Saturday, January 28, 2012

And then this happened...

Yeah... Sometimes, religious people are remarkably insulting.

Awesome, huh.

It only occurred to me a bit later that the first comment meant "where are the atheists now" as in, they all got killed and he was gloating over the idea that they aren't in heaven.

Mythbusters, Markets & Awesomeness

I just posted this on Facebook, but it's something I've been thinking about for a few weeks, so I'd like it to be around for posterity's sake:

Watching a lot of Mythbusters in a row has made me really feel great about markets. Almost every commercial product they test not only does exactly what it's supposed to do, but does it safely and reliably, while almost always being affordable by the average person.

As one example, I give you this Emergency Hammer.

Not only does it do exactly what it's supposed to do - according to Mythbusters' test of commercial car escaping products used to escape a car submerged under water - incredibly well, it does so reliably, and perhaps best of all, it costs just $9.99.

So... Here you have an amazing safety product that could literally save hundreds of lives a year (thousands if you get the kind like this that also cuts seatbelt straps), that is small, portable, efficient and is within the reach of literally every person who owns a car in the United States.

That's remarkable.

I was thinking about this regarding internet security last night as well. Had you put the state in charge of coming up with a way to limit or stop spam or deal with other internet security issues, what would they do?

My bet: They'd have spent an inordinate amount of money on hiring experts to form a committee to research the problem, and they'd spend a few years coming up with options that will then be approved through a multi-stage voting process and sent up the chain to some executive branch official with the authority to implement the solution, and then they would force this one-size-fits-all decision on millions of American internet users, most of whom would find it useless and annoying and which - almost inevitably - hackers will work their way around in 4 seconds.

In my experience, this is not only what the incentives of government operations are likely to produce (and absolutely do produce in reality), it's also really just a pretty straight-forward expression of the central-planning mentality.

And the market solution? The Captcha.

Elegant, simple, maleable, completely effective, affordable and best of all: totally voluntary.

Alternet is an Idiot v2.0

Quite a while ago, I wrote a blog called "Alternet is an Idiot", discussing one of their writers' pieces explaining how people on "the right" are distorting reality on the economy.

Now... As most everybody knows, I have huge criticisms of "the right" on a lot of issues, but if we use the benchmark set out by politicians like Paul Ryan or proper conservative organizations like the Heritage Foundation, if anything they don't go nearly far enough in exposing the reality of our economic problems and particularly the state's role in creating and perpetuating them.

Paul Ryan's budget, just as one example, was called "draconian" by his detractors, yet all he did was propose a very slight decrease in the rate of growth in Federal spending & borrowing. Not only was this not even a "cut", it was barely even a fix.

Even Ron Paul's discussion of cutting a trillion dollars from the Federal Budget if he becomes president just puts us back at the levels of Federal spending we saw just 10 years ago. This doesn't even seem all that dramatic to me, and it would actually do some real good. Plus we got one of the most fun political ads I bet politics will ever see out of the deal:

In any case, you can read that whole post... But here Alternet is at it again, with a new article from Michael Lind, called: "Right-Wing Lunacy: The Shameless Lies Conservative Media Tell Their Audience", loquatiously subtitled: "From Social Security hysteria to "Obamacare" madness, right-wing propaganda is increasingly divorced from reality."

There are a ton of great LOL's here, and though I don't want to spend all day doing this, I'd like to go through a few examples.
"In the real world, of course, today’s national debt has nothing to do with Social Security, whose trust fund has a surplus that will last for decades, with the precise date of the trust fund’s exhaustion depending on the rate of general economic growth. True, the federal government has to raise the tax revenue to repay the money it borrowed from the trust fund — but then, the federal government has to repay all of its creditors, domestic and foreign. What’s wrong with that?"
I'm not really even sure where to begin with this. There is no "trust fund" dedicated to Social Security. The second half of Lind's own damn paragraph expresses this as clearly as I could. The money we pay in FICA and other payroll taxes was supposed to go to programs like Social Security - which were originally supposed to work basically like a forced savings account financially managed by the state (a remarkably stupid idea in any case) - but that's not how it works. In reality, politicians use those funds however they want, drawing from those revenue sources to fund other projects and returning IOUs.

Even people who don't mind this arrangement at least understand it (i.e. this Forbes piece by Steve Vernon).

For a writer like Lind to say that A. There's a "trust fund" that's all paid up and secure for decades, and B. Politicians have borrowed from that "trust fund" and will need to impose new taxes to pay back their IOUs is just really, spectacularly stupid.

Here's another thing:
"If Klein were honest with his readers, he would point out that the main causes of federal deficits in the last generation have been the Reagan and Bush tax cuts..."

Would those be the tax cuts after which Federal Revenues went up? I've just spent a ton of time reviewing tax data for a video I'm working on, so this one is particularly funny to me. I'll wait until that video is out to really talk about that, but seriously... The only way you can say that we lost a lot of revenue from the Reagan-era (or Bush, or Kennedy for that matter!) tax cuts is if you assume that real human beings simply pay whatever taxes you demand of them.

In reality, there's a somewhat obvious inverse correlation to tax rates (particularly marginal rates on incomes), and revenues. I wish there was a better way to talk about this besides the Laffer Curve, but I'm not sure that the theory behind this needs to be any more complicated than that.

If you have really high tax rates, say 70% as you had in 1980, and an accountant offers you a tax-free investment (say off-shore, or in some asset, or what-have-you) that costs you 50%... Then guess what, keeping 50% of your money is a better deal than paying income taxes and only keeping 30%. If you take the tax-shelter deal, the government gets 0% of your income.

And that's exactly what rich people were doing across the board, especially by the 1980s when international markets made even more of those kinds of options available. Sure the rates were high, but nobody actually paid anything close to 70%. Why would they? That's actually kind of insane to expect them to do that, and the fall-out was that Federal revenue was actually a lot lower than it would be when tax-rates dropped. Not that I'm supporting more money going to the state, but reality is what it is.

If you believe that rich people aren't - by and large - smart enough about their money (or greedy enough) to figure this out and avoid actually paying the high rates, then you might be Michael Lind.

I, however, assume that rich people are smart enough to figure out how to engage in tax planning, and thus I do not assume that merely by raising tax rates, you will get higher tax-revenue. And indeed..... Here are some charts you should have a look at to understand this a little better.

1. Top-Marginal Rates for Federal Income Taxes:

2. Federal Revenue from Income Taxes:

3. Share of Federal Income Tax Revenue by Income Bracket:

Take note, note-takers!

As rates have dropped since the 1960s, not only has Federal revenue from income receipts shot up, the richest Americans actually paid a larger and larger share of the overall revenue, particularly since the 1980s.

For all the constant discussion of how "unfair" our tax system is - and the last chart makes an incredibly clear case for that being true - it's not unfair in the way most people want to believe it is. The income tax system is horrendously skewed towards the very richest individuals paying by far the most.

Consider that after the 2004 tax cuts, revenue from income taxes didn't disappear, nor did the rich suddenly pay a smaller share of the overall income tax revenue. Quite the opposite, in fact! Tax revenue continued its upward trajectory and the share of that revenue borne by the richest Americans grew... And grew a lot.

As you can see, from 1980-2007, "The 1%"'s share of income tax revenues went from a little under 20% all the way up to nearly 40% (I believe it's actually at about 39.6% today).

So Alternet's Michael Lind is clearly wrong. It's not tax-cuts of any kind, regardless of the President responsible, which have resulted in increasing Federal Deficits. What is? Well... That has a pretty darn clear answer as well. And I can show you in one more graph.

4. Federal Expenditures vs. Revenues (1980-2012):

Note how we have continued to balloon spending even when recessions have caused predictable drops in revenue. What's more, and this the chart doesn't show, our wild attempts to deal with recessions with huge government interventions into the economy (beginning in 2001-2002, by the way, not just in 2007-2008) are actually causing bigger problems with our revenue stream. As I show above, it's not an issue of tax-decreases.

Also... Holy crap, that chart is scary to me. We cannot simply tax our way into fixing that gap in spending vs. revenue. It seems pretty obvious to me that we'll be taking huge drops in our potential standard of living growth just to pay for what the Federal Government has put us on the hook for as it is.

And.... I have one more chart for you before I move on to some other stupidity from the Alternet idiot.

This is Federal spending as a percentage of GDP. This is to say, here's a chart showing how much government activities are in proportion to the rest of the economic activity in the US:

For my money, all of this is basically demonstrating that the Clinton years were pretty darn good in terms of the trajectory of the economy.

That, by the way, is not to say I credit Bill Clinton, Newt Gingrich or anyone else in politics in the 1990s for this... In general, I actually think people forget about how huge an explosion of economic growth the development of the internet in the early-mid 1990s actually created.

For the most part, I credit innovation and a near-unprecedented wave of creative destruction caused by new mass-communication tools for an exploding private sector during that time. As a result, government expenditures - which clearly continued their upward trajectory (albeit a little slower) in the 1990s - were out-paced by private economic growth.

And the future at that time was pretty darn bright.

Government-surpluses, the ability to afford social programs, a booming private sector (mostly, it would appear, for completely sustainable reasons with a handful of pocket-bubbles thrown in)... It all looks good to me, at least compared to today.

Next up!
"The only number that conceivably would matter would be the overall federal-state-local spending as a share of GDP, which in the U.S. is well below the average for industrial democracies that are just as competitive and prosperous."
Yeahhhhh.... Here's the thing about that.

Spending as a share of GDP matters - as I noted above - and it has exploded over the last 50 years. But there's another number Alternet omits that's kind of important: Revenue as a percentage of GDP.

We don't get nearly the kind of Revenue as a percent of GDP as many European nations do. In fact, we're pretty much historically capped at about 19%.

Sooooo......... yeah.

Here's that chart:

You may note the drop at the end of the chart here. Huge recessions will do that for ya, as will massive increases in government spending, and huge regulatory turn-over that is starting to seriously harm our economic success.

Honestly, I could go on with every single sentence in Michael Lind's piece. It's utter nonsense from beginning to end, largely built on ridiculous assumptions and ignorance of real history. He says not to worry about increases in entitlement spending as if it's ever been a linear problem. Just to take one example on entitlements, predictions for Medicare in 1966 were laughably wrong... From Reason Magazine way back in 1993:
"The cost of Medicare is a good place to begin. At its start, in 1966, Medicare cost $3 billion. The House Ways and Means Committee estimated that Medicare would cost only about $ 12 billion by 1990 (a figure that included an allowance for inflation). This was a supposedly "conservative" estimate. But in 1990 Medicare actually cost $107 billion."
The real cost was 10 times greater than the predicted cost. And it's like this for virtually every government program because that's how the incentives and the process by which government operates works.

And this is really the big problem with these kinds of idiots.

There's utterly no comprehension of the fundamental lessons of economics, particularly of the public choice variety. There is no consideration what-so-ever that perhaps politicians have the incentive not to be very good about reining in spending, or being frugal with other people's money (that they get by force). There's no consideration that perhaps the predictions politicians make for the cost of their programs aren't all that accurate... and there's always the assumption that people don't change their behavior based on new conditions.

Want more revenue? Raise taxes!
Want more health care? Force people to buy insurance or force them to pay for a government-provided system via taxation!
Want more _____? Make someone pay for it!

...or they go to jail.

It honestly shocks me sometimes when I think about it how simple-minded you actually have to be to believe that forcing people to do what you want even works the way you intend it to... much less is a morally good thing to do.

Saturday, January 21, 2012

"Should we have copyright laws?" I don't know.

The other night I wrote an op-ed for the Daily Caller, which got titled, "Should copyright laws exist at all?". As I was limited to just 500 words, there are a few things that people - in the comments particularly - have brought up that I'd like to address on my blog.

First read my "controversial" piece here (I've modified it slightly so that the video links appear embedded as videos, rather than as hyperlinks like they did in the original):
"Whenever politicians get especially excited in naming a piece of legislation, it’s a pretty safe bet that the bill will do the opposite of whatever the name says.

With a bill as gratuitously titled as the “Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act” (otherwise known as PIPA), you can be certain that the only “economic creativity” being protected here is that of the special interests pushing the bill.

In this case, the special interests behind PIPA, and the equally disturbing “Stop Online Piracy Act” (SOPA), are mostly media and entertainment industry giants like the Motion Picture Association of America and the Recording Industry Association of America.

But contrary to the industry claims, these bills do nothing to protect artists and creators like me and actually make it harder for us to innovate and generate new works.

I’ve spent my entire adult life in the media and entertainment industries — as a composer and musician, as a writer and as a video producer. Yet every year as I see more and more examples of cronyism where big media companies work with politicians to squash small producers and consumer freedoms, I grow increasingly skeptical of the very idea of “intellectual property.”

Copyright and patent protections and anti-piracy laws are always couched in language of property rights and fighting “theft.” As a libertarian working in the field of libertarian activism, it’s probably fair to say that no one believes in private property rights more than I do. But there are two big problems with this framework when applied to IP.

First, copying isn’t theft.

If I steal your bicycle, the harm done to you is not that I now have a bicycle to ride, but that you don’t and all the time you took working to earn money to acquire that bicycle is gone too. But if I copy your bicycle, we both have something to ride.

In economic terms, copying increases the supply of a good that’s available to consumers whereas theft is only redistributive. That’s a big distinction conveniently glossed over by the IP laws’ supporters, who generally want you to believe that copying an MP3 and stealing a CD are the same thing.

The second major problem is that you can’t actually “own” an idea unless it stays in your head.
The minute you share an idea with anyone, it’s no longer “yours” in any meaningful sense. Ideas replicate, mutate and evolve when they’re shared from one person to the next. This is what Matt Ridley (author of “The Rational Optimist”) calls “ideas having sex,” and this is exactly what has taken human culture and material wealth out of the Stone Age and produced the amazing standards of living we all enjoy today. New ideas in art, music, science and technology — or in any other field — don’t come fully formed out of nothing; they’re incrementally built on the shoulders of previous inventors and creators.

So when you try to stop people from sharing ideas (which is exactly what SOPA and PIPA would do), you’re putting a damper on the spontaneously ordered innovation that will make our lives even better in the future.

You’re also setting up incentives for some creators to spend more time and money suing people ($31 billion a year, according to Stephan Kinsella) than they spend producing better-quality products. In this way IP law stifles creativity and keeps potential innovators chained down.

If you want an example of this, go check out “Beauty and the Beast in 3D,” which is in theaters now."
Now, I understand that for a lot of people, these kinds of arguments engender a lot of knee-jerk rejection, but rather than calling me a "marxist", as one commenter did, let's actually get into this a bit more.

First of all, it's one of the more hilarious things that happens to me on a relatively regular basis that when I take a position that is out of the mainstream "conservative" vs. "liberal" standard manual of talking points, someone inevitably gives me a counter argument that I first heard in 2nd grade as if it would blow my case out of the water.

For example, the guy who called my piece "marxist" writes:
"If I spend $100 recording a song and 100 people buy a copy for $1, I can afford to make another song. If I spend $100 recording and 100 people copy it off of the internet for free, I can't afford to make another song."
...and along the same lines, another commenter wrote:
"take a three or four years writing a novel and then have somebody slap their name on it and see if it seems like you've not been harmed."
Because, of course, there's no possibility that I have considered either the basic math or what it feels like to produce creative works. Never mind that I've spent the last 10 years - my entire adult life - working in media and entertainment as a video producer, a musician, a composer, a music supervisor & editor and as a writer. Never mind that I've done these jobs working with multi-million dollar clients & accounts like McDonald's, Honda, Chevy, Holland America and others... Never mind that I have written & recorded literally hundreds of songs, classical/jazz works, and film scores, and produced at this point a few hundred video products.

I obviously just don't know what it's like.

Was that too snarky? Ok. Maybe a bit... But seriously... I get that some people were going to find my viewpoint a little controversial, but this stuff gets really ridiculous very quickly. Moreover, those are seriously flawed arguments for two fundamental reasons.

1. They mistakenly presume a Labor Theory of Value. 

This is to say that they presume that merely by doing some action, like writing a book or recording a song, you are entitled to compensation for that work. But that's not actually how value is determined in society.

Value is determined, primarily, by the end-user of a product and there are many factors that go into the end-user's final determination. This is a key insight of the Austrian school economists from Carl Menger through Ludwig von Mises that has been a major contribution to the field.

As most of the commenters innately understand, supply availability matters. If you can only watch a particular movie at a theater, where everybody is watching a single copy of one print of the film then you may be willing to pay more for it. However, if you can see that same movie on your phone, your computer, your TV, your iPad or iPod, etc. and the supply is so widely available that you can see the film anywhere, anytime, that movie isn't scarce and really can't command a particularly high price.

I think most people realize that when supply has been expanded to near infinite capacity of any good, the price drops precipitously.

As I got to thinking about this issue today, I realized that what we're really dealing with here is the Diamond-Water Problem or the "Paradox of Value" which mystified classical economists like Adam Smith & David Ricardo, but which was finally really cracked by Eugene Böhm-Bawerk and the widespread understanding of Menger's theory of Marginal Utility.

For those who don't know what I'm talking about, the point is that for any good that you might ordinarily value, each additional unit of that good is worth less and less.

So for example, if I'm particularly thirsty, a liter of water might be very valuable to me in terms of trade (I'd pay a lot for it). But after I've quenched my thirst with that first bottle, each subsequent bottle that is available to me is worth less and less until it's worth nothing at all... Meaning, I'd pay you say $10 for that first bottle if I'm insanely thirsty, and I'd pay $5.00 for the second bottle when I'm much less thirsty, and once I was no longer thirsty at all I might still pay you a few dollars for a third bottle to plan ahead for being thirsty in the future... But unless I want to walk around with your entire supply of water bottles (I don't), a fourth or fifth (let alone 100th) bottle is not valuable to me at any price.

This explains why scarce diamonds are worth thousands of dollars to people who want to get a girl to marry them, but water - which is generally available most everywhere in abundance - is worth very little in dollars, even though it's a major requirement for life.

The literal reality of innovations in digital distribution of media is that movies and music, paintings and even ebooks just aren't worth what they are when the only places you could get access to them were in movie theaters, concert halls, galleries & libraries.

On the upside, all of this stuff gets a distribution network that artists and creators even 20 years ago could only dream about. So while maybe you won't make as much money (or sometimes even any) off of distribution, your exposure potential is far higher - which certainly in my case, has led to more work-for-hire doing projects I actually want to do.

I experimented once with a business model that involved getting people to buy videos I made for a $2.00, and the fact is, the handful of people who were willing to pay such a small price considered it a donation, and not a payment (and most of those actually paid a lot more than $2.00).

The point of all this is to say that the price of my work - and yours, and everyone else's, no matter what field your'e in - has nothing to do with how much time, effort or skill went into it. The only thing that matters is how much other people value it, and that's a purely subjective concern on the part of a potential buyer.

Marx got this point way wrong and built a remarkably flawed philosophy around the idea.

If you spend $100 recording a song, and that song is worth $0 dollars to all prospective buyers, you have either spent $100 doing something you wanted to do for yourself as a passion project, which is just consumption spending (and isn't a bad thing!)... or... you've missallocated your resources on an investment that didn't pan out. Nobody owed it to you to pay you back for the money you put in.

Now... It is true and sometimes unfortunate that when creative destruction happens, people get displaced (I've been displaced myself more than once by changes in the music business), but this only brings me to the other crucial point my commenters seem to have missed...

2. Nobody is guaranteed a living off of their actions

This aspect might seem harsh, but here's the point: You have a fundamental right to pursue a livelihood doing any old thing you want, but no right at all to be able to force other people to pay you. If that's being a fancy investment banker, a race car driver, a musician, a street juggler or a plumber, the choice is up to you.

You're probably going to make that choice on the basis of a ton of factors, such as what skills you have, what your interests are, what your threshold for stress is, whether you like to be outside or inside, whether or not you want a boss or you want more flexibility in your day, and of course how much you need to get paid to fund the type of lifestyle you want to have.

If you are a composer (like me), and you want to be some kind of jet-setter... your options today are:
  1. Write seven #1 chart-topping albums in a row and get a knighthood.
  2. Don't be a composer.
Seriously... Not to be too blunt about it, but if you want to make a ton of money, then maybe a career in music just isn't for you. Those who do make a giant pile of money in the arts are doing so in a field that has always been insanely competitive and in which success on the level of an Elton John (whose net worth is like $320 million) or a big-name film composer (John Williams and Danny Elfman, for instance, can bring in around $2,000,000 per score) tend to be the result of an nigh-impossible combination of skill, perseverance, tenacity, supportive friends & family and preternaturally timed good luck.

If you're going into the arts as a career, as I often tell younger guys interested in going to film & music schools, then you need to go in expecting to be poor and to struggle.

It's not a career path for people who want to make a ton of money.

The simple reason for this is because, going back to point #1, value is subjective - and the value of art to potential buyers is far more widely disparate than almost anything else. At least with something like energy (however it's produced), people all tend to need it. Some need more than others to meet their desired ends, but everybody is vying for it on one level or another.

A lot of this just comes down to Maslow's Hierarchy of Needs, right? You need energy because the base planks in that pyramid - food, shelter, income through work, etc. all require energy production to be created. So all the goods that go into those base needs are going to be pretty widely and consistently valued by a lot of people.

But it's only at the top of the pyramid - after (most) people have met all their other needs - that they get to creative pursuits.

And once we're talking about creativity, it gets even worse for artists because consumer tastes vary so much.

This is why commercial artists who appeal to the "lowest common denominator" with pop music and big popcorn summer blockbusters get paid a ton, and modernist classical composers who write weird aleatoric or atonal music, documentarians and art-house filmmakers tend to make nothing. I had a professor as an undergraduate who always seemed a little bitter about not being widely rewarded for his compositions... He was an excellent composer, no doubt, and his knowledge of music was substantial. But he also wrote music that was weird and unintelligible to laypeople. So... For my money, any expectations of financial reward were always unfounded.

At the end of the day, making a ton of money is really just a function of how many people value what you create, and how much of their own efforts they're willing to trade for it. If you want to see this in terms of a formula, it's really just about as simple as:

n(P) = I

Here, "n" is the number of people who want to buy your product, "P" is the price they're willing to pay, and "I" is your income.

You can get a millions of people to want to pay you a little bit or you can a couple people to pay you millions (or any combination in between), and your income will be huge. But what you can't do is get rich by creating a product few people are willing to pay for at all. When competitive pressures push prices down to the level they're at in film & music, then you are going to get paid less unless you can get more customers.

This doesn't seem like a particularly radical statement, but apparently (given the comments on my op-ed) it's not very clearly understood.

Like I said above, you have every right to compete with anyone you want in making a living doing any job you want. But you can't force people to pay whatever you want them to for your product. So, if the market has valued your good at $1.00 a unit as iTunes has demonstrated over the last several years with MP3s, then you need to figure out how you can work out a business model based on that (essentially, you need to find a way to get a lot of customers).

If you can't do that, then you need to make a living some other way.

* * * * *

Now... There's one other comment I want to deal with here, because it's yet another major misunderstanding of the issue and actually a really interesting point. The comment was this:
"What if I copy a dollar bill? Is that theft? If I copy your music and use it in my films, stage shows and night clubs, you get nothing - is that your business model? So, your thesis is that you (and everyone else) should work for free. Should doctors and dentists work for free too? You can do what you want, but reasoning from your particular to our general is not convincing."
First of all, I do like that the implicit recognition is that printing a ton of dollar bills renders each individual dollar worth less. Not to go on a whole tirade about the inevitable results of expanding the money supply like Ben Bernanke has tried to do the last 3 years, but the fact is when you balloon the supply of anything, the value of each unit drops - including money.

So that's a good point... although it actually supports my case above in terms of understanding supply & demand and their effect on monetary value. Supply of intellectual property since the internet has exploded. Thus, the price dropped. Hardly anything unpredictable from an economic standpoint.

But counterfeiting is different precisely because money is the medium of exchange and not the end goal of the exchange. So increasing the supply of a currency in that way harms people because it distorts their ability to to acquire the goods & services they value and improve standards of living...

However, increasing the supply of goods available raises people's standards of living.

Surely that's an important distinction to anyone who understands that the point of production is not to give people "jobs", but to give people valuable goods & services like food, shelter, clothing and eventually music, art and other forms of entertainment, enlightenment & fun. If you increase the number of dollars in circulation, but not the amount of goods, all you do is make goods more expensive - this is bad for everyone. If, however, you increase the supply of goods in circulation but not the amount of dollars, you've made goods less expensive. As long as we can agree that people having better standards of living is the goal, this is good for everyone!

And that brings me to the final point regarding this comment... Should everyone work for free?

Yes and no. I would love it if we lived in a world where medical and dental services were so widely and easily available that they could be acquired for almost no cost. High cost is, after all, the big impediment in America to people accessing quality health care, is it not?

If, for example, someone could invent some kind of Star Trekian "replicator" for medical devices, or even just for splints and band aids, we'd be much much better off as a result. If cancer medication was produced at such a scale, by so many different producers that it cost $10 a treatment instead of thousands... this, in my view, would be wonderful!

But the implication of the comment above is that this would be bad because some people would have to change jobs or wouldn't get paid as much as they do today.

This copyright-infringing picture Captain Picard & Commander Riker sum up my feelings on that idea:

Anyway, no... People should not be conscripted into working for nothing... But if their job becomes outmoded then they can't force people to pay them like the relic gas station attendants in Oregon or New Jersey. So yes, people should get paid when they are doing something the market values... No, they shouldn't get to compel you to pay them when they aren't.

Creative destruction happens, and we all need to get over the scary aspects of it because the benefits are huge. The infinite reproduction and free-flow of information is an amazing thing that should not be underestimated as a source for human innovation and development going into the future. I used to not appreciate the OpenSource community as much as I do now, but I'm starting to see how cool it all really is. Unless some huge draconian government crushes information exchange, we're poised for a fantastic explosion of innovation.

Yes, some people are going to have to find other ways to make a living off of creating information products. I do it by working for hire, and getting paid on the front-end of my projects rather than in drips and drabs through royalties. Then I move on to the next project.

One other way to keep revenue coming in as an artist is to provide better quality live experiences which people value and want to buy. For instance, take the comedian and radio/TV host, Adam Carolla. His podcast is recognized by the Guiness Book of World Records as the #1 most downloaded podcast of all time. But he doesn't charge listeners a cent for it.

Distribution to the end-user is free. He is paid by advertisers (which is an obvious answer) and by doing live appearances - which are rivalrous and scarce, and thus command about $90 a ticket (or so the concert hall down the street where he'll be appearing next week would like me to believe).

There's nothing wrong with that and perhaps that's the right model for some people going forward.

However, I should be clear that it's a giant mistake for people to ask me what the "right" model is, and it's an even bigger mistake of me to try to guess.

The only correct answer is: I don't know.

The point of a free market economy is that it's a system where people try different models in a competitive environment and see which ones work and which don't. There are feedback mechanisms in prices, in profits & losses, and in observing the revealed preferences of consumer choices. All I know at the moment is that the 20th-Century media distribution model isn't working. It's up to a new generation of entrepreneurs and artists to figure out how to be professionals in the 21st-Century, not up to me to decide for them.

It's spontaneous order, not central planning, not... So we'll see what emerges!

At any rate, this is a monstrous continuation of a 500 word piece, so I want to close by just saying that everything I said at the Daily Caller was itself a copy of ideas that were never originally "mine" at all. Like everyone else, I built my ideas on those of men and women who came long before me.

Here's Thomas Jefferson, in a letter to Isaac McPherson, wrote in 1813:
"It has been pretended by some, (and in England especially,) that inventors have a natural and exclusive right to their inventions, and not merely for their own lives, but inheritable to their heirs. But while it is a moot question whether the origin of any kind of property is derived from nature at all, it would be singular to admit a natural and even an hereditary right to inventors. It is agreed by those who have seriously considered the subject, that no individual has, of natural right, a separate property in an acre of land, for instance.

By an universal law, indeed, whatever, whether fixed or movable, belongs to all men equally and in common, is the property for the moment of him who occupies it, but when he relinquishes the occupation, the property goes with it. Stable ownership is the gift of social law, and is given late in the progress of society. It would be curious then, if an idea, the fugitive fermentation of an individual brain, could, of natural right, be claimed in exclusive and stable property.

If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me."
Jefferson - the father of American IP law - understood what I'm talking about now pretty well, it turns out.