The Insanity of IP

By Simon Grey, on August 23rd, 2011
Stephan Kinsella details just how much trouble one can get into because of IP laws. Please note that this doesn’t even include file-sharing:

In his paper Infringement Nation: Copyright Reform and the Law/Norm Gap, law professor John Tehranian explains how the normal activities (see pp. 543-48) of a typical Internet user–he takes an “average American, …take an ordinary day in the life of a hypothetical law professor named John”–someone who does not even engage in P2P file sharing–could result in up to $4.5 billion in potential liability annually, for copyright infringement. The acts include:

-having his email program “automatically reproduce the text to which he is responding in any email he drafts. Each unauthorized reproduction of someone else’s copyrighted text—their email—represents a separate act of brazen infringement, as does each instance of email forwarding….” (twenty emails in an hour: $3 million in statutory damages);

-distributing in his Constitutional Law class copies of three just-published Internet articles presenting analyses of a Supreme Court decision handed down only hours ago;

-absentmindedly doodling a sketch of the Guggenheim museum on a notepad during a boring faculty meeting, i.e. making an unauthorized derivative work;

-reading a 1931 e.e. cumming poem to his Law and Literature class, an unauthorized public performance;

-emailing to his family five pictures his friend took of a local football game–his friend owns the copyright;

-having a Captain Caveman tattoo and revealing it while swimming at the local university pool: violating Hanna-Barbera’s copyright by the reproduction and public display;

-singing Happy Birthday to a friend at a restaurant and recording it on his smartphone videocamera, an unauthorized public performance and reproduction of a copyright-protected work–as is the painting on the wall of the restaurant that is captured in the video footage; and

-reading on his email a magazine that itself has clips of interesting items from other publications, a contributory infringement leading to up to $7.5 million of liability.

Obviously, some of the scenarios are a little more far-fetched than others. However, the very first item is very concerning: copyright violations occur when you reply to an email?! Are you serious?

Now, I realize that a lot of people view the opposition to IP as simply a bunch of nerdy white guys wanting to get out of paying for music. And while this typecasting is undoubtedly true in some cases, it doesn’t change the fact that IP is a gargantuan monopoly system that presents a large number of problems for ordinary citizens who act in good faith. Most people aren’t trying to rip someone off by responding to their emails, yet the laws in place operate under this very assumption.
It is obvious, then, that something needs to change. You don’t have to support file-sharing to make a coherent objection to the current system. Given that the laws ensure that every American is a lawbreaker, a good response would be to simply say that certain things shouldn’t be given automatic copyright protection (like email replies, for example). Better yet, one could argue that copyright should be opt-in, which would minimize most people’s liabilities. There is simply no sense in having a system that makes everyone a lawbreaker in order to further the economics interests of an elite, politically-connected few.


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The Economics of Unions

By Rok Spruk, on October 5th, 2009

Gary Becker (link) and Richard Posner (link) opened a discussion on how unions influence policymaking decision. Recently, president Obama imposed punitive 35 percent tariff rate on imported Chinese tire (link) risking the coming trade war. Indeed, China may file a case against the U.S at the WTO, and the WTO may rule against the U.S for imposing illegal and discriminatory trade practices.

Many believe that president Obama enforced trade protection to win the support of the unions in health care reform. In fact, the bailout of GM and Chrysler was one of the major efforts to help unions, particularly the United Auto Workers, in paying the health-care and pension benefits that GM and Chrysler couldn’t actually afford to pay.

Recently, the Congress has been split up on Employee Free Choice Act which suggests giving mandate to unions representing employee in arbitrating union-management contracts. I believe the Congresional Budget Office will yield a meaningful research on the economic effects of the act.

The empirical evidence on union activity is, in fact, quite clear. In OECD comparison panel (link), there is a strong, negative and significant relationship between the density of union membership and labor market rigidity. Sweden, for example, hasn’t enforced a general level of minimum wages. Yet in 2007, over 7o percent of the working population was unionized. High union density further contributed to inflexible labor market structure which led to low employment growth, low productivity growth and exerted a strong upward pressure on real labor cost.

Yet, there is a distinctive character of trade unions within Europe. Traditionally, unions in Europe possessed a stronger influence on political decision in areas such as taxation, income redistribution and government size. However, there are significant disparities in union activity throughout Europe. In 1990s, Denmark enforced a series of reforms that deregulated labor market structure towards greater flexibility. Today, Denmark’s labor market is cited as the most competitive in the world (link). From 1990 to 2007, union density decreased from 75.3 percent to 69.1 percent. On the other side, labor market structures in Continental and Mediterranean Europe are known for inflexible features, regulation and rigidity. Meanwhile, Anglo-Saxon countries, Britain and Ireland, are known for flexible labor markets and few barriers impeding labor market performance. Dismissing and employee costs 10 weekly salaries in Ireland compared to 56 weekly salaries in Spain.

Although variation in trade union density over time explains a relatively large part of variation in productivity, union activity and influence in political decision-making could be the decisive factor in explaining cross-country variation in labor market outcome. That would requiring the design of principal indicator that could measure union influence on the quantitive basis. The influence of trade unions has, in my opinion, a strong common connection to cultural patterns and informal institutions.

For instance, countries with weak rule of law, persistent corruption, high tax burden and barriers to trade and investment, tend to have larger underground economies. Empirical estimates on the size of underground economies suggest that, in Europe (link), Mediterranean countries (Italy, Spain, Greece, Portugal) have the largest share of shadow economies. There is a significant cross-country variation. The estimates of shadow economies for 28 transition countries is 40.1 percent and 16.3 percent for the OECD. So, could union activity affect the size of shadow economies

If unions, as an interest group, exert a strong influence in politics, their political philosophy will probably lean left. Thus, if unions influence decisions on taxation issues, welfare benefits, pension schemes and government size, the outcome will probably induce more complexity, more regulation and more barriers to trade, entrepreneurship and investment. The combination of those factors can strongly influence labor and business incentives and, hence, also determine and productivity growth.



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