Vera Verba

Sean and I (mostly Sean) wrote about seasteading in God Wants You Dead. Before I describe seasteading, let me show you what one of the units will look like:

And, for you mechanical types, here’s a construction drawing:

The idea behind seasteading is to make the technology available for a single family to move to the ocean, and make a living, for something near to the cost of a small building on the land.

These “floating homesteads” would allow seasteaders to hit the trail, find their spot on the ocean, and to start farming fish or engaging in any sort of work that does not require too much space or dirt.

Get this clearly: Seasteading - if it works - is the new frontier. Terra Nova. Seasteaders can just head out to make new lives. No permission slips, no registration, just go out and take a shot.

AND THE GOOD NEWS!

Finally, a rich guy doing something bold with his money!

Peter Thiel (and I don’t think I’ve ever met the gentleman) has put up $500K to get a Seasteading Institute started. Good for you, Peter!

And… The Seasteading Institute will be building their first seastead in San Francisco Bay!

HISTORY

Sean (who is being uncharacteristically humble at the moment) was one of the early originators and proponents of this project. Patri Friedman and Wayne Gramlich are now running the Institute, and there are many others who have provided both engineering and moral support over the past several years.

My deep thanks to you all!

NOW…

Now, let’s see where this goes! Seasteading could be a huge benefit to the world, and especially to those of us who do not appreciate enforced mediocrity.

So, if you are able to contribute in any way to this project, please do so!

Cartoon from the book “God Wants You Dead” by Sean Hastings and Paul Rosenberg.

Happy Tax Day to all you citizens of the USA!

In the past few posts I have been discussing current intellectual property law - how its enforcement is actually nothing more than a government enforced monopoly on the reproduction of patterns, and how this distortion of the free market causes a great deal of economic harm. I have also discussed the true free market value of creation as expressed by the various ways that only the recognized creator/inventor of a specific piece of Intellectual Property can capitalize on that role, and the additional market advantage available to sellers of “authorized” copies, even when no government enforcement of a monopoly exists. In this post I would like to take a look at how the world might run with a concept of Intellectual Property that did not break the free market.

First I want to clearly admit that a true free market system without government enforced pattern monopolies would not have produced all of the cool stuff that our broken system has. Those who support Pattern Monopoly are always quick to point to the amount of research required to produce new beneficial drugs or the amount of money that gets spent on the latest block buster movie with the biggest and best explosions - they say that without our current intellectual property law, such things would not be created. And it is true that a real free market system would probably not produce all of the exact same things that the current system does.

However, saying that the existence of certain impressive works produced under our current system shows us that pattern monopoly law is a good thing, is the semantic equivalent of saying that the existence of the pyramids of Egypt proves that slave labor is a good thing.

Sure the Egyptian pyramids are great, and continue to produce value even now for tourists who go to see them. And it is quite possible that without the use of slave labor they would never have been built. However, it is easy enough to prove that any use of slave labor does more economic harm than a system in which people work willingly for agreed compensation. (Note that Slavery, like Intellectual Property, is a corruption of the useful idea of property.)

Likewise, the best wonder drug you can name and your favorite movie are both really cool things to have in the world, but the system of pattern monopoly law that produced them is doing more overall harm than good. Without pattern monopoly law, there would be greater economic value - more good and less evil in the world. This is true even if the greatest works might not always be quite as impressive as those produced in a system that distorts the market towards expensive investment at the cost of individual liberty.

So given that the right to be known for ones creations is a legitimate property right, but having the government stop other people from reproducing those creations without your approval is not, what is the best system for protecting true free market intellectual property?

Current laws against false advertising and trade mark infringement provide us with clues as to the proper way to prevent theft of free market intellectual property.

As long as each buyer is well informed when they make the choice to buy an authorized or unauthorized reproduction of some pattern, the free market will properly reward inventors and authors. So the problem here is one of making sure the buyer is always well informed. The reputation capitol associated with an act of creation is very much like the value invested in the idea of branding. The reason we grant exclusive use of a certain trademark to a particular person, is that this mark is supposed to inform the consumer about who created the product in question. When someone else uses this mark, they are stealing the reputation capitol of the person who normally uses the mark.

Trademark differs from copyright, in that the former is protecting against a form of identity theft, and the later is enforcement of a monopoly on production of a pattern. Using someone else’s trademark is an attempt to fool people into thinking that you are that person - it is a form of fraud or false advertising that steals that persons reputation capitol. This sort of theft of reputation is exactly what we are trying to prevent in a good free market intellectual property system, so we can use a similar idea.

I would suggest that a simple solution for protecting the value of creation would be a single mark indicating that all the parts of any product sold were authorized by the individual inventors or artists who had registered their intellectual property. Also perhaps a date or time in years to idicate that works or inventions before a certain time have not been authorized.

This would allow complex devices - an automobile for example - to carry a single mark indicating that all the inventors of the various important component parts had been legally compensated for the right to say that their invention was being used in an authorized manor. Older inventions - unregistered ones like the wheel, or even registered inventions that were no longer as novel - would no longer need to be authorized by the inventor, based on the market solution for the number of authorized years that people were found to be willing to pay for. Works of art - music, books, video - would likewise be immediately obvious to the buyer as an authorized copy or a knock off, with the year of authorship clearly shown.

In addition to this simple mark, all manufacturers should make available somewhere (online for example) an easy to reference list of all component registered inventions and works, and whether they were individually authorized or not, to allow a more complex understanding of which creations were authorized. This would allow particularly interesting or novel creations to draw some demand for authorization greater than less interesting and obvious ones. And of course any manufacturer would be free to advertise older authorizations separately from the normal simple authorization mark.

Proper information flow concerning acts of invention/creation would allow the market (that is - the individual people) to reward all true intellectual property to the precise level of value we collectively place on it.

Note that such a system need not even be enforced by government in order to work, it could simply develop as a societal norm. One of the great things about free market solutions is that they do not require both a “carrot” and a “stick.” Less or more carrots properly rewarded suffice to do the job. Enforcement agencies are not necessary for a weaker product or service to fail in the market - this is a natural effect of market forces combined with good information flow. Regulatory and enforcement agencies can give the appearance of improving the market by screening out bad products and services, but they invariably also screen out new and better products and services - protecting the normal rather than encouraging the superior.

Sadly, because the existing system is strongly self perpetuating, no matter how good the system I have just described is - I fear we can’t get there from here - at least not without some other major changes to our political systems. As long as money can buy law (and I don’t think anyone will argue with me that this is not currently the case) the monopoly profits generated from the current system will be used by those that have a vested interest in continuing those monopolies to perpetuate the bad law we currently have.

It is likely that only revolution, or a new frontier, can rid us of the very bad intelectual property law that we are currently burdened with.

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[Paul points out to me that revolutions (violent overthrow of existing government, as opposed to non-violent spontaneous cultural changes) don’t tend to work either. Invariably they just lead to a new set of bosses enforcing the same sort of rules that worked well for the previous bosses. But he also (very astutely) notes that some armed conflicts that get labeled as “revolutions,” are actually the struggle of a new frontier to break away from an older power, rather than a new group seizing control of an old power. He says “I consider the American Revolution to be something of a defense of a frontier, rather than the French/Russian revolution type.”]

In a previous post, entitled “Pattern Monopoly,” I talked about how our current system of Intellectual Property is actually a distortion of the free market that degrades the useful concept of property rights. At the end of that article I mentioned the concept of “Plagiarism,” mentioning that it is often erroneously (and perhaps sometimes deliberately) confused with the enforcement of intellectual property. In this post I will discuss this idea in more detail, and I will explain how being known as the author or inventor of a specific pattern has a free market value that does not involve the government enforcement of a monopoly on creating copies.

First let me digress a little into the concept of “scarcity.” The usefulness of the connected ideas of “ownership” and “property” arises from the fact that many things in the world exist as limited resources. Now this may be rather obvious, but if you have an object in your pocket, I can not also posses that exact same object, and if you build a house on a piece of land, I can not also build my house in that exact same location. The concept of ownership exists as a way to minimize conflict over these scarce resources, and this produces enormous economic benefit - both by reducing the value lost through such conflict and by making people feel more secure that improvements they make to their own resources will actual be of benefit to them, rather than being lost when someone else later seizes those resources.

The current concept of Intellectual Property focuses on protecting a monopoly on the right to copy specific patterns. The rhetoric here is that the a pattern is somehow a piece of property and that preventing it from being freely copied is a good thing. But the only reason the concept of property is useful stems from the issue of scarcity. Patterns are not scarce resources. Unlike an object in my pocket, or the land I build my house on, if I shape some of my property into a more valuable pattern, you can also shape your own property into exactly the same pattern. You take nothing away from me by doing this. I can make use of a pattern at the same time that you can also make use of the exact same pattern. A useful pattern can create economic benefit for any number of people anywhere at the exact same time, unlike a physical piece of property that is limited to a single physical location.

Current intellectual property laws reverse the incentive for improvement that arises from the useful concept of ownership. Rather than providing a feeling of security that effort spent improving scarce resources will not be lost, these laws make people afraid that the will lose their scarce property if they improve it using any pattern for which the government has granted someone else monopoly protection.

The concept of property rights only produces economic value when applied to scarce resources. This is why current IP law actually causes economic damage rather than additional value - it is enforcing artificial scarcity where none really exists. Copying a pattern using ones own resources takes nothing away from anyone else.

The proponents of modern intellectual property law would claim that when one views a specific pattern as something that can be owned, if someone starts forming their own raw materials into that same pattern, that it reduces the IP owner’s ability to sell the pattern. This loss of sales revenue is what they claim is being “stolen” from them. But this is exactly the same as a business selling widgets on one corner getting upset when someone opens a business selling widgets on the neighboring corner. The second business, producing the same goods, reduces the sales of the first business through fair competition. The first business would certainly like to have the government declare that they have the exclusive right to produce widgets and thus prevent fair competition, but this is the definition of a government granted and enforced monopoly. In fact, the very word “patent” comes from having a royal decree granting a specific monopoly right, and copyright was just a system of allocating monopoly rights on publishing between a limited number of government authorized printers.

Historically, patent and copyright had nothing to do with the inventors or authors, so why the confusion of invention and authorship with patent and copyright law today? As economic theory advanced, the benefit of free markets and private property became better understood. People realized that monopolies were bad things that reduced overall value creation for everyone. When this happened, many governments stopped awarding such monopolies. But such monopolies are very profitable for the people that can arrange to have them enforced, so in order to continue the game, an argument was invented that linked the creator of a given pattern to a right to control the use of that pattern, and the term “Intellectual Property” was created to try to cast these monopolies in terms of a property right.

What made this argument something that could be sold to the people (he he) was the universal feeling that being the author or inventor of something has value, and if it has value then it must be a form of property. This is not wrong - but that value has nothing to do with control over the reproduction of ones work. Being known as the author or inventor of a specific creation is indeed something that can be considered property - it is a scarce resource. If you create something, and I claim that I did, both of us can not fully realize the value of claiming the creator title. My claim detracts from your claim. If I falsely convince people that I, and not you, am the original inventor or author, then I have stolen a scarce resource from you - it is as if I have taken something valuable from your pocket and put it in my pocket - my ill-gotten gain is your loss.

But if granting the creator of a pattern the right to control its reproduction is just a distortion of the free market, where then does the free market value of authorship or invention come from?

In my previous post, “Looking Backward at a Forward,” I discuss some of the ways that creators can produce value without requiring some government to grant them a monopoly - I also linked to an article by Kevin Kelly that talks about some of these same ideas and a few others. All of these things are ways that being the acknowledged creator of a specific pattern can be exploited to produce value without preventing others from producing and selling copies of the same work. However (and this is really cool), there is also an intrinsic free market value in being the creator of a pattern that is expressed in the sale of copies of that pattern.

In the free market, an unauthorized copy of a pattern can never command the same price as an authorized one. People who highly value the content are willing to pay more, knowing that the money is going to the creator. Even with free competition (without the need to resort to enforced monopoly pricing) the creator of a pattern has an advantage over everyone else who would sell that pattern. And the beautiful thing is, this additional value is being determined by the free market, which means that the more clever and valuable everyone perceives the creation to be , the more additional value can be realized by the creator.

If the invention in question seems intuitive and obvious, you probably wouldn’t be willing to pay much more for the authorized version than a knock off. But if you are completely impressed with the creation, you are almost certainly going to be more willing to reward the creator. The lack of restrictions on who can reproduce and sell a pattern allows fair competition in the market for reproduction - separate from the market for creation. Separating creation from reproduction means that the price of the authorized copy will reflect the buyer’s perception of the value of the act of creation.

Being a creator does have intrinsic value that can be stolen, but it is not stolen by making unauthorized copies. As long as no plagiarism is involved, each knock off copy sold is spreading the fame of the creator - increasing the creator’s reputation capitol. So, in a free market system, creators would enjoy seeing their works copied and their fame spread - in much the same way that authors in the time before copyright law were thrilled to have monks hand copy their books and actors perform their plays.

Without the broken concept of Intellectual Property, the difference between market prices for authorized and unauthorized physical copies would produce a proper signal of value. A truly free market would always reflect the true value of any act of creation.

[Next I will discuss the nature of a system that would enforce only the sort of free market intellectual property that naturally originates from an act of creation, without the need for granting monopolies on the reproduction of the pattern in question.]

The whole concept of intellectual property is based on having the government enforce monopoly rights over the distribution of certain patterns of information. Anytime you can freely copy existing information that people find valuable, the value created in the market is always greater than the situation in which the government supports a monopoly on the production of copies. The cost of producing copies can be extremely low, thus the number of transactions that are suppressed by monopoly pricing can be very large, and the economic dead weight loss can be very high.

From another point of view, such pattern monopolies are not property in any real sense, but actually degrade the concept of real property. The computer you own is valuable because it can record, copy and manipulate a very large number of useful bit patterns, but it becomes slightly less valuable with each restriction that is imposed, by new copyrights, on the patterns of bits it can legally process. The raw materials you own (metal, plastic, wood, chemicals, etc) can be converted into many possible useful forms, but the value of those raw materials are slightly reduced by every registered patent that limits the shapes that you can legally manufacture your materials into.

The sum total of these small reductions of value always add up to do more market damage than can be offset by any positive value that the registered pattern monopoly holder receives as beneficiary of government enforcement. And this is true even before the significant enforcement costs are considered. We all pay additional costs to enforce these harmful distortions of the free market, and are therefor additionally damaged by each new pattern monopoly grant that the government hands out.

The only potentially valid argument for having governments grant monopoly rights to sell patterns of otherwise freely reproducible information is the idea that more and better information patterns get created as a result of over-rewarding content creators and distributors. However, there is no evidence that such incentives actually work at all, let alone that they create value greater than the damage done by enforcing a pattern monopoly. And there are some good reasons to believe that they have the opposite effect - suppressing new creation/invention.

Government granted pattern monopolies create several additional harmful market distortions that reduce the chance of better patterns being created and efficiently distributed:

• Duplication of effort: Each existing pattern of value that is held under monopoly control distorts the possible reward of finding a competing pattern. Very smart and talented people who might otherwise solve new problems and create new value, spend time trying to “reinvent the wheel.” While this additional effort may sometimes produce better ways of solving a problem, it is still a distortion of the free market. In the world of patents, many equally good or even slightly worse ways to solve the same problem are created - producing no additional market value. In the world of copyrights, many similar works flood the market rather than new original art.
• Distortion of value signaling: The bandwidth with which we perceive the world is limited. To appreciate the value of a new pattern we need to be exposed to it - informed of its existence. Since it becomes cost effective to engage in greater marketing efforts for an “owned” pattern than we would see in a free market, our bandwidth becomes flooded with endorsements for patterns of information that are no better, and are quite possibly worse than, competing free patterns. Patented drugs and devices receive more attention than unpatented alternatives, without regard for the relative merits of the value provided. Copyrighted art receives more media attention than free art. Rational assessment of value is lost in a sea of marketing that is only made cost effective by monopoly pricing on the production of copies.
• Reducing incentive to invent/create: The single alleged purpose of granting pattern monopolies is to encourage invention and creation. But I am not even sure that it actually does this. Government granted monopolies certainly increase the value of any entity that holds the monopoly power, and this should indeed increase the perceived reward for creation. However, the previously mentioned tendency for existing intellectual property to be over marketed and flood the bandwidth in which new creations must compete for attention, makes it much harder to break into the market. Even if the average reward for an act of creation is indeed increased, the distribution of such rewards is skewed towards a very few creators doing very very well, and most receiving little or no reward for their efforts. In a free market, there would exist a healthy “middle class” of moderately successful creators slowly working there way up as they improved their talents, rather than the few overnight successes and the many nobodies that the broken market signaling of a pattern monopoly system supports. This acts as a major disincentive to creation, as many people avoid choosing a creative career, or give up too soon when they could have been great (or at least good enough to make a living). The odds of being able to produce a living wage in creative occupations are artificially low - suppressed by the market distortions of pattern monopoly.
• System perpetuation costs: Even where creative people are not driven away from a creative profession by risk aversion heightened by the distorted market, they are pushed towards working for a larger organization with more marketing capital and surrendering most of the personal reputation capital they might otherwise generate to the larger brand. Such larger organizations (drug companies, record companies, etc) influence government to further increase their market advantage. Money generated by the existing monopoly holders is used to strengthen monopoly controls and manipulate the regulatory environment. Copyright is extended regularly by legislators who receive huge contributions from pattern monopoly holders. Patents are rewarded or struck down based on expensive legal fights. Regulatory agencies set policy requiring that the study of new solutions be paid for by interested parties. Since this is only economical for patent holders, it ensures that any free methods of solving the same problems will never be approved by the agency - such solutions are, by default, considered illegal and are forcibly suppressed by the agency, generating additional enforcement costs.

Taken as a whole, the scope of damage that is done to the free market by having the government grant and enforce the existence of monopolies over the use and distribution of patterns of information is shockingly large. When you get past the rhetoric these actions are based on some sort of property rights, it is easy to see that the reasons for enforcing such monopolies are invalid. The very useful concept of property is actually being seriously degraded by labeling this practice “Intellectual Property” when it would be far more accurately known as “Pattern Monopoly.”

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[Note that the issue of plagiarism is often (deliberately?) confused with pattern reproduction in order to strengthen the case for intellectual property law. It is actually a quite separate issue. A claim to authorship or invention of a specific work can indeed be viewed as property, and I will discuss this more in my next post.]