Friday, April 12, 2013

Marc Clair: Was Kinsella “Crushed”?

 Marc Clair weighs in:
The disagreement arises from Kinsella’s claim that ideas – and here we are really talking about the expression of ideas as formulas, patterns, etc – are not scarce resources and therefore cannot be considered property. Wenzel’s counter is that these things indeed can indeed be scarce. In a follow up blog post, he quotes Ludwig von Mises from Human Action, where he states: 
The available supply of every commodity is limited. If it were not scarce with regard to the demand of the public, the thing in question would not be considered an economic good, and no price would be paid for it. 
This is a very important insight, and leads us to our next question… 
Can Ideas Be Scarce? 
The available supply of every commodity is limited. If it were not scarce with regard to the demand of the public, the thing in question would not be considered an economic good, and no price would be paid for it.If ideas are not scarce, why would anyone ever pay for them? The very fact that an idea can have any price at all seems to suggest that they can have value to individual actors, and therefore can be scarce.
Wenzel gives the example of his “Drudge Formula” – a formula he claims to have developed in order to get an article on the front page of The Drudge Report. Kinsella claims that this formula is an idea and is therefore not scarce, but of course when pressed cannot tell Bob the formula.
Does the “Drudge Formula” , if it works, have value? It would certainly have value to me if I knew a sure fire way to get one of our articles onto Drudge. I don’t know exactly what I would be willing to pay for this knowledge, but I certainly would pay some price. I don’t currently know how to get an article on the front page of Drudge, and I would find value in that knowledge.
Wenzel’s arguement is that the formula itself must be scarce, because if it isn’t, why would anyone pay for it in the first place?
This reminds me of one of my father’s best friends when I was growing up. He worked for Pepsi, and I remember my father telling me on several occasions that he was one of the few people at the company that had access to the formula for Pepsi.  Clearly if only a “few” people have access to it, the formula for Pepsi must be scarce.  I imagine that he also had stipulations in his contract with Pepsi that he could not share that formula with anyone that Pepsi does not authorize him to share it with, and doing so would put him in breach of contract.
This is precisely the concept behind how intellectual property not only can, but in many cases does work in a free market. 
How would IP be enforced? 
One of the most frustrating parts about listening to this debate was that whenever he didn’t want to answer a specific question, Kinsella would continually resort to the Strawman argument of “But…the State!” and then proceed to list all of the bad things the State does in the name of IP – CISPA, SOPA, etc. But this contradicts what he says in his opening statement that, since he and Wenzel are both of the Austrian economic school of thought and are anarchist libertarians, that this debate
should take place in the framework of a free market, private property society. And yet Kinsella keeps going back to the State!
Clearly Wenzel does not advocate State enforcement of intellectual property rights.  Rather he pictures a private property society that would design their own IP rights through contract and enforcement would be at the discretion and at the expense of whatever party feels their copyright has been breached. They would have to take the case before a private court system and hash out the issues via arbitration or legal proceedings of some kind. I’ve described how this could work in my series on anarcho-capitalism, specifically my article on private law.
Was Kinsella “Crushed”?
Wenzel certainly pats himself on the back with the title of his YouTube video.  While I can’t say that I have fully come around to Wenzel’s view on IP, I do believe he did “crush” Kinsella in one sense. Kinsella claims that the IP debate has been over for some time and that there is a general consensus among libertarians that intellectual property is an illegitimate concept, irregardless of whether it is run enforced by the State or the free market. If nothing else, the attention that Wenzel has brought  to the issue of intellectual property and the dialogues that have since taken place among libertarians in the last few weeks does at least show that there is a debate to be had. That in itself is an important accomplishment, and certainly “crushes” Kinsella’s assertion that this is a dead and buried issue.
Read Clair's full analysis here. 

24 comments:

  1. Here is another way IP could be enforced under private law. Kinsella keeps harping on the fact that property rights can only be assigned to rivalrous goods and that information is not rivalrous because it can be copied by another without preventing consumption by the original person. I disagree, but, for the sake of argument, let's assume he is right.

    Well, what if we make a certain piece of information rivalrous? The pro-IP crowd admits that some information is rivalrous, such as bitcoins. Consumption of a bitcoin by one person prevents consumption of the bitcoin by another. I keep thinking about Strangerous Thought's Fallacy # 4, where he compares copying of IP to counterfeiting by inflating a currency.

    Here is what I have in mind. Simply bind a particular copy of the information to physical property. Here is an example. Let's say I want to sell an e-book for $30. I will use dollars for simplicity, but in practice it could be some non-fiat currency. I sell the book for $31, and make the e-book copy a certificate of deposit for $1. Verification of the certificate could be based on a digital fingerprint of the e-book, which could include a copy number worked into the fingerprint, so that multiple copies of the e-book could be issued, each copy for a different $1 deposited by a different purchaser.

    Now the purchaser can use the e-book to get his $1 back, he can sell the e-book to someone else, but he can't copy it. Copying the e-book would result in two certificates of deposit for the same $1, which would be tantamount to counterfeiting or fraud. Thus, the e-book becomes, in a sense, money.

    Other examples include making the copy a share to the stock of a company, or making the copy into another type of financial instrument tied to some physical property.

    I welcome comments and criticisms.

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    1. Ed Ucation:

      "Well, what if we make a certain piece of information rivalrous? The pro-IP crowd admits that some information is rivalrous, such as bitcoins."

      The pro-IP crowd cannot "admit" what isn't true. The electrons, computers, ethernet, routers, etc, these things are scarce. The formulas that are computed are not scarce. Bitcoins have value because of both the physical scarcity of the electrons and so on, but also due to the implicit promise crystalized into the Bitcoin programming architecture that consists of computers and ethernet and electrons and so on, NOT to move in a certain way that would otherwise send information signals to other people's bodies and goods (which we would interpret as someone receiving bitcoins).

      The Bitcoins are valued because of the promise implicit in the programming that relates to the scarce electrons and computers. The program itself is not scarce, EVEN IF PERSONS [A, B, C, D, etc] DO NOT KNOW IT.

      "Consumption of a bitcoin by one person prevents consumption of the bitcoin by another. I keep thinking about Strangerous Thought's Fallacy # 4, where he compares copying of IP to counterfeiting by inflating a currency."

      The rivalry in Bitcoins concerns the computers and electrons, not the formula that solves the mathematical problems. I cannot use $100 million worth of Bitcoins because of the implicit promise within the Bitcoin architecture not to send information signals to everyone else arbitrarily, but according to certain rules of conduct. I can only use my computer for Bitcoins once another scarce set of computers sends me the promise based signalling which is itself not scarce.

      "Here is what I have in mind. Simply bind a particular copy of the information to physical property. Here is an example. Let's say I want to sell an e-book for $30. I will use dollars for simplicity, but in practice it could be some non-fiat currency. I sell the book for $31, and make the e-book copy a certificate of deposit for $1. Verification of the certificate could be based on a digital fingerprint of the e-book, which could include a copy number worked into the fingerprint, so that multiple copies of the e-book could be issued, each copy for a different $1 deposited by a different purchaser."

      "Now the purchaser can use the e-book to get his $1 back, he can sell the e-book to someone else, but he can't copy it. Copying the e-book would result in two certificates of deposit for the same $1, which would be tantamount to counterfeiting or fraud. Thus, the e-book becomes, in a sense, money.

      "Other examples include making the copy a share to the stock of a company, or making the copy into another type of financial instrument tied to some physical property."

      "I welcome comments and criticisms."

      There are two sets of information in your e-book idea. One are the patterns of the words themselves, and the other is the certificate of credit that consists of a certificate of claim to $1.

      Copying the book in its entirety would of course mean a copying of the words, and the certificate information. Neither are scarce. There is no fraud if someone writes down the same computer code relating the certificate, on their own paper or computer screens, unless they sell the electrons or paper containing the information, to others, promising that you will pay them $1. If on the other hand that use that information in their own way, by not including you at all, then how are you defrauded? You're not.

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    2. @ Pete^3:
      Your argument is tantamount to saying that I can counterfeit money, as long as I don't try to spend it. Well, good luck with that in court. If that's all you got, it's just more weak sauce.

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    3. Ed Ucation:

      No, my argument is not "tantamount" to that at all. That's just what you want me to be implying or insinuating, so that you can knock down that straw man, and then pretend in your own mind that you've won.

      Counterfeiting in relation to IP has its own specific arguments, which if you wanted to engage me with those, I'll be more than happy, but I won't agree to sanctioning your weak and silly tactic of attributing to me some fantastical position in the desperate hopes of making it appear as though being anti-IP means you can defraud people of the goods you are selling, via some ridiculous "tantamount" spoiling of the well arguments.

      If A creates "fake" dollars, and sells them to B, and A and B know that A created them, then is there "fraud"? Obviously not. B knows that he's buying. There is no misrepresentation from A regarding the goods he is selling. A is not lying with regards to who created them. Does this mean that selling counterfeit money is always and forever justified? No.

      Please educate yourself on counterfeiting as it pertains to IP before you sit back all lazy like and believe you finally found a gotcha against anti-IP, because EVERY SINGLE PRO-IP argument you have made, every single one, is unoriginal, and already refuted. There are zero original pro-IP arguments on this blog that informed anti-IP advocates have not seen umpteen times before. You have to stop believing that just because you just thought of an argument, that suddenly anti-IP advocates are in a corner unless they respond to you personally.

      It's obvious you have not read any anti-IP literature, because your silly claim has already been addressed countless times in that literature.

      You want to talk about weak sauce? Smell your own, Mr. Weak Sauce seller.

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    4. Ed Ucation:

      No, my argument is not "tantamount" to that at all. That's just what you want me to be implying or insinuating, so that you can knock down that straw man, and then pretend in your own mind that you've won.

      Counterfeiting in relation to IP has its own specific arguments, which if you wanted to engage me with those, I'll be more than happy, but I won't agree to sanctioning your weak and silly tactic of attributing to me some fantastical position in the desperate hopes of making it appear as though being anti-IP means you can defraud people of the goods you are selling, via some ridiculous "tantamount" spoiling of the well arguments.

      If A creates "fake" dollars, and sells them to B, and A and B know that A created them, then is there "fraud"? Obviously not. B knows that he's buying. There is no misrepresentation from A regarding the goods he is selling. A is not lying with regards to who created them. Does this mean that selling counterfeit money is always and forever justified? No.

      Please educate yourself on counterfeiting as it pertains to IP before you sit back all lazy like and believe you finally found a gotcha against anti-IP, because EVERY SINGLE PRO-IP argument you have made, every single one, is unoriginal, and already refuted. There are zero original pro-IP arguments on this blog that informed anti-IP advocates have not seen umpteen times before. You have to stop believing that just because you just thought of an argument, that suddenly anti-IP advocates are in a corner unless they respond to you personally.

      It's obvious you have not read any anti-IP literature, because your silly claim has already been addressed countless times in that literature.

      You want to talk about weak sauce? Smell your own, Mr. Weak Sauce seller.

      Finally, your reference to whether or not my argument will "hold up in court", is just begging the question, because the court system in this country is based on pro-IP positive law. To refer to pro-IP courts as some sort of standard in disputes between pro-IP and anti-IP arguments, is just you tossing your own pro-IP salad.

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    5. @ Pete^3:

      Please show me where these arguments have been addressed before in the anti-IP literature. In general, if you are going to make a claim like that, you better provide a link. Otherwise, it's just an easy cop out.

      "If A creates "fake" dollars, and sells them to B, and A and B know that A created them, then is there "fraud"? Obviously not. B knows that he's buying. There is no misrepresentation from A regarding the goods he is selling. "

      Well, this is exactly what I said, that "Your argument is tantamount to saying that I can counterfeit money, as long as I don't try to spend it." I don't think I misrepresented your position at all. That's what you are claiming. And I repeat my claim that any private IP court system would not look kindly on such "hobby counterfeiting" or whatever you would call it. If the issuer of the original note got wind of this trading in counterfeit notes going on, you can bet your ass that they would bring suit and that they would win. Furthermore, if the note says "This note is redeemable for $XXX" or somesuch, that is prima facie fraud right there, because the note is NOT redeemable.

      I can't believe your position has degenerated to justifying counterfeiting.

      Delete
  2. In order for that Mises quote to make any sense in this context you first have to prove that ideas are actually commodities; this has yet to be proven.

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    1. Ideas are indeed commodities. Consider the wave/particle duality of all matter -- all of existence is simultaneously a wave and a particle.

      Ideas are traditionally thought of as waves, but the way they are stored in computers is really just a particular arrangement of particles/waves (electrons in a proton/neutron substrate). This is also true of our own brains.

      From the point of view of physics, ideas and gold are fundamentally the same. Both are merely particular arrangements of particles/waves that suit particular human means/ends. This is why things like bitcoin, though being entirely "intellectual", are certainly not doubted as being "property" of a sort.

      The primary difficulty with IP over "Physical" Property is that all of us are born to reproduce this stuff. We're so good at assimilating ideas, that sometimes we can't help but make a copy. As such, it is not surprising that nobody on earth feels pity when some fool's Unencrypted idea is transmitted without Authentication to Untrusted parties, and said idea gets copied without regard to contractual obligation or property rights. One does not blame any other creature for doing what is as natural as eating or sleeping to it.

      I have to say I agree with Kinsella on this particular point: IP Law has proven empirically worthless as a guarantor of IP ownership. Encryption, Authentication and Trust of parties you transmit to, however, has. Though a hard road to hoe (and not perfect), it is ultimately cheaper and more effective to take that route than any amount of black robes and badged goons could ever be.

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    2. @ Joel Poindexter

      "Commodity" is used to describe an economic good that is supplied without qualitative differentiation across a market. Do ideas fit this definition? I am not so sure. For example, does it matter who produced an idea? I think so. If Krugman and Murphy both somehow wrote the same article, surely we would perceive the articles differently. This is not the case for sugar, for example. In general, consumers don't care who produced the sugar.

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  3. What you did Bob was make a whole lot of people think about the issue. That's a very good thing.

    Crushing or not, that's beside the point. You make logical, coherent points using Mises and Rothbard.

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    1. I would tend to agree but Wenzel has no formal degree, title, peerage or decorations. Therefore, his ideas must be dismissed, no?

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    2. Is this a joke? Should we judge arguments by what "degree" a person has, or by they're arguments. Paul Krugman has some fancy degrees, does that make all of his ideas valid.

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  4. 1/2

    "The available supply of every commodity is limited. If it were not scarce with regard to the demand of the public, the thing in question would not be considered an economic good, and no price would be paid for it.If ideas are not scarce, why would anyone ever pay for them?"

    They are not paying for the idea itself. They are paying for the goods in the form of the pattern constituting the idea, and they are also paying for a promise concerning bodily behavior and goods usage going forward. The promise is *not* to use one's body and goods in such a way that would otherwise send certain information signals to other individual actors and their bodies and goods.

    The "value" of this promise derives from the scarce bodies and property that are in a specific form that constitutes the idea. The value is not derived from the idea itself.

    This is why the market value of me promising not to use my body and goods in such a way that would otherwise send the information signal "2+2=4" to other parties, would carry such a small price. It's because 2+2=4 is already present in enough of other people's bodies and goods that my promise won't be able to make the buyer earn a profit off derived from scarce bodies and goods.

    "The very fact that an idea can have any price at all seems to suggest that they can have value to individual actors, and therefore can be scarce."

    It's not the idea that has the price. It's the bodies and goods and the promise relating the usage of bodies and goods that has the price. The idea itself is not a good.

    "Wenzel gives the example of his “Drudge Formula” – a formula he claims to have developed in order to get an article on the front page of The Drudge Report. Kinsella claims that this formula is an idea and is therefore not scarce, but of course when pressed cannot tell Bob the formula."

    I have a number in my head right. If I press you to tell me what it is, and you cannot tell me, then that doesn't make the number 47,826 scarce.

    "Does the “Drudge Formula” , if it works, have value? It would certainly have value to me if I knew a sure fire way to get one of our articles onto Drudge."

    It's not the idea that is valued. What you are valuing are the seller's goods that contain the information, and the promise of body and goods usage associated with secrecy. The return from this scarcity are the potential future dollar flows that may accrue to you if you knew the formula.

    You are not buying the idea. You are buying scarce goods in a certain pattern that you perceive as an idea, and you are buying a promise concerning body and goods usage going forward.

    If the seller tells you "I will sell you the goods that contain the pattern named "Drudge formula", but I will NOT promise to refrain from using my body and goods in such a way that WOULD send information signals out to other parties, specifically, right after I sell you this good here, I am going to reveal the formula to everyone on this site, by using my scarce body and goods to send the information signal out to other parties", then guess what? The value of this good would likely plummet. Why? Because the PROMISE is no longer there.

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    1. So if I buy the "Drudge Formula" from Bob for $550, I am not paying for the Drudge Formula itself, but simply for "goods in the form of a pattern"...?

      Exactly. The Drudge Formual IS a good..in the form of a pattern.

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    2. Pete, what value does the number in your head have? Have you found anyone willing to pay you to know the number in your head?

      Please let us know as soon as possible.

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    3. @ Pete^3:

      No, here is why 47,826 is not scarce:
      www.google.com/search?q=47,826

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    4. "No, here is why 47,826 is not scarce:
      www.google.com/search?q=47,826"

      The pro-IP argument is that it was scarce DURING THE TIME I DIDN'T SPEAK IT, because you didn't know what was in my head.

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    5. And it's no argument in favor of pro-IP to show me that the number I was thinking of has a non-zero number of hits on Google, since:

      https://www.google.com/search?q=47,826,475.72728762347078641813242634862365612864628376428354

      returns zero hits. Does that mean this number is "scarce" and I can start shooting at people who use it and refuse to pay me an arbitrary sum of money?

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  5. 2/2


    "I don’t know exactly what I would be willing to pay for this knowledge, but I certainly would pay some price. I don’t currently know how to get an article on the front page of Drudge, and I would find value in that knowledge."

    You aren't paying for the knowledge. You're paying for others to use scarce bodies and goods in a particular way.

    If I give A $100 and I believe in my mind that I am buying insurance for diseases coming from underground unicorns, or God's love, then not only does it not mean the idea is scarce, but it also doesn't mean that I am in fact buying what I think I am buying.

    Similarly, just because you think you're buying an idea, it doesn't mean you're actually buying the idea. What you are buying are promises concerning scarce bodies and goods.

    "Wenzel’s arguement is that the formula itself must be scarce, because if it isn’t, why would anyone pay for it in the first place?"

    Wenzel's question is the wrong question. It would be like asking, "If the underground unicorns aren't scarce, then why did I pay $100 to A to protect me against them?" The answer is that you aren't buying the ideas. You're buying promises concerning scarce bodies and goods.

    "Kinsella claims that the IP debate has been over for some time and that there is a general consensus among libertarians that intellectual property is an illegitimate concept, irregardless of whether it is run enforced by the State or the free market. If nothing else, the attention that Wenzel has brought to the issue of intellectual property and the dialogues that have since taken place among libertarians in the last few weeks does at least show that there is a debate to be had. That in itself is an important accomplishment, and certainly “crushes” Kinsella’s assertion that this is a dead and buried issue."

    THIS ISN'T A DEBATE. THIS IS THE SAME FALLACIOUS PRO-IP CLAIMS BEING MADE OVER AND OVER, AND THE SAME REFUTATIONS BEING REPEATED OVER AND OVER AGAIN.

    Just because some misguided person keeps claiming the Earth is flat, and just because people are taking the time to correct him again and again, it doesn't mean that there is a "debate" over the flatness of the Earth. It's more accurate to say that there are tutoring sessions taking place.

    Clair is misinterpreting Mises' quote and committing the same fallacy of affirming the consequent that Wenzel committed. Mises wrote:

    "The available supply of every commodity is limited. If it were not scarce with regard to the demand of the public, the thing in question would not be considered an economic good, and no price would be paid for it."

    In syllogistic format, Mises is arguing:

    1. If Scarce, then Price.
    2. Scarce.
    3. Therefore Price.

    Or, in general

    1. If P, then Q
    2. P
    3. Thus Q

    Wenzel and Clair are committing a fallacy by claiming that the above implies: Price, therefore Scarce. Or, in general: Q, thus P.

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  6. What those who say that information is not scarce fail to take into account is the time dimension. This is a common failure, alas, and is even seen on occasion in Austrians comments. Curious, because Austrians generally understand time better than anyone.

    Specifically, between the time that an idea (e.g. a piece or body of information or an understanding) is thought of by the very first person to create or discover it, and the time that it becomes common knowledge, it must be scarce. And that is the period when the knowledge is an economic good.

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    1. You bring up a good point...I did bring the issue of time preference up way early in this debate...it was pretty much ignored by everyone but one guy who didn't quite understand my meaning.

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    2. Scarcity of a concept is not grounded on the number of instances that the concept is perceived to occur.

      "Common knowledge" is vague. No single idea is known by every single individual in the world.

      If I originate an idea, and then you learn it, is it "common knowledge"?

      If we know the idea, and then a third person learns it, does it become "common knowledge then"?

      At what number of people do you claim the idea goes from scarce to not scarce? Clearly any number you give would be arbitrary.

      If I have a number in my head, say 75.8934928329743897209347289560209328294743972037, and I am the only person at this time to think of it, this is not sufficient to make the idea scarce.

      Scarcity is grounded on rivalry, where it is impossible, in principle, for more than one actor to use the thing in question. The number I posted above is not rivalrous, because more than one actor can in principle use that same idea. There is no vagueness to this.

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  7. Posted by NSK on Daily Paul:

    "No, it's not possible to square libertarian principles with IP. I understand this issue probably better than anyone on the planet and have answered dozens of -- always flimsy or incoherent -- arguments for it. The debate is over. Principles libertarians know this."

    Well there you have it! No need for debate, and if you think there is you aren't a principled libertarian.

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    1. Well, at least he is humble about it!

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