Intellectual Property is a Fraud

Once an idea leaves your head, it is no longer scarce; once an idea is no longer secret, it ceases to become an economic good. There is no purpose in having a property right in an object that is superabundant. Property rights depend on a world of scarce resources, where interpersonal conflict can occur because there is competition for these scarce resources. If goods are infinite, everyone can be satisfied to their fullest desire without any need for conflict. Intelligent property is man-made law; it cannot be reasoned from any natural laws. Scarce resources are a given in the equation that determines the need for property rights just as gravity is a given in a physics equation.

The grossest aspect of intellectual property “rights” is that because you have invented a new way to arrange matter, whether it be creating a new type of vacuum cleaner or writing an original story, you now become part owner in every tangible physical object on the planet. IP asserts that by coming up with an intangible idea, you may now tell the rightful owners of any physical good, “you may not use your object in this particular way; you may not take that printing press and paper you own and print words on the paper in the same way I have,” etc. 

For property rights to mean anything, it must mean the ability of the owner to use his property in whatever way he sees fit, provided it doesn’t infringe some other individual’s property rights. Property rights mean little if we are prevented from using our property in whatever manner we deem acceptable. How can you truly say you own a piece of paper if you cannot write certain things on it? How can you say you own a piece of metal if you cannot shape it certain ways?

The person who comes up with a new way to shape metal does not have his “property” rights violated when someone takes  their own rightfully owned tools and shapes his rightfully owned metal in the same way. The inventor still has possession of all his original property and may still use it to his own pleasure; there has been no theft. Ideas cannot be stolen, they can only be replicated.

The first occupier homesteading rule, stating that the first individuals to occupy a given object or piece of land becomes owner of that property, cannot apply to ideas; once an individual shares an idea he cannot claim exclusive title to the idea any longer, provided he did not contract with the individual he told to tell no one. An idea can only be exclusively occupied so long as it remains in your head. In reality, there can be no conflict over the idea sitting in your head; no one can possibly compromise the integrity of the idea in your head, or steal the idea from your head, since it is not a physical object. There is no way anyone can ‘take’ that idea unless you freely share it. Even if there was a way to read minds, and obtain information from individuals heads, I still don’t think there would be a need for a property right to the idea because you would still have that information and still be capable of using that information. Your own thoughts would still be your own (assuming they didn’t violate you physically in the process, although then the violation would be against the individual’s body).

Some would argue that intellectual property came about through the courts, as opposed to government granted monopoly, in recognition that man has a property rights in ideas and are entitled to the fruits of their labor. They assert that labor is the test to determine homesteading of property, but that is wrong in the first place. In Against Intellectual Property, Stephan Kinsella argues that mixing your labor with something is simply a way to tell that an object has been occupied. He quotes Tom Palmer, writing “Occupancy, not labor, is the act by which external things become property.” Since labor is not the determination of homesteading, we can’t apply it to intellectual property and assert that by mixing labor with our idea and creating a new invention we now have a property right in that idea, restricting others’ use of their own physical property. By mixing one’s labor with other materials to create an invention, one can only have a property right to that specific object that was transformed. As Kinsella would say, it is not because you mixed labor with some materials that you became the owner of that new object, it is because you rightfully owned the original materials in the first place that you own the new object.  

Pawn Stars, the Time Value of Money, and more

Pawn Stars is a TV series that focuses on the day-to-day activities in a pawn shop, featuring Rick Harrison, his father, his son “Big Hoss” and one of the workers, Chumlee It’s not your average pawn shop though; the World Famous Gold & Silver Pawn shop, as its title suggests, is world-renowned and as such attracts many high-value, rare and unusual items individuals are looking to pawn or sell. Viewers love the show for many reasons. The shop features experts that weigh in on various antiquated or specialty items, each show is its own mini history lesson and there are many hilarious antics. Further, it is a prime example of how the market works.

When determining the price the pawn shop is willing to pay for an item, they must weigh in many factors: the cost of labor, the overhead expenses, general expectations of the market in the future (whether prices are going to be falling or rising), how large of the market of potential buyers is, how long they will have to hold the item before they can come to terms with a buyer and sell the object at an agreed upon price, etc. As they often repeat to their customers, they aren’t collectors and a lot of time and expense will be spent by the shop in order to find a buyer, something many sellers don’t take into consideration when they claim the shop gives them a ‘lowball’ offer. If there is no profit to be made, they have no reason to buy it.

One of the aspects the show downplays are the pawns, which aren’t shown as often but are probably more representative of the day-to-day activities of the pawn business. Pawning is a perfect exhibition of the time value of money. Because the seller values $X today very highly, he is willing to pawn his item (let the shop hold it as collateral for the loan) and pay $X+Interest at a definite point in the future in order to reclaim their item . These types of buyers may be described as “motivated” buyers, meaning their time preference is high; they need the money now, even if it means selling their item at a discount to what they believe is its true value. We also see the time-value theory on display when Rick mentions often that they could possibly get more at auction down the road, but this is less desirable than taking the money Rick is offering right now because all things being equal, a dollar today is more desirable than a dollar tomorrow.

Maybe the most glaring aspect of economics that it showcases is that an individual’s value is subjective; the value Rick places on an item may not be the same as the value the seller places on the item. There is not only differences of opinion in value between buyer and seller, but within the pawn shop itself. Rick’s value may not be the same as Big Hoss’ value, or the Old Man’s value, or Chumlee’s value. Many sellers are revealed to have sentimental value attached to the object that they find hard to quantify in a money value and thus have a comparative overvaluation to the relative market price, in which case the shop cannot come to terms with the seller without taking a loss. 

Additionally, we see subjective value in action when Rick is forced to decide whether to buy an object whose authenticity cannot be determined with 100% accuracy. While Rick may be able to make a money profit by selling this questionable item, in his own mind he would take a loss on the item because he would be putting his and his business’s reputation at stake, which is more valuable to him than monetary profit; in fact, to him his ability to make monetary profit is driven by his reputation and so profit and reputation are inextricably linked. 

Pawn Stars is a showcase of how transactions occur in the marketplace. No one is obligated to patronize Rick’s pawn shop by being forced to sell their items or buy his; however, each individual wants to come to terms at a price where each derives an advantage, where each side profits. Each side is driven by self-interest to attain the best price they can and neither buyer nor seller has any power to compel the other. Many times we see that the seller would have been willing to accept a lower price than that which they received from the shop, dispelling the notion that business operates at the expense of consumers. Any time Rick and a seller are able to come to a deal, despite the sellers usually begrudging comment they would’ve like more for their item, both sides are better off than they were beforehand; the shop ends up with a new item to profit from and the seller ends up with some much needed cash.

Other principles we see in action are specialization, the division of labor and comparative advantage; Rick cannot possibly be an expert in every object that comes into his store, he repeats this himself all the time. So he often calls in experts to use their specialized knowledge to come up with a value rather than doing it himself and possibly erring. Also, despite Rick’s expansive knowledge in many specialty antiques, sometimes his knowledge is lacking in specific areas even to a relatively inexperienced Chumlee. In one episode, Rick gave Chumlee leeway (no pun intended) to go out and look for profitable deals on expensive sneakers, an area Chumlee has both absolute and comparative advantage over Rick in. Situations like this display the benefits of social cooperation and the division of labor. 

There are probably even more examples one could come up with on Pawn Stars’ parallels to the market, but these examples go to show how representative Pawn Stars is of economic principles of the free market.

P.S. Pawn Stars also displays the burden that government intervention and regulation puts on businesses. Anytime an antique gun comes into the shop, he must make sure that it was made before 1898; otherwise it is considered a modern weapon by the ATF and he must file paperwork and jump through hoops to be licensed to buy and sell these weapons, which he claims isn’t worth the time and effort. Also, any time any former military weapon comes into the shop he needs to make sure it has been de-militarized and made legal-to-own before he can consider purchasing it, also adding to the regulatory burden.

Mises Against Anarchy

On pg. 149 of Human Action, speaking on anarchy, Mises says:

The anarchists overlook the undeniable fact that some people are either too narrow-minded or too weak to adjust themselves spontaneously to the conditions of social life. Even if we admit that every sane adult is endowed with the faculty of realizing the good of social cooperation and of acting accordingly, there still remains the problem of the infants, the aged, and the insane. We may agree that he who acts antisocially should be considered mentally sick and in need of care. But as long as not all are cured, and as long as there are infants and the senile, some provision must be taken lest they jeopardize society. An anarchistic society would be exposed to the mercy of every individual. Society cannot exist if the majority is not ready to hinder, by the application or threat of violent action, minorities from destroying the social order. This power is vested in the state or government.

State or government is the social apparatus of compulsion and coercion. It has the monopoly of violent action. No individual is free to use violence or the threat of violence if the government has not accorded this right to him. The state is essentially an institution for the preservation of peaceful interhuman relations. However, for the preservation of peace it must be prepared to crush the onslaughts of peace-breakers.

Mises here speaks against anarchism essentially because not all individuals will consciously realize the benefits of social cooperation and can “jeopardize society” if there aren’t provisions made to protect society against these individuals. He rightfully deems the state as the de facto social apparatus of compulsion and coercion. The problem, though, with Mises’ analysis is that he fails to realize that other social institutions would spring up in absence of the state to preserve the harmony of society and protect individuals property rights. He fails to realize that property rights could be enforced by voluntary institutions. Despite his pervasive views on social cooperation, he displays a noticeable lack of confidence in the ability of society to cooperate in creating voluntary justice and legal systems. 

He says “Society cannot exist if the majority is not ready to hinder, by the application or threat of violent action, minorities from destroying the social order. This power is vested in the state or government.” He is correct is stating society cannot exist if individuals cannot defend themselves against violent action, but jumps to saying government has that power, without any justification as to why government should rightfully hold that power. He seems to be inferring that government is granted that power by society when he calls it a social institution, despite the reality that no government has ever truly been founded on consent; government is an antisocial institution.

If an overwhelming majority of individuals recognize the benefits that come with social cooperation, as Mises asserts, it seems obvious that they would take steps to ensure their property rights were secure by creating voluntary institutions designed to do so. He also gives credence to the notion that rights come from government by saying that, “No individual is free to use violence or the threat of violence if the government has not accorded this right to him.”

In conclusion, Mises is rightfully worried that there will always be individuals wanting to harm others and jeopardize society itself; where he is wrong is that he assumes a state monopoly power of coercion and violence is the only way to secure the blessings  of society. For someone whose works are extremely rigorous, Mises fails here in many aspects by making many blind assertions and dubious assumptions that someone of his caliber should not make.

Senate votes unanimously for strengthening enforcement of sanctions against Iran

If you thought Rand Paul was a libertarian like his father, the vote in the Senate today confirms otherwise. The Senate voted unanimously to “[s]trongly support(s) the full implementation of United States and international sanctions on Iran and urg[es] the President to continue to strengthen enforcement of sanctions legislation.” This is just further impetus towards war with Iran, and any real libertarian would never vote yea for a bill such as this.

Marketplace Fairness Bill passes Senate

It’s funny that the bill passed by the Senate today, which would establish an internet sales tax, is called the “Marketplace Fairness Bill.” Sure, internet retailers have an advantage over brick-and-mortar retailers because these businesses conduct most transactions with out-of-state buyers and currently aren’t obligated to collect a sales tax on these “remote sales”. However, in what way is forcing internet retailers to collect a sales tax “fair?” Why not instead of making it “fair” by forcing every retailer collect a sales tax we make it “fair” by making no retailer charge a sales tax? We shouldn’t be seeking to add burdens to others to make them share an equal burden; no burdens across the board is as equal as it gets. Taxes for everyone is fair for no one. And anyways, the bill has nothing to do with the marketplace or fairness or anything of the sort; it’s just a way for states to try and collect sales taxes they are missing out on.