your land due to the generally illegal actions of your government. There is no "mists of time." Native Americans know they were here long before Europeans ever showed up.


You completely misread me. I didn't say land was deeded to the U.S. government, which after all is a criminal gang and has no right to own land. But land owners do have a right to sell land (i.e., exchange their land titles for money, etc.) and Indians did sell some of their land, for example Manhattan Island, where I reside. To the extent that they were forced off it, that would have been a crime. Since I live in Manhattan, I'm not giving my land back, for which there is a proper land title.

You also believe, incorrectly IMO, that all other land titles in the U.S. claimed by non-Indians were stolen or are otherwise invalid. I disagree, and challenge you to provide supporting documentation.


I disagree with you that ANY land was transferred from Native Americans to Europeans legitimately. Yes, you can argue that trading a handle of junk beads for Manhattan island was a legitimate transfer. There are at least two problems with that transfer.

First, Native Americans almost completely misunderstood land "ownership." Native Americans could no more "own" land in the sense we consider ownership than you could endorse intellectual property. In essence, they really did not know what land "ownership" meant.

Second, Europeans lied, cheated, and stole the land of Native Americans. Even when they proclaimed the trade was "fair," even that was usually a lie. If you would care to read more about the travesties that gave you the "rights" you own today, secured at the loss of rights of Native Americans along with periodic genocide, I invite you to read some of the following:





These web sites are but a few of the DOZENS, and possibly hundreds (I have not read them all) that document in depth how Native American land was stolen. Sometimes the theft was through deception. Other times it was due to biological warfare. Entire tribes and Nations were wiped out, and the land became "free." Hah. Others were exterminated and their lands taken. Finally, after the Native Americans were so weakened from continuous slaughter, the remnants were herded like cattle onto marginal land. Then, when that land proved to have gold or oil, guess what? Yep, their land was stolen again.

I think you will find that virtually ALL the land stolen from millions of murdered Native Americans was unjustly gained - even Manhattan. So, when you think of your "natural rights," remember the untold millions who lost the rights they believed were natural just so you can have your belief.

Have a Merry Christmas.


On the problem of land theft, see chap. 10 of Rothbard's _The Ethics of Liberty_, which I link to here:


See chap. 10, "The Problem of Land Theft." He points out that if land was stolen at one time "where the victims are lost in antiquity, the land properly belongs to any non-criminals who are in current possession." He also discusses the case of slavery. Go back in time to the year 1600. Suppose Smith steals something from Jones, land or anything else, Jones is never given proper restitution by Smith, and the latter is never punished. Both die with Smith in possession of the stolen property, which is passed on to his heir. Now fast forward to 2009. Smith's heirs, if they exist, haven't the foggiest notion who their long deceased ancestor was, never saw his picture, etc. The property, say a painting or trinket, is now in s Salvation Army warehouse having been sold by Mrs. Johnson, who resides 3000 miles from where Smith did. You buy it. Should you turn it over to one of Jones's descendants? To ask this question is to answer it. Ditto for Manhattan land titles. No Indian today can identify an ancestor of his who might have resided on Manhattan island. Anyone who cliams otherwise is more deluded than Comrade O's would-be Soviet economic planners.

I looked at the links you provided and was reminded of the high crimes committed by the American state against the Indians. Andrew Jackson was Exhibit A. The Land Removal Act of 1830 was a case in point. As the links mention (and something you neglected to say), many of the crimes against the Native Americans were committed with the duplicity of their own people, sometimes acting as their "agents."

You also state that Native Americans didn't understand the concept of land ownership. I doubt this (after all, it's not much more complicated than exchanging ownership of two goods, such as fish for berries, and surely they understood that).

The fact that they had a different conception of natural rights doesn't negate existing land titles, even of property that might have been stolen at one time. To the extent that they believed in communal land ownership, I say their system was as corrupt as any communist system. Commies, after all, believe in Marxism. So should we genuflect at the grave of Marx?

If anything these links should turn you into a libertarian, and perhaps an anarchist.


One of the things that has fascinated me about my ancestors is how they viewed the land. I think I can give you a rough analogy. Now, keep in mind that different tribes had different concepts regarding land, but many thought along the lines I describe.

Let us say that a person comes to you and says, "I would like to buy the air over your land for one million dollars." You think to yourself, "What an idiot. Who can own the air? It is all around and indeed I do not own the air because the air is available for all to use. However, a fool and his money are soon parted." So, you agree. A short time later you realize, as you take your dying gasp, that the person you sold your air to in fact had the ability to take your air, though you failed to grasp that the person was able to do so.

Native Americans did not understand that land in the European concept existed only through the existence of governments and "titles." All the Native Americans knew was that the land was a gift from the Great Spirit. Many failed to understand that once they gave land to the Europeans that they were giving up those rights forever.

As for the past acts of criminals, sure, ignore those acts. Ignore that fact that the only reason the Native Americans were conquered was because of the existence of a state - the very state you repudiate. Ignore the fact the land you own exists only because of the acts of the state, again, the same one you repudiate.

I observe that regardless of whether the state acted as a criminal in the past, and, as you believe, continues to do so, you have participated in that crime by taking possession of land taken under false pretenses by the very entity you repudiate and you continue to live on that land only at the sufferance of that entity. Now, if you wish to argue that you are a victim of circumstances and if situations were that you could undo the damage done, okay.

However, if your argument is that a people who were closer to your ideal of stateless society (I should point out that some Native American tribes verged on being completely stateless; no taxes, justice was administered on a common sense basis by elders, there were no written laws, land was possessed only to the extent that a tipi, wigwam or garden was placed on the land - the land was made available again when the wigwam was torn down or when the tribe moved on, depending on the tribe) were communists and therefore were no better than the system that replaced it, then you are in error.

Native Americans were not communists. They had possessions. The "possessed" land to the extent that they used the land. Individual tipis were not communal. Individual wigwams were not communal. Horses, once they arrived on the scene, were not communal. Ownership by the tribe would represent a communism. Many tribes, perhaps most (I am unsure regarding the practices of many of the dozens of tribes that once existed), were actually more akin to associations where individuals worked together in groups for mutual benefit.

Seems close to the ideal you seem to desire.

So, if you wish North America to return to the condition that existed prior to the arrival of Europeans, wonderful. Otherwise, you continue to participate and actively support the very things you claim are criminal. Seems quite strange to me.


You are incorrect in thinking that government is the source of land ownership and property titles. They are no more responsible for the creation of land and land titles than they are for the creation of the computer I'm typing these words on. I suggest you read Rothbard. Government arrogates a monopoly of force, and if you ask a lawyer who is responsible for land titles, no doubt he would say the state. (My next door neighbor, an ex-practicing lawyer-turned-past-life-regression-healer told me recently that in law school he was taught that Microsoft was essentially a creation of lawyers! In didn't know they were software geeks too. Ask a lawyer who created the shirt on your back, and it sounds to me like he might say it was a gaggle of lawyers.) The reality is that land ownership and land titles exist because someone homesteads property (occupies and works it) without regard to lawyers. This establishes legal title, the government be damned.

And if you want to learn how law and legal institutions actually evolved historically, check out Bruce Benson, _The Enterprise of Law._ Law didn't come about because a gaggle of legal wiseguys met in a room and wrote the laws. It evolved spontaneously, over many years, and, crucially, as a result of voluntary exchanges. It wasn't a top down, state-imposed set of institutions, although criminal gangs known as states tried to stamp their imprimatur on the law, and basically succeeded in messing it up and ruining it, which was a bonanza for rent seekers everywhere.

I have not participated in any state crimes just because the state might have stolen some property 300+ years ago. Again I ask you if the current land owners don't legally own the land, who does? You can't possibly give a reasonable answer to this question.


Many of the land thefts (though not Manhattan) occurred within the last 100 years, and are quite well documented. However, that is neither here nor there.

I claim that government was the source of land titles and ownership in this case, regardless of what Rothbard might say (which is really unimportant in this case), because the vast majority of Native American lands were acquired by the State first, which then established the titles for the land and then transferred ownership to Europeans. There are some cases where Europeans first established ownership and then recorded a title with the state, but as a percentage of the country, the title was established by the government first.


Yes, much land theft occured the last hundred years by the U.S. government. That's brings up colonialism of a sort in the Indian reservations. Whoever the reservation lands belonged to when they were created, it sure as heck wasn't Uncle Sam. I gather you agree that the reservations should be ended, and the land turned over to the current occupants. Let them become owners, and stop the subsidies that maintain this hideous system. That would be a win win for the Indians and the taxpayers, and go at least some short distance toward repairing past injustices to the Indians.

The State cannot establish land titles, because it's a criminal organization. The only legal thing it can do is to quit and give up possession of the stolen property it has.

Btw, I'm declaring you an Honorary Anarchist for tomorrow.

Open debate is very useful and, whenever you feel like, either of us would be very happy to have one, possibly in public, with you or anyone else willing to debate, to discuss how "impractical" and "extreme" our positions are vis a vis other, including yours. vidro temperado
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