The Progress & Freedom Foundation Blog

Any, yes, all legally protected private property rights, including copyrights and patents, are thus government-granted "monopoly" rights. By definition, a private-property right is a legally protected "monopoly" right to the exclusive use of some good, service or resource. Economist Milton Friedman made this very point when discussing copyrights and patents in Capitalism and Freedom:

[Copyrights]... can equally be regarded as defining property rights. In a literal sense, if I have a property right to a particular piece of land, I can be said to have a monopoly with respect to that piece of land defined and enforced by the government.

Black's Law Dictionary makes the same point about property/monopoly rights. Consequently, Masnick merely re-confirms that he cannot grasp a basic premise of market economics when he says, "By definition, copyright and patent laws are the opposite of allowing market forces. It's the government stepping up and providing monopoly rights because they believe (rightly or wrongly) that basic market forces don't work in those areas...."

Again, Masnick is not just wrong, he has reality backwards. In real market economies, governments have long been "stepping up and providing monopoly rights" to a vast array of private producers of a vast array of privately produced resources--from computers, to iPads, to music--precisely because they want "basic market forces" to work in such areas. See, e.g., Murray N. Rothbard, Free Market, in THE CONCISE ENCYCLOPEDIA OF ECONOMICS (David R. Henderson, ed. 2002) ("the key to the existence and flourishing of the free market is a society in which the rights and titles of private property are respected, defended, and kept secure"); Robert Sugden, Spontaneous Order in 3 THE NEW PALGRAVE DICTIONARY OF ECONOMICS AND THE LAW 489 (Peter Newman, ed. 1998) (arguing that an economic system with markets "requires an ability to predict one's own property rights"); id at 491 ("a market system is one in which, as far as possible, all goods that people might want are private property"); id. at 492 ("the market cannot be expected to satisfy wants for goods in which private property rights do not exist"); Jack High, Competition, in THE CONCISE ENCYCLOPEDIA OF ECONOMICS (David R. Henderson, ed. 2002) ("The competitive process ... is governed by rules that, taken collectively, we call the market economy or the system of private property"); Armen A. Alchian, Property Rights, in THE CONCISE ENCYCLOPEDIA OF ECONOMICS (David R. Henderson, ed. 2002); Lester Telser, Competition, in THE MCGRAW-HILL ENCYCLOPEDIA OF ECONOMICS 181 (Douglas Greenwald, ed., 2d ed. 1994) ("Property rights are essential for competition."); Hearings on the Home Recording Act Before the Subcomm. on Patents, Copyrights, and Trademarks of the S. Comm. on the Judiciary, 99th Cong. (1983) (testimony of Alan Greenspan) ("For economic incentives to work appropriately, property rights must protect the rights of capital assets.... At present... severe economic damage [is being done to] the property rights of owners of copyrights in sound recordings and musical compositions....").

Moreover, though unbeknownst to Masnick and his benighted readers, governments that grant to private producers of potentially valuable resources these sorts of legally-protected private property/monopoly rights thus generate vast increases in overall social welfare. For example, the World Bank estimates that of the intangible capital that accounts for 80% of the wealth in the developed world, 57% of that intangible capital arises from the rule of law--including all those government-granted monopoly rights that most call "private property rights." The World Bank, Where Is the Wealth of Nations? 20, 87 (2006).

Of course, none of these realities will matter to unhinged copyhaters like Masnick and TechDirt. For example, I once wrote a paper Tragedy and Farce: A Review of the Book Free Culture. In it, I argued that Lessig's later-conceded excessive faith in the power of governmental control was apparent in the parts of his book Code that argued that the dictators of Communist Vietnam had bestowed upon terrorized citizens left with "barely any infrastructure" an "effective freedom" superior to any that we enjoy here in America.

Well. You would have thought that I, like Lessig, had driven a bus over Jesus. My critique of Masnick's own digital God thus inspired the "libertarian" Masnick to explain that I was wrong and Lessig was right; Vietnam's incompetent, terror-using communist dictators really did bestow upon their victims an "effective freedom" superior to any that we enjoy here in America:

The biggest difference in terms of freedom between Vietnam and America is the ability of the government to effectively execute its laws. Vietnam is, no doubt, far less efficient at executing its tyrannical laws than the United States, thus reducing many of them to being little more than bloviating as far as many average Vietnamese need concern themselves with the law.

Yes, that's right: according to the "libertarian" Masnick, the Human Rights Commission of the United Nations High Commissioner for Refugees won a Nobel Peace Prize only because hundreds of thousands of Vietnamese Boat People were abandoning their property and risking their lives to flee in the wrong direction.

I thought that I had refuted such nonsense here and here. But Masnick just could not agree. Eventually, I decided to refute his ceaseless toadying for totalitarianism even conclusively in Copyright-Skeptic Hypocrisy: A Belated Reply. Perhaps readers familiar with Masnick's TechDirt blog posts may join me in sensing something familiar in the voice of the first commenter on this post, "Jonny," who merely spouts conclusory nonsense--after somehow managing to mis-spell his own first name....

NB: To be clear, I realize that the higher transaction costs associated with intangible property rights like copyrights and patents merit special attention. I also realize that we can also use indirect or non-market-based means to encourage the production of expressive works. For example, like Masnick, I realize that creators could cross-subsidize their work by giving away copies and hoping to recoup costs by selling advertising or T-shirts. Fine: but in such cases, we are using "market forces" to encourage the private production of advertisements or T-shirts, and expressive works are just one of many means to that end. And if expressive works ever become a means to that end less efficient than all others, then "market forces" will collapse the cross-subsidization scheme. Those unsure about what that means can consult any newspaper or magazine journalist, editor or shareholder. Their misfortunes explain why copyright laws deliberately support a vast and diverse array of "business models," including both cross-subsidization schemes and actual sales or licensing of copies of works or access to copies of works.