The Future of Information Exchange

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I've been dead for a bit. Mostly because I've been working on a little something that I should be able to announce on this blog soon (something much more on-topic for all of you planet readers). But, business first: my last two posts were on piracy, and I think I need one more to leave things neat and tidy before we can all move on for a bit.

In my last post I discussed how piracy can be treated as an "externality," a situation where a transaction that is beneficial to both direct parties harms a third party. I then asked if we were defining externality too broadly to be useful, given that value and harm are subjective. I'll rework an example I used there: if a person finds their house less valuable due to a black neighbor moving in, does that neighbor's purchase of the house next door contain an uncompensated externality?

I put this to my private economist, and he cringed a bit, then answered with a simple "yes." Perceived value is, as usual, the only value, and if racism makes you perceive value differently, non-whites moving in next door does have an externality.

The conclusion we came to was that society isn't necessarily obligated to correct all externalities, and morality may be one reason it chooses not to. We could think of it as a sort of punishment for racism; suffering the externality is merely the wages of being racist.

This gets interesting when we bring it back to our piracy discussion, though. Society has a choice in whether it compensates an externality. That choice may be a moral choice, but really the choice could be made for any other reason as well. Remember, it is this same society that outlines property rights to begin with, and for many information freedom advocates, intellectual property is even more artificial.

So we come full circle: we want to establish a system that is both just and efficient, and we can set up any set of rules we like. IP law as is attempts to apply markets to the problem, which are just where certain common and presumably attainable conditions are met, and which are preceded by a reputation for efficiency. IP law remains a good solution unless:

  • The conditions that establish justice don't work for information goods. This is more or less what Stallman is on about; he basically asserts that closing the externality of piracy is unjust toward the user (and his requirements for accessible source code go further than that).
  • We can't effectively set up markets for information goods.
  • The efficiency markets create can't be created for information goods.
  • There is another system which is better when measured in terms of efficiency and justice.

There's probably more ways to approach the first point than swallowing the entirety of FSF ideology whole, but we'll call Stallman good enough for now.

The second point is interesting. It gets back to the old excludability/rivalrousness debate around intellectual property. When presented with the remark that "information is non-excludable and non-rival, and therefore the market should push its price to zero," most economists will retort that IP law creates that excludability, which is largely its purpose. This is true, but at what cost? Information is excludable under IP law. Also, alcohol was unavailable within US borders from 1920-1933. Draw whatever other comparisons you want, but there's precedent in history of "enforceability" dictating the justice of the government's actions. In the case of prohibition, legal signaling never quite produced a popular moral sense that drinking was "wrong." Eventually the government relented.

The third point is even more exciting. It's hard to say how much could be done with more conservative IP law reforms, but right now, IP, and patents in particular, are absolutely disastrous in terms of efficiency. We can pretty much just say "patent trolls" and end this here, but this argument can actually go further. Surprisingly far, even. Look at this and then look at this. Each of these games features similar play style, probably similar weapons, environments, even roughly similar voice acting. Every year the respective owners of each franchise spend millions to update each game, without any cost-sharing, despite immense amounts of reusable work between them. Market IP law means two people make a new 3D mesh of the same M16 each year. It's a sharp highlight on the reality that information is more efficiently produced when existing information can be freely reused. It's the power of "collaboration," and you hear about it a lot in the open source world, while in the proprietary world you have two giant companies duplicating eachothers' efforts at great expense.

And all of that leads nicely to point four: is there a better way? I have some ideas, but much as I'd like to end this piracy series, I think that should wait for another post. I've scratched my piracy itch for awhile now though, so I should be able to leave it be for awhile. Exciting news in posts to come!

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