Free Markets and Exceptional Wealth

Both the left and right say things about the free market that are not true.  The left says the free-market is "devil-take-the-hindmost" "competition, and the right says the free market is the path to riches.  How come in practice, neither is true?

In places where free markets reign relatively, say Hong Kong, there are two reasons why no one goes for want.  One, anyone and everyone who wants to work, can work.  Help wanted signs are up everywhere, because people start their own businesses given so much opportunity.  Th communist party restricts Chinese from moving to Hong Kong, because everyone would.  So for slackers to say "I can't find a job" would get no sympathy in Hong Kong.  ("Then go to China...")  For those who are truly in trouble, a house burns out, serious domestic violence, often what charities offer is a step up from where victims came, charities are so well funded.  In a free market, where so many people live authentic lives necessary to a free market, with all of its ups and downs, nobody has the nerve to say "no" to someone truly in trouble.  Those the left pretend to care about are better served in a free market.

There are no billionaires who got their fortune from working in the free market.  Bill Gates and Ross Perot computerized the welfare state.  Govt forced pensions paid into the stock market which made Warren Buffett a billionaire, one of his most famous companies is GEICO, a company that runs delightful ads with several pitchmen.  GEICO of course stands for Government Employee Insurance COrporation.  He started with a shirt company, but pensions had to put the money somewhere.  You'll say, "But Buffett was smarter than the rest.."  Are you sure it is not just an example of "survivorship bias?"  True true,  had he not picked the stock biz, on the advice of his congressman father as to where the money would be, he would not have had a chance.  And do you really believe, with his connections, it was chance?

But what does if matter chance or not, without a government requirement and tax coercion, there would not be the funds flowing through stocks that are the basis of his wealth.

Of course, at this point, people will ask, if not exceptional wealth, then what is the point of a free market?  The point of a free market, as in freedom from and freedom to, is competition and division of labor.

Free competition is what keeps anyone from amassing exceptional wealth, short of government intervention.  The left knows exceptional wealth is the result of government intervention in markets, and in essence picking winners and losers, and protecting the winners by statute (not common law), so the left logically wants to tap those "winners" to pay for the left's generosity to selected groups.  In a free market, there is no exceptional wealth because competition is drawn to success, and in essence invited to compete.  In USA we do not allow open competition, so we have these vast disparities as to who gets what portion of an unnaturally limited pie.

And here is what a free market competition does not do:  it does not copy exactly what someone else is doing. In a free market no one would see microsoft's success and open a microsoft clone.  In a free market someone would do microsoft one better, or serve that market microsoft ignores, such as those who desire improved efficiency when using a computer for work, or security when online.  In a free market there would be no reason to try to take microsofts customers away, there would only be people doing microsoft one better or one different, serving people microsoft cannot or will not serve.  This is division of labor, leading to more and better options.  The pie just gets bigger and bigger, assuring a surfeit for any and all participants in the market.  Right now, in usa, anything remotely like anything microsoft does, real or imagined or even just tendentious, leads to a crippling lawsuit.  Chinese are freer under communism than we are in USA under democracy.

So you can see why the left and right hate free markets: the left has no poor to exploit, and the right has no means to amass wealth.  There is only the more better cheaper faster of the constant improvements readily introduced.  Who wants that?

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Joy of the Gospel, Part 4

This Pope has people coming out of the woodwork to attack his letter.  Even the redoubtable Mises Institute is hosting a guest contributor who plainly misreads the notorious paragraph and then sets about demolishing a straw man argument.  Here is the quote in question

...trickle-down theories, which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. 

Here is the original complete sentence...

54. In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. 

and here is his argument...

However, the criticism of free markets is clear and presents a difficult challenge to suggest that the document does not refer, indeed, to free markets after arguing for “semantic nuances.” ... the Pope inserts a negative bias against the free market; a neutral term would been a better choice of words. 

Well, no, there is criticism of trickle-down theories.  Not the free market.  Bad theories always look for a solid basis to build upon.  Socialism is based on worker ownership of the means of production.  Good idea.  Capitalism is based on power in accumulated means of production.  Proven.  It's when prescriptions come in that things get very un-free market.  The language is plain: the Pope is criticizing supply-side economics, which is clearly NOT free market, and supply-side economics does indeed ground it's pedigree in free markets.  So this statement by the Pope is unremarkable.  The controversy is introduced by people mischaracterizing what the Pope plainly says.

And WSJ editor Jude Wanniski, supply side champion, and I exchanged emails on trickle-down, where I pressed him in detail.  His plan was the government would simply watch the price of gold, at some arbitrarily set price, and sell as the price drifted up, and buy as it drifted down, thus controlling the whole economy.  And to his mind, this was essentially a free market, certainly based on the free market.  Never mind he envisioned the state controlling all by controlling one price.  A theory encouraged by the free market, but certainly not the free market.

And then the critic goes on to build a case about another statement the Pope made about poor people in rich countries suffering more than poor people in poor countries.  I did not finish the article simply because I've seen poor people in both places, and for reason that have nothing to do with numbers, poor people in rich countries are far more wretched than in poor countries.  Rich countries have the money to run human subject trials on poor populations in their countries, and they do.  Look at obesity, ignorance, drug proliferation, violence.  I'd much rather be poor in the Philippines or India than USA.  (Although USA is certainly the best place to be rich.)

I took apart Judge Napolitano's tendentious reading of this paragraph here, but it will do good to add the next sentence to that which the fellow above criticizes:

This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. 

So what is the Pope saying?  Trusting those who wield economic power to do the right thing is delusional?  Who can disagree with that?  In a free market there is no one wielding economic power, since free markets militate against the concentration of power one sees in capitalism, a system that depends expressly on concentration of power. There is nothing here to alarm anyone who admires free markets.  In the measure one's pretenses are based on reference to a free market, this letter exposes those liars.  Whole lotta objecting going on.

To continue my reading... and another sentence from that very paragraph:

Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.

I should be alarmed that the Pope seems to be criticising competing on design, wrapped in talk of the poor.  But he is not talking about an economic system that results in new and better solutions to current problems, and the opportunity and wealth derived therefrom, he is talking about things people are thrilled to have something new to purchase, for its ability to distract from life.  Those things that keep us from caring about others....

Something like this:

SAN FRANCISCO – When a California college student was shot dead by a stranger on a crowded commuter train in San Francisco last month, none of the dozens of passengers on board saw it coming - they were too absorbed in their mobile devices, officials said on Wednesday.

A crowded train, a nut waving a gun around, no one noticed.  Films show he did the night before too, no one noticed.  Mass transit is ideal for criminals.  I am glad I like to people-watch.  People are thrilled to have something that so closes us off to others.

The argument the Pope is making is we have a system that crowds out a lot of productive people, and then distracts us from caring. I could not agree more.  I love studying architecture.  People of African heritage are largely excluded from the field in the USA.  I regret they are not competing with everyone else, and showing what they have.  That is just one example of the hard and fast outrages in our economic system.  Another is "get big or get out."  But we all love a system that works for us, so never expect change from those who benefit from the system.

What strikes me as interesting is no one seems to be attacking this point:

While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules.

"Absolute autonomy of the market" and the right of states "to exercise any form of control." Well, that the gap is widening is not controversial.  That this is the result of ideologies and financial speculation is not controversial.  That we have a system in which the regulated capture the regulators is not controversial (that they do is controversial, but the fact that they do is well known.)  That this makes for a de facto lawlessness, and supra-national entities beyond the reach of states is also well known.  It is a form of tyranny.  When questioned by those who say such entities should be controlled by those charged with vigilance for the common good, these people fall back on the autonomy of marketplace argument.  (Note the Pope did not say "free market.")

Now the Church specifically rejects democracy as a legitimate form of government, a position I agree with.  But if people assent to a democracy, and charge it with vigilance for the common good, and it does not perform, then it is right to criticize the results.  And this is not only a criticism of those who abuse the system, but the system itself.

To be sure free markets are free of State regulation.    But the free market is hardly free of regulation.  Lex Mercatoria is a non-state, or private, law.  The ICC promulgates the UCC which governs LsC.  No state actors in involved in this critical market function.  SWIFT, the international payment mechanism has no state involvement.  The state is unnecessary to a free market, in fact, mutually exclusive.  But all markets have conventions that the members self impose, and violations are met with shunning, in the measure offense is given.  The diamond market, writ large.

A supra-national, utterly autonomous market system, without any form of control, is tyrannical. And such a system is only possible because the states meant to control them become captured by them.  Obviously what the Pope has in mind here is the banking and oil industries, which fit this description to a T.

Enough for today, the same paragraph has another fascinating observation, which I'll address tomorrow.

Feel free to forward this by email to three of your friends.

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Amish & Violence

On Oct 16, 2011, at 12:16 PM, mgranich wrote:

http://news.yahoo.com/hair-attacks-force-ohio-amish-seek-outside-help-170921965.html

So, you'd need some sort of law enforcement with an anarchical society.  

The Amish do have a law enforcement system, it is entirely voluntary, with no sanction higher than shunning, up to and including, excommunication.

But you mean the Amish do not have a system for effectively dealing with malcontents in their group who shave another’s beard.  This is a strange case, so let’s add a more common and more difficult case, and Amish man murdering his wife, which occurred a decade ago.

The Amish are expressly nonviolent, and nonviolence is a necessary condition for a free market (but not sufficient).  

Violence is a non-market event, like falling in love or an act of charity.  The market is exchange of goods and services, and economy is the management of the household.  There may be economic ramifications to falling in love or being charitable, and there may be economic ramificaitons of violence, but they are not market events.  There is no more a market solution to violence than violence being a solution to a short apple crop.

(Now vast swathes of austrians theorists, led by Rothbard, do see market solutions to violence, but their antagonists have the better argument.)

When Amish shun, they are imposing an economic sanction, commensurate with the acuity of the shunning, the acuity being pitched perfectly by the opinions of the unversal group as to the damage of the offense.

An Amish totally shunned will find himself in Columbus Ohio knocking on a neighbors door notifying the neighbor that “in den morgan you vill help me build das haus, habst die frauen prepare and serve meals for die herren...”  That boy will shivver and starve.

In the case of the beard shaving crime spree, the amish are faced with meeting violence, and calling the cops is controversial.  Most Amish say no, but it only takes one caller to bring the cops.  So this brings up the idea of a nonviolent people calling on the violence of the state to meet the violence of the beard shavers.  

Now this is precisely the problem God was arguing against in 1 Samuel 8, where the israelites expressly wanted to shift responsibilty for self-defense to others.  God rejected it, was importuned, made full disclosure, and then condemned Israel to its history of oppression.

The temptation to call the cops is always there. there is the hman temptation to call the cops, which is a facility the Israelites wanted for themselves, and hen there is the feed-th-bears problem of once it is there, people organize around its existence.

But what of the murder of the wife by the Amish man?  Hard cases make bad law.  Apparently one instance in Amish 250 year history in America.  OK, but what about a homcidal maniac who has just killed his wife?  Shun him?

If the Amish way were unversal, the maniac would starve to death, for lack of human association.  But would he not lurk on the outskirts and rid homes and commit mayhem, pillage, more murder?

Let’s say he did.  The Amish are not monolithic, and among the Amish, with their varying degrees of commitment and understand, there would be at least one who would find this intolerable and take a hatchet into the woods and sort the miscreant out, rules or no rules.

If an when the murderer was found murdered, that would likely be the end of it.  And even if a bloody hatchet at the next barn raising gave away who did the deed, in a regime of shunning the fellow who sorted out the problem is unlikely to be sanctioned, and if I know some of those Amish gals, rewarded!

We see in anarchic societies there would not be universal nonviolence.  Between the people angered to violence, and the invincibly ignorant, there is enough violence to keep perpetrators in check.  Like the Amish, violence would be checked by shunning, when the entire community refused service to someone who took violence too far, or some measure thereof.

And think of it, no prisons, no courts, no cops, no tickets, just the occasional hatchet work in the woods and shallow graves.

Check out all of the peaceable people playing dodgebal at Cal Anderson Park a couple of nights a week.  Watch with such force the throw the ball at each other, even occasionally knocking someone on the other side down.  What athleticism is brought to the contest!

Let a player step 20 feet off the court and nail a pedestrian walking home with groceries from QFC.  What was a game 20 feet away is in this instance now a crime.

Context matters.  We mistakenly apply blunt force trauma to all non game situations, when there are so many other options.  We call the police.  if no police, there are enough of us who see force being abused, and step in.  Many people fear the bully, but enough see the bully initiate force and think "game on."  Such people are no more worried about the bully on Broadway then the sportsman opposite on the court in cal anderson park.  In a free market, with no govt police, these sportsmen would be necessary, and sufficient.

AS they sorted the bully out, the immediate judgment of observers would bring justice to bear.

But this is mob rule, and street justice.  Yes, but it is superior to what we have.

Plus you have to put it in the context of a superior economic system.  There is a horrific video out there, for which I will not provide a link, of a driver running over a 2 year old girl in communist china, and then backing up to finish her off.  A dead child is a fine, and injured child is incalculable medical bills.  Some 18 people walk by the injured child.  Such is communism, we do similarly horrible things in capitalism.

it would never happen in Hong Kong, where there is a different, more free market system. And in Hong Kong, there is far more fear of being shunned and far more direct addressing of non market problems, like violence, without government intervention.

As it stands, we must all tolerate the bully, until the police come to deal with it, or you might be arrested for objective grounds, not contextual or subjective grounds. So we wait for the police. Tick tock.

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Ronald R. H. Coase & Free Markets

The main reason the term “free market” is in disrepute is because the Chicago School of Economics, whose leading lights would be the well known Milton Friedman and the less known but more influential Ronald Coase, who use the term, but in no sense are free marketers.  Both endorse and serve the state, and a free market and the state are mutually exclusive.  Free markets have government, but we need no state to be well and self-governed in a free market.

Coase won a Nobel Prize in economics writing in relation to Pigou, who was a titan in early 20th century economics.  Pigou pointed out the necessity of government providing public goods such as lighthouses, and how to best tax for such provision.

How could something like a lighthouse, that guides ships in the night, ever be in private hands?  If the state did not tax for lighthouses, ships would just sail by the light, get the benefit, and pay nothing. Government intervention is necessary to deal with the free rider problem, the ship that does not pay for a necessary service.

Pigou, like Adam Smith, was a moral philosopher, and was writing economics in the milieu in which he lived.  He addressed matters such as “externalities,” for example the costs a new factory in a crowded neighborhood are borne by the neighbors, and how to tax to arrive at just distribution of costs.  You can see how Pigou would be popular with progressives, with the government stepping in to solve all ills.

Pigou's ideas were popular with the powers that be, because there really was nothing that was not a public good, if the people, or a party, wanted it so.  The problem was, by 1937 when Coase started writing, some very wicked people, like Mussolini and Stalin and Hitler were agreeing, everything is a public good.  Pigou supported Keynes, who asserted his ideas would work best in national socialism, and said so in the 1935 German edition of his most influential work.  The USA economy is largely Keynesian.

Coase made his bones by taking out  Pigou. Coase noted that, in fact, lighthouses were, and always had been, privately owned and operated.  Lighthouses were private companies.  The lighthouse companies charged ships when they landed in port.  Ships paid voluntarily.  Pigou simply had no idea what he was talking about.

This is an+ archy in action.  Free markets existed before there were kings, and free markets are the natural condition.  When people say there is no such thing as a free market, they are largely correct.  As long as there is a state, there cannot be a free market.  Happily, we know we can have free markets, that we already have them, it is just they are buried under the wreckage of prescriptive law 14000 pages of NAFTA and 72000 pages of tax code, 163,000 pages of CFR etc.

Pigou ignored the fact that problems Pigou addressed had already been solved in a free market.  But with capitalism, property rights needed to be abrogated, and in essence, the contemporary theories were clearly ignorant and unjust.

Whatever Coase’s intentions, the result was to eliminate property rights and give free reign to big business/big business.

What Coase did not address is, what if the ships did not pay voluntarily?   The ships were shunned.  Does not do you much good if you come into harbor to unload or pick up, only to find no one will give you a space to dock, tie you up, or load and unload you.  As with malefactors among the Amish, you’d get shunned.  It’s not that free markets make people saints, it’s that it is a system in which people cooperate or suffer in the measure they refuse to cooperate.  It is pitch perfect in dealing with the free rider, when one appears.

The coast guard rescue boats were all private companies, too.  Ship owners and insurers were happy to know, and pay for voluntarily, that a crew of expert rowers had a sound boat to come out and rescue a crew in a wreck.  Local pride motivated participation, not to mention salvage rights.

You’ll notice in both instances we have an exercise in self-government, but there is no state.  So it goes through any and all public goods.  There is really no role for the state in life.

Nonetheless, Coase developed a theorem in relation to government action to deal with the problems that arose with capitalism. Coase argued regardless of property rights, two players in an economic action may arrive at a solution without reference to property rights or law.  What if a train running along a Montana wheat field sends off a spark that burns down a wheat field?  Never mind this too is already laid out in law and free markets and property rights. That 800 year tradition blocked progress as defined as “get big or get out.” Coase offered the idea that regardless of property rights, between the railroad and the wheat farmer, the two rights holders would sort out an agreement in spite of property rights.  And this theory could be applied in law to economic problems.

Now this put some rational limit on public goods by reframing the question.  What the Chicago school managed to do was to blend economics and law so that less state may yield better results under more freedom, as big business would deem it.  Thus the Nobel price.

If you want to understand the application of modern economic theory, then read Coase, not Keynes nor Friedman, especially if you want to understand the rational basis for the modern practices in markets and law.  The book to read is The Firm, The Market and The Law.

Of course I much disagree with the contents, but it cannot be denied that Coase's’ ideas are  widely applied in modern practice.  Reading the book will help you understand some of the more inexplicable policies we see around us.  Coase was widely influential, far more than Milton Freidman.

One of Coase’s most prolific expounders was the University of Washington economics professor Steven N. S Cheung,  who specialized in the fields of transaction costs and property rights,   US authorities have issued an arrest warrant for Cheung on tax-evasion and conspiracy charges, fin relation to his other work in intellectual property rights and truth in advertising.  But that is another story.

When asked if at 101 years old this year in an NPR interview “”Is there anything in the world you would consider a public good?”  Coase replied,  “I don’t know, I can’t think of anything .  O yes, I can.  The provision of the army is something, which I think, the government, on the whole, can provide better than leaving it to private enterprise.”

Now this is funny.  Even at 101 years old, this lifelong academic has not gotten around to reading everything.  And too bad for someone who wanted to be an historian, not an economist (in fact, he’s never taken any course on economics.)  And he could not become a historian because he could not read Latin, a requirement in his youth.  He would have learned, when studying the classics, that in fact in ancient Greece, it was private individuals who raised armies in times of need.  It was private individuals who provided all of the items we call “public goods,”  he would know Greece as free and safe for 500 years under this system, and grew in wealth and peace.  It was the idea USA was founded on, and the basic military unit is called a company, not a coincidence.

And to this day, it is not soldiers who determine if a country is safe, it is the population they front.    USA is safe not because of our soldiers, it is because any invader would face an angry and well-armed population.  When countries fall, it is a demoralized population that gives in.  The Germans lost the will to fight at the end of W.W.II, the Vietnamese, like the Afghanis, have not.

The Chicago School put a happy face on government intervention, and called it “free markets.”  It is nothing of the sort.  The Chicago School, at the University of Chicago, a Rockefeller outfit (Rockefeller Chapel...!  Not Saint James Chapel?) promotes government dominated by big business as opposed to the progressives business dominated by big government.  

The two views of the world held a showdown in Chile in 1973, and the Chicago school won out, by violence.  “Free markets” as a term, and the Chicago school as an economic system have been loathsome to the Left ever since.  

In their sibling rivalry, the two sides in the same family, statist rent seekers, misuse the term free markets.  It is a revolutionary act to use term correctly.

The free market preceded the state.  The free in free market means free to and free from.  Free to join in voluntarily, free to contract, free from force or fraud.  We do not have a free market because our currency is an example of both force and fraud, we are obliged to use it, and it is not money.   And we are not free to make up our own money, and contract in money.  So at the most fundamental level, our state does not permit free trade, so there is no instance in which a problem can be attributed to market failure or the free market.  The failures we see around us are state policy failures.

And irony of ironies, the shorthand term for the Chicago school of economics is “monetarist.”

While everyone in Chile asks about Friedman, and indeed Friedman is the face of the Chicago school, few understand it was from Coase and his law and economics that animated the policies that were applied under Pinochet. 

I agree with the progressives that the military industrial complex robs us of the resources for education and health care and all sorts of good things. I agree with the fascists that social spending excesses imperial our national defense. But a pox on both of their houses, we can have the best of both in a free market, a term both abuse.

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Free Market Violence

At a party the other day an erstwhile conservative candidate for office was questioning me on anarchy, and of course threw out the "big question," how about police and border defense, if no government.  I pointed the "police experiment" has been going on for maybe a 150 years, and so far has not worked out.  And the founding fathers assumed no standing military, and had none, but nonetheless when oppressed farmers got their guns and whipped the UK, the most powerful military in the world at the time.

But now is different! No, the Vietnamese farmers, when oppressed, got their guns and beat the most powerful military, the USA.  The Afghanis did it to USSR, and are doing it to USA.  (They had help when they beat USSR..! so did USA when we beat the UK, and so do the Afghanis now... it does not change it can be done, in fact it is the way it goes.)

What did we do before we had police? Well, we did not have drug laws, which is what keeps most law enforcement occupied.  We did not have government controlling so much, so free markets ruled.  We had courts, but they were mandatory, and very many people did not want, both sides, to submit to a court.  So we had dueling.  Vice President Aaron Burr shot and killed the very evil Alexander Hamilton.

But we cannot have dueling!  Why would it be any of your business?  But it is barbaric! Isn't 30% of black males at sometime jailed barbaric?  But they break the law!  They break specially targeted drug laws, and being convicted is no indication of being guilty, in USA, as DNA evidence keeps showing.

But what about drug dealers in the neighborhood?  A throwback to much older times, the USPO simply stops delivering mail to that street when a dog bites a mail carrier.  People on that street must go to the post office to pick up their mail until the dog is gone.  No cops, no dog catchers, no storming a family home by swat teams who "fear for their lives" just old-fashioned shunning.  The same system the old-fashioned Amish use when someone misbehaves.

The great thing about shunning as a policing mechanism is the entire community is involved, and everyone freely votes their own conscience: was what he did so bad that I should not even give him a ham sandwich, or not.  Usually, the punishment fits the crime: you are shunned by the amount of people who view this about right.  There is always some consequence, as in the punishment tends to fit the crime.  You have to go and explain yourself to people if you want "back in." If no one will even give you a ham sandwich, you better repent or move on.

The entire diamond trade is policed through shunning, and in general is the large part of decency and standards setting.

No cops, no jails, no trials, just free market non violent community based policing.  But what about the homicidal maniac?  Scare any man, even an Amish, and contrary to all philosophy and religion, he just might instinctively lash out and sink a pitch fork in your chest.  And then he'll run the risk of ever getting a ham sandwich or not.  Call it free market violence.

Back when there were no cops to protect mail carriers (we had mail carriers long before cops) the post office came up with a way to deal with dog bites... shun the neighborhood, the neighborhood will sort out the bad dog.  The post office still does this.  In this report on nothing new, what is new is the slant on the article which makes the USPO the bad guys.

The US Govt tasked the CIA long ago with infiltrating media to promote government policies.  One carrer made by the CIA was Gloria Steinem of Ms. Magazine.  She claims never to have never been asked to inform on progressives, but as one fellow pointed out, the CIA knew the never had to ask.

You do not have to tell what Sean Hannity or Rush Limbaugh what to say, they will say it anyway.  You simply give them 600 stations and pay for it with "Go Army" ads and they will say what they would say anyway.

In his book laying out Wurlitzer,  Hugh Wilford comes away with a generl approval but a conclusion Wurlitzer ended.  I sincerely doubt it, after watching First Things magazine going from questioning the legitimacy of the US Supreme court to featuring articles by Victor David Hansen.

When I see such a coordinated assault by main stream media on government workers and unions, it is clear the game is up.  70% of the firefighters in USA are volunteer.  Overnight the Samurai were dismissed in Japan.   The process of eliminating government overbloating has started.  First win the hearts and minds of the people.  The divide and conquer (first nail the teachers, then the cops).

I was speaking to a retired firefighter the other day who say in 1964 when he applied there were 3 applications for 7 positions.  Last week there were 500 applications for one position.

What is gone is an America when we did not need cops, and an America that was free of senseless interference so there were better things to do than become cops, or firefighters, or whatever.  Getting back there will take far more than firing people.  We have to cut back on senseless interference too.

But as soon as the modern state defined itself as a monopoly on violence within a given territory, the state became illegitimate, and anarchy became imperative.  No one should have a monopoly on anything, if so, we have no free market.  USA cannot have a free market as long as the government has a monopoly on violence.

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Wealth And Trade

Last session in my seminar we examined cheap labor and found there is nothing to support that as a factor in international trade.  The idea is unremarkable to people who are actually involved in international trade, but often a surprise to those outside the field.  Welcome aboard!

There is another fundamental that must be understood, a fundamental which helps people analyze their experience as they proceed.

Everyone in this class desires, at least, to learn something about acquiring wealth through trade (even if one aspires to mere nonprofit status).  What if the common idea of wealth is misguided?  A proper understanding of wealth will help you order your priorities to gaining it.

As a preface, let me point out that the market is a subset of the economy.  The market is limited to the distribution of goods and services.  The economy is all transactions, the majority of which are non-market events.  When a neighbor gives you a pie, it is a non-market event, but it is part of the economy.  When a house is built and sold, it is a market event and an economic event. When a house burns down, it is a economic event, but not a market event. When volunteer firemen, which are the vast majority of firefighters in USA, put out a fire, it is non-market event, but it is an economic event. 

Then such things as love, violence, charity and so much more are neither market nor economic events.  A walk through the park, playing a song on a guitar, falling in love are neither market nor economic events.  The markets are not the answer to everything, not everything is about economics.

Having said that, let’s look at how wealth is created, to see how we fit in.

The entrepreneur advances the market function of innovation in goods and services. Innovation is a process that results in the unique, rough, pricey and plodding.  We saw this in the example of the first Apple computer products.  A product is introduced, when it is only good enough to get enough orders to cover a supplier’s minimum production run. The next order constitutes a product iteration which includes  improvements suggested by initial market reaction.  Over and over, new versions keep coming out based on customer feedback.  You keep making money since each order is profitable.  This process continues, at least for several years, until the the item is so good and so widespread in its market acceptance that conservators "steal the idea," and apply their economies of scale to the innovation. The result is the product becomes commodified, and the conservators apply their economies of scale to the product and we get more, better, cheaper, faster versions of the innovative good or service.  Ultimately, through the market and the concomitant division of labor, access to the the goods and services is made universal because the conservators “steal” the ideas of the innovators.

Of course, properly understood, the conservators steal nothing, because they redesign the idea at least one more time before they release their version, and they use their factories, distribution and finance to produce their version, and sell it to customers the innovator could never serve.  So except out of some delusional conceit grounded in insupportable theory of “intellectual property rights” conservators steal nothing from innovators.  And keep in mind the years the innovator was ever improving the item, the innovator was enjoying a nice profit on the sales thereof.

At the same time, the point in this process where the conservator is inclined to “steal the idea” the innovator has the opportunity to become a conservator himself.  With such a history and such a proven item, the innovator may decide to offer an Initial Public Offering, the IPO, and change from innovator to conservator himself.  Microsoft, Boeing, Apple were all at one point startups and innovators, and all at some point decided to offer the IPO, and become conservators.  In any event to become a big business at some point the business must first start.

Happily almost all business remains small.  The owner gets to some point, say $5 million in annual sales, with $500,000 net, after supporting himself through the business, and decides he has it just right.  At that point to maintain that level of business, he is obliged, as we see from history, to dump about 20% of his line each year and introduce 20% new.  This keeps the business steady. Which 20% to dump is indicated by which items are being “stolen” by the conservators.  Those are the items to let go.  What new items to develop is indicated by customer feedback.

We saw the market, when relatively free, lowers the price of computing and widen the access to the point where today people have more power in an iPad than was available to NASA to put a man on the moon. Nasa spent billions on such computer power, you get it for $500. If we had as free a market in medicine, then the cancer cure would be at $87.50, over the counter.  

By “free market” we do not mean capitalism or its rival communism, but markets free of force and fraud, statutory vs common law regulation, and subsidies, which both -isms accept as necessary.

Think of deregulation of phones in 1980 and the internet thereafter.  No one anticipated the world wide web, but it could not have happened without telephone deregulation.  (As a side note, this, Carter’s wholesale dismantling of the CIA plus deregulation of air travel, beer and trucking led to the economic boom that occurred under Ronald Reagan.  Change takes time, and Carter’s brilliant work took effect during the terms of Ronald Reagan.)  Cell phones, introduced about 1980, were terribly expensive, huge, with poor service and design, and hard to come by.  Today most cell phones, even an Apple iPhone, are free if you sign up for telephone service.

Affordable access to a wide variety of goods and services is the definition of wealth.  A free market creates an ever expanding menu of more specific goods and services, at every lower prices.  The people are served with ever more selection at ever lower price.  

This is the original sense of "wealth," ie, weal, commonweal, commonwealth, before the bad guys hijacked the term.  Wealth is not how much gold you have stacked up, wealth is access to goods and services.  Progress is when prices fall, to the point where everyone has access to the good or service, like the cell phone and service plan that goes with it.

Wealth is an every widening selection of goods and services and an individual’s access to the same.  King Henry the VIII was one of the richest people on planet earth in 1540 when he had a beautiful home, great personal security, meals ready at a snap of the finger, chamber music with each meal, wore silks from China, could travel anywhere he wanted, outstanding carriages, excellent medical care (not that it did him any good), had a fabulous education and could start his own religion if he wanted.  Today even the poorest American citizen has all that and far more.  Did the US citizen get fabulously rich, or did the price of all those benefits fall to where virtually everyone has access to them?

That is the function of the free  market in the classic sense, not what politicians call the free market.  When politicians say “free market” they mean help their friends, and hurt their enemies.  The use subsidies, regulations and taxes to pick winners and losers.  In any case, the consumer loses, no matter which gang wins. Poverty is the result of failed government policies, not the free market.  It is not possible to get government policies right since they necessarily pick winners and losers.  Someone’s ox gets gored.  The market is the only means for getting selection and distribution right, and get the price down to where it is affordable.

Wealth is the result of freedom to act and contract, in which one can pursue solutions to problems and share them with others.  This sharing is in response to the needs of others.  Merchants are in essence at the service of others, in the strictest sense.

Each enterprise is unique to the entrepreneur and the situation in which he finds himself.  He may open merely yet another coffee shop, but his kind of coffee and what baked goods he offers will meet the needs of his customer base, making his shop unique.  He may have come to love coffee cut with chicory and its health benefits, and found that sweetening such coffee with molasses and calling it Cafe Creole satisfies the aspirations of a Francophone section of his customer base.

This is not a world in which we "live simply, in order that others may simply live" but a world in which we live fully, because everyone is free to contribute.

Wealth is not how much money one has, but what goods and services one can access with the money one earns.  A free market allows the range of goods and services multiply indefinitely since markets are constantly being divided up by entrepreneurs introducing new and better goods and services.

The ability to create and satisfy customers earns one just compensation for his efforts, and he that refuses to work will find it difficult to earn.  But as we see in better ordered economies such as Hong Kong, anyone can earn and the range of goods and services make life comfortable for all who participate.

But we may be inspired to do something more than a coffee shop.  As we get closer to what we truly love, we may find something larger to work on.  Let’s experience free thinking in a couple of examples.

Radio waves occur naturally, and so when you are between stations or out of range you get static, natural radio waves.  Marconi and others discovered sound could be recorded, transmitted and sent to receivers (radios).  That is an invention.

Around the 1900s a theory emerged that said there was such things as natural monopoly, for such things as roads, telephones and radio.  Therefore, the state should step in and control these things.  But they would say that, wouldn't they?

About 1980, the scales fell from the eyes, and we had the unimagined wonders of the internet when telephones were deregulated, just lightly.  Imagine what we would get with full deregulation!

The internet is an example of unseen goods and services that emerge in freedom, and deregulation is a return to freedom.

As to radio, it is an invention.  100 years ago the invention was in a stone age form.  The government locked down the invention.  So entire swathes of band are allocated to one owner.  This is madness.

Think of a sine wave of a radio frequency, with its up and down pattern.  There is no reason why radio transmitters cannot be designed to separate out the wave upswing with the wave downswing for reception of signal, and then build the reception with that half of the wave.  It would be a mere improvement on what we have now.  It is in fact exactly how your computer works.  An email is broken into many packets as it goes out, and on the other end a computer reassembles the parts into a coherent message.

Now, if you can wrap your brain around cutting a band wave in two, then you can see how where we allocate certain bandwidth to one radio station now, we can split it in two so we can serve two radio stations. Call it AM 1000 a and AM 1000 b.  Same bandwidth, just double the capacity.  Old radios might no longer work (or someone would come up with an adapter) but we have plenty of old computers that do not work either, because they cannot handle the internet, a new invention.

Once you understand we can cut bandwidth in two, then you see we can cut that in two also. So, one channel, two channels, four channels, eight channels, 16 channels, 32 channels... on to infinity, for that one dedicated channel of bandwidth.  That is to say, radio is an infinite resource, limited only by mans desire to exploit.  The price of something with infinite supply is very cheap.

“Health Insurance” is a hot political topic, for which there are plenty of ways to provide a solution.  Never mind that health insurance is diet and exercise, and what we want is cures for a medical disaster, not insurance for health care.  Insurance, in essence, is where a group gathers for mutual aid.  So how about members agree to make a monthly insurance payment, in this case full medical care for a single at $135, two parent family at $320.   The members submit any medical bills above the first $300 per year to the group headquarters.  HQ verifies the bills, and then directs the members that month to mail their payment to the person in the group who has medical bills to cover.  So if Joe Smith has $13,500 in medical bills this month,  100 members mail their payment to him, as an act of charity, and he pays his $13,500 in medical bill directly to the hospital or doctors or whoever.  Anyone else who has bills gets covered as well.  Each month they clear out all bills, one way or another.  Wow.

Members pay $175 a year to join, and for that administrators check and verify the bills, and negotiated down bills for members (cash talks) and also maintains lists and a clearing house of doctors who esteem cash paying patients.  This efficiency lowers the cost of health care.  This isn’t fantasy, it has been in place for the last 15 years.  It works, but few can imagine it, so it only has about 18,000 members.

Pollution:  Cars are inventions.  The invention could include a system to catch all emissions.  When USA changed from common law to statutory law on pollution, then the manufacturers were given a pass, so now we have pollution where once none was permitted.  Go back to the common law on pollution, redesign cars to package up exhaust for resale to industrial users, and end auto pollution.

In business, in a free market properly understood, your passion, your joy is mixed with customer feedback to ever refine the collection of goods and services available at ever falling prices.  There is no better means for distributing society’s goods and services, not to mention there are no other means for initiating the improvement in the selection of goods and services needed by society at any given time.

This is entrepreneurship in a free market, properly defined and understood. 

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Excellent Summary of Economic Circumstances Today

Anyone interested in a good summary of the situation at hand should read this economic analysis from Hayman Capital.   My big fear is our circumstances lead us to war, and it is the worry at Hayman Capital too.

I think their exposition of where they are putting their money and why (subprime housing) is interesting   but I think there are still so many surprises possible that any bet is a shot in the dark.

We concentrate too much power in too few hands.  then those too few people begin to use terms loosely or misleadingly, and it is difficult to understand the problem.

1. Money is merely a medium of exchange, which emerges in a free market as what from the array of commodities best suits the purpose. Lending money at interest (usury) is a criminal act in natural law. Usury (interest) cannot be sustained without state sanction. State sanction is where the violence begins.   Lending money at fractional reserve (that fraction above money is properly called “credit” but we are told it is money. )  The fraud begins.  Lending credit at interest (usury) is the next step.  Mischaracterizing this as “money” and then lending this credit at fractional reserve makes for exponential force and fraud.  Once the game gets to that point, there is no rational limit.  At some point it comes apart.  We are at the point it comes apart.

Governments support the arrogation of all of this credit unto themselves in order that they may concentrate power.  The concentration is achieved through usury (what we call interest) and the act of muclting proceeds is called taxation.  Govts are simply the legal fiction that curtains off the very human people who pull the strings.  

2. The score in this game is kept by the financial services industry.   In a free market The purpose of this regime is taxes, and banking to track the flow of “wealth” in order to tax it.   That is why all power is brokered at the financial institution level.  The Soviets report Hitler was so constrained by finances he could not develop his atomic bomb.  The Swiss report the Allies met with the Nazis regularly to settle accounts (in gold) for their cross-trade in war material.  This is to say that even total government is limited by its accounts.  When their credit is shot, transactions must be settled in gold.  Osama bin Laden got away at Tora Bora while the Coalition awaited the payment of gold to arrive, the media of exchange demanded by the Northern Alliance.  In history gold is used at end times.  

3. War is the default course.  I’ve been saying this for a while, and I hope I am wrong.  Whoever can prove their credit is better, that their ability to borrow and concentrate power is superior, will win the war.  The winners settle up all of the debts, usually by simply repudiating the debt.  (Something any country can do without war: Iceland is recovering since it repudiated its debt.  Ireland is sinking because it has not.)  Default is the peaceful solution.

The state has only two means: force and fraud.  They use both.  That is why state policy necessarily always gets worse.

4. There is an alternative.  In a free market there is money, properly defined.  There is finance based on credit, but limited to rather micro instances which, in total, add up to precise what is necessary and sufficient to maintain prosperity.  But there is no interest (usury) since it cannot be sustained in a free market.  There is investment, but only in instances in which both or all parties share the risk.  In this world, risk is minimized by normal market practices.

In a free market the above scenario gets no farther than money, vendor finance, and shared risk in investments.  Loans happen, but never with an expectation of gain.  In a free market, loans are economic events, but not market events.

To avoid war, the first step is to unregulate the financial markets, and make a separation between industry and state.  The paradox is to live in a free country we must be free of the state.   The tragedy is few people want the freedom that is the basis for peace and prosperity.

5. The only way forward is unregulation.  Not enough people will agree to that, because they want free stuff.    We will get unregulation, and free markets, when the system collapses.

To thrive in that system you need to know how to make something, or trade it. 

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How To Play "Intellectual Property Rights"

As we all know, the concept of intellectual property rights is a criminal activity, one of many, that the state engages in, by virtue of the fact that the practice is contrary to natural law.  Further, the regime is ultimately enforced by violence, which is in violation of revelation, "thou shalt not kill."

Now be that as it may, we in fact do labor under an intellectual property regime.  Truly no getting around it.   In Romans 13 St. Paul says obey your government.   Jesus said render unto Caesar...   Some evil preacher men say this means you should get with the program, and join the bad guys.  Nonsense!  Later the same St Paul says never use the government court systems.  So which is it?

Saint Paul explicitly says the way to overthrow the bad guys is to treat them well, which will heap burning coals on their heads, following Jesus who said love your enemies.  When Jesus was faced with a tax, which the bible teaches is odious to God,  Jesus' response was to pay it so as not to give offense to the evil power-mongers.  

And we have no enemy more lethal than the state.  Just ask Jesus.  And for that matter, St. Paul.  Both of whom were whacked by the state for teaching "love your enemies."  Jesus and Paul are not teaching "the state is evil, it is good to join them!  Intellectual property is wrong, let's join in!  The state kills people.  Let's join in killing Jesus and Paul!"  They are teaching the counter-intuitive means for working ones way out from under the evil of the state. Does heaping burning coals on someone's head strike you as cooperation? They are teaching how to free oneself from slavery.  The starting place is recognizing slavery exists.  Understanding is not agreement.  But understanding is fundamental to the process of liberation.

So we do want to understand how IPR works, but we do not want to participate in it.  How can we do that?

First understand how IPR harms the economy.  The best introductory book on the topic is Against Intellectual Monopoly.  You can read the whole thing for free online, compliments of the authors.

You can also buy it on amazon, which you will want to do, because the book is that good, you want it in your essential library...  either kindle or hardcover.

Hardcover:

Kindle:

The book is wrong on trademarks, but who cares?  It is 99.9 % right on.  Saint Paul said no one has the entire picture.

Once you've read the book you'll be able to begin to overthrow the system.  Here are the specifics.

1. Gain IPR on anything you can.

2.  Open source whatever you have granted as IPR.

Done.  The system falls apart.  No bloodshed in the face of implacable evil, just the free market.

IBM is the number one patentholder in the USA.  They have open sourced their patents.  How come?  Because when some 19 year old genius sees an cool new thing to do with IBM source code, the kid is free to do so.  The kid sells the idea to his uncle, who uses it, and saves money in his business.  The kid got $500 from his uncle, and is deliriously happy.   IBM sees it, and mature sober IBM people assess it for merchantability. IBM then, through its monster network of customers, makes money on the 19 yo kid's idea.  IBM makes tens of millions.  Each uses their labor mixed with natural resources to produce something valuable in the market.  Everyone is happy, peace and prosperity is justly distributed.  No Jesuit peace and justice committee necessary.

Even if the kid made ten million on his idea based on IBM code, IBM could care less.  The business the kid found was never IBMs business anyway, since they would never have thought it up.  What IBM gets is market on the scale that IBM is tied into, and that is the hundred of millions.  So what we see is the free market, in spite of being saddled with odious state violence-based economic rules, can still operate.  People can be free from the evil slavery of IPR.

Bezos claims he patented oneclick ordering to keep anyone from gaining IPR and forbidding one click ordering on Amazon.com.  Attaboy!

I maintain copyrights on my books, so that I am free to give my books away.  If I did not maintain the intellectual property rights, I could not give the book away for free on google or amazon, nor sell them on amazon, because IPR is positive law and to play we are obliged to make positive representations of our legal status.  If someone else owned the IPR, they could forbid me from giving the book away for free.  Giving my book away for free is critical to the success of the book, critical to the achievement of having it sell consistently on Amazon.com for ten years now.    Rarely do bestsellers last that long.  I am up there with Shakespeare for consistent sales.  My book sells well (ok, let's just say far in excess of what any promotional efforts would yield) because I give it away for free on googlebooks to anyone who wants it.   (It is also free for the reading on amazon, but google search engine actually drives people to the book. Amazon does not have that push.) Enough people who find the information in my book for free on googlebooks want to buy the book.  Therefore, giving it away makes it sell.  Finding the book finds me, and people contact me directly. It is the modern version of the book signing event. It is counterintuitive, it is paradoxical, but it is reality.

This is only possible because I know IPR is evil, and I know how to beat it.  By giving my book away for free on googlebooks, it is so widely accessed that I get sales otherwise not possible.  Yes, people "steal" my book on googlebooks.  But if they "steal" it, they were never my customers anyway.  How have I lost anything by not enforcing the violent provisions of IPR?

Now, if I did not "own" these evil IPRs, then someone else could, and forbid me to give the book away.  Under our system, if IBM did not own the IPR on their patents, they could not make them free.  We do not own the IPR so that we can benefit ourselves by visiting violence on our neighbors under the system,  we own the IPR so we can free our neighbors and ourselves from the system.  We recognize the system.  We overthrow the system, using the system.  This is the nonviolent, free market way.

Saint Paul was not saying slavery was a good thing, he was saying slavery needs to be overthrown. Killing government workers will not do the trick.  To free a slave may very well result in re-enslavement by someone else, manumission is always tricky business in states that constitutionally provide for slavery.  We see this in USA 2012, the only modern state whose constitution provides for slavery.   By "owning" a slave, one may protect a slave's human rights and freedom.

This thinking can be applied to any and every field in which IPR is doing its harm: medicine, movies, music, agriculture, automobiles, you name it, we can be free of it.  But the problem is so many people prefer to enlist state violence to ensure a sinecure, and prefer not to serve people or make an effort to meet other peoples needs.  They love the state.

When Michael Lewis wrote Liar's Poker to explain just how wicked the practices were on Wall Street and the utter abuse of the USA investor, he hoped to effect some change and improvement by his expose.  He was perplexed to get an overwhelming number of letters from the best and brightest at Harvard, Columbia, Stanford, Yale... Christians all, inquiring as to how they could get such jobs themselves ripping off their fellow man.

IPR lawyers, who are all state workers, know the system is dead, and know that smart people are moving away from the regime, so they are now in a death-struggle to rewrite the laws to make themselves relevant and to maintain the stream of what they mulct from the productive sector of society.  We all love a system that will feed us.   Most IPR lawyers love the IPR system.  Some patent attorneys are honest, and admit the system is evil and harmful, and advocate the system must be abolished, in fairness.

The trick is not find a way to change human nature, the trick is to withdraw the consent for the state to aggregate power.  As I pointed out 1 Samuel 8 is the first of many instances where people clamor for oppression for themselves.  Part of our work is to undue the damage done. We can take heart observing places like Switzerland, Hong Kong, Andorra, Singapore, San Marino, Iceland, the Vatican, etc, where the state is nearly non-existent and in that measure malefactors find little purchase from which to leverage their evil designs.

 AS the capitalist system continues to disintegrate, mustn't worry.  This is good.  Simply review reality, and understand that a better system is largely in place already, and the sooner the malefactors bring their system down upon themselves, the better for the rest of us.  Just be well versed in how the free market works, so you may thrive as those who have aggregated exceptional property find their world crashing down around them.

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Anti-IPR Summary

The US Intellectual Property Laws (IPR) laws are statutory laws enacted as a policy decision.  They were at no time considered natural rights. By law they are legal rights, but not natural rights.  Therefore, they are not inalienable.

There is nothing to support the claim that IPR fosters innovation.  It may be true, but at no time in history, has anyone warranted that claim.   With about 150 years of intensive practice we might have yielded proof, but no.

The claim that IPR places tremendous cost on society is warranted by enough studies to make it true.

Therefore we have a tremendous cost with not proof of benefit.

Further, of the nearly 7 million patens issued in USA since 1789, almost nothing patented has ever turned into a product  If the extremely few items that are patented and are turned into products, almost nothing is ever profitable.  If anything, a patent correlates with failure.

Nonetheless, we maintain a state agency with $3 billion budget for this regime.

It is not true that if you do not have monopoly rights you cannot make any money.  As opposed to all that is traded in commerce, only a sliver is covered by patents or IPR.  For example, 70 percent of new books sold are not covered b copyright, they are public domain content.  It is true that almost everyone owns some Apple product, now the largest corporation in the world by stock value, but an Apple product is a minor purchases in a persons economic activity.  The single largest purchase a person makes in a lifetime is a home for which intellectual property pays almost no part .  Food, clothing, gas, utilities, the next biggest costs, are rarely associated with intellectual property.  In any event, there is little monopoly if any, on those items.

Almost nothing traded in commerce is under IPR, yet people seem to make money without it.

You can invent, market, manufacture and sell an item and make money.  Based on customer feedback, you are likely to change your designs to please an ever wider group of customers.  

You can market, manufacture and sell an item and make money.  Based on customer feedback, you are likely to change your designs to please an ever wider group of customers.

In both instances the marketing, manufacturing, selling, and distribution is by far the major effort in making money.  The design is a minor part of the effort.

Therefore, small businesses really have no business with IPR anyway since they are constantly changing their offering.

Factories make money selling things they make.  They want the best designs, so they can make more items.  Designers may contract with factories to bring their designs to a given factory, in return for what we now call royalties.  In this was designers can make money under contract law, which is a part of natural law, and not bother with IPR, which is not found in natural law.

Apple Computer sells a system of distributing music called iTunes.  By paying well, Apple attracts the best artists to Apple’s means of production, iTunes.  So it is with factories and artists.  We need no IPR for artists to make money.

Someone else can ”steal” market, manufacture and sell an item and make money.   Based on customer feedback, they are likely to change your designs to please an ever wider group of customers.  This is good for the consumer.  This is were true wealth, more options to choose form that more closely match your desires.    Yes, the free market militates against individuals amassing personal wealth, so defined, but it was never intended to provide massive personal wealth.  The purpose of the free market is to offer ever more options at more better cheaper faster.  The free market is essentially about justice in distribution.

The research and development of products contributes almost nothing in the way of costs.

I understand in capitalism companies SPEND phenomenal amounts of money on research and development, but R&D does not cost that much.

Business expenses are taken off the bottom line, and the bottom line is what is subject to tax.  In the pharmaceutical industry, imperial lifestyles are buried in the R&D budget.  Vacations, sexytaries, Aspen and Davos confabs, personal effects, kids education's, sinecures for friends and relatives, bribes to officials, are all buried in R&D.  IPR invites personal corruption.

R&D that pays off is marginal, tiny tweaking at the margins.  Apple continuously introduces excitement with its miniscule improvements.

Why should society prevent individuals from using their equipment and skills to market, manufacture and sell an item and make money?

But what if our competitor goes low price?  Then you can go low price, if you want that market.

What if your competitor puts his name on your product?  If he does well, apparently people prefer his name on your product.  Therefore, if you want that business, put his name on your product.  If you do not want that business, leave it to them.

The fatal flaw in IPR is the holder shifts from marketing to violence backed monopoly.  Why should taxpayers be obliged to fund state agents to sort out a disagreement between and inventor and an adopter?  It was not necessary under the law merchant, why is it necessary now?  4th and 5th parties pay to protect 1st parties in disputes with second parties.  Why should I contribute to the millions in cost to protect bill gates from the free market?  Why not let Bill gates pay to protect his so called “wealth.”

What IPR does promise, aside form a sinecure for lawyers, is that you might win a lottery of sorts.  You might gain exceptional personal wealth.  Thus IPR appeals to the sort of people whose hopes are tied up in winning a lottery.  A lottery has one winner and countless losers, with nothing of value otherwise provided.  This is why all major religions condemn gambling.

The cost of IPR is less wealth for everyone else.

A lottery mentality is not a sustainable economic model.

In a free market, an individual may make less money, but never too little money, because one can always redesign to please more customers.  A free market is the only means of facilitating people’s best efforts, and rewarding it.  We see with deregulation how, as in telephones,we get more better cheaper faster.  This would be true of food, medicine and education as well.  There was no way to foresee the good we have now today back in 1980 when the telephones were deregulated.  Unregulation would be even better.

It may mean you will make less money, but that is not proven.  it may mean less money, less personal wealth, but not less access to a wider range of goods and services at ever lower costs.

Bastiat noted how economic calculation cannot include the unknown, what we would have if we were free.  WE can know it is better, we just do not know how, what new wonders we would see.

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