Mining rights and intellectual property rights

I was talking recently with an Australian, who expressed outrage that the Australian government allows mining companies to extract valuable resources from state-owned land, almost for free. Now, I have expressed similar sentiments in the past about the comparable US practice. But on reflection, it occurred to me that I couldn’t agree with the claim of another lunch participant that it is a “no-brainer” that the public should be taking a significant portion of the value realised from the resources extracted from public land.

If you think back to the time when US mining laws were first laid out — I think the main US law dates back to 1871 or so — the general view must have been, there are vast territories out there, where valuable minerals are buried, that would be of great use to the general economy, if only we could get them out of the earth. Rather than pay people to go search for them systematically, we offer that anyone who finds some and figures out how to get them to market, can keep the profits from their sale. Continue reading “Mining rights and intellectual property rights”

Intellectual property is theft

Chris Bertram at Crooked Timber has pointed to this paper by esteemed Harvard economist N. Gregory Mankiw, in which he raises the temperature on the tired old “taxation is theft” thesis. In Bertram’s pithy summary, “Taxing the 1 per cent would be like the state forcibly ripping out their spare internal organs!” This just shows how easy it is to get people to accept almost any moral argument once you frame it to appeal to their squeamishness.

As mathematicians know well, from an inconsistent logical system any proposition may be derived, and human moral calculus is nothing if not inconsistent. Here we see that you can make a perfectly coherent-sounding argument for why taxation is in principle just like forcing people to give up their second kidney to someone who needs it, and that obviously seems wrong, when the alternative might be a situation where people literally need to part with their second kidney in order to eat, or to obtain needed medical treatment for their children.

But I’m interested in another feature of this essay. Mankiw sets the stage as follows:

Imagine a society with perfect economic equality. Perhaps out of sheer coincidence, the supply and demand for different types of labor happen to produce an equilibrium in which everyone earns exactly the same income. […] The society enjoys not only perfect equality but also perfect efficiency.

Then, one day, this egalitarian utopia is disturbed by an entrepreneur with an idea for a new product. Think of the entrepreneur as Steve Jobs as he develops the iPod, J.K. Rowling as she writes her Harry Potter books, or Steven Spielberg as he directs his blockbuster movies. When the entrepreneur’s product is introduced, everyone in society wants to buy it. They each part with, say, $100. The transaction is a voluntary exchange, so it must make both the buyer and the seller better off. But because there are many buyers and only one seller, the distribution of economic well-being is now vastly unequal. The new product makes the entrepreneur much richer than everyone else.

The society now faces a new set of questions: How should the entrepreneurial disturbance in this formerly egalitarian outcome alter public policy?

The sharp-eyed reader may be wondering, why are these people paying $100 to J.K. Rowling for a pile of paper with printing on it? Why didn’t someone take the first copy, reprint it, and sell copies for $5? Oh yes, because there’s copyright, and the strong arm of the state willing to use force to prevent you from printing certain words on the page. Without that implicit threat of violence, Ms. Rowling’s creation would be worth very little. So what does she owe us in return? A thank-you card? The cost of enforcing her copyright? Or maybe just some constraint on how much of the potential profit she should be allowed to retain, from the monopoly position that wouldn’t exist without the effort and investment of many other people, both living and of prior generations.

The fact that this guy is considered one of the top minds in economics today is sobering…


500px-Flag_of_Edward_England.svg Piratenlogo

Outside of Germany, no one seems to have noticed the extraordinary efflorescence of a new party, Die Piraten, the Pirate Party. (Also, no one seems to have noticed that the German word PARTEI — political party — is an anagram of PIRATE.) It’s an international movement, of course, and I suppose it started in Sweden, with links to the Pirate Bay file-sharing site. As with many such political movements — fascism and the Green movement are just two examples — Germany has proved a particularly fertile ground, and the most recent state elections in Nordrhein-Westfalen found the Pirates winning 7.8% of the votes, nearly as many as the liberal FDP. Interestingly, that vote has drawn quite a bit of attention in the foreign press for its undermining the ruling coalition, but no one outside of Germany is talking about the Pirates.

There is a long tradition, going back to Cicero — and continuing through Gilbert and Sullivan — of invoking pirates as an ironic commentary on rapacious rulers, extended to rapacious capitalists by Bertolt Brecht and others. The association of piracy with illegal copying of artistic works goes back to the 17th century in England, as I learned from Adrian Johns’s magisterial book Piracy rights, where I also learned that the earliest designation of copying as piracy did not describe neglect of an author’s right to earn a living from his work (which right was nonexistent), but rather neglect of the king’s right to censor. A pirate was not someone who stole a poor scribbler’s hard-fought text, but rather one who arrogated to himself permission to publish without royal license. More recently, pirate radio expressed the opposition between piracy and censorship.

I find myself enormously encouraged by this movement. Their stated goals are ones I generally support: reform of intellectual property laws, data protection, civil rights and government transparency. But there’s not enough there to really make up a political program. I see it in generational terms. It may not be true that all property is theft, but it certainly seems that those who got into the world before us have gone out of their way to make sure that everything that exists has been carved up and allocated to owners, up to and including the land, the sea, their ideas, their music, and their genetic code.

German election poster
Greens: Every power needs something to drive it
Pirates: Strengthen education. Understand Physics.

Here’s an election campaign poster of the Piraten in NRW. The Greens on top with one of their solemn eco posters: Windmills and the slogan “Every source of power needs a driving force” (approximately), and then “Green makes the difference.” What does it mean? Damned if I know, but it sounds green!
Below it the Piraten put a graphically much cruder retort to this vaguely pious blather:
“Strengthen education. Understand physics.
You’d rather vote for the Pirates.”