Re: When is an MP3 file like a lighthouse.

Date: Thu Oct 25 2001 - 16:36:38 MDT

Lee Crocker writes, quoting Hal:
> > Suppose we lived in a world in which copy protection of information
> > could be achieved....
> > Then I would propose that this would lead to the optimal allocation of
> > resources for the production of information and other goods....
> So how do you propose to measure the immense loss of valuable goods
> from those people who would have made use of a larger public domain
> of art and ideas to create, but who were priced out?

They wouldn't be "priced out" if the goods they could have created were
really of such immense value. The funds they would receive from selling
their valuable goods would allow them to purchase the information they
needed for production.

> Your argument
> assumes that "creative" works appear ex nihilo, and that they have
> some inherent value, both of which I can't agree with.

No, I was basing my argument on the assumption that information goods
can be treated like other private goods in economics. This does not
involve assuming that the goods appear out of nowhere, or that they have
inherent value.

> Creative
> works are worthless. They only have value when there is demand, and
> you can only create demand by exposure to similar works or to the
> products or research.

I don't agree that demand for creative works arises _only_ from exposure
to similar works. But I don't think that point is relevant here.
To the extent that it's true, it applies to many physical goods as well.
Demand for commonplace items like clothing, furniture and cars is
influenced by exposure to similar works. This does not differentiate
information goods from physical goods.

> As for patents, it is very likely that the
> people best able to make good products from an invention, and those
> best able to market those products, are not the inventors or those
> hired by the inventors.

Those people who are best able to exploit an invention are the ones who
would be able to afford to bid the most for the rights to it. This is
standard market economics.

> By limiting the use of the invention to
> "authorized" uses, you effective shut out the imaginations of the
> billions of people who might have come up with better uses for the
> idea, or slightly better crafted products, or slightly derivative
> works of great value.

If these people can really be productive with the patent, the holder
will have an incentive to offer them a license, and they will be able
to afford to pay his license fees.

To reiterate, market economics predicts that excludable private goods will
be optimally produced by society. Information goods are special in that
their marginal costs of production are extremely low, practically zero.
That does not invalidate the reasoning which shows that society will
maximize its wealth under a market system with private goods.


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