A Thought Experiment about Patents and Taxes

IP Law
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In Reducing the Cost of IP Law, I argued that one improvement to the patent system (short of abolition) would be to eliminate injunctions and provie for a compulsory licensing system. As I noted there, the compulsory licensing approach is not new. Some countries impose compulsory licensing on patentees who do not adequately “work” the patent. I discussed provisions in US patent law that do permit compulsory licenses already in some situations.1 I was reminded of this when discussing with some friends a comment to this blogpost, Pirated Software Could Bring Down Predator Drones. The commentor stated: “Just declare the IP a state secret. The market value is then zero, as the company cant sell it legally. Buy it from the company for 1 cent. Then classify the contract as top secret. If the company complains, send the people to jail or gitmo.”

As I noted in the previous posts, the feds have the authority to license third parties to manufacture patented articles, without patent infringement liability; this was threatened in the Cipro anthrax drug a couple years ago. The feds then have to pay “compensation” to the patent holder. Something similar happens if the some federal agency issues a “secrecy order” for military or other reasons for a pending patent.2

It occurs to me that the very notion of a compulsory license for IP can help to illustrate how IP is an obvious transfer of wealth. Consider: under current law, the state grants a patent monopoly to some applicant. Then, the state can declare a compulsory monopoly (or issue a secrecy order), and pay you some compensation for this “taking”. Obviously this payment comes from tax payers. So the IP step can be seen as just an intermediate step to justify transferring money from everyone else to the patentee. It’s as if you tell the state you have an idea and the state takes money from others and gives it to you. Come to think of it, this is exactly the idea behind proposals for tax-funded “innovation” awards–proposed even by some libertarians (!).3 The point is that even when the state does not issue the compulsory license, they are simply deputizing the patentee to go out and extort the money himself; it’s like taxation.

(Incidentally, in An Objectivist IP Argument for Taxation, I provide another argument for why IP could be used to justify taxes.)

  1. See Ciprofloxacin: the Dispute over Compulsory Licenses; Tom Jacobs, Bayer, U.S. Deal on Anthrax Drug, Motley Fool (Oct. 25, 2001); Compulsory Licensing in the US. See also Kinsella, Brazil and Compulsory Licenses, Mises Blog (June 8, 2007); Kinsella, Condemning Patents, Mises Blog (Feb. 27, 2005). ↩

  2. See The Secrecy Order Program in the United States Patent & Trademark Office; 35 USC ch. 17 §§ 181, 183. ↩

  3. See my posts Libertarian Favors $80 Billion Annual Tax-Funded “Medical Innovation Prize Fund”; “$30 Billion Taxfunded Innovation Contracts: The ‘Progressive-Libertarian’ Solution“; “Re: Patents and Utilitarian Thinking Redux: Stiglitz on using Prizes to Stimulate Innovation.” ↩

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The Instituto Ludwig von Mises Ecuador is born

(Austrian) Economics, Education, Libertarian Theory
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When I embarked upon the task of teaching Austrian Economics at USFQ (as ECN101 and with some concessions to the mainstream such  as teaching their flawed theories before attacking them) I couldn’t predict beforehand if I was going to find either resistance or support from my students and colleagues. I promise to tell TLS readers about the latter in another occasion. Of every class of 30-33 students for ECN101 I end up focusing on the 5-10 that are really into the material. We read a lot of Hoppe, Rothbard, Reisman, Dilorenzo, Kinsella and Block. Of course I tell my students that my class’ purpose is to show them a different point of view, since the “official” one can be found on the MSM of Ecuador and the U.S. and other classes even at USFQ (most PhD professors being either natural science types or liberal arts former hippies that support any soft form of socialism you can imagine there is.)

Of course of this 5-10 (per class, and I teach 3 classes per semester) maybe 2 or 3 become ardent libertarians and are encouraged to attend Mises University and FEE Seminars during the following summer. Last semester, I taught an “Advanced Libertarianism” seminar for the 12 best students from the past two years. Their enthusiasm being at a peak, they decided to do as Helio Beltrao and his libertarian cadre did in Brazil and create a LVMI-Ecuador think tank. My students Esteban Perez, Cindy Aguiar, Esteban Torres, Lizeth Torres, Alejandro Veintimilla, Pablo Mateus, Paul Riera and Lizeth Vasconez are the culprits: they are they driving force for LVMI-Ecuador. I’ll just say you better remember their names, they are very young but I bet they will make the headlines of libertarian and MSM publications later on.

The most exciting thing is that thanks to web 2.0 we can hold board meetings via Skype, promote our articles (60% of mises.ec being the translated Mises Daily articles) and events (this Wednesday we begin with “Cuba and the elephants” a thought-provoking documentary) via Facebook and keep our fixed costs to $40usd a year (for the .ec domain.)

In sum, today I want to share with you the official launch of www.mises.ec as the core service the Instituto Ludwig von Mises Ecuador has to offer the region and country in which it operates.

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Our Efficient, All-Volunteer Killers

Imperialism, War
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Steve Chapman extols the benefits of having an all-volunteer military force:

A few decades ago, the draft was a requirement for any major military undertaking. No one would have dreamed of fighting the Germans and Japanese, or the North Koreans and Chinese, without calling up young men for mandatory service. Not until the waning years of the Vietnam War did the nation elect to rely entirely on volunteers.

It was a controversial step, and one whose durability was very much in doubt. But in the intervening decades, the draft has gone from being indispensable to being unthinkable. Even the extraordinary demands of two difficult wars have not induced a reconsideration.

Anti-conscription badge from WWIEven the military’s leadership recognizes now that armies perform better when they’re filled with people who actually want to be there, and as Chapman points out, it’s a more efficient use of training dollars to spend them on Army careerists than on guys who’d rather be smoking pot and watching football.

If this is the extent of Chapman’s argument then I agree, but I’m not any more comforted by the fact that the military’s bombing and killing of poor people overseas are performed by people who actually want to do that sort of thing.  And he ignores the fact that young men must still notify the government of their whereabouts via Selective Service in case the draft is reinstated.  If the military really does not want conscripted men (and possibly women) among its ranks, why does the infrastructure for conscription still exist?

More dubious is Chapman’s concluding paragraph:

It was once a novel experiment: fielding a force to protect freedom without grossly violating freedom by dragooning young men to serve. But it’s worked so well we’ve almost forgotten there’s an alternative.

“Protect freedom” is a canard I expect from National Review, not a supposedly libertarian publication such as Reason.  Few if any all-volunteer forces have ever been used to protect Americans’ freedoms, even during the Revolutionary War (see volume 4 of Murray Rothbard’s Conceived in Liberty); and there isn’t a single military campaign undertaken in the past century that could be called a legitimate defense of freedom.  If one wishes to sing the praises of America’s efficient, all-volunteer killers, at least one shouldn’t pretend they exist for any reason other than to satisfy the imperialist aims of the Washington elite.

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Does Going to the DMV Hurt Worse than a Root Canal, or Is It Just Me?

Nanny Statism, Taxation
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Some time ago, having just gotten rid of a car, I figured it best to turn in my plates and get that magnanimous refund from NY State for the registration fee on my erstwhile means of transportation.  Being somewhat “unplugged” from the typical goings-on at the Department of Motor Vehicles, I decided to drop by on a Friday afternoon, the last Friday afternoon of the month to be exact. A mistake. A BIG mistake.

You see, on the last day of the month, there apparently is a big rush to get things done at the DMV.  Well, there’s a big rush for the customers.  The people working at the DMV frankly didn’t seem all that rushed.  And that’s from whence the question that titles this essay emanates.  First, let’s recap my visit.

Arrival:  1415 hours (That’s 2:15pm for those who are military-time-challenged.)

Obtaining of Ticket:  1455 hours  (That’s 40 minutes later.)

Visit with Cashier:  1525 hours (That’s 30 minutes after that.)

Departure:  1530 hours (That’s 5 minutes later still.)

Yes, it took me 75 minutes (1 hour and 15 minutes) to accomplish a 5-minute task at the DMV.  For those unfamiliar with this incredibly demeaning scenario, allow me to explain some of the subtleties.  When one arrives at the DMV, at least in my county, he is met with a line that leads to an “information counter.”  This is where they tell you where you need to go next, what forms you have to fill out before you get there, and where they also—in a stroke of bureaucratic genius—give you a ticket with a number on it.  This number corresponds to an electronic display that provides a sort of visual presentation of the “Next!” one hears at the barber shop.  On the ticket is the number for which you should look, and an estimate of how long you’ll be waiting.  You may then go to any one of the fine church-style pews to sit and wait.  Hopefully, you brought a book.

In essence then, one has waited in a line that is not hidden to wait in a line that is hidden.

The punch line:  All of this is an improvement—a vast improvement—over what used to happen at the DMV.  I’m not saying it was bad.  It was worse than bad.  If one was smart, he showed up with a lunch box, or at least a snack.  Standing on line for an hour or so on an empty stomach is tough!  Plus, once one got to the counter, he was faced with a person who himself was pissed off to be there.  A disgruntled worker meeting a disgruntled customer does not a recipe for statist happiness make.

Here’s what I’m trying to figure out:  If I had a choice of vendors for this service, would it still be so terribly inefficient and, frankly, crappy?  I don’t think it requires a degree in, or even an understanding of, Austrian Economics to emphatically declare, “No.”

Cross-Posted at the LRCBlog.

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Sexuality, the State, and the Death of Black Manhood

Drug Policy, Nanny Statism, Police Statism, Racism, Victimless Crimes
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Recently, my college friends and myself were discussing a recent article in Vibe magazine on the experiences of a flamboyantly gay man at Morehouse College, and the response of the school’s president. I shared the two articles with family and friends, and the inevitable question “what has happened to black men?” came up. It seems clear to me that the main things which have happened are the reasons I despise Lyndon B. Johnson and Ronald Reagan. The war on poverty brought us welfare, which pushed a lot of black men from homes in the name of easy (or easier) money. That was Johnson. Reagan escalated the war on drugs, which further devastated the black family, especially the black males. Can anyone really claim that it is better for a black guy to be locked up for smoking or selling weed, rather than going to a community college and getting himself a job some day? Is controlling what someone does with his own body so very important? Is promoting the creation of drug gangs, then promoting the increase in the intrusiveness and violence of policing something we can really describe as “good?”

Because of these two factors, black men have fewer male role models. Many men emulate their mothers, unsurprising, as so many men are reared without fathers. Some of those mothers are educated, so that is fine as far as education goes. These men will pursue education. But they do not act like men. This is true even of many heterosexual men. Among any sufficiently large population, a number of gay people is to be expected. I do not find it surprising that a segment of the gay population would take emulating their mothers to an extreme that the straight men would not.

I predicted years ago that black higher education would become increasingly gay, and specifically, effeminately so. The war on drugs has devastated the ranks of black men in black communities to such an extent that female role models are, all too often, the best role models for success that black boys have. The testosterone has been depleted from the segments of black society most in need of it. This is one of the many tragedies brought to neighborhoods across the nation by the desire to force moral choices on others “for their own good.” And, while I targeted those two presidents for specific criticism, we can hardly “blame whitey” for this one. There are lots of people who are black drug warriors. Pretty much every black politician, including Obama, is a drug warrior. Eric Holder, his pick for Attorney General, is an especially fervent drug warrior. As far as I am concerned, we should treat blacks who support the war on drugs the same as we would treat a black guy doing a minstrel show in full blackface at an NAACP meeting. They deserve nothing but derision for being essentially black slave overseers. They profit from promoting oppression.

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