Big Government

by Dave Schuler on August 10, 2009

In his column this morning Paul Krugman praises Big Government for saving us from Big Finance, Big Business, and Big Labor.

{ 31 comments… read them below or add one }

Mark August 10, 2009 at 7:20 am

Wasn’t it extreme economic incentives by Big Government that created the problem in the first place?

Since Mr Krugman did not give any references to the claim that 1 million jobs have been saved by the stimulus plan, can we assume that he just made that number up?

Dave Schuler August 10, 2009 at 7:33 am

I agree, Mark. Indeed, I think it’s arguable that, Big Finance, Big Business, and Big Labor only exist because of Big Government.

Chris August 10, 2009 at 8:46 am

Big Labor, perhaps. Big Finance and Big Business in the form of JP Morgan, Standard Oil, etc., certainly existed in the Gilded Age, when Big Government arguably did not exist.

_Something_ always fills a power vacuum – if government was scaled back to the point libertarians and conservatives would like to see, it’d almost certainly be large corporations and the ultra-rich, just like plantation owners and land barons were unreasonably powerful in the South and West in the 19th century. Decry Big Government all you want – at least we have a degree of control over that, however imperfect.

Dave Schuler August 10, 2009 at 8:48 am

Monopolies of any kind are essentially government grants. The business that has grown large without some sort of monopoly is rare, indeed.

Specifically, you might want to consider the franchises that were granted to railroads, the consequences of the overbuilding of railroads, and the growth of the House of Morgan.

Big Government and Big Finance are mutually dependent. It’s a tag team.

Chris August 10, 2009 at 9:42 am

What government grant did Microsoft get in the 1990′s?

And I don’t think you can lay the railroad bubble of the 1870′s at the feet of government intervention – that was pure, unregulated speculation. Unless, of course, you’re prepared to say that the government merely _recognizing_ the right of a railroad business to exist, purchase land and rights-of-way, etc., is somehow a function of Big Government… which is fairly far off of what I understood the term to mean.

As for Big Finance and Big Government, I don’t see any government regulation of, say, the High Frequency Trading markets at all, but, especially given the amount of money sloshing around in there, I think you’d be hard pressed to say that’s not Big Finance.

Dave Schuler August 10, 2009 at 9:45 am

Chris, you are aware, aren’t you, that patents and copyrights are temporary monopolies granted by the government? And that both Microsoft and IBM (Microsoft’s primary customer throughout the 1980′s) have both benefited mightily by them?

Chris August 10, 2009 at 10:12 am

Patents and copyrights are monopolies on a specific idea, not on an industry as a whole, which is the meaning of monopoly we had been arguing over.

Nor did patents cut only in Microsoft’s favor – Apple clearly held many valuable and important patents on the GUI, for all the good it did them. So it’s clearly not the case that Microsoft’s monopoly existed because of outsized government interference or influence.

And, again, if you’re going to label the mere granting of patents by the government as Big Government behavior, then the term has lost all meaning. Are you trying to say that any government action constitutes Big Government?

Dave Schuler August 10, 2009 at 10:29 am

No. I’m saying that government creates or, at the very least, facilitates Big Business and that Big Business facilitates Big Government.

Steve Verdon August 10, 2009 at 10:56 am

Krugman is being a naive fool. We live in a country of state corporatism. Look at the Obama Administration, where did they all come from? From big business. Emmanuel? Sat on the board of Freddie (IIRC), Summers–Wall Street. Hank Paulson–Wall Street. Cheney–Haliburton. Big Democratic and Republican party people move effortlessly between industry and government. Is it any wonder that we see rent seeking going on with health care reform, highway bills, defense bills, energy bills and so forth? The idea that you can tell the difference between Big Business and Big Government is getting harder and harder to do.

_Something_ always fills a power vacuum – if government was scaled back to the point libertarians and conservatives would like to see, it’d almost certainly be large corporations and the ultra-rich, just like plantation owners and land barons were unreasonably powerful in the South and West in the 19th century. Decry Big Government all you want – at least we have a degree of control over that, however imperfect.

Without big government to back them up, they’d have a hard time. Unless of course they resort to violence. But then again that is what government is–violence. When you strip it down to its core element government is violence. Try it. Don’t pay your taxes, violate a silly law (e.g. light up a joint in your house while settling down for the evening, or buy too much Claritin), or even open a lemonade stand in Tulare county CA. Government is something to be restrained because it is not a good thing. It is at best a necessary evil.

And I don’t think you can lay the railroad bubble of the 1870’s at the feet of government intervention – that was pure, unregulated speculation.

Actually, yes government was involved with land grants. Huge land grants. And if you had land near where the railroad was going to come through you would see the value of your property rise dramatically. And it was one of the biggest cases of government corruption in history, Credit Mobilier. It went on to include a Vice President and a future President (James Garfield). No…government played no role…bwahahahahaha.

Patents and copyrights are monopolies on a specific idea, not on an industry as a whole, which is the meaning of monopoly we had been arguing over.

Bzzt, no. Or more accurately not quite. If you have a copyright you have a monopoly on the copyrighted item for…well pretty much forever now (thanks to government!). If people want to buy it from you they have to pay your monopoly prices. Competition for that item can only be found in terms of substitutes…which themselves will likely be copyrighted too. Given the rather steep entry costs into some industries this can severely curtail competition driving up prices. To the extent that entry costs are also a result of government regulations the decline in competition is all around due to government.

Now patents on the other hand are much, much more limited in terms of time span, which is why getting a patent for computer code is not nearly as good as a copyright (remember that forever condition–yeah it isn’t literal until Disney’s copyrights come up for expiration again and they flex their political muscle and get them extended again).

As for GUI, I think much of the work started with research done by Xerox, not Apple. And Apple claimed to own the “look and feel” of the GUI desktop environment a bit broader than claiming ownership of some bits fo code and protected by copyright–recall the forever thing I noted about copyrights vs. patents.

And, again, if you’re going to label the mere granting of patents by the government as Big Government behavior, then the term has lost all meaning. Are you trying to say that any government action constitutes Big Government?

Well, according to the research of David Levine and Michelle Boldrin, yes its an area where the government’s role could be seriously curtailed and not at a loss, but actually improving our overall economic condition. And just as a side note, Levine is pretty liberal. So…yeah, Dave’s claim is valid and yours is not, IMO.

Chris August 10, 2009 at 11:20 am

Ok, we need to clarify here. Your original statement was:

“I think it’s arguable that, Big Finance, Big Business, and Big Labor only exist because of Big Government.”

I think a fair and clear reading of that is that Big Government creates Big Business – that there is no Big Business without the previous existence of Big Government.

Above, you say that little-g government creates Big Business, and that Big Business in turn creates Big Government. If there is a difference, as you seem to be implying, between little-g government and Big Government, then that would seem to contradict your earlier statement that Big Government creates Big Business – now you seem to be saying that Big Business creates Big Government, and not the other way around.

(Which seems unlikely, since I don’t believe the Standard Oil monopoly encouraged the development of Big Government – the majority of their success seems derived from size and leverage, plain and simple.)

This also raises the question of what the difference between Big Government and little-g government is – can you define it?

That’s NOT to say I disagree with some of your thesis – that government action can help create and sustain business monopolies and unfair competition, regardless of whether the government action was a legitimate, run-of-the-mill transaction (little-g) or an unfair, unreasonable action on behalf of a large donor (Big Government’s support of AT&T prior to the 1980′s).

But I read your earlier statement as saying that we’d be free of Big Business, etc., if not for the existence of Big Government. I think that’s clearly incorrect, and that, while government certainly has its own problems, the introduction of more government often (but not always) acts as a counter to Big Business.

Dave Schuler August 10, 2009 at 11:27 am

What I believe is that Big Government, Big Finance, Big Business, and Big Labor are symbiotic. They are mutually reinforcing. I further think that it would have been very difficult for finance or business to get big in the first place without government. In some ways it’s a “chicken or the egg” question.

Chris August 10, 2009 at 11:47 am

Steve-

You seem to be boldly and condescendingly claiming facts that aren’t in dispute. Yes, government has a monopoly on violence. It’s not news to me, and I don’t particularly have a problem with it. And yes, corporations (and large land owners, etc.) DO resort to violence in the absence of government – the history of the South and West is rife with examples, as is the history of the 19th century Pinkertons.

The Credit Mobilier scandal IS a good example of how government can enforce Big Business, and well supports Dave’s point. But CM is NOT the same as the speculative railroad bubble that Dave and I were speaking of earlier – in fact, you could argue that land grants and the like would not have been necessary had pure free enterprise been sufficient to create a trans-continental RR without government intervention.

I’m a software engineer who’s worked for a patent firm in the past, so I don’t need an overview of patent and copyright laws, thanks. And while I certainly agree that the system could use overhauling, it’s still not the case that Microsoft was where it was because of patents, which was the point in question. (Nor is it the case that copyrights and patents -in principle – are a bad thing, as you seem to be arguing, but that’s a separate argument.)

Dave Schuler August 10, 2009 at 11:57 am

Sorry, Chris, I don’t buy it. I think that selling software is a business solely because of copyrights. Without them they’d be selling services which is significantly more labor intensive and costly.

Whether patents and copyrights are good things or bad things are a completely different question. Whether they create big businesses is, at least to my mind, simply beyond dispute.

Where would Microsoft be without IBM? Where would IBM be without patents? IBM became IBM by cornering the market on punch card and line printer technologies through securing the patents to all of the equipment up and down the chain (punches, sorters, etc.)

Chris August 10, 2009 at 12:00 pm

Dave, I agree with that more nuanced take. However, I again reiterate that it’s not universally true – government can aid the creation of Big Business, but it’s also somewhat antagonistic to it. It’s not all one thing or the other.

And insofar as some (but not all) of the things that government does that are beneficial for Big Business are ALSO the things that create or facilitate a functioning economy in the first place (patents, copyrights, the buying and selling of land, infrastructure creation and maintanence, etc.) then this is a somewhat inescapable problem. We demand as much accountability and transparency from the process as possible, punish corruption when it comes to light, and move on.

Chris August 10, 2009 at 12:17 pm

bq. Sorry, Chris, I don’t buy it. I think that selling software is a business solely because of copyrights. Without them they’d be selling services which is significantly more labor intensive and costly.

bq. Whether patents and copyrights are good things or bad things are a completely different question. Whether they create big businesses is, at least to my mind, simply beyond dispute.

Sure, copyrights create big businesses, but that’s a different animal than creating Big Business. FAR fewer people would be writing software (or creating music, movies, or novels) without copyright enforcement – government action certainly created (or vastly enlarged) those markets. But unless you’re going to say that by creating the market, that automatically makes government responsible for all the actions of those within the market, I don’t see how you can say that IBM, etc. existed as it did because of government action.

michael reynolds August 10, 2009 at 1:55 pm

Just a word from a copyright holder: no copyright, no manuscript. No manuscript, no book. No book, no bookstore, no printer, no paper mill, no movie, no TV show, no DVD, no DVD player.

Entertainment is one of our most successful exports, one of the industries we dominate. It runs from very small businesses (me) to very big businesses (NewsCorp) and it’s all possible because of copyright.

If we’re going to blame government for the effects of its laws and their enforcement we have to in fairness balance it by pointing to the fairly spectacular successes.

Steve Verdon August 10, 2009 at 2:24 pm

Yes, government has a monopoly on violence. It’s not news to me, and I don’t particularly have a problem with it. And yes, corporations (and large land owners, etc.) DO resort to violence in the absence of government – the history of the South and West is rife with examples, as is the history of the 19th century Pinkertons.

That’s funny, the West is where people prospered, went to seek fortune and glory and what not. Sure there wasn’t nearly as much government as there was in the East, but I’m thinking that it wasn’t nearly the place depicted in television or movies where people were often at the mercies of of armed bandits. And yes, there were private law enforcement/protection organizations, the Pinkertons for one. Still around today doing the same job. In fact, the West is often pointed at by some anarcho-capitalists as what things might be like with dramatically less of a government footprint.

The Credit Mobilier scandal IS a good example of how government can enforce Big Business, and well supports Dave’s point. But CM is NOT the same as the speculative railroad bubble that Dave and I were speaking of earlier – in fact, you could argue that land grants and the like would not have been necessary had pure free enterprise been sufficient to create a trans-continental RR without government intervention.

It wasn’t. It took government and the violence it entails to make it happen. Which immediately raises the point? Was it needed?

I’m a software engineer who’s worked for a patent firm in the past, so I don’t need an overview of patent and copyright laws, thanks.

I work for a utility, can’t tell you diddly about electricity, so you’ll have to forgive me if I don’t think this amounts to much.

And while I certainly agree that the system could use overhauling, it’s still not the case that Microsoft was where it was because of patents, which was the point in question. (Nor is it the case that copyrights and patents -in principle – are a bad thing, as you seem to be arguing, but that’s a separate argument.)

It is not a seperate point. Big government is in part when you have government getting into an area and mucking things up. Copyrights are a dramatic example of that.

Second, yes Microsoft is in part where they are because of copyrights. The lawsuit against them by Apple was precisely over copyrights. Microsoft one, and hence were able to go on and become the giant they are today. Would they be smaller if they had lost? Maybe, maybe not, but they would likely be different.

And insofar as some (but not all) of the things that government does that are beneficial for Big Business are ALSO the things that create or facilitate a functioning economy in the first place (patents, copyrights, the buying and selling of land, infrastructure creation and maintanence, etc.) then this is a somewhat inescapable problem. We demand as much accountability and transparency from the process as possible, punish corruption when it comes to light, and move on.

So let me ask this…precisely who are you going to ask this of? Big business? They are protected by Big Government. Big Government? They are in bed with Big Business. Asking the one with the guns and the money and the ability to make the rule to police themselves sounds rather….naive.

Michael,

Just a word from a copyright holder: no copyright, no manuscript. No manuscript, no book. No book, no bookstore, no printer, no paper mill, no movie, no TV show, no DVD, no DVD player.

Not true. We’ve had books, and music, and such long before we had copyrights. Maybe not as many, but they did exist. Really. Copyright is not a necessary condition for the creation of intellectual property.

Once again, just because you hold a copyright or several does not make you an expert on the topic of the economic impacts of creating rather long lasting monopolies…monopolies that can be used strategically to prevent further competition. Here’s an example:

You develop a product and can copyright it. You do so. Its very much in demand, you start making lots of money. A competitor comes along with a similar idea, but different enough not to violate your copyright, but similar enough to threaten your profits. You buy up that competitor and sit on the new innovation. Who is better off? You. Who is worse off? Your customers, and those who would buy the product but can’t because of the monopoly prices (the deadweight loss).

Entertainment is one of our most successful exports, one of the industries we dominate. It runs from very small businesses (me) to very big businesses (NewsCorp) and it’s all possible because of copyright.

This does not mean that the current system is at all good. Is there any reason at all why something should be copyrighted for a period of time that extends for 75 years after your death? Is there any valid economic reason to extend copyrights on already existing works? No and no…well other than enrichment of yourself and your heirs, but the very notion of copyright is to make society better off by allowing for such works to be created in greater numbers than they would be absent such protections. Excessive copyrights can actually reduce such works.

I know, you’ll just pass this all off as theoretical puffery and dismiss it with a wave of your hand. But that’s okay, in fact, I’m hoping you do.

michael reynolds August 10, 2009 at 2:53 pm

Steve:

I don’t work in software, I work in entertainment.

We aren’t generally threatened by other people doing things which are similar, and in any event we’d have no legal case. We are certainly not in a position to buy up and shut down other writers. (Although . . .) In fact we sometimes profit from people doing things that are similar, for example, by expanding a genre which gives us a toehold in a market.

I know a fair number of writers, none of whom would be producing product if we were unable to control the exploitation of our product.

I write a book. A movie company says let’s make a movie of it and pays me. If a movie company can just xerox my book, steal it and make a movie, I don’t write the book. So the movie doesn’t get made.

If the movie company for its part had no control over its product it, likewise, would not spend the 100 million or whatever because it relies on the DVD market for profitability.

If the DVD maker had no control over it’s product and so on.

So yes, there would be a lot less produced. A vast and profitable industry would go away.

You’re positing a world in which I would work just as hard if I knew everything I made was going to be stolen. No. I wouldn’t. Just like I wouldn’t plant tomatoes if I knew someone would come along and take them as soon as they are ripe. There kind of wouldn’t be any point.

It’s like arguing that 100% taxation would result in no diminution of effort. In another thread you argued vociferously that productivity would be harmed by even a small increase in marginal tax rates.

So why would I work less if I thought I’d be taxed another 5%, but work just as hard knowing that I’d lose 90% of my income in a world without copyright?

Brett August 10, 2009 at 4:49 pm

That’s funny, the West is where people prospered, went to seek fortune and glory and what not.

It’s where they went to seek new farmland (usually on that possessed by Indians) and seek wealth (but ask the 49ers how well that went for most of them).

In fact, the West is often pointed at by some anarcho-capitalists as what things might be like with dramatically less of a government footprint.

Is that after the federal military (the “big government”) cleared out the locals for you?

Steve Verdon August 10, 2009 at 5:28 pm

So yes, there would be a lot less produced. A vast and profitable industry would go away.

I disagree that it would go away. Change, sure, but not go away. There is money to be made, what needs to be done is look at how these things are done.

You’re positing a world in which I would work just as hard if I knew everything I made was going to be stolen. No. I wouldn’t. Just like I wouldn’t plant tomatoes if I knew someone would come along and take them as soon as they are ripe. There kind of wouldn’t be any point.

Well all I can do is refer you to Boldrin and Levine,

Start with English authors selling books in the United States in the nineteenth century. “During the nineteenth century anyone was free in the United States to reprint a foreign publication”10 without making any payment to the author, besides purchasing a legally sold copy of the book. This was a fact that greatly upset Charles Dickens whose works, along with those of many other English authors, were widely distributed in the U.S., and

yet American publishers found it profitable to make arrangements with English authors. Evidence before the 1876-8 Commission shows that English authors sometimes received more from the sale of their books by American publishers, where they had no copyright, than from their royalties in [England]11

where they did have copyright. In short without copyright, authors still got paid, sometime more without copyright than with it.12

[...]
The amount of revenues British authors received up front from American publishers often exceeded the amount they were able to collect over a number of years from royalties in the UK. Notice that, at the time, the US market was comparable in size to the UK market.

Link

And publisher Norton managed to snag and envious and royalty free “winfall” off of the 9/11 Commission Report…a governmnet docutment. Free for download too. They were given the right of first publishing that other publishers would have to wait to do. Oh, yeah…government documents are not copyrighted.

So, while things might be different I think you are exaggerating the extent of how different they would be.

You can find Boldrin and Levine’s book, free for download, <a href=”http://levine.sscnet.ucla.edu/general/intellectual/againstfinal.htm”here.

Steve Verdon August 10, 2009 at 5:32 pm

Oh and Michael,

It’s like arguing that 100% taxation would result in no diminution of effort. In another thread you argued vociferously that productivity would be harmed by even a small increase in marginal tax rates.

No, I argued against your notion that the labor leisure choice is invariant to tax increases and even that tax increases would promote more labor when most evidence suggests the counter is more likely to be true.

Now here you are assuming you will get paid $0 for your work, when it is not clear at all that is the case.

And I appear to have goofed on the link above for the book,

Against Intellectual Monopoly

Hope I got that right this time.

Steve Verdon August 10, 2009 at 5:35 pm

It’s where they went to seek new farmland (usually on that possessed by Indians) and seek wealth (but ask the 49ers how well that went for most of them).

Not all the land was indian land. Also, while people went there to seek their fortunes not all of them made it, obviously. Just like people don’t always find their fortunes even in our current economy with all the laws, police, and so forth.

Is that after the federal military (the “big government”) cleared out the locals for you?

Again, not all the land was owned by the indians. And yes, the government moving in an violating treaties and the shameful way they treated Native Americans is an example of the government abusing its power. It highlights how governemnt is something to be restrained, not unleased with unbridled enthusiasm. I would think the lesson would be clear, guess not.

Chris August 10, 2009 at 7:14 pm

Steve-

Re: the West, that’s a non-sequitur. You said that large corporations and land owners would have a hard time dominating others unless they resorted to violence; I pointed out that’s exactly what they’ve historically done when there hasn’t been much government around. Extolling the virtues of the West doesn’t negate that point. (Also, take another look at the Pinkertons in the 1800′s – they were assassins and thugs-for-hire who were famous for killing union protesters, among others. That’s NOT the same thing they’re doing today.)

Re: the transcontinental railroad – I can’t figure out how to read this sentence unless you’re asking whether the railroad itself was needed. Which is an odd question to ask, since you were just talking about how great the west is, and the west as we know it would never have existed without the transcontinental railroad.

Re: working for a patent firm – I drafted patent materials and studied for the patent bar (although I decided not to take it.) Believe me when I say I don’t need a lecture on patents and copyrights.

re: copyrights – your argument here is pretty much incoherent, but Michael correctly takes you to task for that, I think. Suffice to say, it doesn’t make sense to say that Microsoft was a monopoly because it won its lawsuit against Apple – Microsoft was the one trying to break Apple’s attempted monopoly of GUI technologies in that case. Microsoft winning that case made it possible for there to be MORE competition in that space, not less – the fact that Microsoft was arguably later a monopoly had far more to do with things like forced bundling and other unfair competitive disadvantages than because the government granted it a monopoly over some set of ideas.

So let me ask this…precisely who are you going to ask this of? Big business? They are protected by Big Government. Big Government? They are in bed with Big Business. Asking the one with the guns and the money and the ability to make the rule to police themselves sounds rather….naive.

I’m not asking this of anybody, Steve – I’m going to demand it of my elected officials and work for it through the democratic process. From your sneering tone I’m sure you’ll think that’s naive and unlikely to work, but it does raise the question – if Big Government is so evil and unstoppable, then how will you ever stop it from doing anything it wants to do? Because however ineffective trying to work through the democratic process might be, bitching about government on the web is far less so.

michael reynolds August 10, 2009 at 8:55 pm

Steve:

There were books in the 19th century. There are books today. They are not the same product.

A few of the things that have changed since then: chain bookstores, online retailers, movies, TV, audio, paperbacks, book clubs and book fairs, deep discounters, foreign rights deals, gaming rights, marketing, web sites, school visits, author tours.

We no longer write a book and then ask Jeeves to discreetly slip it onto the shelves in the the gentlemen’s club smoking parlor.

Books now are like books then in much the same way that aircraft now are like aircraft then. Yes, they both fly. Everything else has changed. And things will be changing a lot more in the next 5-10 years.

We are no longer selling books to gentlemen of leisure. We now attempt to sell books to everyone. When you are still in the womb we have a book for you. When you are on your death bed, we have your book.

I’d bet that a good urban Barnes and Noble currently stocks more titles than were published in all of the 19th century.

And the difference between the business now (tens of billions of entertainment dollars) and the business then (two shillings, tuppence and a pinch of snuff) is the difference between the car industry then and now. Or between the abacus business and the computer industry.

And all of it rests on copyright because it’s not about the gentleman farmer taking time off from beating his slaves to pen a small tome, it’s a huge freaking industry employing hundreds of thousands of people risking billions of dollars and making billions more.

Once again, Steve, there’s theory and abstraction, and there’s the real world. In the real world there are a limited number of people who can supply entertainment to the masses. So we who are in that limited number want to get paid. The way we get paid is by enforcing copyright.

No pay for Mikey and his ilk, no books. No books, no movies. No movies, no DVD’s or downloads. No giant entertainment industry, no publisher’s row, no Hollywood.

You want to talk about cutting back on the length of copyright? No problem. But ending copyright would destroy a vast and profitable industry.

Steve Verdon August 11, 2009 at 12:12 pm

There were books in the 19th century. There are books today. They are not the same product.

A few of the things that have changed since then: chain bookstores, online retailers, movies, TV, audio, paperbacks, book clubs and book fairs, deep discounters, foreign rights deals, gaming rights, marketing, web sites, school visits, author tours.

Please, how much of this simply technological advancement. Sure we didn’t have television 120 years ago…because there was no television. The idea that copyright can’t change because of television is a rather dubious claim. You want to make it sound like its totally different now…and it is, but in part becuase of copyrights but not necessarily in a good way. Monopoly limits competition, limits innovation, and raise prices and leads to rent seeking. It is usually a thing to be avoided not sought out. If we can come up with a way of providing books, movies, music, television and other innovations without resort to monopoly why not use it? Because your income might decline. Hello, rent seeking!

Books now are like books then in much the same way that aircraft now are like aircraft then. Yes, they both fly. Everything else has changed. And things will be changing a lot more in the next 5-10 years.

Please, they are bundles of pieces of paper with words on them. The process might be different, but you have utterly failed to show how the changes in the process necessitate the kind of copyright we have today. I on the other hand have pointed to a complete argument as to why the current system can and should be scrapped and replaced with something else.

I’d bet that a good urban Barnes and Noble currently stocks more titles than were published in all of the 19th century.

Well duh. Of course. Why? Becasue they can stock all the stuff published in the 19th century, the 20th century, and what little of the 21st century. Its like saying there are more people alive today than there were back in the 19th century. The point here is….completely lost on me.

And the difference between the business now (tens of billions of entertainment dollars) and the business then (two shillings, tuppence and a pinch of snuff) is the difference between the car industry then and now. Or between the abacus business and the computer industry.

Depends. A Christmas Carol in the UK that were copyrighted sold for around $2.50 in England while in the U.S. they sold for $0.06/book. And keep in mind many of the English writers got more money from U.S. publishers than they did in royalties on their books sold in the UK. And $2.50 in today dollars is pricey to say the least. Using the U.S. rates of inflation from 1913 in today’s dollars it is over $54.

And all of it rests on copyright because it’s not about the gentleman farmer taking time off from beating his slaves to pen a small tome, it’s a huge freaking industry employing hundreds of thousands of people risking billions of dollars and making billions more.

Riiight. Do you even read history. Did you even read the link. Copyrights were created quite awhile ago and their initial use was for censorship. Rulers would issue rights to publish to those they liked–i.e. those who either wrote stuff they liked or wrote nice things about the rulers. Then it was used to gain rents. Thomas Edison is a good example. For films he favored copyright type laws, for music he opposed them. Why? For movies he held strong patents on the tools to make movies and he wanted strong enforcement of those patents. But for music since he would make more the more widely available music was for the phonograph, he did not want strong copyrights for music. It was purely driven by rents–i.e. unearned profits.

In fact, Hollywood was built by intellectual property pirates. The film producers who moved out west were trying to get away from Edison and his MPCC. By the time they were able to get to the independents on the West coast the patents had already expired. Fox and Paramount moved to California so they could pirate Edison’s inventions for making movies.

Boldrin and Levine argue that an industry is going into decline when it starts to implement copyright and other intellectual property rights. The reason is simple: rent seeking is not cost free. As companies devote more and more time to seeking rents they start to devote less and less to producing the goods. Also, with intellectual property protections the drive to be innovative and stay ahead of the competition wans.

Once again, Steve, there’s theory and abstraction, and there’s the real world.

Yes, and you’ve demonstrated a complete lack of understanding of some of the history of copyrights. Please spare this nonsense of yours when you can demonstrate even an inkling of understanding of the history…i.e. the real world. Not abstraction, not theory, but the real world. What I’ve written above is not theory, but points to actual events and history. Like Edison being on both sides of the inellectual property rights fence when it suited his pocket book, like Hollywood being built by pirates.

No pay for Mikey and his ilk, no books. No books, no movies. No movies, no DVD’s or downloads. No giant entertainment industry, no publisher’s row, no Hollywood.

You want to talk about cutting back on the length of copyright? No problem. But ending copyright would destroy a vast and profitable industry.

You keep writing this kind of pablum, but yet where have I said that creators of intellectual property should not be paid? Provide a single quote or wake up and realize you are, yet again, responding to a strawman.

Steve Verdon August 11, 2009 at 12:26 pm

Which is an odd question to ask, since you were just talking about how great the west is, and the west as we know it would never have existed without the transcontinental railroad.

People got their without the rail road. It was more of a political thing. “Look what I did, I got the transcontinental railroad built!”

Suffice to say, it doesn’t make sense to say that Microsoft was a monopoly because it won its lawsuit against Apple – Microsoft was the one trying to break Apple’s attempted monopoly of GUI technologies in that case. Microsoft winning that case made it possible for there to be MORE competition in that space, not less – the fact that Microsoft was arguably later a monopoly had far more to do with things like forced bundling and other unfair competitive disadvantages than because the government granted it a monopoly over some set of ideas.

I never said Microsoft was a monopoly, but you make my point. By blockign Apple’s claim to copyright Microsoft ended up creating more competition and innovation. In other words, without copyright we had more innovation and more competition than with it! Copyright limits innovation and competition. Thank you for finally getting what I’m saying.

And just to be clear, I’m not saying that innovators shouldn’t be paid for their innovations, what I’m saying is that the claim that we grant innovators monopoly status is one we should view with great skepticism since monopoly is usually a bad thing. It limits innovation, competition, raises prices, and is inefficient. It has no redeeming features in and of itself. The argument for intellectual property rights of the type we have is that without them we’d have even less innovation and competition. But if that claim is false, in that we can get rid of it entirely or put in a better system that doesn’t depend on monopoly then why not do it? Instead of exploring this question you just decide what the answer has to be, and think anyone who is suggesting otherwise is stupid. But I can assure your that David Levine is far, far from stupid.

I’m not asking this of anybody, Steve – I’m going to demand it of my elected officials and work for it through the democratic process.

And that will get you precisely nowhere. Did you ever watch the rather so-so movie Wargames. Its a bit old, but the computer running the U.S. ICBM system goes a bit wonky, and near the end it starts running simulations on thermonuclear war. At the end it concludes the only way to win is to not play the game. Government is kind of like that. The less we have the better off we probably are from a freedom and responsibility stand point. Businesses can’t use the government to prevent competition, grow to obscene sizes, and start to garner undue influence. You want all the trappings of state corporatism, but yet somehow think that you can control the State and the corporations it represents. Truely a bizzare world view.

michael reynolds August 11, 2009 at 1:02 pm

Please, they are bundles of pieces of paper with words on them.

No. They aren’t. And this is why your next 5,000 words are a waste of time.

A book is a product. It is not about the paper. It’s a product in the marketplace. It’s like saying a tomato today is just the same tomato it was 1,000 years ago, but as a product it is no such thing. The uses to which we put our tomato means that the tomato now is not the tomato then.

And we are talking about the marketplace, not botany. It’s what the book is as a product, and that’s you’re just not getting. Just because the word “book” has not changed does not mean that “book” today equals “book” 100 years ago.

Here you are, for the second time, arguing that things which I actually DO are not possible because they conflict with a pet theory of yours. It’s really kind of crazy, don’t you think?

First you argued that I could not be motivated to work harder and be more productive by higher taxes. I demonstrated that you were wrong. Pretty easy, since of course I have intimate knowledge of my own motivations.

I speculated that I’m not the only person on Earth in that same situation. Again, a pretty safe bet, don’t you think?

Now you’re arguing that if you essentially obliterated 95% of my economic gain from writing I would still write just as much.

So again, you’re arguing theory against facts on the ground. I don’t have to guess why I write, or theorize why I write, I KNOW why I write. Money. I do it for money. I like money. I find it useful. I’m in this business — and yes, it’s a business — because I make money.

When the theory doesn’t match the facts, it’s the theory that gets thrown out, Steve, not the facts.

michael reynolds August 11, 2009 at 1:28 pm

Steve:

What in the hell does Edison have to do with what I do?

All of your arguments have to do with technological innovation. Not my thing. I have no idea if you’re right or wrong as pertains to building the next widget. Of course neither do you.

I’m not innovating, primarily, I’m entertaining. And your arguments regarding that are ludicrous and contrafactual. It’s like talking to a Marxist.

However, as a sideline, I am involved with some innovation having to do with books and other media.

We had this idea I came up with some years back. Set aside for now what it was, it’s not reevant. We built a prototype, took it and showed it to all the Hollywood weasels. The universal reaction was, “Sweet Jesus, this is amazing! Come back when you have all the bugs worked out.”

So we needed a VC to handle the initial costs. VC’s say, “Have you got a patent?” We say, “No, because it’s a specific process using off-the-rack elements in a new way.” So the VC’s say, “Yep, that’s a brilliant thing all right. Now run along, because no patent means no property and that means no dollars.”

Why in hell would anyone put millions of dollars into something he couldn’t own? I wouldn’t. You wouldn’t. No one would. Because we all venture our capital and our time in the hopes of profit. And if we can’t own what we invent we can’t profit.

michael reynolds August 11, 2009 at 1:32 pm

By the way, your counterpoint re: Barnes and Noble and 19th century books? You’re assuming that all such books are still in print (I assure you, 99% are not) and that those 19th century books which have survived are stocked at B&N. (I assure you they are not.) Nor does B&N stock all current books. Or all books published.

Steve Verdon August 13, 2009 at 4:08 pm

Michael,

I suggest first a class in biology. The tomato is largely the same today as it was 100 years ago and 200 years ago.

That the process of getting it to market is vastly different I admitted to in my post, hence my second recommendation: a course on reading comprehension. See the book is the same way. A book today and one from 150 years ago would be quite similar. The current mode of production is different, but once again…I noted that.

Finally, you missed the forest here for the trees. Yes you deal in books, but your initial claims and statements were about intellectual property in general: books, movies, television, DVDs, etc. Thus it encapsulated not just pure intellectual property like a good fantasy novel, but also technological innovation which is….included in that area of intellectual property and the laws governmening them.

First you argued that I could not be motivated to work harder and be more productive by higher taxes. I demonstrated that you were wrong.

No, you argued that everyone would be motivated to work harder with higher taxes. I showed that in general this is a false assumption and that for some individuals it might be true. Please try to get the facts of the matter correct.

Now you’re arguing that if you essentially obliterated 95% of my economic gain from writing I would still write just as much.

I made no such claim. I have argued that our current system of intellectual property laws are not good. I have not argued that you get paid nothing or that you take a 95% pay cut. Might you get paid less for a book? Maybe. But the fact that you resist really highlights nothing other than that you are benefitting from rents–unearned ecnoomic benefits.

So again, you’re arguing theory against facts on the ground.

Except you’ve presented no facts other than numbers you make up. I on the other hand point to actual history and you dismiss it as “theory”. I don’t think I’m the one who is crazy here.

However, as a sideline, I am involved with some innovation having to do with books and other media.

Translation: now let me contradict myself….

So we needed a VC to handle the initial costs. VC’s say, “Have you got a patent?” We say, “No, because it’s a specific process using off-the-rack elements in a new way.” So the VC’s say, “Yep, that’s a brilliant thing all right. Now run along, because no patent means no property and that means no dollars.”

There are plenty examples of where people made money by being innovative and not having property rights. For example, bio-engineered crops. Sure they enjoy lots of intellectual property now, but back when they started out that area of the law was non-existent. To stay ahead and make a profit you had to innovate, you had to be constantly looking for a way to make your product better. And innovation thrived. Then along came the legal aspect for intellectual property and the rate of innovation plummetted.

So you’re personal anecdote I find quite uncompelling.

Let me know if you ever stumble upon a fact, or just stick with writing fiction. Based on what I’ve seen at Amazon, you are good at that.

Steve Verdon August 13, 2009 at 4:12 pm

You’re assuming that all such books are still in print (I assure you, 99% are not) and that those 19th century books which have survived are stocked at B&N. (I assure you they are not.) Nor does B&N stock all current books. Or all books published.

No, you are assuming that. I made the assertion that they could stock all such books. That is, they could, but they don’t have too. That they have such a huge list of titles to pick from is any wonder that they have more book titles available in a single store than were available 150 years ago? No. I just don’t see the relevance to your position. You toss out these claims then fail to tie them into your position. It is equivalent to me saying I had a burrito for lunch, therefore your argument on intellectual property laws is nonsesns. Its a non sequitur.

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