Creating ideal market conditions (was "Raging Libertarian")

Discussion
1

Starchild,

I disagree with:
� Wide variety of consumer choice
� Highly competitive (not dominated by any single company or small
group of companies)

If one genius, e.g., an Einstein, devises a terrific idea,
e.g., E=mc2, far ahead of its time, which people universally
embrace, this is great. The absence of choice and competition
is no problem in such a case.

I also disagree with:
� Low barriers to entry

If you wish to build an airplane, for example, and compete
with Boeing, the start-up costs would be high even in a free
market.

Best, Michael

2

Michael,

  In what way does Einstein's theory of relativity constitute a product
in a market? Should other scientists have to pay him when referencing
or using his theory in their work? That would be a disaster for
scientific progress. Right now most scientists work primarily for love
of knowledge and peer recognition, not money. So requiring them to pay
all kinds of royalties to previous innovators in order to be able to
effectively push the frontiers of knowledge would add little incentive,
but would clearly have a major inhibiting effect on progress.

  And surely you can't be suggesting we should all pay royalties to him
if we adopt the belief that the universe works the way he described it?
I'm not sure I follow your example.

  Regarding the costs of entering a market, I recognize that for complex
and expensive products like airplanes the barriers will naturally be
fairly high, and I wasn't talking about these "natural" costs. What I
meant to suggest is that in an ideal market, barriers to entry would be
no higher than required by the nature of the products or services to be
offered.

Yours in liberty,
              <<< Starchild >>>

Starchild,

I disagree with:
• Wide variety of consumer choice
• Highly competitive (not dominated by any single company or small
group of companies)

If one genius, e.g., an Einstein, devises a terrific idea,
e.g., E=mc2, far ahead of its time, which people universally
embrace, this is great. The absence of choice and competition
is no problem in such a case.

I also disagree with:
• Low barriers to entry

If you wish to build an airplane, for example, and compete
with Boeing, the start-up costs would be high even in a free
market.

Best, Michael

From: "Starchild" <sfdreamer@earthlink.net>
To: <lpsf-discuss@yahoogroups.com>
Sent: Thursday, September 18, 2003 12:23 AM
Subject: [lpsf-discuss] Creating ideal market conditions (was "Raging
Libertarian")

It seems to me that an ideal market would be one with the following
characteristics:

• No government interference
• Wide variety of consumer choice
• Low barriers to entry
• Highly competitive (not dominated by any single company or small
group of companies)
• Favorable conditions for innovation, creativity, and technological
progress

In the computer industry, a lot of the issues that come up, and that
determine which companies prosper and how, are going to be issues of
intellectual property. Now given that intellectual property is such a
grey area of libertarian philosophy to begin with (should government
enforce patents? should they eventually expire? etc.), might it be
worth tolerating a little government interference if that interference
was designed to enhance the other four characteristics noted above?

Your devil's advocate,
<<< Starchild >>>

Don't get me wrong. I support the free market. All
I was saying
is that I blacklist that company in my book, and I
have every right
to do so.... unless someone feels this is an
inappropriate topic
for this list. I suppose it is. Sorry.

I did not mean to imply that it was wrong to
personally not choose MS or Linux or that your
comments here were inappropriate.

My commentary was meant to address the fact that
Microsoft's aggressive business tactics should not be
compared on the same level as those that McNealy has
sunken to in wrongly leveraging government. That is
much, much worse in my opinion. And it's not like Sun
is lily white on the business tactics either. They
have been sued for patent/tm violations, etc. as well.

BTW - I'm looking for any supporting material on a
comparison between competitive markets vs. free
markets, if you know of any. Very subtle difference
between the two...I've found many neo-libs to say they
support the free-market(like McNealy) but what they
really want is 'a level playing field' on their own
terms - i.e. no domination. Doesn't sound free to me.
ideas on this?

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3

Michael,

  In what way does Einstein's theory of relativity constitute a product in a market? Should other scientists have to pay him when referencing or using his theory in their work? That would be a disaster for scientific progress. Right now most scientists work primarily for love of knowledge and peer recognition, not money. So requiring them to pay all kinds of royalties to previous innovators in order to be able to effectively push the frontiers of knowledge would add little incentive, but would clearly have a major inhibiting effect on progress.

  And surely you can't be suggesting we should all pay royalties to him if we adopt the belief that the universe works the way he described it? I'm not sure I follow your example.

  Regarding the costs of entering a market, I recognize that for complex and expensive products like airplanes the barriers will naturally be fairly high, and I wasn't talking about these "natural" costs. What I meant to suggest is that in an ideal market, barriers to entry would be no higher than required by the nature of the products or services to be offered.

Yours in liberty,
              <<< Starchild >>>

4

Okay, let's forget Einstein. Let's pretend there was this perpetual motor
that worked by drawing static electricity out of the atmosphere, and that
motor made fossil fuels and nuclear fission obsolete... :slight_smile:

Do you honestly think the inventor of that motor would give it away "for love
of knowledge and peer recognition"? Come on. Sometimes it's better to have a
single breakthrough product that's fairly well monopolized in a free market
than it is to have a government-regulated market where such innovation has
absolutely no incentive.

As for natural barriers to entry, let's get back on the topic of software.
Just because I can personally, by myself, write a word processing program that
competes with Word does not mean that there's no naturally high barrier to
entry. The naturally high barrier is that millions of people use Word, and
nobody uses my software, and people tend to only use software that writes
files in formats that are easily transferred and read by others.
Compatibility vs proprietary file formats is the naturally high barrier in
software.

It's funny. Sun is notorious for being proprietary. Ever tried hooking up a
Sun Sparc keyboard to a PC or a Mac? When they claim that Microsoft is too
proprietary, and that's a barrier to entry, it sounds a bit hypocritical to
all the hardware manufacturers who can make one keyboard that works on all
Wintel machines, but they have to make a different keyboard for Sun, Mac,
etc., which all use proprietary connections.

Face it. McNealy's own company doesn't practice what he preaches, and he's
blatantly using the force of government to win advantage over competitors in a
market where he's simply been competitively out-maneuvered. Government
controls only hurt consumers, and there's nothing ragingly libertarian about
them.

5

I disagree with:
• Wide variety of consumer choice
• Highly competitive (not dominated by any single company or small
group of companies)

If one genius, e.g., an Einstein, devises a terrific idea,
e.g., E=mc2, far ahead of its time, which people universally
embrace, this is great. The absence of choice and competition
is no problem in such a case.

The physics community is still highly competitive. I think Starchild was referring to competition in general, not competition over everything specific which would eliminate the possibility for any kind of property.

I also disagree with:
• Low barriers to entry

If you wish to build an airplane, for example, and compete
with Boeing, the start-up costs would be high even in a free
market.

Angel investors, venture capitalists and capital markets make this much easier though.

-- Steve

6

Rob,

  Is your position that the inventer of a technological process or revolutionary new product should have sole and complete ownership of that process or product forever?

  Think what this would mean had such a policy been in effect for a significant length of time. The heirs of the people who invented photography, computer chips, the telephone, the internal combustion engine, and all kinds of other things that are used daily by virtually everyone in developed countries (or the people who bought them out) would be making all kinds of money, and it would be a huge drain on the resources of everyone else in society.

  Taking your hypothetical example of a perpetual motor, he or she would not be forced to "give it away," strictly speaking, even with no government protection of intellectual property rights for the inventor. Others would simply be free to copy the design and make their own motors. The cachet of being first and the desire of people like yourself (and possibly me) to properly compensate invention would still give the original inventor's motors a natural advantage in the market, and consequently some not insignificant financial renumeration.

  Going to the other extreme would tend to hamstring the entire society by making the new technology only just barely enough of a better value than existing energy sources to get people to switch (thereby maximizing profits for the inventor or the people who bought him/her out), instead of realizing a major economic leap for the entire planet that would come with the availability of a radically cheaper energy source.

  I'm not sure that no legal protection whatsoever for intellectual property is a good idea (though that would of course be the case under anarchy), but that approach appeals to me more than its opposite.

Yours in liberty,
              <<< Starchild >>>

7

I'm not talking about any "policy". I'm talking about an absence of "policy".
You were the one advocating for market controls to artificially create or
bolster competition. I'm just saying that a monopoly isn't a bad thing if
someone innovates to create that monopoly. Bell had a monopoly on phones for
most of his life. Edison had a monopoly on most things electric. Ford had a
monopoly on cars for the masses. Kodak had a monopoly on consumer
photography. Until very recently, Intel had a monopoly on consumer computer
chips. Each of these monopolies or near-monopolies lasted for decades, and I
think we consumers weren't harmed.

My point is that a market-determined monopoly is not so evil that we must have
government come in and "level the playing field" for the sheer sake of
preventing monopolies. If not for each of these innovative people or
companies having a huge profit motive due to their near monopoly status, it's
highly unlikely that most of them would have put so much effort into their
innovations.

Under your proposed system, there might be a "more level playing field", but
we'd all still be playing with horse-drawn wagons, candles, oil paintings,
telegraphs, and an abacus.

:slight_smile:

8

Rob,

  I'm still unclear as to whether you believe inventors of new technological processes or products should have sole and complete (meaning transferable) ownership of those innovations forever. You pointedly did *not* say that we would be better off if the heirs of Edison, Bell, and Kodak still had monopolies on electricity, telephones, and photography.

  I'm not sure which "proposed system" of mine you're referring to that would allegedly have us still using horse drawn-wagons and such, as my last message pretty explicitly refrained from advocating a free-for-all on new technology and I made no other specific proposal.

Yours in liberty,
              <<< Starchild >>>

9

Unless we've veered off onto the topic of copyright and patent law, I thought
we were talking about McNealy's "raging libertarian" comment. In that case,
Microsoft's dominance is 100% market-determined, with no "ownership"
whatsoever causing the monopoly. On the contrary, it's McNealy's Sun
Microsystems that is claiming "ownership" of java technology, thereby blocking
Microsoft from adding its own extensions.

We can talk about copyright and patent law elsewhere if you like, but I'm just
saying that the mere fact that Microsoft has a near monopoly is not
justification for government interference. What you proposed a couple of
emails ago, which is government leveling the playing field whenever a monopoly
arises naturally, would take the incentive out of productive innovation.
That's what would cause technological process to halt. If monopolies had been
considered as evil back in the 19th and 20th centuries as they are now in the
21st, we would never have seen mass produced cars, consumer photography
equipment, electric everything, or the miniaturization of computers.

If you still want my opinion on copyright and patent law, let me know. We can
start another thread.

10

Well, with a physical device that can be analyzed, the first copy sold does have the potential to be copied, possibly by a better-financed competitor. While the cachet of being the inventor, and possibly making money on reputation or consulting, is one way to approach the problem, it's by no means a guarantee. What if you invented the disposable lighter? No one cares whether you did or not, because they're relatively simple to duplicate effectively.

Some things are harder to analyze; Coca-Cola has never been patented, because the company prefers just to keep it a secret.

But there is a non-governmental solution (well, a few, really); one is called the Street Performer Protocol. A guy playing saxophone on the sidewalk doesn't care if the payers and the listeners are the same people. If he gets paid, he keeps playing; if he doesn't, he stops. As long as he's playing, everyone can listen. With SPP, the author decides how much a work is worth, and puts the work in escrow. When the value of the work is paid, the work is released for everyone to use.

The work in question could be the plans for a free-energy motor, or it could be the sale of the motor itself. The inventor could give demonstrations to pump up interest, and to raise the funds... it could also be looked at as an alternate way to raise capital. The inventor could make an estimate of how easily the engine could be copied and how much reputation counts when deciding to set the threshhold.

For more thoughts on IP, see <URL: http://crism.maden.org/writing/dmitry/notathug.html >. For an implementation of the Street Performer Protocol, see <URL: http://www.openculture.org/ >.

~Chris

11

This was a message I wrote a while ago and seem never to have sent. Sorry for the delay.

12

Oops, the final sentence was screwed up in the copy of this message I sent. Here's a corrected version.

            <<< Starchild >>>