Confusing Economic Factors With Moral Ones; Explaining Economics Is Not Anti-Intellectual

from the make-something-and-sell-it,-if-you-can dept

JohnForDummies points us to a blog post by John Cook that attacks those who explain economics of abundant/infinite goods by misstating our argument as a moral rather than an economic one. The crux of his complaint:
There's an anti-intellectual thread running through these arguments. It's a materialistic way of thinking, valuing only tangible artifacts and not ideas. It's OK for a potter to sell pots, but a musician should not sell music. It's OK for teachers to make money by the hour for teaching, but they should not make money from writing books. It's OK for programmers to sell their time as consultants, and maybe even to sell their time as a programmers, but they should not sell the products of their labor. It's OK to sell physical objects or to sell time, but not to sell intellectual property.
This is a huge strawman of an argument. It is not anti-intellectual at all, but actually involves understanding the economics, rather than wishing the world were a way it is not. No one is saying you shouldn't sell "intellectual" output, but that it often will not be possible, economically, or that it doesn't make the most sense to do so. And that is economics at work. With ideas and intellectual output, the content is abundant and infinitely available in a digital form. In economic terms, it is non-rivalrous and non-excludable, such that the supply curve drives the price to $0. It's not being against intellectual output, it's recognizing the reality that it does not make economic sense to try to sell it when the economic forces at play will increasingly push the price towards $0.

It's certainly not about "valuing only tangible artifacts." In fact it's quite the reverse. Cook seems to be confusing price with value again, and missing the fact that we're showing how you can use the value of those intangible ideas to increase the price of scarce goods (which do not need to be tangible at all -- just scarce). It's basic economics.

Honestly, when I saw the title of Cook's post, I thought I was going to agree with it. It's called "Make something and sell it." This is, in fact, the very model we espouse here on a regular basis. But we point out that you can only sell what people are actually willing to buy, and that means understanding the economics at play, and selling what is scarce, while using what is infinite to make those scarce products even more valuable, thus driving up the price.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Anonymous Coward, Feb 16th, 2010 @ 10:23am

    Well, what do you expect from someone who posted in his comments that he read and agrees with Mark Helprin's Digital Barbarism, and then proceeded to trot out the debunked "but businessmen can leave businesses to their children, so copyright should last forever so authors can leave their books to their children!"

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Feb 16th, 2010 @ 7:27pm

      Re:

      "...and then proceeded to trot out the debunked "but businessmen can leave businesses to their children, so copyright should last forever so authors can leave their books to their children!"


      That was debunked? Citation please.

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Feb 16th, 2010 @ 9:26pm

        Re: Re:

        So you think IP should last forever?

        It was debunked by explaining that no one owes anyone a monopoly on anything and that if we are to grant it it should only be to the extent that it helps society and that current IP laws hurt society more than they help it partly because the present value of any investment made today would not yield enough future return 20 years from now to convince someone to invest more today for a return 20 years from now and also because most of the evidence suggests that IP hinders innovation and there is little to no evidence suggesting that it helps society.

         

        reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Feb 16th, 2010 @ 10:56pm

          Re: Re: Re:

          So you think IP should last forever?


          No. But I still don't see the difference between inheritance of a business and inheritance of the copyright on a novel. Both are nepotistic acts that give heirs something they didn't earn and don't deserve.

           

          reply to this | link to this | view in chronology ]

      •  
        icon
        Mike Masnick (profile), Feb 17th, 2010 @ 12:45am

        Re: Re:

        That was debunked? Citation please.


        Sure, it was debunked. You can certainly pass on a business to children, but not a pension/welfare check, which is effectively what copyright is. If you pass on a business to children, those children have to keep running the business. They don't just get people sending them "royalty" checks without them doing anything.

        If you can't see the difference between inheritable copyright and inheritable businesses then I really can't help you. You're simply a very confused individual.

         

        reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Feb 17th, 2010 @ 8:03am

          Re: Re: Re:

          No, he's just being intentionally disingenuous.

          Exactly, there is a huge difference between passing on a business and passing on IP. With IP one gets to restrict others and make money without doing any work whatsoever. This hinders innovation and harms aggregate output, both because those who hold IP privileges have less incentive to work and innovate and because IP privileges restrict the work and innovation of others. When you pass on a business your business doesn't tell others what they can and can't do and who get the business must still compete in the free market to succeed, they still must WORK and innovate as the free market requires.

           

          reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Feb 17th, 2010 @ 1:23pm

          Re: Re: Re:

          If you pass on a business to children, those children have to keep running the business.


          This is simply not true.

          There are many positions in many businesses that are the equivalent of a welfare/pension check.

          Inheriting a large stake in a company would be an even more apt situation to inheriting a copyright. There is no upkeep, there is no day to day toil...

          Why are you stuck on royalties? How are they any different than someone inheriting a business and selling it? Do you really see a big distinction between a lump-sum welfare/pension check and a royalty welfare/pension check?

          In both instances, you're still dealing with the same thing: undeserved, unearned assets.

           

          reply to this | link to this | view in chronology ]

  •  
    icon
    lavi d (profile), Feb 16th, 2010 @ 10:25am

    Illumination

    It's OK for a potter to sell pots...

    "I have a great pot for sale"

    "I have a great idea for a pot. You must buy it from me in order to make pots"

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    jbscpa, Feb 16th, 2010 @ 10:43am

    a brief story:
    In ancient times a young, newly minted scribe, proud of his ability to write, spoke to a small village's wise old illiterate story-teller.

    "Sir, I have written down your stories. Your heroic tales, your humorous anecdotes and your morality plays are now mine. I will distribute these fine stories far and wide, they will pass from hand to hand, they will be read and retold to audiences as near as the next village and as far the other side of the great ocean. You sir will pass from this life unwanted, unneeded and unknown."

    The wise old story-teller smiled and gently said, "Dear one you are mistaken, they are not my stories, nor are they yours, but they belong to the Wise Ancient Ones from whom we have descended and to whom we will return. For me to be needed requires only two things, a willing spirit to speak and my friends’ willing ears to listen. All else is folly."

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    yozoo, Feb 16th, 2010 @ 10:47am

    pretty standard fallacy

    Its the standard image of anyone who favors IP reforms as either a nihlistic pirate or a communist hippy. At least he thinks your in the nicer group. Frankly his article reads as anti-intellectual to me, but its all about perspective I guess.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Feb 16th, 2010 @ 7:31pm

      Re: pretty standard fallacy

      Its the standard image of anyone who favors IP reforms as either a nihlistic pirate or a communist hippy.


      You forgot "Libertarian THEORIST".

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Feb 16th, 2010 @ 9:35pm

      Re: pretty standard fallacy

      Communism is the idea that the government gets to allocate resources. IP maximism gives more power to the government, so IP maximism resembles communism more than its opposite.

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Feb 16th, 2010 @ 9:36pm

      Re: pretty standard fallacy

      "Its the standard image"

      Who'se standard image? According to whom? IP maximists.

      I mean, if this is the best you can do then I suggest you give up because the only thing you're doing is exposing how weak the IP maximist position is.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Ryan, Feb 16th, 2010 @ 10:54am

    John Cook, Democrat?

    Reading this, I couldn't help but think that this guy's argument is an excellent allegory for social liberalism; he ignores basic economics and prefers instead that consumers be forced to pay extra merely so that the poor artists will benefit irrationally and thus the world will fit his personal moral paradigm. Which is just a variant manifestation of progressivism and economic redistribution. Never mind that that it's unfair to us to pay for the labels' charity, or that we could all be better off in a more efficient system would he just allow economics to work...

    And no, I didn't bring this up just to slam democrats(most conservative politicians ignore economics as well and have a multitude of issues imposing their morality on others as well), but I just thought it was interesting how similar the thinking is in that quote.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Feb 16th, 2010 @ 12:06pm

      Re: John Cook, Democrat?

      actually since his argument is against change, he is by definition a conservative (also his seemingly poor grasp of basic economics gives him away as a Repulican as well).

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    someone who actually knows what he's talking about, Feb 16th, 2010 @ 10:56am

    you're still confused about what you're buying

    you're still confusing bitwise copy with what people are willing to pay for.

    when you go onto pacer and you buy a case document, you're buying only the PDF. you get nothing else. when you go onto itunes, you're not buying just a bitwise copy. you're also paying for some guaranteed level of customer service, as well as a warranty of usability, as well as a warranty that you'll be able to re-download the content again later on when your hard drive crashes. while the warranties are mostly fixed costs, the customer service is a marginal cost. the fact that you still can't see this shows just how out of touch you are with the industry.

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      nasch (profile), Feb 16th, 2010 @ 11:04am

      Re: you're still confused about what you're buying

      In other words, people are paying for scarcities that go beyond just the digital copy they can get for free? So why do you think you're disagreeing with Mike?

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      Ron, Feb 16th, 2010 @ 11:06am

      Re: you're still confused about what you're buying

      Customer service??? From who? Seriously, are you talking about Itunes?

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      Mike Masnick (profile), Feb 16th, 2010 @ 11:20am

      Re: you're still confused about what you're buying

      you're still confusing bitwise copy with what people are willing to pay for.


      Nope. I'm not actually, but thanks for making false assumptions yet again (you've been doing this on a regular basis, and I really don't understand why).

      when you go onto pacer and you buy a case document, you're buying only the PDF. you get nothing else. when you go onto itunes, you're not buying just a bitwise copy. you're also paying for some guaranteed level of customer service, as well as a warranty of usability, as well as a warranty that you'll be able to re-download the content again later on when your hard drive crashes. while the warranties are mostly fixed costs, the customer service is a marginal cost. the fact that you still can't see this shows just how out of touch you are with the industry.

      Actually, I've pointed out, repeatedly, that additional services above and beyond the content is a great scarcity and a good reason to buy. So I haven't ignored it at all.

      But I do question whether or not that's true in the case of iTunes. I do believe many people using iTunes are doing so for the *convenience* of it, and thus are really buying the scarcities of saving time and hassle, rather than any "customer support."

      Either way, none of that has anything to do with this post.

      So, basically your comment is both wrong and off-topic. At least in the past, you were just wrong, but on-topic. Let's see if you can fix that.

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        someone who actually knows what he's talking about, Feb 16th, 2010 @ 11:30am

        Re: Re: you're still confused about what you're buying

        additional services above and beyond the content is a great scarcity and a good reason to buy. So I haven't ignored it at all.

        so why don't you count any of these other costs as a marginal cost?

        (this is not off-topic, because you claim to "get it" when it comes to the economics, when you clearly still don't).

         

        reply to this | link to this | view in chronology ]

        •  
          icon
          Mike Masnick (profile), Feb 16th, 2010 @ 11:44am

          Re: Re: Re: you're still confused about what you're buying

          so why don't you count any of these other costs as a marginal cost?


          Huh? I do count them as marginal costs when they ARE marginal costs.

          I guess I'm confused. You seem to agree with me and then accuse me of not getting it. What exactly are you suggesting I have said?

           

          reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Feb 16th, 2010 @ 1:25pm

          Re: Re: Re: you're still confused about what you're buying

          They aren't marginal costs because they are unnecessary to reproduce the music. They are scarcities, but they aren't needed.

          For instance, the competition offers the product without these costs attached. You get no service, but you get the music. If you wanted the music without the service, you still get it.

          Some might be willing to pay for the service, and that's wonderful. But some aren't, thus we still get claims of piracy being a problem.

           

          reply to this | link to this | view in chronology ]

          •  
            identicon
            someone who actually knows what he's talking about, Feb 16th, 2010 @ 3:37pm

            Re: Re: Re: Re: you're still confused about what you're buying

            "They aren't marginal costs because they are unnecessary to reproduce the music. They are scarcities, but they aren't needed."

            itunes isn't selling just reproductions of the music. they're selling a working ecosystem, and customer service is a heavy part of that (ever walk into an apple store?). whether the costs of the customer service are incurred before or after the sale is irrelevant... they're still costs which directly scale based on the number of units pushed.

            the problem is that for quite a few years of our lives, the only digital distribution we've known was the bitwise copy. you got it from some p2p network, and ALL you got was a bitwise copy. the marginal cost of a bitwise copy is zero, but the digital distributors aren't selling just bitwise copies. that's why the cost of their product will never go to zero, even with a perfect storm of competition.

             

            reply to this | link to this | view in chronology ]

            •  
              icon
              Mike Masnick (profile), Feb 16th, 2010 @ 4:27pm

              Re: Re: Re: Re: Re: you're still confused about what you're buying

              they're still costs which directly scale based on the number of units pushed.

              Seriously. Learn economics. Directly scaling fixed costs are not the same as marginal costs.

              but the digital distributors aren't selling just bitwise copies. that's why the cost of their product will never go to zero, even with a perfect storm of competition.

              Really. Econ 101. It would really help you out here.

               

              reply to this | link to this | view in chronology ]

            •  
              identicon
              Another AC, Feb 16th, 2010 @ 6:18pm

              Re: Re: Re: Re: Re: you're still confused about what you're buying

              I see where the confusion is.

              The marginal cost of an additional unit of output is the cost of the additional inputs needed to produce that output. More formally, the marginal cost is the derivative of total production costs with respect to the level of output.

              Thus, your 'customer service' is not included in the marginal cost, as it is not necessary for the production of the item.

               

              reply to this | link to this | view in chronology ]

            •  
              identicon
              AR, Feb 16th, 2010 @ 7:01pm

              Re: Re: Re: Re: Re: you're still confused about what you're buying

              You almost have it.

              "the marginal cost of a bitwise copy is zero"

              That part is right.

              "but the digital distributors aren't selling just bitwise copies. that's why the cost of their product will never go to zero, even with a perfect storm of competition."

              Partially right. When offering a digital catalogue, there are always costs involved.

              An example with a few assumptions:
              Say it costs a distributor $20,000(per year) to maintain a server.
              If they sell 20,000 copies, (at $1 each) of that one song in a year, they break even on those costs.

              Here is the part you always fail to see.

              That catalog has 50,000 different songs in it.

              So 20,000 dls, of one song, covers the costs.
              20,000 dls of the OTHER 49,000 at $1 each equals
              980,000,000 per year, straight profit, after cost recovery.

              So if the costs of maintaining that server is spread across all dls, the cost per each song would be: $20,000 divided by 1 billion dls = $0.00002 for each download.

              I know those download numbers seem high but as you can see, although the costs never do reach zero, they do become negligible over time and number of downloads.

               

              reply to this | link to this | view in chronology ]

              •  
                identicon
                AR, Feb 16th, 2010 @ 7:18pm

                Re: Re: Re: Re: Re: Re: you're still confused about what you're buying

                Oops my math was a little off.
                So 20,000 dls, of one song, covers the costs.
                20,000 dls of the OTHER 49,000 at $1 each equals
                980,000,000 per year, straight profit, after cost recovery.

                that would be So 20,000 dls, of one song, covers the costs.
                20,000 dls of the OTHER 49,999 at $1 each equals
                $999,980,000 per year, straight profit, after cost recovery.

                 

                reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Feb 16th, 2010 @ 1:53pm

          Re: Re: Re: you're still confused about what you're buying

          Saying you know what you're talking about and then clearly showing that you don't helps you out how?

           

          reply to this | link to this | view in chronology ]

        •  
          icon
          Nastybutler77 (profile), Feb 16th, 2010 @ 3:22pm

          Re: Re: Re: you're still confused about what you're buying

          Is your handle ironic intentionally or unintentionally? I'm guessing unintentionally, otherwise you'd be too smart to waste your time being wrong on purpose.

           

          reply to this | link to this | view in chronology ]

    •  
      icon
      Brian (profile), Feb 16th, 2010 @ 11:28am

      Re: you're still confused about what you're buying

      Your stupid made me lol

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Feb 16th, 2010 @ 9:39pm

      Re: you're still confused about what you're buying

      Your an idiot, because Napster was able to provide the guarantee that I can download the same song again if my computer crashed for FREE. Oh wait, evil people with no regard for morality destroyed that.

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Feb 16th, 2010 @ 9:44pm

        Re: Re: you're still confused about what you're buying

        In other words, ITunes provides nothing that we can't provide for ourselves, the only thing that prevents us from providing it to ourselves are stupid laws that should be eliminated.

         

        reply to this | link to this | view in chronology ]

  •  
    identicon
    light anti tank intellectual property, Feb 16th, 2010 @ 11:00am

    oh and as i said about hammers

    we need people tha use hammers to think of the children

    1stly we need to extend copyrights to them and make htem last 3 -4 generations

    then the following can enjoy money
    the miners that get the ore
    there kids
    there grand kids

    the company that mines
    there kids
    there grand kids

    the share holders of the mining company
    there kids
    there grand kids

    then the smelting workers to fashion and make hammer
    there kids
    there grandkids

    the factory company and its office workers
    there kids
    and therer grand kids

    then the people that drive all these hammers ( shippers)
    three kids
    there grand kids
    the comapny that does this for them
    there kids and grandkids

    there share holders
    there kids
    and there grand kids

    then the store and its workers
    there kids and grand kids

    the stores shareholders
    there kids
    and there grand kids
    --------------
    wonder how much would a hammer cost after all this if every time i use a hammer ( and we put them in electrified holders that prevent tampering and thus DRM them )

    I have to pay them,
    then there kids
    and then there grand kids

    DO you htink in all likely hood that society would not tolerate a 400$ hammer
    OR a car costing 300000 for a Chevette style economy car.

    hey NOW apply this too home building and see some serious costs

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Feb 16th, 2010 @ 11:40am

      Re: oh and as i said about hammers

      what in gods name are you babbling about

       

      reply to this | link to this | view in chronology ]

      •  
        icon
        Chronno S. Trigger (profile), Feb 16th, 2010 @ 12:21pm

        Re: Re: oh and as i said about hammers

        Basically what he's trying to say is if we put the concept of copyright and apply it to other industries, it would kill the economy.

         

        reply to this | link to this | view in chronology ]

        •  
          icon
          Henry Emrich (profile), Feb 16th, 2010 @ 2:50pm

          Re: Re: Re: oh and as i said about hammers

          What he's doing, is pretty clever, actually:

          IP apologists love to do specious comparisons between intellectual "objects" and physical objects ("you wouldn't steal a car...etc"). What he's doing, is basically taking them at their word, by illustrating the real consequences of applying the (nonsensical) thinking used to justify "Intellectual property" to another realm of equally-creative activity -- the supply/manufacturing chain involved in manufacturing a hammer.

           

          reply to this | link to this | view in chronology ]

    •  
      icon
      Dark Helmet (profile), Feb 16th, 2010 @ 11:49am

      Re: oh and as i said about hammers

      Where are my goddamn rhymes!!??!?!?

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      johnnymags (profile), Feb 16th, 2010 @ 1:14pm

      Re: oh and as i said about hammers

      there/their.

      or use punctuation "Then, there kids...."

      Grammar Cop hands you a ticket.

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      Derek Kerton (profile), Feb 22nd, 2010 @ 3:52pm

      Re: oh and as i said about hammers

      Aargh, dude. I agree with your point, and I tried not to go grammar cop on you, but if you're going to post this same type of comment on multiple Techdirt articles, and use the word "there" that many times in each one, it would behoove you to use the correct word.

      It's "their", dammit. Update your copy/paste content for the next article.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    light anti tank intellectual property, Feb 16th, 2010 @ 11:05am

    adlib

    this is why an acotr should do a job , gt paid thats it , end the residual crap.
    the distributor fo the film SHOULD be told by society if yu cant make money off the folm in 5 years YOUR NOT going to thus we move it to public domain after that.

    so maybe JUST maybe someoen will invent the hovering automated robot hammer so

    I DONT HAVE to do work the hammer will do it for me...
    after all this all about WHO can be the laziest right?

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Feb 16th, 2010 @ 11:07am

    Selling IP

    " It's OK to sell physical objects or to sell time, but not to sell intellectual property. "

    How do you sell intellectual property? A sale requires the transfer of ownership.
    An author can use his intellectual property to create a tangible object, and then sell that object, or he could use it to perform a service for someone, or he could sell the rights to use it to someone else.
    I see no way anyone can transfer the IP itself. Once created, it just exists. It can be forgotten but never "un-created", or transferred to someone else.
    The value of intellectual property is in its use, it has no values until it is used.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Russ (profile), Feb 16th, 2010 @ 11:16am

    Common thread

    Most of these arguments have a common failing in that they don't recognize what they are really selling or believe that they are selling something else.

    Newspapers don't sell news, they sell advertising. The news is the value add to the consumer to pick that version of advertising over a different one.

    the teachers don't sell knowledge, they sell time. the knowledge is just what adds the value to their time.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Richard (profile), Feb 16th, 2010 @ 12:24pm

    Morals versus economics

    To my mind the attempt to contrast morals with economics is false. Good morals make good economics. Good economics makes good morals.

    The point is that economics requires people to co-operate and "play the game" if they don't then the game itself breaks down. Then the costs go up because more resources have to be spent on security, lawsuits etc etc.

    Your arguments have to work BOTH ways.

    True moral and philosophic principles work in all domains.


    The "anti-intellectual" argument in the linked article is just nonsense. The morally acceptable and economically viable reality is that everyone sells their time. Your have to spend your time producing something that other people want and are prepared to pay for.

    Selling copies of so called "intellectual property" is morally wrong precisely because you are not selling you time. You sell a copy of a file and yet you still have it. You are attempting to multiply the value of your time to a potentially infinite degree. This "something for nothing" attitude is morally wrong (analogous to usury - as condemned by most major religions. It is also economic nonsense. The two, inevitably, go together.



    When

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Ryan, Feb 16th, 2010 @ 12:59pm

      Re: Morals versus economics

      Scarcity and human wants/desires(i.e. reality) make "good" economics. Economics is, by definition, a science and thus descriptive(as opposed to prescriptive). People developed a system of trade and engage within it cooperatively because it is in their best individual interests to do so, not because of some arbitrary code of conduct established and forced upon them by somebody else. The economics may vary depending upon societal mores (for instance, many vendors in Russia will not place a soda fountain within customer access because of distrust, and some countries value service tipping more than others) and as a result be less efficient in some cases, but this doesn't make them "good" or "bad".

      In this case it is obvious that the public doesn't feel the need to subsidize the living of artists involuntarily because copying/distributing a song requires no cost, effort, or labor on the part of the vendor(and thus no appeal to conscience), and because songs are easily acquired and easily substitutable. However, I don't see how placing a price on digital files is immoral either. You may personally pull a moral code out of your ass that says so, but the rest of us don't follow it. Rather, we don't pay for infinite goods because we don't individually see the need to and the economics provides that we don't have to.

      Maybe this is confirming somewhat what you just stated in that personal creeds are a factor in economics, but in no greater or lesser manner than our desires for TVs, shiny cars, breast implants, etc. The economy may be less "efficient" by wasting money on these items, but economics is really just a description of how scarce resources are distributed to fulfill a group's desires.

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Feb 16th, 2010 @ 9:51pm

        Re: Re: Morals versus economics

        "In this case it is obvious that the public doesn't feel the need to subsidize the living of artists involuntarily"

        So then basically you agree that IP is not here to serve the will of the public, it's just here to serve the will of a very small minority. So then why does it exist? It should not exist, the government should not exist to serve the will of a small minority against the will of the public.

        "However, I don't see how placing a price on digital files is immoral either."

        Lobbying the government for laws that make the government create and enforce laws that restrict public rights against the will of the public is wrong.

         

        reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Feb 16th, 2010 @ 9:53pm

        Re: Re: Morals versus economics

        "The economy may be less "efficient" by wasting money on these items, but economics is really just a description of how scarce resources are distributed to fulfill a group's desires."

        The economy, and innovation, are less efficient when stupid laws get passed like the IP laws that exist now.

         

        reply to this | link to this | view in chronology ]

      •  
        icon
        Richard (profile), Feb 17th, 2010 @ 4:36am

        Re: Re: Morals versus economics

        Economics is, by definition, a science and thus descriptive(as opposed to prescriptive). People developed a system of trade and engage within it cooperatively because it is in their best individual interests to do so, not because of some arbitrary code of conduct established and forced upon them by somebody else.

        Morality and economics are two different views of the same thing. Like describing a physical system in two different co-ordinate systems. If you attempt to move from one domain to the other without applying the appropriate transformations then you will of course get nonsense.

        However it is bad economics to assume as you do that individual self interest can explain everything. From a scientific viewpoint you have to consider the evolution and natural selection of whole societies.

        If a society consists of individuals who behave unselfishly (for whatever reason) then that society tends to be more efficient overall (because of the reduced cost of policing, lawyers, ticket inspectors etc etc). Consquently that society is more likely to survive long term than one where everyone was more selfish. At times the unselfish behaviour even extends to actions that definitely aren't in the individuals self interest (even an "enlightened" self interest). Of course economics should never try to get involved with the reasons WHY individuals behave unselfishly - that is the domain of philosophy, psychology and/or theology. However it is perfectly proper to observe that if they do the overall system can work better.

         

        reply to this | link to this | view in chronology ]

    •  
      icon
      Henry Emrich (profile), Feb 16th, 2010 @ 3:06pm

      Re: Morals versus economics

      Good point:

      Another way to look at it, is that failure to "pay for" the privilege of IP monopolies by allowing stuff to enter the Public Domain, is *infinitely* more like "theft" than ANY form of copying could ever be.

      Why?
      Simple: If I *copy* a file, there are now TWO files. You have lost NOTHING, to the extent that the "original" file still exists.

      However, twenty years (let's say) of copyright term extension means:

      1. Many potential uses of the formerly-monopolized content simply won't happen, because the potential users can't pay what you'll want to extort from them.

      2. Such uses of the monopolized content as *do* happen, will cause the cultural "product" using them to be more expensive.

      3. Probably the greatest (unacknowledged) cost of copyright itself (and any term extension thereof), is that it deforms the way art and culture are created, and fosters a viewpoint that creative folks are "owed" something in perpetuity (or as close to it as they can get), by the very public whose domain their IP privileges encroach upon.

      This notion is self-evidently absurd to the extent that, for example, musicians learned by playing *other* musician's songs (even in private, in their bedroom).

      Remember, folks, the "rights-holders" to the song "Happy Birthday to you" actually assert that singing this (arguably traditional) birthday-song at a child's birthday party constitutes a "public performance", and thus, that they are "owed" royalties for it.

      Intellectual "property" is by definition, theft from the Public Domain. That's why it's called the "copyright bargain". Any attempt to deny this fact, is dishonest in the extreme.

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Feb 16th, 2010 @ 9:57pm

        Re: Re: Morals versus economics

        Me copying something is not theft because I am depriving no one of anything. You preventing me from copying something IS theft because you are depriving me of something.

         

        reply to this | link to this | view in chronology ]

  •  
    identicon
    Matthew, Feb 16th, 2010 @ 12:56pm

    The argument frequently espoused here is that the burden is on the seller to create a scarce good that can increase in value and price by association with their valuable and abundant IP.

    I've not yet heard a persuasive argument to address this question, though: What is the buyer doing to encourage the seller to create IP? It is the abundant good that we really want. We can propose many ways in which a seller can monetize their abundant good but that all puts an additional BURDEN on the seller.

    I can see how this proposal might ultimately create even greater value for the seller, sure. The combination of valuable, abundant IP and scarce goods might be worth more than the sum of their individual values. Nonetheless, this model, while addressing how the seller can get a lot of value from their time, does not address how to maximize the time available to the seller to create IP, which is what we want from them in the first place.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Ryan, Feb 16th, 2010 @ 1:06pm

      Re:

      The abundant good is not a specific artist's creative expression, but music in general and its distributive mechanism(digital audio files). If a consumer prefers specifically more music from their favorite artist(s), then the availability of that satisfier is scarce, not abundant. This is why a lot of fans will pay a lot for their producer's goods, even donating for the sole purpose of compelling them to make more music.

      Music itself, however, is especially easy to create and distribute now and will readily be produced by many artists - even for free. If your desire is simply for good music, then its a perfectly competitive market in which the marginal cost is zero; thus, the pressure is on the sellers to convince you to notice them.

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        Matthew, Feb 16th, 2010 @ 1:19pm

        Re: Re:

        I can see the merit of this argument BUT the general argument being expressed above seems to be the pure economic argument about reproduction and distribution, which would drive the marginal cost (and thus, the price) of ANY particular instance of music to zero.

        Your argument would be more compelling if the conversation went something like this: There are lots of artists who charge nothing for their music so if you don't want to pay for your music, just patronize artists who offer it for free. Instead the conversation seems to be more like this: Music shouldn't ever cost anything. It's marginal cost of reproduction is zero; therefore, the price should be zero.

         

        reply to this | link to this | view in chronology ]

        •  
          identicon
          Ryan, Feb 16th, 2010 @ 1:33pm

          Re: Re: Re:

          I don't see anywhere in your post how you actually refute my response for why sellers don't require marginal compensation for their music to be incentivized to create it?

          In any case, there is no "should" involved in anybody's argument. You can argue that wheat farmers "should" be paid much more than wholesale for their no-doubt tireless efforts, but nobody cares because some other poor wheat farmer will just offer the same wheat for less and why does he deserve it any less? This is a competitive market, and in that market the economic price gets set to the marginal cost of the product. When the marginal cost is zero, the public will consume that product for free.

          Now artists can choose to price their music above that within their own distributive mechanism, but consumers will only pay if they specifically desire that music above others and voluntarily choose not to pursue other avenues to acquire it for free. In many cases(and in more all the time as technology evolves and other convenient services emerge), that small section of fans that pay is not worth the opportunity cost of the leverage that could have been gained by drawing many more fans with free music.

           

          reply to this | link to this | view in chronology ]

          •  
            identicon
            Matthew, Feb 16th, 2010 @ 1:55pm

            Re: Re: Re: Re:

            I think that we have different assumptions about the nature of music, as a product. Your argument about wheat farmers suggests that you mostly consider music to be interchangeable. I'll agree that different pieces of music are similar goods / substitutes for one another. If Garth Brooks music becomes too expensive, I may substitute Randy Travis music in its place. If Randy Travis music is FREE, this is much more likely. I do not dispute this.

            My argument, however, is that it is the nature of art, music, culture in general, that individual instances are valuable and desirable. In other words, I don't treat culture as a bulk commodity (like wheat.) Garth Brooks' expression is intrinsically different than Randy Travis'. Furthermore, while the two may serve as similar goods to one another, if Garth Brooks chooses to charge for his music, if I am unwilling to pay for music, I must instead listen to Randy Travis' free music. I must not, however, insist that the correct cost of Garth Brooks' music should be zero and download it through unauthorized channels.

             

            reply to this | link to this | view in chronology ]

            •  
              identicon
              Ryan, Feb 16th, 2010 @ 2:12pm

              Re: Re: Re: Re: Re:

              Right, okay. Good points. This is sort of what I addressed in my first paragraph in my first reply, that you're right in that music is not necessarily homogeneous. If you have your heart set on one provider's music, then their choosing not to provide it to you would deprive you of fulfillment. However, the nature of digital copying means that providers can no longer discriminate to whom they provide; all it takes is one copy to provide the music to everyone with an internet connection.

              The only way to really remove your access to it is not to produce it at all, and then they're neither making any money at all nor practicing what they enjoy doing anyway. The much-reduced cost in creating and free cost of distribution means that there is not a whole lot of impediment in producing a product once the sound has merely left the instruments, so many, many more artists can do it than before. Is one big artist gonna hold out when there's so many other choices for consumers? Or is he gonna put the track out on the internet for free and leverage all the new fans into more revenue from concerts, merchandise, publicity, etc.?

              Even if there were no money to be made, the point is that a song is free to obtain for anyone once produced, and there are many options available. You may think that musicians morally deserve some money just for the song(just as you may think wheat farmers deserve more for their wheat), but they will actually maximize revenue by charging wholesale based on the economics of the market.

               

              reply to this | link to this | view in chronology ]

            •  
              icon
              chris (profile), Feb 16th, 2010 @ 3:42pm

              Re: Re: Re: Re: Re:

              Furthermore, while the two may serve as similar goods to one another, if Garth Brooks chooses to charge for his music, if I am unwilling to pay for music, I must instead listen to Randy Travis' free music. I must not, however, insist that the correct cost of Garth Brooks' music should be zero and download it through unauthorized channels.

              none of that matters. the simple fact is that any music/movie/book that has a following will be made available for free regardless of what anyone wants, says, or believes.

              another simple fact is that this distribution cannot be stopped. morality has nothing to do with it.

              it's never going to be more difficult to copy bits than it is right now. with every bit that gets copied, the process gets easier.

              that's just how the world works. if artists want to make money they have to change the way they do business and start selling what people are willing to buy.

              i know you would prefer that we just pretend that the internet and file sharing do not exist, but they do. file sharing exists. it's easy, it's fun, and it's impossible to stop.

              no amount of whining or moral hand wringing is going to change that fact.

               

              reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Feb 16th, 2010 @ 10:08pm

          Re: Re: Re:

          No, the argument goes something like this (and I posted this elsewhere).

          "as google has proved with their logo ordeal, plenty of people are willing to make art absolutely free and even give it away. Plenty of people are willing to make music absolutely free and give it away (ie: at creativecommons.org ). There is an myriad of art, music, etc.. available on the Internet for free under licenses like creative commons licenses. So there are SOME, an overwhelmingly small minority, of artists that want these laws and it's not really artists that want them it's big corporations like the RIAA pretending to represent artists. Should the world succumb to these few people and change the laws just to please every last person who would otherwise cry and not do art? Every time some crybaby cried that "if society doesn't pay me more or give me more favorable laws I won't work or instead of working at a restaurant I will work at a grocery store" should society all of a sudden create laws to make more people work at restaurants? Doing so is economically inefficient and artificially brings people to do things (ie: create art or music) that are less relative to what the market needs hence increasing scarcity (by moving workers away from items that the market demands, like maybe building airplanes or whatever) in other segments of the market where the market needs less scarcity. If someone has a high price tag to do art why should society artificially pay them more (or create laws in their favor) than what the free market would demand, hence taking away their time from doing something more productive relative to market demands?

          We have enough artists, musicians, etc.. who are more than willing to give their art and content away for free, we shouldn't succumb to the demands of every last artist. Let them do something more productive.

          For instance, with my restaurant vs grocery store example, both restaurant workers and grocery store workers are important. But to pass laws to entice more people to become restaurant workers artificially takes away from grocery store workers and it's more productive to allow the free market to allocate labor. That is, with the laws passed it would be more productive for some of those restaurant workers to become grocery store workers because that's where the most benefit to society would be provided. This is basic economics."

          http://www.techdirt.com/articles/20091014/0147596522.shtml?threaded=true

          So it's a matter of economics. Those people who refuse to do art without an unowed monopoly should not be allowed to extort the public into passing ridiculous monopoly laws. Instead, society would be much better off if they did something else.

           

          reply to this | link to this | view in chronology ]

          •  
            identicon
            Anonymous Coward, Feb 16th, 2010 @ 10:11pm

            Re: Re: Re: Re:

            In fact, such people are in fact terrorists. Terrorists have this attitude, "if you don't give me exactly what I want I will burn buildings"

            The attitude of these terrorists is that, "if you don't give me a monopoly I won't create art." The public's response should be, "fine then, don't create art. Others will create art." We shouldn't succumb to the demand of every terrorist just to prevent him from terrorizing things, why should we succumb to the demand of every IP maximist just so that s/he would do something? It's ridiculous.

             

            reply to this | link to this | view in chronology ]

            •  
              identicon
              Anonymous Coward, Feb 16th, 2010 @ 10:14pm

              Re: Re: Re: Re: Re:

              Another analogy is that if you told your boss that if you don't get the exact raise that you want, you'll quit. You know what your boss will tell you? You're fired.

              Why should society be more naive than any employer with just a tiny bit of common sense. Should the public really be so stupid as to give in to the demands of every last IP maximist that refuses to do anything unless they get their monopoly rents? NO! We should do like any reasonable boss would do, you don't want to work under our terms, you're fired. There are plenty of people who would replace you.

               

              reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Feb 16th, 2010 @ 6:02pm

      Re:

      I'm confused. When has the burden of coming up with a way to make money ever been on anyone BUT the seller?

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        Matthew, Feb 16th, 2010 @ 6:33pm

        Re: Re:

        The point I was trying to make is that MUSIC was supposed to be what the seller was selling. The purpose of copyright was, as I understood it, to make it possible for creators of culture to make money by creating culture. Not by mixing culture and merchandising or culture and live appearances or culture and anything else, but pure culture. The mindset, I thought, was that we, as a society, want creators to create. Therefore, we enshrined in our Constitution the notion that as a society, we would grant rights to creators that they did not naturally hold, to promote the creation of culture (ultimately for our benefit.)

         

        reply to this | link to this | view in chronology ]

        •  
          icon
          Sneeje (profile), Feb 16th, 2010 @ 6:56pm

          Re: Re: Re:

          Actually the purpose of copyright has NOTHING to do with making it possible for anyone to make money. It is to "promote the progress of science and the useful arts".

           

          reply to this | link to this | view in chronology ]

          •  
            identicon
            Matthew, Feb 16th, 2010 @ 7:31pm

            Re: Re: Re: Re:

            I'm sorry. I skipped some steps because I thought I was making an acceptable assumption. The promotion of the progress of science and the useful arts is the purpose. I concur. The mechanism of said promotion is the grant of rights that creators do not naturally hold. The exercise of those rights allows creators of culture to make money by selling their creations. Succinctly, to achieve the stated purpose, a mechanism is implemented to make it possible for creators of culture to make money by creating culture.

             

            reply to this | link to this | view in chronology ]

            •  
              identicon
              Anonymous Coward, Feb 16th, 2010 @ 10:18pm

              Re: Re: Re: Re: Re:

              There is absolutely zero evidence that intellectual property promotes the progress and most of the evidence suggests that it only hinders progress.

               

              reply to this | link to this | view in chronology ]

            •  
              icon
              Sneeje (profile), Feb 17th, 2010 @ 4:49am

              Re: Re: Re: Re: Re:

              No, creators can sell their creations regardless of copyright. And they make money by selling things that are different from their competitors (actual or perceived) or executing their business model better than their competitors.

              If you are in the business of selling things that are easily copied by someone else, then you might want to look for other ways to differentiate yourself (in things that are not easily copied) rather than turning to the government for a subsidy (in the form of copyright).

               

              reply to this | link to this | view in chronology ]

          •  
            identicon
            Anonymous Coward, Feb 16th, 2010 @ 7:51pm

            Re: Re: Re: Re:

            Actually the purpose of copyright has NOTHING to do with making it possible for anyone to make money. It is to "promote the progress of science and the useful arts".


            You are an idiot.

             

            reply to this | link to this | view in chronology ]

            •  
              icon
              Sneeje (profile), Feb 17th, 2010 @ 4:46am

              Re: Re: Re: Re: Re:

              Ok, how exactly? You might want to look in the mirror with a comment like that.

              BTW... please cite your understanding of the history of copyright in your examples. And by the way, please explain how making money and being granted exclusive use of an unique creative expression are one in the same. I see the former requiring proper execution--there are many, many things that are copyrighted on which no one makes any money.

              And, you might also want to read: http://www.techdirt.com/articles/20100216/0234308176.shtml

               

              reply to this | link to this | view in chronology ]

              •  
                identicon
                Anonymous Coward, Feb 17th, 2010 @ 1:36pm

                Re: Re: Re: Re: Re: Re:

                And by the way, please explain how making money and being granted exclusive use of an unique creative expression are one in the same.


                Copyright gives creators a FINANCIAL incentive to create. This is so simple I'm amazed I have to explain it to anyone.

                You assertion to the opposite is absurd even by Techdirt standards and I stand by my initial comment.

                 

                reply to this | link to this | view in chronology ]

                •  
                  icon
                  Sneeje (profile), Feb 17th, 2010 @ 5:45pm

                  Re: Re: Re: Re: Re: Re: Re:

                  Except for the part where they already have a financial incentive to create without copyright. You know, like the fashion industry, where there is no copyright?

                   

                  reply to this | link to this | view in chronology ]

                  •  
                    identicon
                    Anonymous Coward, Feb 18th, 2010 @ 1:24am

                    Re: Re: Re: Re: Re: Re: Re: Re:

                    Except for the part where they already have a financial incentive to create without copyright.


                    The founding fathers disagree with you.

                    You know, like the fashion industry, where there is no copyright?


                    And the fashion industry is rife with knock-offs and other parasitic behavior. Go figure.

                    Also, Europe grants protection to its clothing designers and they don't appear to be the least bit stymied by it.

                     

                    reply to this | link to this | view in chronology ]

                    •  
                      icon
                      Sneeje (profile), Feb 18th, 2010 @ 4:51am

                      Re: Re: Re: Re: Re: Re: Re: Re: Re:

                      Cite your evidence. Actually, the founding fathers disagree with you. The reason for copyright was not to *create* financial incentives because they already existed.

                      And there is evidence the fashion industry is thriving here and being stymied in Europe. Oh, and knockoffs and parasitic behavior exist there too. Don't let any facts get in the way of your death-grip on ignorance.

                       

                      reply to this | link to this | view in chronology ]

                      •  
                        identicon
                        Anonymous Coward, Feb 18th, 2010 @ 10:43am

                        Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

                        Actually, the founding fathers disagree with you. The reason for copyright was not to *create* financial incentives because they already existed.


                        The purpose of copyright is to "promote the progress of science and the useful arts" via providing a financial incentive to creators that would not exist in an unregulated market. You can blather on about how there was already sufficient incentives but again, the founding fathers disagree with you, otherwise they would not have implemented it in the first place. If you believe the inherent financial incentives afforded by copyright were not the apparatus by which to achieve the aforementioned progress, I would love to hear your crazy crackpot theories on what the apparatus actually was/is, for shits and giggles if nothing else.

                        If you are unable to do so, I'm afraid I'll still have to stand by my original comment and reiterate that yes, beyond any shadow of a doubt, you are an idiot.

                        And there is evidence the fashion industry is thriving here and being stymied in Europe.


                        I agree that there is evidence that knock-off companies are thriving here and being stymied in Europe but don't let reality get in the way of your death grip on that sloshing jug of kool-aid!

                         

                        reply to this | link to this | view in chronology ]

  •  
    icon
    WillPage (profile), Feb 16th, 2010 @ 3:07pm

    The nature of economic goods

    Interesting debate.

    Those interested in the definition of goods may want to refer back to my first ever publication on music industry economics, aptly titled: 'Is the price of recorded music heading towards zero?' - from Nov 2006.

    www.prsformusic.com/SiteCollectionDocuments/Independent%20research%20papers/WillPage-Transm issionConfPaper.pdf

    The classic 2x2 matrix is explained, and then applied to digital music (non scarce, non rival) and posed challenges for rights holders to think through - then.

    Mike's post, and many of the comments above, are right to point to the 'you wouldnt steal a car' mentality of the original report.

    Understanding the 'need for a toll', as opposed to holding onto a private good mentality, helps you understand the difference between transactional activity and licensing.

    Worth a pause for thought.

    WP

    PS: Great to finaly post on this blog - big fan.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Devonavar, Feb 16th, 2010 @ 11:41pm

    My response to the original article, since I can't feel sure my response will get through moderation

    I think this would be an appropriate place to observe a minute of silence for the distinction which used to be carried by the difference between "should" and "ought". That distinction would be helpful here if it were still a common part of the English language. When advocates of free say things like "Musicians should give away their music and make money off concerts and T-shirts." etc., they nearly always mean "Musicians ought to give away their music...", without the moral suggestion that not giving it away is somehow evil. All that is meant is simply that it is a good idea to give away one's music and make one's money off a scarcity. I don't think I've ever seen anyone seriously entertain giving things away for free as a moral principle, particularly where creative work is concerned. So, of COURSE it's okay for a musician to sell music or a teacher to sell books. It's just not likely to make you much of a living these days... Please note also that it is possible to be in favour of a "free" culture in which cultural ideas are shared without the permission of the creators without denying authors the right to sell their work. Believing that ideas should be widely shared does not mean creators should not try to benefit from their creations. You lose me completely when you suggest that being in favour of "free" somehow means you cannot or do not value ideas. ("valuing only tangible artifacts and not ideas.") Ideas fundamentally gain value when they are shared as widely as possible. I *do* think there is a moral imperative to spread good ideas as widely as possible because of what this means for humanity. In an online world where spreading ideas is virtually costless, restricting access to ideas in an attempt to artificially boost price is a problem, and it's a problem because it reduces the value of the idea by slowing its spread. But that doesn't mean the idea shouldn't have a price or that it's somehow impossible to charge for it. It just means you ought to be charging for something other than access to the idea. Better to charge for the creation of the idea (e.g. a customized programming project, as suggested in another comment), for example, or a physical manifestation of the idea (a printed, dead-tree book), or any other scarcity created by the idea. So, sorry, I consider attempting to monopolize ideas (i.e. restricting access to) far more anti-intellectual than the idea that ideas should be shared freely. How on earth can you reach the conclusion that spreading ideas is anti-intellectual?

     

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This