Wednesday, September 3, 2014

Round 3: Edelstein and Block vs. Wenzel, on IP

This is a good one. In our last round, Walter Block called my grandmother, my mother and me a family of criminals. In this round, I come out swinging and charge Walter with thinking like a central planner. We all take it in the spirit of good natured debate, but most assuredly this is worth listening to.

Round 1 is here.

Round 2 is here.


  1. One thing I haven't seend covered in these discussions is a more pragmatic consideration of the role IP might play in a free society. I believe there would be contractual requirements put in place by consumers, employers, contractors, suppliers, and others:

    So I just moved to this new region where everyone made such a big deal that they don't have any government. I can't say that I support it or not, but I moved here for a job, so, *whatevs*.

    Apparently this society is supposed to be super free, but I just spent my first 4 days here filling out more forms than I had in my entire life. But now that I've finished my first week at my new job and I'm getting unpacked, I thought I'd go down to the Wal-Mart I spotted and pick up a few things, namely, my favorite brand of popcorn: Orville Redenbacher's.

    After getting home from the store, I get the Netflix cued up and make the popcorn - I prefer old-fashioned pot-popped corn.

    But, man, what the hell crap is this? This isn't the same Orville Redenbacher's popcorn that I've been popping for decades, this is some cheap knock-off. The popped kernels have no flavor and there are a TON of unpoppoed kernels.

    I hop onto the Internet and find out that, sure enough, Orville Redenbacher's popcorn sold at fake Wal-Mart stores, wait, FAKE WAL-MART STORES???

    So I go to and find out that they have a list of official Wal-Mart locations, and the one I went to isn't on it! WTF?

    So I go down to the nearest REAL Wal-Mart store and I look around more closely at the store. Placed at the entrance is a letter, signed by the chairman of the board, stating that Wal-Mart guarantees to its customers that all products are legit. So I buy a bottle of Orville Redenbacher's popcorn, and it turns out to be a REAL bottle of Orville Redenbacher's, and that's the story of the last time I went to a fake Wal-Mart.

    Wal-Mart knows that when they place guarantees on the products they sell, they will get more business, so they enter into contracts with their customers which guarantee certain quality standards.

    Orville Redenbacher's knows that consumer demand for their product is so powerful that they can place rigorous demands on those they do business with. They make contracts with customers which state that if the customer offers a product that appears to be like theirs, then said customer will have to pay Orville Redenbacher's for lost sales and damages.

    Similarly, if an employee wants to work at Orville Redenbacher's, then the employee must agree not to share their processes with others, and the same would be true for contractors and suppliers.

    All of these actors could choose to violate the agreements with Orville Redenbacher's (just as they could choose to violate any agreement they make with anyone), but since there is likely to be a great many firms desiring the same consideration, there would arise enforcement firms or something similar to maintain these contracts to protect both the holders of the IP and those they do business with. I suspect said enforcement firms would essentially be their own 'universes', so to speak, of IP rights.

  2. If I were Robert, I don't know that I would have these discussions about IP on language because the argument is too ridiculous. In my experience, whenever someone chooses scenarios that are impossible to defeat only because they are so ridiculous, it's because any other discussion will reveal that their position is not the correct one (e.g., if there were no government, we would get destroyed by everyone who has nuclear weapons - I'm pretty sure this can stand by not accepting anything an opponent states about human nature and continually pointing out that people don't nuke us because we have nukes, yada yada).

    I also find it quite an irony that this is supposed to be a discussion in Austrian economics, which everyone involved in loves to discuss its incorporation of the important concept of praxeology, yet Block has so far been unwilling to look at how language has actually been used by people.

    Block's argument should be attacked on its assertion that a free market in words would not benefit word creation or the users of words.

    Block's assertion is that someone would:

    1. Create a a word
    2. Claim ownership
    3. ?????
    4. Profit!

    The reality here is that if there is no way to profit from the word, then why would someone create it? On the other hand, if someone had some method of creating words that generated a profit, wouldn't we end up with better words? No? Do you not believe in the market system? People wouldn't pay for words in a mutually beneficial transaction? What are you, a communiss?

    Block may additionally suggest that it is impossible to control what words people use, and we are back to the profit question previously discussed. Also, we have the economists and philosophers playing the role of entrepreuer by trying to guess methods employed by actors, or, really, claiming to know all possible methods an actor may choose, which leads us back to the communiss issue.

    As far as I see it, Block needs to either support communism or support communism; or choose a different angle to debate.

    I freely acknowledge that I throw out most philosophical arguments in favor of pragmatic considerations.

  3. I thought this conversation was interesting although it really didn't get to the heart of the IP debate. Unfortunately I think they got bogged down in an interesting but ultimately minor discussion about the nature and origin of words. Since I would liked to have a deeper discussion on copyrights and patents here is my take on the IP debate.
    There are two main types of IP, patents and copyrights. Patents are completely incompatible with libertarianism and the NAP. Patents give their holders the right to prevent people from using their property if the use has been "patented." The owner of property has the right to use it as he sees fit as long as he doesn't aggress against the person or property of another. This means that a patent violates the NAP because it forces people to not employ their property in certain ways that are peaceful and voluntary. An invention or other another idea that can be patented is essentially a recipe or a process for using your property in order to achieve an end. If someone creates an invention and another person copies it the originator of the idea has not lost anything. The copier has not aggressed against the person or property of the creator of the idea. The proponents of patents argue that the copier has stolen the idea and perhaps the creator has lost income from the idea but that is absurd. The creator of the idea still has the idea so how is it stolen? The income from building and marketing the invention or idea is still available. In fact one could argue that there would be more income possible due to the increased exposure. Really what pro-patent people are essentially saying they are anti-competition. They want patents so that they can develop their product without competition. Also they want to be able to use patents as a way of constructing more barriers to entry for new firms and in order to favor large firms over smaller firms. Libertarians, minarchists, and anarcho-capitalists should recognize patents as evil statist/fascist/corporatist tools that further the status quo and utterly reject them.
    Copyrights are compatible with libertarianism and the NAP but not in their current form. Currently copyrights have the same problem as patents in that they force people to not employ their own property in the manner they wish. Who is the government to tell me what I should and shouldn't print on my paper with my computer, printer, and ink? Or why should the government be able to decide what I play on my speakers with my stereo? I'm not saying that the author and musician don't have the right to their original work. However copyrights should be enforced through private property and voluntary contracts. In my opinion copyrights should be enforce by performance bonds that are part of the sales agreement. In addition to the money cost of the book or album the purchaser will be bonded to not reproduce the work. A savvy author or musician will make the default of the performance bond painful enough to discourage anyone from copying it. The purchaser would also be liable if the item were stolen and copied. However the thief, when caught, would be on the hook for the theft and the default of the bond. A third party individual who receives a copy is not legally liable but I think there would be social pressure to lessen the amount of copies received. This is the only way I can see IP being legitimate. Every other pro-IP person I've read or hear has a position that to varying degrees violates the NAP.

    1. Kenn,

      I'm not clear on why you feel trademarks are not a type of IP.

      One thing that is commonly misunderstood about patents is that they only protect a process, not an output. I'm not sure you're making this mistake in your discussion, so I'm making sure we're clear on it in mine.

      In your anti-IP claims on patents, there are several key concepts you are overlooking.

      In your comment, replace the word 'patents' with the phrase 'government-defined patents', because your entire argument is based on the government's definition of a patent, not what Wenzel or other free market thinkers have defined it as.

      Wenzel states and re-states (then re-states, again) in nearly every single discussion that independent discovery is protected, and I believe this is what a free market would choose. If we continue to imagine how a free society would choose to conduct itself, I believe that actors would not choose to limit their own opportunities. In effect, given competing 'universes' of IP enforcement, the actors would, a majority of the time, not choose one which prevents their own independent discovery of methods to produce an output, despite the fact that they would know their own processes would be subject to a competitor's independent discovery and subsequent usage of said processes. Limiting the opportunities of your own firm is riskier than independent discovery of your processes.

      You basically acknowledge all of this in your last paragraph, and I urge you to apply the same considerations to patents.

  4. Interesting discussion. I think Bob came out much better in all threes and I am rather baffled by the arguments that Dr. Block is making. In any case, the discussion is getting bogged down in minutiae and I would like it to move forward to more relevant topics, like published works, songs, and software.

    Here is my take on the concept of owning words. I think Dr. Block is missing a few key points.


    In order for there to be property rights for some resource, the concept of owning the resource needs to exist first, in order for people to make property claims. For example, before agriculture, nobody made claims about owning a piece of land. The concept of land ownership was foreign. Thus, hunter gatherer tribes that roamed a piece of land thousands of years ago cannot be said to own the piece of land, because they didn't make a claim. Similarly, the concept of IP didn't exist until people started writing books. Thus, any IP created beforehand is in the public domain, because no one has made a claim on it.


    Just as there is the concept of homesteading, there needs to be a concept of the abandonment of property. For example, if someone locks a bike to a bike rack, that bike is clearly owned by someone. But what if that bike sits there for a year? What about five years? At some point, if no one makes a claim on the bike, the bike should be considered abandoned. As another example, what about trash you throw out? Clearly you own the thrash, but by throwing it out, I think we can all recognize you are relinquishing your property rights. Most English words have not been claimed by anyone and can thus be considered to be abandoned as far as any property right claims are concerned. Furthermore, unlike other types of property, I would make the argument that once a piece of IP is abandoned, it cannot be homesteaded by someone else.


    In each field, there is a relevant technological unit of property ownership which the courts will recognize. For example, can you claim to own a molecule, such as a molecule of nitrogen you have breathed into your lungs? Clearly that is ridiculous. Can you sue someone for stealing a penny? Can you sue someone for polluting your land with a few molecules of soot? No, you have to meet the relevant technological unit which the courts would deem to recognize. With IP, a single word just may not be a long enough piece of works to meet that requirement. For example, I think with music, you can copyright eight measures of a song, but not anything else. Thus, this whole discussion about words may fall outside such technological unit requirements.

    1. "Interesting discussion. I think Bob came out much better in all threes and I am rather baffled by the arguments that Dr. Block is making. In any case, the discussion is getting bogged down in minutiae and I would like it to move forward to more relevant topics, like published works, songs, and software."

      I agree 100%. I think exploring why Block finds copyrights tolerable and comparing that to IP will get to the crux of the issue.

      I am as baffled as you by his claim that artifacts or the Trademark "Coca-Cola" are quick Google yields over 2 million in the US alone...and copyrights, well that's a ridiculous number. We need to hear them hammer out why Trademark & Copyright wouldn't be considered IP in Block's world....

      Also, I totally reject Block's argument that just because something CAN be owned(IP) that it must be decided that it is or is not at that very moment in order for it to qualify as property. The artifact example Wenzel put forward is brilliant in thinking that one through as well.

      I'm going to keep saying over and over again that Bastiat addressed this idea of property abandonment in an IP setting via his theory of property and it's movement into a communal sphere...

  5. Paul, Kenn, et al:

    The entire argument for or against IP should be what's in it for us, “we the people,” for all of us, i.e. why & what should a government* do about IP law (any law actually) with its armed enforcers.

    Paul nailed the why! We, the citizens at large, should rest assured that we are not defrauded in our transactions, whether buying Redenbacher's popcorn, Coca-Cola, a Piper Aircraft, or anything. Thus, Trademarks. They are for us & we don't have to worry about enforcement, contracts, or any fuss, the TM owners do it for us in their own interests.

    This is what Adam Smith was describing when he wrote: “Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”

    We rightfully attend to the TM owner only because it promotes the interests of the consumer. And, because it is in the interests of all, a TM may be renewed indefinitely. A Coca-Cola comes from Coke.

    I have limited this to TM which is primarily the subject of the debate - protecting words in general & Coca-Cola in particular.

    *Please assume a government here to avoid going completely off target.

    1. Tex, the problem with assuming a government in the discussion is that it tends to muddy the issue. Kinsella provides evidence that there have been periods when governments either didn't exist or didn't enforce IP laws, yet these societies were able to grow and thrive regardless. The issue here is that he is suggesting the government, through power of decree, determines the existence of a right, including an 'artificial' one.

      If this is true, then a government law against murder must therefore not be valid nor have any equivalent in a free society, or, at least, must not protect against murder under any other circumstance than when there is a government to create and enforce such a law. Kinsella is arguing against IP rights incorrectly when he produces such limited evidence. He would need to go further and evaluate enforceable contracts, where, I believe, he would find ample evidence to refute his claim that IP can not be protected.

      In the latter part of my above discussion I assert that processes are also able to be protected. This works in congruence with the Smith quote (not that it has to), in that it provides a private method to support a popular argument in favor of patent law: investors are encouraged to invest when that investment can be reasonably assured of a return, thus contracts guarding trade secrets, such as non-disclosure agreements, protect investors against theft of important parts of what they are investing in.

      The only thing I didn't directly address is copyright, but, frankly, I don't see how it differs from the other protections. When I buy a book written by Stephen King, I expect it to be the actual book written by Stephen King, and Stephen King will place contractual requirements on everyone he sells his book to.

    2. Paul, I've read very little of those referred to on this site: Kinsella (I just downloaded & will read over some time, maybe), Austrian Economics, “free society” literature, etc. I'm primarily a mathematician though EE thru masters & lived happily pursuing techie things for pleasure & a few $ now & again. The current recession, wars, unending regulations & restraints upon my freedom caused me to begin reading more about politics & economics. So here I am, and proceed with a desire to understand & the mathematician in me believes it necessary to come to some agreement on a few very basic ideas (the entirety of mathematics is based upon a few very simple axioms we hold to be true).

      Thus, my trying to introduce fundamentals: Why should we have TMs?

      And you've muddied me with “government,” perhaps viewed as unnecessary and contrary to a “free society.” I'm naive on the issue, but it appears you suggest the enforcement goons would be (private?) “enforcement firms” with which we contract. The enforcement seems much more complex than: What justifies TMs, Copyrights, Patients, etc? And each are different. All here seem to support private REAL property so it does not seem an issue. It is IP, which generates the disagreements.

      If “gov” muddies, is “enforcers” or some other power you choose satisfy you? Then, may we proceed with Why?

      I think I can observe “Enforcement Firms” in the world's governments and how that works out. It is too hard to quit one and join another and the plains Indians may advise against too small of one, or Randy Weaver's experience going alone, but off the subject, and offhand, it seems the world's governments are just the maturation of “Enforcement Firms.”

    3. Tex, one of the biggest issues I have with the anti-IP argument is that it suggests some external force being provided with coercive authority which prevents actors from freely making a choice to enter a contract, and I am completely baffled by this, although I recognize my opinion is colored because I only consider there to be one right: the right to choose. All other proposed rights are just sub-sections, which is why I see the anti-IP stance as a violation of the only right.

      I have not read anything from Kinsella other than a few articles and listened to a few debates he's had with Wenzel and others as well as some speeches in YouTube videos. There may be more to his arguments, but I don't see how the anti-IP position can exist without violating the right to choose a set of terms for a relationship.

      You are correct that governments act similar to an enforcement firm, but since the market has no other choice, the government's behavior is really quite different from how a private enforcement firm would choose to operate, given that such a firm would face competition.

      The introduction of the government into the discussion makes it muddy because it is a coercive force that distorts the choices that actors make. I think a good introduction to this topic can be found in two books:

      Chaos Theory, by Robert P. Murphy. I enjoyed this book because it uses very simple language to discuss how enforcement of various contracts and properties might work in a free society.

      Sharper Security: A Sovereign Security Company Novel (Volume 1), by Thomas Sewell. It is a quick reading novel that illustrates how a private security firm might work. I would consider it utopian, but the basic concepts are there. I read it for free through Amazon's Kindle Unlimited program.

    4. Paul:

      “One of my biggest arguments with anti-IP. . .”

      This is, to me, the fundamental problem. It may not be resolvable. I am not pro-IP or anti-IP except that which may be derived by agreeing upon fundamental justifications, which seems unduly hard. I'm certainly pro-IP on TMs and believe I've justified them.

      This is not meant to sound “anti-IP” but at least some of it seems to boil down to “property” rights where one side asserts “physical property” = “intangible property” and tolerates no further discussion. It seems so heated that I would prefer new words be invented so they may be discussed separately. There are clear differences in what, I assume to be a good faith effort, however distorted by implementation, to have reasons for differences in law between them and even between forms of IP, e.g.

      TM can go on forever while Copyrights & Patents are time limited and each provides different restraints and all are different than physical property (laws). A physical wheel I make is mine, but a concept must meet criteria such as being non-obvious, etc where my physical wheel is totally obvious yet mine, all mine. Were PP = IP an identity all times & restraints would be the same.

      Thus, I seek more fundamentals: Why are times & restraints different? What justifies any restraints? There must be reasons. Why cannot each type be separately justified and times & restraints be discussed by type?

      Sorry for being naive, but if there are no fundamental justifications & contract only between parties, it seems like little protection. Be tough to be required to research every store & every product in a store and impossible for me to separately contract for the billions, maybe trillions, of things for sale.

      I would prefer no discussion of anti-IP vs IP, but rather how should we live together, under what rules (all of which is some restraint on freedom and so should be limited)?

    5. Paul:

      I have now read your “Chaos Theory” which is a cruel trick on a mathematician as it is not that at all (in jest), and I've read the initial pages of Kinsella's AIP including his “Summary of IP Law” and up to his assertion that Pro-IP is divided into 2 arguments: “natural rights” and “utilitarian.”

      Perhaps those 2 arguments are more fundamental than whether or not IP is property & it is my lack of reading enough IP vs !IP that I thought “property” the fundamental divide.

      The “Chaos Theory” is orders of magnitude more complex than fundamental justifications of IP and provides me neither help nor compelling evidence: “. . . would develop. . .” is no certainty nor is there compelling evidence that over a few hundred years those with power would not aggregate it by hook or crook and end up w/ the equivalent of nation states*. On 1st read it also seems extremely complex, and unlikely as current nation state rulers are not likely to hand over the keys to the palace. This is a wholly different & complex subject and I think there are alternatives.

      Without knowing the “Anti-IP” argument I'm not qualified to comment, but offhand I am “baffled” that any such argument could limit your ability to enter any contract with anyone you choose. Perhaps reading Kinsella will make it more clear how he might outlaw your right to enter contracts.

      In any case, this thread is about Coca-Cola and AIP says there is not much argument there, so maybe the next debate is a better time to pursue more & I will know more.

      *There is a fable about a man & a horse being threatened by a wolf and the man tells the horse if he will accept a bridle & let the man ride, together they can slay the wolf. The horse agreed and they killed the wolf. Then the horse told them man, deed done, unbridle me and dismount. The man replied, “Never!”

  6. You know, sometimes I feel like Eddie Murphy in "Coming to America" when I'm discussing IP with with you guys:

  7. Robert, it would be nice if you asked Block how he can support blackmail but deny IP. I'm not clear on how these things are different.