IP is cronyism dressed up as freedom

Many people rightly believe that respect for private property is one of the cornerstones of economic prosperity in any society.  Private property is not only a fundamental tenet of natural law, but crucial to obtaining and maintaining true freedom.

The opposite of a system of fairly and justly acquired property is a system of patronage, special privilege and disrespect for property rights.  Mugabe’s Zimbabwe or Stalin’s Soviet Union are obvious examples of these kinds of systems.  But in the supposedly liberal Western world there are far too many other examples of patronage and special privilege for us to be confident that we live in genuinely free societies that truly respect property.

For one the state confiscates our property without asking us in the form of taxation.  Don’t be fooled that democracy gives us a ‘choice’.  Other infringements on freedom and property include prohibitions on drug ownership, gold ownership, gun ownership and all other manner of property ownership restrictions.  In many supposedly free countries you can own a piece of land, but find something of value underground and the state will happily confiscate said land from you in short order.

You may own a car but only if it is registered with the state.  Why on earth does your car need to be licensed with the state but your shoes don’t?

Folks, in far too many instances in our free societies we have surface-level freedoms, but underneath we have a system of criminal taxation, disrespect for property rights, and disregard for free and unhindered ownership of property.

Intellectual property (IP) law is a most cunning beast.  IP masquerades as freedom.  IP pretends to be sticking up for respect for property.  In reality, IP is nothing but patronage and privilege dressed up as one of the pillars of the free society.

Many freedom lovers are seduced by the IP monster.  Uber-libertarian Ayn Rand famously tried to have her prolific works protected by IP laws.  Even South Africa’s own Free Market Foundation, who we greatly respect and whose articles we often cite in these pages, are right behind the protection of intellectual property.

Like I said, to the lover of freedom, IP is a seductive beast.

Before we briefly examine the case for IP, we have to ask: is there even such a thing as ‘intellectual property’?  What does IP actually mean?  Can you really ‘own’ ideas?  Are they really your ideas?  If you add an incremental idea to a 5000 year history of ideas to make a ‘new’ idea, can you legitimately own the whole idea?  Can you own words or thoughts?  Who’s to say you thought of it first?  Just because you got in your car and drove to the patent office to lodge the patent, does that give you just legal claim on an idea that you may have gleaned from someone else?

The world of IP is a world of abstracts where people who know how to play the system gain an advantage.  Inventors who make incremental changes to previous ideas try to sell their invention as wholly unique, and then ask government to prohibit anyone from copying it.  Yet they have copied everyone before them and added only an incremental improvement.  Strictly speaking these inventors should be required to pay to other inventors their portion of the total idea, and furnish with monetary compensation the bank accounts of the descendents of the inventors of time gone by.

IP laws are a pure excuse for protected privilege, something which is anathema to a free society.  People are very hung up about equality and justice, but IP laws are unjust.  Injustice in the guise of justice – this is what makes IP laws so seductive and so dangerous.

People will protest that entrepreneurs need an incentive to create and invent and that without IP laws this incentive disappears, leading to economic stagnation and technological regression.  IP laws, they say, are the bedrock of progress.

The response to this contention is a simple one: nonsense!

A few weeks ago we had this to say about how IP laws impact companies,

“Companies thrive when intellectual property laws are abolished.  This is controversial but true nonetheless.  The competitive advantage in any business invention or idea is in having special knowledge and first mover advantage.  In some instances that special knowledge is impossible to copy, while in many other instances it can be copied easily.  Legal protection of the IP is an additional privilege that entrepreneurs have sought from the state.  While these entrepreneurs benefit from these laws, other companies are worse off for not being able to replicate and improve these ideas, and consumers are worse off because production is restricted and therefore prices are higher than they otherwise would be, diverting income away from other goods and services.  Like trade barriers, IP laws protect a minority while making the majority worse off.  The incentive for a company to invest in an idea and benefit commercially from it is inversely proportional to the replicability of the special knowledge.  The better the invention or idea, the harder to replicate that knowledge, meaning a longer period of time of exclusive commercial benefit for the inventor.  If something needs IP laws to have any commercial benefit, it is a weak invention.  IP laws are bad for companies and bad for the economy.”

Indeed, those hiding behind IP laws have sought patronage from the state.  The social benefits that progress is supposed to create are stifled as protected products are produced by isolated firms.  Consumers pay too much for products as a result, diverting funds away from other goods and services.  Furthermore, because others are legally prohibited from copying ideas, the incremental invention process is retarded, meaning, if anything, technological progress is slower, not faster, under an IP regime.

For thousands of years societies never had IP laws, and yet inventions flourished and technological progress went ahead.  The inventor of the wheel didn’t derive some special state-granted privilege, she just benefited from using the wheel, a powerful enough invention that it would encourage anyone to put in the time and effort to develop it.  For as long as she enjoyed unique knowledge in how to make wheels, she had a tremendous business advantage.  When others eventually learnt how to copy her invention, society suddenly had the technological innovation that literally transported it to the next level of economic productivity and integration.

The free market of ideas and inventions and innovations will provide society with as much R&D and technological progress as is needed.  Absent IP laws, entrepreneurs will seek even harder for those inventions that are excludable from others, either by special knowledge, painstaking research required to understand, or unique materials that only few know where to source.  These knowledge-advantages are legitimate and should be exploited by entrepreneurs for their personal gain until the code is cracked by others who then improve upon the original idea or method.

This is the essence of progress.

IP laws stifle and retard this process.  IP laws allow people to accumulate all manner of knowledge and insights throughout their whole life, some of it freely given to them and some of it paid for, combine this with technological advances that have gone before, mix this with inspiration received from others, throw that in with their own flair and intuition and skills, and call the final product their property!

This is ludicrous my friends, and lovers of genuine freedom should stop punting respect for intellectual property as a corner stone of freedom.  It is no such thing, but instead is a system of patronage and privilege to be exploited by the strong and well connected and out of reach of the weak and disconnected.

Intellectual property is a ruse and must be distinguished from homesteaded physical property.  The whims and sparks of thought and intellectual inspiration are fundamentally different from physical, homesteaded property.  They cannot be traced, ring-fenced, legitimately protected, proven or defended.

We don’t need IP law.  Countries that care for freedom and progress should scrap it.  Lovers of freedom should stop trying to protect it.  Entrepreneurs will act in any system to maximize their advantage.  The state should abolish its legal monopoly on granting patents and intellectual exclusivity.  The system is rotten.

Someone told me recently that Taiwan has the most pending and registered patents of any country in the world.

Shame.