Pattern Monopoly
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.]
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