If Cheap Labor is a Factor...

The how come Indian management organizes call centers in USA?  It is not USA labor vs overseas labor, it is USA management vs overseas management.

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Community Cultural Freedom

If you reside within a polity, you produce and consume, both of which contribute.  What you produce, others use, and when you consume, others are compensated for their production.  All of this contributes to the cultural community, each transaction a vote as to what the sum total of our culture might be.

Government spending distorts this process and thus distorts our culture.

If one wishes to earn money selling ideas and expressions there of, it is surely possible to record those expressions in some sort or media (book, film, cd) and sell them.  Today we have limits on what you can produce and sell, with the odd situation that those who do not actually produce anything are allowed to sit back and earn money on those who do.

But, you say, they created, say, the song, and should be compensated.  Very good.  Let them record it and sell copies.  The Grateful Dead, long before the internet, let people "bootleg" copies of their concerts, which people reproduced and sold.  With practically no promotion, the band became one of the most famous ever.

Here is a song being created, which steals from bossa nova, Paul Butterfield, Ray Charles, and Frank Sinatra.  The band creating the song did very well.  You must pay them to play this song.  But wait, they do not pay any of the aforementioned people for their contributions to the song.  The problem here is gun barrel politics established this system, not the market.

Gun barrel politics is where no matter what the rule, any resistance on your part with be met with ever escalating violence, up to being gunned down by state agents.

We need to replace the IPR (intellectual property rights) regime with CCF (community cultural freedom) regime.  All ideas are open to all to exploit in any way. If you want to make money on cultural items, intellectual "property," then sell copies you made.  Depend on marketing, not violence, to advance your business.

If we could just break on through this other side...

http://www.youtube.com/watch?v=yfQAaK1pFM4&NR=1&feature=fvwp

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Creativity, Taxes, Beatles

“I’m mortified to have to pay 50%!” So said the phenomenally successful singer Adele in an interview with Q magazine. And why shouldn’t she be?... Not if you write for or read the Guardian. ... their rebuttal of Adele’s complaint about the 50% tax rate was bizarre; the Guardian simply said “The Beatles had to pay 95%”

This article on the Cobden site is about the Laffer Curve, and how the higher the taxes, the less incentive, the less output you get.  The Laffer theory says govt gets zero income at zero tax rate, and zero income at 100% tax rate.  The proper tax rate for optimum govt income is somewhere in between.  Liberal think tanks have proven that is 34%, and conservatives have proven it is 22%.  We now pay some 60% of our money to govt, unless you are paid by govt, then your taxes are zero, since the tax money you paid comes from tax money you were paid.  Government workers should be tax exempt, it would save a lot of cost of paperwork.

I was there in the 1960s.  The Beatles made so much money so fast, they had no idea what the implications were. Paul McCartney's accountant called him the day he became a millionaire and told him.  McCartney was astonished. How?  They had not been touring...  "Airplay... royalties on radio play of their songs..."  McCartney did not know that the Beatles got a nickel for every time a song played on the radio.  He thought the songs were played on the radio for free to get people to buy albums and come to concerts where they bought tickets. 

And when they realized they were paying 95% taxes, the Queen made them "most excellent members of the British Empire" in 1965. With money she mulcted from their work, she had medals made for them.  Their solicitors made them corporations, John Lennon Ltd, etc... and the Beatles eventually formed Apple Records.  Their lifestyle continued, in pretax dollars, as business expenses, and then they "earned" as little as possible, at 95% tax.

Mick Jagger managed to incur 110% taxes one year, so he split for France.

So two things not true:  people will not create without intellectual property rights. The Beatles did not know how it worked, they assumed they had to perform or sell albums they made to make money.  They did not know about, let alone believe in, IPR, yet they produced prodigiously.

Second, people quit producing at higher rates.  Not so, people just adjust.  It is not the taxes that matter but the regulation and the fines.  Here people selling rabbits earn a $90k USDA fine on about $2000 profit.  This stuff kills us, not the taxes.  There is no way to beat the discouragement of being attacked by people of limitless resources.

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Patriot Act Follies

Definitions matter, and a college kid was just awarded $167k on a false arrest for being a "known anarchist."  Seems our domestic intel ops caught some internet chatter on anarchists heading for an anti-war protest, in ahem,  Montesano, Washington. The Washington state patrol and assets from two counties had them under surveillance and made a pre-emptive arrest, allowed under the patriot act.

Problem is anarchists are by definition non-violent.  Yes, the media calls vandals anarchists, but one should not believe everything one reads.  For all of the money we spend on the 800 federal agencies snooping on citizens, you'd think they would be able to discern a vandal from an egghead.  Since these anarchists had no WMD, the driver was arrested for "being high" in spite of passing all field sobriety tests.  ACLU stepped in.

The government has a long history of employing agent provocateurs, people meant to incite violence by starting it.  Perhaps if this was forbidden, there would be far more peaceful demonstrations in USA.

Here is a chart for every law enforcement break room:

Anarchist - Dorothy Day



Vandal - Knucklehead

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Property is Theft

This phrase comes from the French anarchist Proudhon, La propriété, c'est le vol! and was very popular in the 1960s.  it refers specifically to state property, and it is quite true.  In the measure the stte owns property, is the measure the markets are distorted.  But as an anarchist, I believe in private property, personal property defined as what you own by trade and mixing your labor with real estate (and limited to that, everything else is homesteadable.)

There is no "intellectual property rights" without government.  With a mere turn of phrase, an astonishing thing happens: ideas turn into property, and a right to steal from everyone else is formed.  The "rights" in intellectual "property" is a means for theft.  Now, how is that said in Feench?

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Solution: Legalize Falsified Appraisals

Not.

Circa 2005, at some exotic location, I was at a table of top performers for Washington Mutual Loans.  They were all planning their exit strategy from WaMu, into retirement, based on their rate of income, which would never decrease, since housing prices never went down, and it did not occur to them that interest rates might go up, or worse, banks might stop lending (or tighten requirements.)  In any event, they were super-successful based on native talent, and no external forces were going to get in their way.  Every one of them, and it was true, could command a signing bonus with any other bank. Countrywide had approached every one of them. I offered that Washington Mutual would be out of business before any of their dreams could come true, and their options with it.  It was an easy prediction to make, because 100% of WaMu business was based on a false economy, and at some time the boom would bust.  At that point plenty of people were predicting the bust, on solid grounds.  This information was available to anyone who wanted it.  Extremely few wanted it.

Stories about foreclosures being 100% of the market like this were easy to predict.  It will get much worse.  I am no financial adviser, but if anyone asked me, I'd say get out of "paychecks, property and pensions" and into means of production.  Take money from the one and put it into the other.  (Have nothing in stocks or bonds, which is either property or pension). Any tax and penalty hits today will be nothing compared to future taxes and losses.  Better to have $100,000 in beehives on rented land today than $150,000 in a pension.  Have something you trade in.

Don't plan on bugging out, because things are worse overseas, and if it gets bad, it will be easy to blame the American, where you are the only American.  Especially if your income is pension money, and the locals love you for your money, and your money stops coming in, why, they will no longer love you.

One of the most terrifying phrases I ever hear is "John, I think you are right..."  None of us has the whole picture, and I am especially happy to hear from people who disagree.

But for the economy to improve, prices must fall.  Indeed, in a properly functioning economy prices are always falling, as options widen.  So getting out of property pensions and paychecks is an act of confidence in our recovery. It will take at least 30 years to get out of this mess (as long as it took to get into this mess) and that is too long to watch your paycheck, property and pension shrink.  Get over to production, but own it free and clear, so as prices for your items drop too, it is ok, because the prices on everything else is dropping as well.

And another phenomenon is crimes are converted to government policy in due course.  One factor contributed to the housing debacle was falsified house appraisals, a very wide practice during the housing boom.  Appraisals mopped up what "money" was available to the borrower. Q. "What is the appraised value of the house?"  A. "How much money do you qualify for?" Now comes a legislator who desires to make the falsification of appraisals a legal requirement.

After Ponzi made famous his scheme for swindling investors, the United States Government introduced the Social Security program, in design and fact a Ponzi Scheme.  What was illegal for Ponzi, is legal for Uncle Sam.  Madoff did the same and is off to prison.    While Christopher Cox was responsible for policing people like Madoff, and private citizens were demonstrating Madoff was a criminal, the SEC was unable to perceive any Madoff wrongdoing.  There is a very simple reason for this:  Christopher Cox's entire adult life was working for the government.  If governments run Ponzi schemes, they must be good.  In this foggy state, Cox cannot perceive that what Madoff is doing is wrong, since Uncle Sam does the exact same thing.  Government regulators simply cannot tell right from wrong, for the internal contradiction would be overwhelming.

As a matter of power politics the scheme cannot be stopped, but in terms of results the outcome is exactly the same.  People get hurt.  Had Madoff been subject to the market he would have been brought down very early, or perhaps he would not have tried.  But as it was, Madoff could count on hiding behind the morally obtuse (and economically ignorant) SEC to advance his ponzi scheme.  People got hurt.

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Galileo, Orbits and Vacuums

In 260 BC, Aristarchus proposed heliocentrism, an idea that went into the shadows with the fall of Rome, and reemerged in the 1540’s when after Islamic scholars shared the ideas with Christians. Copernicus worked on the geometry of the theory and published in Latin, the most widely read language in Europe. His ideas were known to scientists far and wide.

Based on Copernicus, followers Johannes Kepler and a Carmelite Foscarini were working on heliocentrism at the same time as Galileo.  Astronomy was exciting stuff in the renaissance.  The Jesuits were the astronomers to the Pope, and as fast as the latest in astronomy was being discovered (rediscovered) in the West, the Jesuits were teaching the Chinese Emperors in the East.

Galileo was astronomer to the Duke of Tuscany, a less prestigious post than astronomer to the Pope, but one more suited to his talents.  Galileo also picked up commissions to work on projects for the Pope.

In 1613 Galileo published on heliocentrism, but Galileo was wrong on one point he inherited from Copernicus, and that was that the planets moved in perfect circles. Cardinal Bellarmine, yet another world-class astronomer, could do the calculations to know this was clearly wrong (but not yet why) and warned Galileo of his errors.

Kepler worked it all out: the movement is elliptical, not circular.  Further, the planets in their motions cause tides and other phenomenon on earth.  Kepler and Galileo were contemporaries and corresponded, but Galileo never adopted any of this, insisting planets could remain in orbit only in perfect circles.

Much is made of the problem that the nonscientific Western Culture largely believed in terracentrism. Thus, given the new awareness, work would have to be done to explain certain biblical passages in the light of the new knowledge.  So what?  From the Apostles to Augustness to Aquinas, the Church was much experienced in adapting to emerging science.

By the time Galileo was publishing his offending work, the Dialogue, his schoolmate and friend was Pope.  Galileo published in Italian instead of Latin, made fun of Kepler and his (correct) theories, and insisted on the error that planets moved in circles.  The worst part is Galileo was directly insulting to the Pope, in a time when the reformation was heating up. 

The protestants took up Galileo’s cause, and to this day he is the poster boy for putative Church anti-science. The idea that the Church suppressed science is nonsense, since several other scientists were working on the same idea widely and freely, including the Pope’s own. What was suppressed was Galileo teaching something clearly wrong, by advancing circular orbits and dismissing Kepler’s elliptical orbits.  But it is far more likely Galileo got in trouble for insulting the Pope, his friend and benefactor, in Italian, when that was becoming fashionable in protestant circles. That is not anti-science, that is just raw Italian politics.

To this day far and wide Galileo is invoked to libel and slander the Church.  It is funny that scientists, who should know better, and journalists, who should dig deeper, would accept the story at face value. The facts are far more interesting. Galileo’s book was banned, Copernicus’ book was not.  Galileo was placed under “arrest,” such as it was, on the payroll but not allowed to teach error any longer. The church was sending scientists world-wide, and evangelization of the Truth will not get very far if the Church was also teaching things it knew to be wrong, like orbits are circular.

In his series Connections, in one of the best episodes, James Burke claims the Church forbade any talk of vacuums since theologically a vacuum contains nothing and if God is everywhere, He could not be in a vacuum, where there is nothing...  or some such nonsense that is no where to be found in church teachings.

The scientific fact is there is no such thing as a vacuum,  Various scientists have theorized over it, and Einstein said given what we know about physics, the idea is irrelevant.  When people say “vacuum” they mean relatively lower air pressure.  There is either a vacuum, or there is not. On the other hand, the degrees to which relative air pressure  can be lowered is quite impressive, but it is no vacuum in the theoretical sense that there is a void of nothingness.  Amazing things can be done when air pressure is lowered. But by definition, nothing can be done in a vacuum.  Again, the church will not teach somethin clearly wrong.

People also claim that science died in Italy after the Galileo affair.  Hmmm... Avogardo, Marconi, Beccaria, Fermi, Galvani, Venturi, Volta, Italians all.  As much science, good and bad, comes out of Italy as much as anywhere else.  The Galileo story is an opera, not a tragedy.

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IPR and Commercialization

As I watch Connections, Burke explicitly repeats a point over and over: a famous inventor or some such was one of maybe dozens of people who contributed to a success, contemporaneously and historically.  Yes, Edison tried 6000 filaments for light bulbs before getting the one he settled on... but the blown glass, the vacuum, the spark, all invented by others.

I think people get it backwards; IPR led to USA inventiveness.  Obviously there was worldwide inventiveness before IPR, and although we have some 7 million patents issued in USA, almost nothing traded commercially is patented.  USA inventiveness seems to have more to do with the explosion of commerce than IPR law.  And can we trace the rate of inventiveness?  Are we  introducing pathbreaking new technologies at and ever greater rate?

Intellectual property rights allows one who commercializes a product to shut out all of the competition, regardless of how much those shut out may have in fact contributed.  

As a practical mater, almost none of the nearly 7 million patents issued in usa have ever turned into a product, but the fact is the valuable ones , the commercial ones, use govt to block the ever improving market process to the benefit of a patent holder.

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Change

In advocating change and improvement, and arguing for change, there is a phenomena that recurs. You listen to a complaint, argue for a better way, and convince the person your way is better.  But they will not commit to any change... it goes something like this:


Is there are problem?  Yes.

Do you desire change?  Yes.

Will this solution work? Yes.

Will you now change, by adopting this solution as your own?  No.

The recurring problem is people want change, in everyone else.  If change is obliged in oneself, normally people draw a line and feel that is going just to far.

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Edison Invented Inventing

More from the series Connections,  host James Burke asserts that inventions normally come out of religion, the environment, war or accident, accident being the most prolific.  For the other categories, it is all solving problems of some sort.  In the case of religion, it may be with their unique means for aggregating capital through voluntary association (the monastery) they we able to work on solutions better than others (and this monastery phenomenon is worldwide). , 

What Edison introduced was the invention of inventing.  He applied technology and his rules dwelt on here, and gained 1100 patents, and in spite of going bankrupt once, lived and died a rich man. His laboratories in Menlo Park, New Jersey were emulated in what is now the Silicon Valley, centered in a town named Menlo Park, California.

Edison is also deemed a thief, for stealing other's ideas.  The entire Connections series make very clear all ideas are based on others works, and it seems about ten people contribute to one successful invention.

Now I am not complaining that Edison "stole" any ideas, or how he came by them.  I am the first to admit nothing in my book, that has sold consistently for ten years, is mine.  I simply put down what I learned from others, and worked for me.  My book on Perish Your Publisher is full of arranging what everyone else invented to serve teaching and writing one's way to paid publication.

What I object to is "stealing an idea" (something that cannot really be done because ideas are not property) and slamming the door on others' desire to exploit knowledge by filing for patents. Those ten people feeding Edison ideas, should Edison begin to exploit an idea in the market, would then see an opportunity, and compete with Edison.  What was competition in research now becomes competition in the market.

Now note, this is where the benefit meets the consumer, in the market.  And this is where the market speaks.  Due to market feedback, improvements come.  Before patents, just about every invention introduced, was tinkered with for slow, sure improvement.  With patents, the door is slammed on the benefit the market provides, and we are stuck with inadequate version of goods and services with no means to improve them.  Look at nuclear power plants, automobiles, medicine and agriculture and see the horrors of patent regime control.  Dangerous, high prices, scarce, not very good.

But probably more important, although we cannot measure it, is what we do not see.  I have met countless people who have inventions that will never see the light of day because they are prohibited by prior patent protection from going into manufacture.  Different, but too close.  And it is precisely this "difference" that is the nuancing that leads to division of labor and full employment.  We need these slightly different versions on the market, or at least need to the market to consider them.

Another problem is wasted effort.  Under US patent regime, we are obliged to keep our ideas secret until they are released for commercialization, a difference in our law to European patent regime.  So terribly talented people strive in utter secrecy, to come up with well worked over ideas, only to find when ultimately, but first time presented to the market, there is no demand for this invention.  Of they nearly 7 million patents issued since 1789 in USA, almost nothing patented ever turns into a product on the market.  What a tremendous waste!  We are denied the benefit of these people's genius, where in a free market system, their ideas would be tested every step of the way, pay as you go, benefit as we proceed. (For libertarians of the Randian sort, Ayn Rand developed a massive argument in favor of the US patent regime.  Except she kept referring to the European regime, not knowing there is a difference.  Ooops.)

And then there some cases of once invented, approved for patent, but may not be exploited commercially.  For example you are free to develop a chair back for a three legged stool (and let's pretend there is a patent on the three legged stool). Now you chair back is patented, but you do not have the right to make and sell these chair backs, because the fellow with the patent on the three-legged stool has the right to stop you from abusing his "property right" on the three legged stool.

What we need is not patent protection, but free markets and competition and price reduction.  It is precisely this phenomena of price reduction that so offends pro-IPR people.  In a free market we get more better cheaper faster or any new idea.  But in a free market, no one gets exceptionally wealthy.  In a free market we are all exceptionally wealthy because the price of just about everything is within the reach of the income we earn doing what we do, or at least satisfactory versions.  There will always be people who have more from their efforts, who drink better wine from silver goblets, but everyone will have good wine from good glass.  We will have what Gandhi referred to as "one-generation industrialists" (the term for billionaires in his time) people who make it but since it is excessive, lose it as easily due to inability to control all that excess wealth.  In a free market, there is no taxing poor people to guard the wealth of the rich.  The rich have to keep playing, and over time, their faculties falter, and the wealth is spread wider and wider.  The go out the way they came in, like everyone else.

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Anarchy, Love and Free Markets

I advocate free markets, which necessarily means I am anti-capitalist. (And for that matter, anti-communist).  I haven’t seen a definition of capitalism that does not allow for, indeed require, some sort of government intervention to maintain it.  In one way free markets are free, is free from government intervention.

By no mean do free markets address all human concerns. The free market is about freedom in the market.  If and when we wish to make an exchange, for goods and services, the market ought to be free: free to do so, free from force or fraud.

The phenomena of force or fraud is where advocates of government insinuate their private desires into other’s business.  They offer protection, or more likely, the masses clamor for this intervention.  But it is not legitimate, because our freedom is a natural right, inalienable, and we cannot give it up nor have it take away.  In the measure we do so is the measure we decline to live our lives.

Force or fraud are non-market events, but they in some instances can be dealt with in market means.  For example, I may buy insurance against fraud, or hire private contractors to protect me against force or hire an arbitrator should I get in a dispute.  When you reckon private vs government provision of safety and security, by far private enterprise provides the build in USA.  70% of the firefighters in USA are unpaid, volunteer.

But the most effective defense against non-market phenomenom of force or fraud is the non-market phenomemom of shunning. Peoples reputations matter.  If your actions cause people to shun you, then that is a non-market sanction that is felt in the market.  From the lowest criminal to Adolf Hitler, they all worry about what other people think.

There are non-market events that may consume much of our lives: love and religion.  Now both lend themselves rather easily to commercialization, but in general these important human pursuits are not market phenomena.  

Free markets are based on subjective valuations.  Certain conditons, like justice or love, cannot be achieved in the market, in spite of their purely subjective nature.

Although a free market is the best response in a disaster, with its pitch perfect response of pricing scarce resources (what martinets call “price gouging”) a free market does not offer charity, which is often the only response possible, and a necessary response.

Altruism offers charity, but that is not a market phenomenom.  We see where markets are freest, such as Hong Kong, charitable contribution is second to none.

Economists tend to see the entire world in term of economics, all phenomena explainable by their theories and formula, and all can be managed, as though economics is sociology.  The word economics comes from the Greek to mean manage the household.  Managing a household is often abut daily commercial exchanges, but there is much more to a home than what gets bought or sold.  The free market is about markets, buying and selling, rather mundane matters, yet where freedom is crucial.  This commerce is what we do, a lifestyle, but a rather small part of being alive.  This larger more important part of life - who you love, what you think, what you believe, who you take care of, I think just about everyone agrees govt ought not tread there.  And if not there, why in the market?

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