Against Monopoly

defending the right to innovate

Against Monopoly

Monopoly corrupts. Absolute monopoly corrupts absolutely.

Copyright Notice: We don't think much of copyright, so you can do what you want with the content on this blog. Of course we are hungry for publicity, so we would be pleased if you avoided plagiarism and gave us credit for what we have written. We encourage you not to impose copyright restrictions on your "derivative" works, but we won't try to stop you. For the legally or statist minded, you can consider yourself subject to a Creative Commons Attribution License.

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Abstinence programs work

Free at last

Corporations get a crack at even more political power

The Supreme Court decided Citizens United v. Federal Election Commission this week link here. It declares that corporations and other groups have the same rights as live humans. The left considers this a great defeat which will lead to a flood of corporate money in elections to the detriment of the average voter while the right only sees a justified extension of corporations and other groups freedom to speak and spend money to affect political races.

Professor Juan Cole in his blog, Informed Comment, asks a sensible question: Does this decision really change the amount of corporate money in political campaigns? The cynic might note that both parties seem to be captive of one interest group or another. Another blogger noted that TV time for political ads is already fully spoken for.

There is some irony, however, when one notes that both Chief Justice Roberts and Associate Justice Alito carefully claimed to be judicial conservatives and would stick with precedent. In fact, they are turning out to be radicals of the right. Stay tuned to learn the new surprises they have for us.

American Broadband

Scientific American has a gloss in this month's issue on the decline of U.S. broadband access over the first decade of the 21st century (no link provided because access is limited to paying subscribers):

At the turn of the millennium, the U.S. had some of the best broadband access in the world. It reached more homes, and at a lower price, than most every other industrial country. Ten years later the U.S. is a solid C-minus student, ranking slightly below average on nearly every metric.

Just how the U.S. lost its edge and how it plans to get it back are the issues before the Federal Communications Commission as it prepares to launch the most significant overhaul of network policy since the birth of the Web. As part of last year's stimulus package, Congress provided $7.2 billion to expand broadband access to every American. It also required the FCC to outline a plan for how to make that happen. The outcome of the FCC's deliberations, due February 17, could determine not just control over the broadband infrastructure but also the nature of the Internet itself.

The reason for this decline can be traced the the FCC's decision (under the stewardship of Bush administration appointees) to exempt the telecoms and cable companies from the open access provision of the 1996 Telecommunications Act, which forced the local telephone monopolies to grant access on reasonable terms to any and all long-distance telephone service providers. The result of this act was a dramatic reduction in long-distance phone costs, and a corresponding decline in profits for the telecoms.

The exemption the FCC put in place for broadband services has had the direct effect of putting the U.S. in a distinctly inferior position on broadband access across a variety of metrics, most notably download speeds and cost of service. But Verizon and Comcast love it. With the FCC now under new management, it looks as though it is poised to rescind the previous rules and bring open access back to internet services.

Warhol Foundation Accused of Creating Artificial Scarcity Of Artwork To Boost Value

An interesting lawsuit complaint as reported by CourthouseNews.com:

Andy Warhol's estate is behind an "insidious" conspiracy to monopolize the authentication and sale of the late artist's work, according to a complaint in Federal Court. Susan Shaer claims that the Andy Warhol Art Authentication Board routinely defaces authentic Warhol artworks with a "DENIED" stamp, thereby creating "artificial scarcity" and inflating the value of the art owned by the foundation.

By falsely declaring certain works as inauthentic, the board can "systematically exclude Warhol from the marketplace," Shaer says in her 43-page complaint.

Shaer says that without the board's intervention, independent sales would compete with the foundation's holdings in auctions and private sales.

Shaer says board members feel "free to abuse the authentication process in pursuit of their naked self interest."

The board's stamp of approval is necessary for anyone in the world to sell a Warhol work, which allows it to wield "disproportionate power over the Warhol market," according to the complaint.

Read more HERE.

Rather a delicious irony for those familiar with the broader message behind much of Warhol's work.

Lessons from 60 years of pharmaceutical innovation

An executive at Lilly, Bernard Munos, has written a very revealing and candid article in Nature Reviews Drug Discovery link here.

The article, "Lessons from 60 years of pharmaceutical innovation" confirms what many already know - that the productivity of the pharmaceutical R&D enterprise is declining and has been for some time. Stated differently, the cost per new molecular entity has increased rapidly. This has occurred despite mergers and consolidation in the industry, changes in R&D management structures and changes to the technologies used to discover new drugs.

He also admits that "in many organizations, short-term priorities encourage marginal innovation, which provides more reliable returns on investment, at the expense of major change." He recognizes, in other words, that the current incentive system rewards the development of me-too drugs over novel therapies. Finally, he admits that alternatives to the traditional patent system, including prizes, may be required to boost R&D productivity.

Very encouraging words!

Sobran's Classic "The Reluctant Anarchist"

I was recently reminded of "The Reluctant Anarchist," a wonderful piece by the great columnist Joseph Sobran about his intellectual journey from conservatism to strict constitutionalism to anarchist--thanks to Rothbard and Hoppe. Highly recommended.

Note: I post this on this blog because the proprietor assured me once that this blog is not only about IP but all forms of monopoly. And it is the state that is the biggest and most dangerous monopolist of all--in fact, the only true monopoly. It is the source of the monopoly known as intellectual property; without the state, IP could not exist. Those who oppose IP but favor the state remind me of members of skeptics groups--those who scoff at ESP, astrology, and divining rods--but who are still religious. Those who oppose IP but favor the state should engage in some reflection.

[Mises; SK]

NBC--Comcast combo will screw the public

Once again we get to watch the advance of monopoly with the planned acquisition of NBC Universal by Comcast. One needs to read the details to see the full power of the deal link here. It turns out to be about a lot more than NBC broadcasting as NBC Universal owns several more cable companies and content in addition to the NBC network. GE would retain 49 percent of the joint venture, so we will have two giants in cahoots.

"Almost one in four cable subscribers in the U.S. is a Comcast customer. NBC Universal owns cable networks such as Telemundo, MSNBC and Bravo, TV shows such as Jay Leno's, regional stations such as Washington's WRC (Channel 4), and Universal movie studios," writes the Post's Cecilia King.

She notes that the "merger will be a test for how regulators will deal with the Internet video market, which doesn't fall directly under the FCC's jurisdiction. But the agency is exploring competition in online video, and it could use the merger to implement conditions that would set guidelines for the burgeoning market."

We can now see the folly of our deficient planning and regulation of radio and TV, which has permitted the growth of such giants and the extraction of maximum revenues from the public. Video over the internet promises to break what is a monopoly on distribution but will it be allowed to happen? Don't hold your breath.

Had we the luxury of starting over, we should rather have separated the means of distribution, the pipes, from control of the content. We might also have opted for local government control of the pipes, in the process creating a bilateral monopoly to exert some control of content fees.

Now we face a new situation. In time, video over the internet might destroy the hold of the cable companies over the pipes, but the outlook isn't good with the cable companies providing internet access and the only competitor in most places being the phone company, another congenital monopolist.


Bilski oral argument highlights (or rather, lowlights...)

Just to give you an idea of how radical the IP maximalists have become, check out these excerpts from today's Supreme Court oral argument in the Bilksi case (which may help decide the scope of patent law in terms of what can or can not be patented):

JUSTICE GINSBURG: But you say you would say tax avoidance methods are covered, just as the process here is covered. So an estate plan, tax avoidance, how to resist a corporate takeover, how to choose a jury, all of those are patentable?

MR. JAKES: They are eligible for patenting as processes, assuming they meet the other statutory requirements.

JUSTICE BREYER: So that would mean that every -- every businessman -- perhaps not every, but every successful businessman typically has something. His firm wouldn't be successful if he didn't have anything that others didn't have. He thinks of a new way to organize. He thinks of a new thing to say on the telephone. He thinks of something. That's how he made his money. And your view would be -- and it's new, too, and it's useful, made him a fortune -- anything that helps any businessman succeed is patentable because we reduce it to a number of steps, explain it in general terms, file our application, granted?

MR. JAKES: It is potentially patentable, yes.


JUSTICE BREYER: You know, I have a great, wonderful, really original method of teaching antitrust law, and it kept 80 percent of the students awake. They learned things.[Audience laughter.] It was fabulous. And I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?

MR. JAKES: Potentially.


JUSTICE SCALIA: You know, you mention that there are all these -- these new areas that didn't exist in the past because of modern business and what-not, but there are also areas that existed in the past that don't exist today. Let's take training horses. Don't you think that -- that some people, horse whisperers or others, had some, you know, some insights into the best way to train horses? And that should have been patentable on your theory.

MR. JAKES: They might have, yes.

JUSTICE SCALIA: Well, why didn't anybody patent those things?

MR. JAKES: I think our economy was based on industrial process.

JUSTICE SCALIA: It was based on horses, for Pete's sake. You -- I would really have thought somebody would have patented that.

MR. JAKES: There are also issues with enforcement. I can't really answer why somebody wouldn't have. There are teaching methods that were patented. There are a number of them that we've included in our brief where there were patents issued for teaching methods, and I don't think that we've had a serious enforcement problem with people being sued for using teaching methods. But there have been those people who have sought to patent them rather than keep them as secrets or just use them.


In the world view of the IP maximalist, even a method for "picking a jury" is patentable and subject to a monopoly. Imagine that you are a criminal defendant and your attorney has strategies for picking jurors that might be favorable to your arguments. Unfortunately however, another high-priced law firm which regularly makes large political donations and is located on the opposite coast has a "patent" on it. It refuses to let you choose the jurors in the manner you wish without forking over a fee which you can't afford (assuming they decide to license it to you at all....).

Very scary stuff.

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