Writing as Schumpeter, The Economist speculates on how far to push the idea that companies have the same rights as real people (Paywall workaround: enter the link in Google) link here. That started me off, speculating on civil rights for companies and trade unions as  court imputed rights notably lacking grounding in the constitution or in common sense. Who dreamed up the idea that companies are persons? That got me to thinking about how intellectual property in general is anchored in the constitution but it too has no physical dimensions; I can't see it or pick it up or lock it up. Therefore, intellectual property is a legal construct or attribute, also lacking in common sense.

One notable difference results; the civil rights of persons have a grounding in the constitution to the extent that personhood is clearly defined there. But it is not. A major further consequence is that personhood gets defined by the courts, hopefully applying common sense but with no guarantees.

In contrast, the constitution allows the Congress "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." No room for the courts in that until someone's rights are violated and he shows he has a substantial interest sufficient to satisfy the courts and they agree to hearing the case. Thus, changing the law pretty much requires getting the Congress to act.

Schumpeter has a lot of other interesting things to say, so read the article. Among them is a defense of the personhood of corporations which struck me as way over the top. But it is thought-provoking.

Felix Salmon alerts us to two Kauffman Bloggers Forum lectures with short online video-lectures on drug patents link here.

Salmon writes, "Two highlights of the Kauffman Bloggers Forum were the presentations on the broken nature of the pharmaceuticals market. And they came from opposite ends of the left-right spectrum: Megan McArdle went first, followed by Dean Baker."

Worth watching.

The Economist takes a look at the movie business and calls it ailing link here. It sketches out the trends and competition-induced changes from the rise of new technologies and the responses of consumers. Consumption has gone from movie houses to homes, from tape to DVDs to Blu-ray, from sales to rentals, from video stores to kiosks like RedBox and now to streaming on line. One gets the impression that this is a vibrant industry with lots of innovation but the industry sees its revenues declining and profits under pressure. Competition has kept the adoption of new technology rapid despite attempts to suppress it.

The article fails, however, to mention the fact of copyright and the long and stringent monopoly it provides, far in excess of the minimum to induce investment or innovation. That is evident by the rush to reduce prices and expand the services. Nor does the author address how the creator of these stories and films gets a very small part of the total revenue generated by the industry. I almost forgot the lawyers and litigation as a significant barrier to competition and maintaining prices higher than they would otherwise be.

It is difficult to imagine what the industry would be like without copyright. Even more innovation and lower prices? In reaching a conclusion, it is hard not to conclude that the consumer would not be still better off; he pays for all of this, in the form of high theater prices, and expensive media sales and rentals. This could not occur without copyright.

It comes as no great surprise, but a court has thrown out the Google-publisher agreement on scanned books still under copyright. [link here If you are not a subscriber, you will face the NYTimes paywall but can access the article by putting the article's title, Judge Rejects Google's Deal to Digitize Books, into the Google search box.]

Though copyright is the law of the land, the finding holds back technological change that would have made all printed books available on line for a fee ranging from nothing to a modest sum. "…[C]iting copyright, antitrust and other concerns, Judge Denny Chin said that the settlement went too far. He said it would have granted Google a "de facto monopoly" and the right to profit from books without the permission of copyright owners." Hilary Ware, managing counsel at Google, called the decision, "clearly disappointing," adding "The judge did expressly leave the door open for a revised settlement."

On a still more hopeful note, publishers' representatives indicated they would try to negotiate a revision of their agreement that would pass muster with the courts. Apparently, neither side will appeal the judge's decision.

This article says the only way to stop copyright piracy is to cut prices link here. It reports the results of a study called the Media Piracy Project published by the Social Science Research Council. This defines the problem in a somewhat limited way as it only looks at relatively poor countries where prices are the same as those in rich countries. For the poor, the pain of paying rich country prices is unacceptable and their consumers are willing to violate the law, even when they risk "three strikes and you're off the internet" or other penalties.

To charge lower prices in a neighboring country is to risk arbitrage and probable rejection by copyright owners. Thus none of us should expect any change in copyright moralizing about "thieves". Monopolist-economists would instead suggest maximizing revenue by continued price discrimination, probably on a less extreme scale. But please, no more moralizing.

From the consumers' point of view, competitive market prices would be better. But since copyright is a legal monopoly--of almost unlimited extent in practice--we seem to be stuck with it until public opinion shifts. That could happen when the public gives up GDP as the sole measure of the good and includes some measure of welfare.

The Times editorializes today on the urgent need for patent reform, but it is only likely to make the problems worse link here . Its issues with patents include award to the first to file rather than first to invent to bring us into line with the rest of world, the slowness in issuance, the amount and costs of litigation, and the large and growing backlog of applications. The Times seems to feel that the problems will be solved by allowing the Patent Office to keep all the fees it charges and to allow small businesses and inventors to file a low cost preliminary application in order to get a place in the queue.

There is no real discussion of the constitutional grounds for patents being their encouragement to innovation or the product of patents in the creation of more large monopolistic businesses.

As it stands, these measures may go through because business wants them, and its interests are reflected in the views of both parties. Too bad.

But the fact that the Times peddles propaganda like this shows how badly the media have been brainwashed by the self-serving big business propaganda that patents promote innovation, contrary to much evidence.

I googled "ebook library" and was happily surprised to see the number of sites available. These are books you can download for free, some of them for a limited time and others indefinitely, some still covered by copyright, but others not.

Ebook publisher Harper-Collins sees this as a threat to its business and so wants to limit the number of times an ebook can be lent out link here. Mike Masnick at Techdirt observes, "two of the big publishers -- Macmillan and Simon & Schuster -- don't allow any lending of ebooks, which is unquestionably worse." He thinks such publishers will simply lose business in a publishing world that is becoming increasingly digital.

I suspect we will end up in a divided world, one part with cheap or free e books and another with expensive ones with sharply limited use. Nor would I count on big business being unable to get legislative changes that further limits user rights, all in the name of protecting authors but really to protect copyright owners who by then will be mostly "publishers". Competition might provide a better outcome, but it hasn't stopped cartels in other business lines. For the moment, however, the news is good.

A hopeful story about monopoly under attack is by Julian Fisher, MD whose piece entitled Read This Academic Journal Article, but Prepare to Pay looks at the outlandishly high cost of medical journal reprints and more broadly, of scholarly journals link here.

He asks why the journals in all disciplines are so expensive and demolishes the argument that their costs are high. Authors are not paid by the publication, and the editor, normally a prestigious academic, works only for the honor. The journals ask $20-50 for reprints or require expensive subscriptions and there are lots of journals. In a limited breakthrough, "the National Institutes of Health now insists that the research they fund, when published, must be made available somewhere at no cost." Thus, that part of the government imposed monopoly has been broken. But the broad academic requirement for publication in one of those scholarly journals persists.

Fisher goes on to note, "The market has long been monopolized by mega-corporations making mega-bucks. But new business models abound. In the spirit of full disclosure, I started a not-for-profit to offer an alternative to the traditional models." That website is here

This interesting innovation is of interest to patients, doctors, and academics of all persuasions. It has been slow in coming, but there are other opportunities as well. One is the cost of textbooks. I note the price of N. Gregory Mankiw's recent rewrite of his basic economics text, Principles of Economics, "on sale" at Amazon for $199.11 with free shipping, as against the list price of $238.95.

Ah, to be an academic monopolist with what amounts to a perpetual copyright.

Good Artists Copy, Great Artists Steal

This is usually attributed to Pablo Picasso, but I'm not sure he ever actually said it. It sure has been copied a lot!

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