The IRS Continues To Destroy The Internet

Business, Taxation
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Just when we thought that the “1099 nightmare” was going to be it for 2010, we learn of the new IRS impositions on internet commerce. These rules target folks selling stuff online. People selling 200 items or making $20k on eBay, for example, shall be subject to reporting rules. People who make a living (or complement their income) by selling trinkets online will be particularly hurt by this. I foresee a reduction in business on Etsy and similar cottage industry sites. Personal sales in the open market might take a hit, at least for marginal sellers. Some might just sell less while others will have to distribute their online activity so that they are not as easy to target. To make things worse, Paypal will be required to report online activity, meaning that they will send the IRS 1099 forms that will have to match each individual seller’s information.

The 1099 nightmare extends from small businesses to tiny one-person operations. Of course, I bet that large companies can only cheer. After all, they already have systems and personnel to deal with the flood of paperwork that the money-thirsty IRS has required from society. A great win for corporatism.

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How State Lotteries Make Markets Less Efficient

Anti-Statism, Business, Finance, Statism
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Someone sent me a link to this paper yesterday.

Prof. Harris argues that skilled traders, who consistently profit, do so by taking money from people who trade for extrinsic reasons, to hedge risks, increase their savings, or simply to gamble for entertainment.  He then points out an interesting implication:

If gamblers do indeed contribute to market quality in the long run by subsidizing information acquisition, an intriguing argument can be made about public lotteries.  Lotteries would appear to compete with financial markets for gamblers willing to lose money. Lottery gamblers subsidize the state through their voluntary participation in a negative-sum game. Financial market gamblers subsidize productive information acquisition.  Perhaps prices, and ultimately economic production, would be more efficient if gamblers gambled exclusively in the financial markets.

So there you have it — state lotteries make us worse off by wasting gambling money that would otherwise be productively spent.

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Progressive Egalitarians Should Be Anti-IP

(Austrian) Economics, Business, IP Law, Libertarian Theory, Pop Culture, The Left, Vulgar Politics
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The Obama Administration insists that “‘Piracy is flat, unadulterated theft,’ and it should be dealt with accordingly.” Nonsense, of course. Only scarce goods can be property and therefore only scarce goods can be stolen. Ideas or information patterns are nonscarce goods. If I take your bicycle, you don’t have it anymore. If I copy your idea, now we both have it. Copying, i.e., piracy, is not theft.

As the Left is wont to do in lieu of sound argument, US Commerce Secretary Gary Locke recently related what is meant to be a heartrending story:

Recently, I’ve had a chance to read letters from award winning writers and artists whose livelihoods have been destroyed by music piracy. One letter that stuck out for me was a guy who said the songwriting royalties he had depended on to ‘be a golden parachute to fund his retirement had turned out to be a lead balloon.’ This just isn’t right.

My first immediate thought was why isn’t it right? Shouldn’t a progressive egalitarian’s own values lead him to be against intellectual property?

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“But without intellectual property . . .”

(Austrian) Economics, Business, IP Law, Technology
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The next time someone claims that not having intellectual property laws will squash the little guy and let established companies rule the day, I’m going to remember to bring up Netflix. Mike Masnick at Techdirt reports on Blockbuster’s recent decision to file for bankruptcy — after the heroic Netflix has stolen most of their customers:

Late last week, there were a ton of press reports about how Blockbuster was preparing to declare Chapter 11 bankruptcy in September. It’s not shutting down, but just trying to restructure its debt, get out from under a bunch of store leases and try, try again. That said, this is yet another example of the fallacy of the claim of many that if you have a good idea some big company will just come along, copy it, and be successful. It also demonstrates the huge difference between idea and execution.

Netflix had a good idea and executed well on it. But for years everyone thought it was only a matter of time until the company got destroyed, because all these bigger (at the time) companies were just going to copy Netflix and win. First it was Wal-Mart. The retail giant started a service that seemed almost identical to Netflix way back in 2002. Everyone thought there was no way an upstart like Netflix could compete with the likes of Wal-Mart. Fast forward two and a half years and Netflix took over Wal-Mart’s online DVD rental business, because Wal-Mart’s offering couldn’t compete. …

And, of course, there was Blockbuster. It came out with a Netflix-like offer around the same time that Wal-Mart did, and while it held on for much longer, it was just never able to build up the same sort of userbase that Netflix did, and now the company is going to declare bankruptcy and try to restructure once again.

More at the link. It just goes to show that when you give people a little liberty, you never know what someone will come up with. A giant like Blockbuster or even WalMart can spend as much money as they’d like trying to copy an innovative, well-executed idea, but at the end of the day, the one who best pleases consumers will rule.

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