Ebook Price Fixing and Bad Journalism

(Austrian) Economics, Business, IP Law, Statism
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You may have heard that the Department of Justice decided to launch antitrust litigation against Apple and some major publishers for alleged price fixing and that most of them decided on the same day to settle. The alleged sin was that Apple and the publishers decided to go with the agency pricing model in which the publishers get to set the prices for their books in the iBooks Store, while Apple takes, I believe, a 30% cut.

So late last night I read this:

How Steve Jobs Got Apple Into Trouble Over Ebooks” by Lance Ulanoff, Editor-in-Chief of +Mashable.

Wow, is this guy clueless.

And if Steve Jobs really thought Amazon screwed up, he was clueless as well. Amazon is WINNING.

Jobs pushed the agency model on the publishers? I don’t think so. They preferred that model but couldn’t get Amazon to go along with it without Apple’s help. It’s the screw-your-customers model and it wouldn’t have been good for the publishers over the long haul. They want high ebook prices so that they can hang onto their outdated IP-dependent business model of selling paperbacks and hardcovers in big box brick & mortar stores for as long as possible.

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Tom Woods’s Liberty Classroom

(Austrian) Economics, Anti-Statism, Education, History, Technology
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My friend Tom Woods has just launched an exciting new educational platform: Liberty Classroom, the tagline of which is: “The History They Didn’t Teach You.” As the website explains:

The intellectual battle for the free society is on. Liberty Classroom’s ambitious goal is to equip as many ambassadors of liberty as possible with the knowledge they need to win that battle. We take a machete to the comic-book version of U.S. and European history most of us learned in school. We don’t believe the version of events that credits government with all the good things of civilization, that insists we’d be lost without the political class, and that warns us of the wickedness and exploitation to be found in the voluntary sector of society.

We believe in freedom. And that’s what we teach at Liberty Classroom.

We’re starting with history, but watch for other subjects to come.

Win more debates. Spread the message more effectively. Understand the world better. Learn from — and interact with — some of the most respected and accomplished scholars in the liberty movement. Join today!

Initial courses include:

Congratulations and good luck to Tom!

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Education by Experience as the Only Hope for Mankind

(Austrian) Economics, Anti-Statism, Education, Libertarian Theory
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a long habit of not thinking a thing wrong, gives it
a superficial appearance of being right, and raises at
first a formidable outcry in defense of custom.
But the tumult soon subsides. Time makes more
converts than reason.
Thomas Paine

It has been my experience that many libertarians abhor realism. They deride it as being pessimistic. They seem to think it is some sacred libertarian duty to “believe” that we “can” “win”—in our lifetimes, or in the next election cycle, I suppose. My sense is that much of this is driven by the more “activist”—in the sense of electoral politics—type of libertarian. It’s as if they believe that without a belief that possible victory is around the corner, too many people will give up in resignation. So we have to maintain the illusion that victory is around the corner to remain self-motivated.

I have always disliked this kind of—what seems to me to be—self-deception. I fight for liberty because it is right, not because I think we are about to “win.” I fight for liberty whether we can win or not. So I have never been afraid of pessimism or realism since in my case, I am not afraid it will lead me to give up or change my mind. This is the advantage of having a principled case for liberty. If you get involved in the movement in the naive hopes that we can change the system with a few pamphlets or blogs or campaigns, you are setting yourself up for disappointment. But if you have a more long-term view, you fight for liberty for love, and because it is beautiful and right.1

And when you look around things are pretty bleak. Most people have no interest in sound economics or intellectual consistency. So is there any hope? Well, what is needed to achieve a free society? It is 100% conversion to libertarianism? No, I don’t think so. In fact such a society is hard to imagine. Suppose we had an anarcho-libertarian utopian paradise where literally everyone was peaceful and libertarian. In such a society people would not lock their doors, they would be less careful in protecting their property, and so on. In such a society, the incentive for the marginally worst person to “defect” and start stealing would be great, since there is so much low-hanging fruit. The point is that even in a largely libertarian utopia we can expect some degree of private crime. And this can be dealt with by insurance, private security agencies or measures like locks on doors or passwords on accounts, ostracism, and so on. To achieve a private law society we need not totally eliminate aggression, but keep it to small, marginal levels. There would be no public or institutionalized aggression, as there would be no state, but there would be some marginal background amount of private crime. The key thing is that the overwhelming societal consensus be compatible with libertarian property rights. Is this achievable?

Well we already have a certain degree of civilization and society. To the extent we do, it is because most people are already more or less libertarian, at least in their private lives. Most people would not steal from their neighbors, rape, pillage or loot, even if they could get away with it. They are simply not consistent or economically literate enough to realize that their basically civilized stance implies the state is illegitimate. My view has long been that most people are decent and have civilized grundnorms or basic values; if they were only more consistent and principled and economically literate, they would realize why a full-fledged free market is necessary, and why the host of modern state policies and institutions are incompatible with their more basic values.2

This is why one principal libertarian goal has been one of education: to educate people in basic economics and basic political philosophy. Thus we recommend Hazlitt’s Economics in One Lesson or Bastiat’s The Law to people. We corner them at cocktail parties. We offer to send them PDF pamphlets or links or blog posts. But as we have all seen in such cases, they are not really interested. Most of these people have rarely read a non-fiction book or article. Certainly not the type we think they need, like Bastiat, Rothbard, Mises. In the far flung future perhaps we will all be hyper-wealthy men of leisure with 50 more IQ points and this will change. But I doubt it.

Perhaps recognizing the futility of educating or converting the masses in any reasonable time frame, a divide and conquer approach is employed: libertarian think tanks and scholars attempt to influence those at the top of the intellectual pyramid, such as academics, in the hopes of some kind of trickle-down effect: the professors write the texts and set the tone, the students and future politicians pick it up, and so on. Yet this has been tried for decades and the results are obviously discouraging: taxes and spending keep going up. I suppose some could argue that without the subtle behind the scenes push on the top of the pyramid current spending and taxes would be even worse. But this is hard to imagine and harder still to prove, and, in any case, even if true, it’s thin gruel.

I do agree that if there is any long run hope for a liberated mankind it has to be accompanied by a significant overall enlightenment, specifically more economic literacy. Given the failures we have seen to date in our efforts to spread the good news of free markets, is there any realistic hope that we can achieve a freer society by raising the level of economic literacy, despite the general anti-intellectualism of the world or nation’s populace?

I think there is. The opening quote above by Paine is a hint as to my view on this. Consider the fall of Soviet communism circa 1990. Before then you had many leftists in the West who were commie/socialist apologists. Most people were dimly aware of the debate and paid little heed. As far as they were concerned capitalism (in the libertarian sense) and socialism were just alternative ways of arranging an economy, each with its own advantages and drawbacks. Misesians and libertarians had various principled and economic reasons for opposing socialism. Everyone else was ignorant, apathetic, inconsistent, or pragmatic. Thus they were prone to treat the two as competing systems.

But my impression is that the general attitude towards central economic planning, communism, and outright socialism has changed. Most people now recognize that we have to have at least some free market core to produce wealth. They realize that communism is bankrupt and leads to poverty. Why do they know this? Have they read Mises or Hazlitt? No. They simply saw the West get richer, and communism collapse. Experience was a teaching moment in history, for all of humanity. This is a sign of hope. Even people that are un- or anti-intellectual, who are uneducated in economics (or, worse, educated in mainstream economics), have learned something basic about economic freedom. They know that it works, and that state planning does not. They are not consistent, of course, but their awareness of the failings of central planning is levels above that of people in the 1970s, say.

To me, this is a sign of hope. It implies that we do not have to hope that 78% of adults become libertarian intellectuals, reading Rand and Rothbard and Bastiat, to rally to the side of freedom. We can presuppose that they are decent already at core—if not, humanity and civilization have little hope. But we can hope for a gradual improvement in overall economic literacy because experience and the unfolding of history will continue to teach it. (With some of the intellectuals and scholars in the background offering an undergirding support for those few seeking more depth and consistency.)

I picture the underlying free market economy as a strong stallion, with a bunch of gnashing state parasite beasts latching onto it with sharp claws and blood suckers, continually sapping its strength, living off of it, and dragging it down. If the state grows faster than the market and technology, maybe it will finally drag the stallion down, killing it, and dragging society into a new dark age. But I think it is more likely that the free market stallion will continue to outpace the ability of the state to sap its strength. The Internet will continue to develop into a market force and an informational/communicative force to fight to the state. As technology and the division of labor expand and improve, as the world population increases and more developing nations lurch towards industrialization and some semblance of libertarian capitalism, as the Internet and communication and networking, learning, and sharing combine, it is possible that we will continue to see radical increases in wealth and prosperity—despite the state’s frictional drags and setbacks. As I noted in “Stephan Kinsella on the Logic of Libertarianism and Why Intellectual Property Doesn’t Exist,”

The Internet is one of the most significant developments in our lifetime, perhaps in the history of humanity. The state is trying to control the Internet but I believe and hope that by the time the state is fully roused to the danger the Internet poses to it, it will be too late for it to stop it. As a Salon writer said about former congressman/now copyright lobbyist Chris Dodd after the Internet uprising that helped defeat the Stop Online Piracy Act (SOPA): “No wonder Chris Dodd is so angry. The Internet is treating him like damage, and routing around it.” My hope is that the Internet will find ways to treat the state like the cancerous damage that it is, and route around it and leave it in the dust.

I do expect technological advances to continue, despite state interference, and to continually enrich mankind. As this happens, over time, I expect that a growing number of average people will learn by experience and osmosis of the power of freedom, technology, and market, and become more and more cynical about the efficacy and justice of state interventions—just as people have learned to be cynical about central planning after seeing the economic collapse of the USSR and its satellite states.

I am actually fairly confident this will happen, since life is a force that is hard to snuff out. There may be setbacks, and it’s hard to predict how long this will take, but I do believe that in the end, freedom will win because it is just, it is right, it is compatible with the nature of reality and with the nature of decent humans. At some point the disparity between the statist way and the individualistic, free way will become too apparent for most people to ignore.

This is my hope.

Update: Louigi Verona has an interesting response to my post at Bad lessons of history: Do we really learn?, where he argues that I am a bit too optimistic. Could be.


  1. See my post Why I’m a Libertarian–or, Why Libertarianism is Beautiful; also, The Trouble with Libertarian ActivismWhat It Means To Be an Anarcho-Capitalist, and The Irrelevance of the Impossibility of Anarcho-Libertarianism

  2. For more on such “grundnorms,” see What Libertarianism Is; The Division of Labor as the Source of Grundnorms and Rights; Empathy and the Source of Rights

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Spike Lee’s Twitter Message About George Zimmerman and Causation under Libertarian Theory

(Austrian) Economics, Anti-Statism, Libertarian Theory
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As Bob Wenzel notes here:

I hate to say this about a fellow Knicks fan and author of one of my favorite books, Best Seat in the House: A Basketball Memoir, but Spike Lee did something really stupid.

He tweeted what he thought was the address of George Zimmerman, the shooter of Trayvon Martin. That’s dumb enough. Talk about rush to judgement and mob rule. But the idiot on top of everything else tweeted out the wrong address. It’s the address of an elderly couple [Elaine and David McClain] in the general vicinity of where Zimmerman lives, but have nothing to do with Zimmerman. They now live in justifiable fear.

If some third party aggressor had used the information supplied by Lee to harm the McLains, should Lee be liable under libertarian principles?

As a general matter, someone—say, A—is responsible prima facie only for his own actions, not those of others. That is, A is responsible for harm he directly causes. If someone else—say, B—directly commits aggression against victim C, then A is “vicariously” responsible for B’s tort or crime only if there is some special reason to impute B’s acts to A. (For more on Rothbard’s and my views on vicarious liability, respondeat superior, etc. see my posts Corporations and Limited Liability for Torts and Corporate Personhood, Limited Liability, and Double Taxation.)

In the case posited, Lee is at most indirectly or vicariously responsible for the acts of aggression committed by someone acting against the McLains using information from or acting on suggestions in Lee’s tweet. The basic question is: should Lee be considered vicariously responsible, along with the direct aggressor, for the direct aggressor’s crime? Can Lee be considered a cause of the harm done to the victim?

Most libertarians recognize that in some cases, A is vicariously responsible for B’s actions. For example: if A coerces B to harm C, then A is causally responsible for what happens to C. (B is responsible too, but maybe even less responsible than A.) Or, if A has a contract with B, such as a wife hiring a hit-man to kill her husband. But these are ad hoc exceptions, not grounded in any general theory of causal responsibility. Some, such as Walter Block, seem to believe that these are the only grounds for vicarious liability (see, e.g., Reply to “Against Libertarian Legalism” by Frank van Dun; also Rejoinder to Kinsella and Tinsley on Incitement, Causation, Aggression and Praxeology). Walter’s concern seems to be that a more general theory outside these two narrow exceptions would be contrary to Rothbard’s view that someone is not liable for “merely” “inciting” others to commit aggression (Rothbard, Self-Defense and “Human Rights” As Property Rights, in Ethics of Liberty).

I think this ad hoc approach is problematic. First, it is not general or clearly rooted in a general theory of causal responsibility. Second, there are problems with each of the two ad hoc exceptions. In the case of A coercing B, this would imply that, say, President Truman is not responsible for dropping nuclear weapons on Japan. Walter has argued that in such a case the higher-ups in the government always and necessarily are coercing the underlings down the chain of command. This does not seem correct. It could be correct, but as far as I know Truman didn’t actually carry a firearm. At most he could have ordered someone to coerce the general, to coerce the next down the line and so on. But he was not coercing the first guy he ordered. And so on. Further, it seems that Truman should be responsible even if he had not coerced anyone. If his commands were effective in a given hierarchical structure or organization, then he is causing the underling to perform certain actions.

And in the case of A hiring B to harm C—a contract is merely a transfer of title to property (A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability). The Austrian theory of subjective value recognizes that a person B may value many things—not just money transferred by contract. He might value instead the possibility of sexual favors A might give him later. And so on. It seems odd and unAustrian to assert that A paying money to B is the only way of inducing B to do something that makes A responsible for it.

Pat Tinsley tried to sketch out a general theory of how to treat such matters in Causation and Aggression. We argue that in some cases A can be vicariously responsible for crimes committed directly by B (B is of course always liable too). We do not limit this to the two narrow cases noted above—A and B having a “contract,” or A coercing B. Our view is rooted in praxeology and its conception of action as the choice to employ certain causally efficacious means to achieve a given goal. We need to recognize that other humans can serve as means to action. In the free market, for example, hiring someone to provide a good or service is one way to achieve a desired end. But others can be employed as means to achieve illicit ends as well. For example, a mafia boss ordering someone to kill a victim; a wife hiring a hit man or seducing her lover to persuade him to murder the husband. But these are just example. They do not exhaust the general category.

Still: the default presumption is that only the direct actor (B) is liable or responsible for his torts/crimes. If you want to implicate  A as well, to make him also responsible for B’s action, you have to in effect show that A has used B as his “means” to accomplish the sought-after illicit goal. A has to be more than a so-called “but-for” or factual case of the harm (e.g., Hitler’s mother is a but-for cause of the Holocaust but it is not her fault). A has to be a so-called “proximate” cause. I.e., the nature of A’s action is such that it is characterized as a use of B as a means to achieve aggression against C.

Just as in the case of what kind of menacing statements may be counted as threats, determining whether only B is liable for his actions, or whether he was also a “means” for A’s action, there is a continuum and a necessity to draw lines. As Rothbard notes in Self-Defense, the threat must be direct and overt to justify a violent response. Otherwise, you get something like George W. Bush’s doctrine of preemptive self-defense used on the Iraq War. (For a discussion of the libertarian approach to preventative force, see my Knowledge, Calculation, Conflict, and Law, p. 65.)

In my view, just as a diffuse menacing statement does not count as a threat, so making generalized statements, e.g. a opinion expressed in a book that you wished people would kill red-heads, is too far removed—not “proximate” or close enough—implicate the speaker. In the case of incitement of a lynch mob, I think the inciter actually may be liable (contra Block and Rothbard). But I think the Twitter/Lee scenario is closer to the case of publishing an opinion in a book, than to inciting a mob.

Therefore, I would say that Lee is not vicariously liable in this case, though arguably it is a close call.

(Incidentally: apparently the tweet was a violation of Twitter’s terms of service. I don’t see this as relevant. At most, Lee owes Twitter some contractual penalty damages. Or, if the positive law were to [wrongly, in my view] hold Twitter liable, maybe Lee would have to contratually indemnify them. But I don’t see this as relevant to his liability to the hypothetically victimized McLains. Also: One could also say Lee has defamed the McLains; but of course defamation law is unlibertarian. See Rothbard, Knowledge, True and False.)

So at most, Lee is implicitly expressing a desire that people harm Zimmerman (well, the McLains). It’s not even explicit. But just because you say what you would like, does not mean you are causally responsible for others doing it. Of course, I do think it’s very immoral. But not all immoral actions rise to the level of rights violations.

That said, in a free society suppose Zimmerman or the McLains came to harm—I think Lee “ought” to try to make restitution, and indeed, he may be ostracized for his role in this if he does not make amends. (And, in fact, Lee has now agreed to pay private compensation to the McLains.) So in the end, in a free society, it might not matter that he is “only” morally culpable. People in a free society where ostracism and restitution are the dominant mode of enforcing law might be more willing to “punish” non-crimes, i.e. merely immoral action, since you don’t really need to justify this “punishment” as we do with real corporal punishment, since the latter is justified only in response to a rights violation. But non-violent forms of “punishment” are justifiable in response to mere immorality. So it seems to me that in a society with mostly ostracism and restitution as an enforcement mechanism, the “law” might tend to prohibit not only aggression, but also severly immoral actions (with bad consequences) like the Lee scenario. But since the law is here per assumption not backed up by force, that result should not trouble the libertarian very much. (It is possible that a private law society would actually employ punishment in a regular or institutionalized way, but it is costly. For reasons why a restitution-based system relying on ostracism would be more likely, see Fraud, Restitution, and Retaliation: The Libertarian Approach and Knowledge, Calculation, Conflict, and Law, pp. 64-65; also The Libertarian Approach to Negligence, Tort, and Strict Liability: Wergeld and Partial Wergeld.)

On the other hand: suppose harm came to the victims, and then some relative of the victims were to attacks Lee in retaliation. It is easy to imagine  a jury acquitting the relatives in their trial.

Spike Lee’s Twitter Message About George Zimmerman and Causation under Libertarian Theory Read Post »

It’s Rothbard contra the conservatives this summer in Denver

(Austrian) Economics, Education, Libertarian Theory, The Right
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If you happen to be a University of Colorado student, or if you’d like to shell out lots of bucks as a non-degree student, join me this summer at the Denver campus for an upper-division, 3-credit-hour undergraduate seminar on the Conservative-Libertarian debate on the American right. We’ll consider the usual texts, but also the history of the movement through the writings of Murray Rothbard and Justin Raimondo.

See the class web site here.

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