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Government versus Progress

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Intellectual Privilege: Copyright, Common Law, and the Common Good
by Tom W. Bell (Mercatus Center 2014), 238 pages.

Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom
by Adam Thierer (Mercatus Center 2014), 1089 pages.

These books cover two different aspects of the same phenomenon — how laws and regulations obstruct progress.

Tom Bell’s Intellectual Privilege examines copyright law, which creates government-protected monopolies for writers, artists, composers, and other creators. Adam Thierer’s Permissionless Innovation covers the growth of regulations that require people who want to offer new goods or services in the market to first obtain the consent of government officials — which they often can’t.

I will start with Bell’s book.

The idea behind copyright was simple — that creativity would be stimulated if individuals were given the exclusive right to profit from their works for a period of time. The law was supposed to strike a sensible balance between financial incentives for creators and benefits for the populace.

Early on, that may have been the case, but the law has changed greatly since the first Copyright Act was passed in 1790. Today, copyright does far more to create an information oligarchy than the robust information democracy the drafters of the Constitution and the first act had in mind. It is now widely seen as an obstacle to intellectual liberty and creativity.

Some scholars challenge the assumption that we need copyright at all, among them Chapman University Law School professor Tom W. Bell.

In Intellectual Privilege: Copyright, Common Law, and the Common Good, Bell takes a probing look at our copyright system. He concludes that it leaves us worse off than if Congress had never made use of the Constitution’s grant of authority: “To promote the progress of science and the useful arts by securing for limited times to authors and inventors the exclusive rights to their respective writings and discoveries.” Rather than acting as a catalyst for creativity, copyright has become a great obstacle to the flow of information.

Even though it’s the very field he teaches, Bell would like to see copyright law disappear.

Copyright, he argues, is not like the natural rights people have —rights to peacefully use their property. Instead, copyright is a privilege that government confers on writers, composers, and other creators. It is a privilege that allows them to interfere with the natural rights of others, by invoking the power of the state against them for “infringing” on anything to which they hold copyright.

What about the constitutional premise of copyright, that by conferring exclusive rights on writers and other creators, we encourage more books, songs, movies and other works? Isn’t it correct?

Bell answers in the negative. He points out that we have never applied copyright to many items that involve creativity, but nevertheless enjoy a steady stream of innovations in them. “The designs of clothes, furniture, automobile bodies, and architectural structures have developed without the benefit of U.S. copyright law,” he writes. So we probably wouldn’t suffer any decrease in output of creative works in the areas where copyright does apply — books, music, and so on — if we got rid of it.

What would happen in the absence of copyright? Bell maintains that instead of relying on the copyright crutch to squeeze the maximum revenue out of consumers willing to pay a high price, creators would look to common law. That is, they would use the same rights everyone else has in contract to make arrangements whereby consumers would pay some amount for access to their works and then not worry about the legal thickets of “infringement.”

“Fared use”

As the law now stands, copyright holders usually try to cash in by charging consumers a profit-maximizing price and having their lawyers or the government go after anyone who infringes rather than pays. But there is a big exception for “fair use” of copyrighted items. People can make some use of copyrighted material so long as it doesn’t go “too far.”

There is, however, no clear line between “fair use” and “infringement.” Bell observes that even law professors can easily find themselves facing a lawsuit over some use they thought was “fair” but the other party claims is “infringement.” We could escape from much costly and pointless litigation by abandoning copyright.

Exactly what arrangements would replace it is impossible to say. Development of those arrangements would not be planned, but would evolve under the spontaneous order of the free market. However, a good idea of how things might change can be seen in the way many Americans now enjoy music on their iPods or other devices.

Bell writes, “Before, you did not have to pay to carry your favorite music; now you do. Has that made you worse off? Surely not. Apple’s fared use offers a better deal than analog’s fair use.” By “fared use” Bell means that everyone pays a small amount to the producer. Replacing copyright with a common-law “fared use” system would benefit everyone except copyright lawyers, who would have to find more useful work. (Some law professors, too.)

Abandoning copyright wouldn’t mean that creators would be without defense against misappropriation or misuse of their works. Common-law doctrines and a number of statutes protect against that. Instead of relying on copyright infringement threats for any use they dislike, creators would have to look for legal causes of action under fraud, breach of contract, or state and federal statutes covering unfair competition and consumer protection. If there were no such grounds, other parties would be free to use material for their purposes. Bell thinks that would be a great improvement over the status quo. He’s right.

Consider how this controversy would turn out if copyright no longer gave its privileges. (It isn’t in the book, but I know about it directly.)

When working on his book Blown to Bits, Harvard professor and former dean Harry Lewis wanted to show that things posted on the Internet never completely disappear. An example he wanted to use related to his former boss, Larry Summers, who was Harvard’s president until an unguarded remark that there are reasons other than discrimination to explain why there are relatively few women on science faculties. After uttering that, Summers came in for intense criticism, but his initial reaction was to post a statement on Harvard’s website saying, “I have nothing to apologize for.”

Summers soon realized that response was ill-advised and deleted it — or tried to. Lewis was able to locate it with a search and wanted to include the original post in the book to help make his point. That’s when he ran into copyright trouble.

Harvard refused him — a former dean of the college! — permission to include Summers’s statement on the grounds that it held the copyright. Lewis and his publisher did not want a copyright suit against them by Harvard, so the statement was left out. That’s quite amazing: a statement made in public by a national figure is off-limits to reproduction! How does that serve the public interest?

Without copyright, Lewis could have used the statement without fear that Harvard would find some common-law or statutory ground for preventing him. Only copyright allows people and institutions to lock published material away without reason.

Compared with the copyright regime, fared use and common law would probably mean that some writers, musicians, and so on would make somewhat less money, but, Bell asks, why should the law aim at maximizing their returns? They should have no legal rights or privileges different from everyone else.

Another reason why Bell finds copyright objectionable is that, like other special-interest statutes, it is often manipulated to serve the politically connected few. Congress has repeatedly made the law more beneficial for those who hold copyrights by extending the period of time for exclusive rights. Initially, it was a maximum of 28 years; now it lasts for the life of the author plus 70 years after his death. It’s impossible to see how that does anything to promote the progress of science and the useful arts.

Intellectual Privilege is a carefully reasoned, thought-provoking book. Copyright is such an ingrained part of American life that most of us assume that it’s essential, but Bell makes a strong case that we would be better off without it.

The “permission” question

Just as copyright sends creators into dense legal thickets if they want permission to use published works, so must innovators hack through legal thickets to get permission for new things. That is the subject of Adam Thierer’s book Permissionless Innovation. Thierer, a senior research fellow with the Mercatus Center, examines the barriers to innovation that government creates with laws that compel people to get official permission before they’re allowed to try out their ideas.

“The central fault line in technology policy,” he writes, “can be thought of as ‘the permission question.’ The permission question asks, Must the creators of new technology seek the blessings of public officials before they develop and deploy their innovations?” Unfortunately, the answer is more and more often: Yes, you must get permission.

America grew up under a very different set of rules — a regime of permissionless innovation. Anyone who wanted to try new products or methods just went ahead and did it. John D. Rockefeller did not have to petition any government officials before he could use new ways of refining oil; Henry Ford did not have to ask if it would be all right to build a horseless carriage. Today, however, the first step for an innovator is to see a lawyer for help in preparing and submitting all of the mandatory permission applications.

What is driving our shift away from permissionless innovation is the so-called precautionary principle. Thierer explains that this entails “the belief that new innovations should be curtailed or disallowed until their developers can prove that they will not cause any harms to individuals, groups, specific entities, cultural norms, or various existing laws or traditions.” Obviously, proving that an innovation will never do any harm in any respect is nearly impossible and it gives enemies of progress many opportunities to obstruct changes they fear.

Thierer gives lots of examples. Taxicab commissions have been hostile to Uber, Lyft, and similar alternatives to the inconveniences of relying on taxis, in some cities denying them permission to offer new transportation options for consumers. The Food and Drug Administration has ordered the company 23andMe to stop marketing its home genetic analysis kit. New York regulators have been doing their utmost to keep Airbnb from getting any traction with its home rental service.

In those and many other cases, the rationale for the governmental barriers — the obligatory permission begging — is that safety is the paramount consideration. What if someone were hurt while riding in an Uber car? What if the information from a genetic test were mistaken or too frightening for the individual? What if a property rented through Airbnb didn’t conform to every safety regulation?

Of course, nothing can be perfectly safe or completely harmless, but to the minds of many politicians and activists, the immense prospective benefits of allowing innovations are far less significant than the possibility, however unlikely, that someone will be worse off. They don’t want to be blamed if an innovation has some undesirable results. Thierer responds, “Living in constant fear of worst-case scenarios — and premising public policy upon them — means that best-case scenarios will never come about.”

The “precautionary principle” is often just a smokescreen for interest groups that don’t like laissez faire, Thierer suggests. Two groups in particular have formed an unholy alliance against progress: reactionaries and technocrats. Reactionaries simply don’t like many new things that they find threatening, either emotionally or financially. Social conservatives have qualms about anything to do with genetics, for example. Taxi companies would rather not have to compete with upstart firms and want government to stifle them with regulations.

Technocrats aren’t completely opposed to innovation, but believe that the state should pass judgment on new things because government officials are more knowledgeable and concerned about the public interest.

Combined, they create a strong “Baptists and bootleggers” force that is slowing technology and innovation.

It is true that innovations can cause harm, but Thierer argues that the country would be much better off by allowing innovation and relying on “bottom-up” adaptations to it rather than trying to prevent harm with stifling government regulations.

These books dovetail in showing that government is the problem and freedom is the solution. I recommend both.

This article was originally published in the May 2015 edition of Future of Freedom.

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    George C. Leef is the research director of the George C. Leef is the research director of the Martin Center for Academic Renewal in Raleigh, North Carolina. in Raleigh, North Carolina. He was previously the president of Patrick Henry Associates, East Lansing, Michigan, an adjunct professor of law and economics, Northwood University, and a scholar with the Mackinac Center for Public Policy.