The Nature of Property

I like when things boil down to one or two simple premises. That's one of the great attractions of libertarianism. It has one simple premise--that people should be free to do what they want so long as it does not cause harm to another person or his property.

But of course herein lies the difficulty--how do you define "harm" and "property"?

Defining property seems obvious, but it isn't. For example, it used to be the case that your real property rights extended down into the center of the earth and up into the heavens. But now that's not that law, otherwise modern flight would be impossible. So now your property right goes up on the air a distance, but not forever.

And it's not always clear what it means to "own" a piece of property. For example you cannot do whatever you want on your property. If you mix some chemicals on your property that smell horrible and that waft onto the neighboring property, you most likely have gone beyond your property rights and committed the tort of nuisance. On the other hand, you generally can't move next to a pig farm and then win a nuisance claim against the farmer for the smell.

One thing that seems kind of obvious is that when you own property you can keep people off of it. One Supreme Court case, Kaiser Aetna v. United States dealt with whether excluding ships from transversing private property is a property right, such that taking that right requires compensation under the constitution. The court held that compensation was, in fact, required. Except someone can have an access easement over your property, and you can still "own" the property in some sense. Depending on the type of easement, the owner can modify the access, maybe reroute the access, pave the road, leave it dirt, and make other changes, as long as the easement holder can cross the property.

In a condominium, the unit owners usually "own" the exterior of the condominium as tenants in common--meaning that each owner has an undivided interest in the exterior of the property. It's kind of like how a husband and wife might own a house 50/50, but no one owns a specific "half" of the house. Except do the unit owners actually own the common elements? The owners have no power over the common elements. Instead the Association has the power to decide what is done with the exterior--when to paint, what color to paint, when to repair, how to repair, when to replace, who to hire, etc. And the Association is a fiction of law. Really, its just 5 member board elected from owners. In what sense then do the owners "own" the exterior when the association has all the power to make decisions? And who is the "association"? Three of the 5 directors that control the board?

Here's another interesting post about how determining whether something is a externalities depends upon property rights. To some extent it also implies that property rights depends upon who has gotten there first. Not sure I'm convinced with the particular example of pollution because it seems to me like shortening a person's life through pollution is invariably an externalities. Still, there is this principle and property law where property rights frequently turn on who gets to the "property" first. One of the first property cases you read in law school is about two guys chasing a fox, where the first guy chases the fox for most of the time and tires it out, but the second guy actually killed it and carried it off. The second guy was "first" to the fox. Same with nuisance law. The first person in a location generally has the right to continue the activity they are doing. Again, you generally can't move next to a pig farm and then win a nuisance claim against the farmer for the smell.

This is all a long way of saying that ownership of property and property rights really are more a construct of law than anything else. We have a sense of what it means to "own" property, but that definition changes from circumstance to circumstance depending on expectations and policy considerations embedded in the law.

So this was a long windup for what I wanted to get to, which is intellectual property. Two of the blogs I've started reading are against it. Some argue that eliminating copyright makes sense from a libertarian perspective, because it maximizes individual freedom:

3 February 1995

To the Editor:

The copyright hassles of Blaise Faint (Independent Weekly 2/1/95) [2010 note: alas, I no longer recall what Blaise Faint’s copyright hassles were] illustrate how obsolete intellectual property rights have become in the electronic age, when information can be duplicated and transmitted a hundred times over in the blink of an eye.

Intellectual property rights – copyrights, patents, and the like – have always stood on dubious ground, both ethically and economically.

Don’t get me wrong. As a wild-eyed free-marketeer, I’m a fan of property rights in general – probably more so than most people. And at one time my enthusiasm for property rights extended to intellectual property as well.

But ethically, property rights of any kind have to be justified as extensions of the right of individuals to control their own lives. Thus any alleged property rights that conflict with this moral basis – like the “right” to own slaves – are invalidated. Intellectual property rights also fail to pass this test. To enforce copyright laws and the like is to prevent people from making peaceful use of the information they possess. If you have acquired the information legitimately (say, by buying a book), the on what grounds can you be prevented from using it reproducing it, trading it? Is this not a violation of the freedom of speech and press?

Me: of course when the constitutional power to protect copyright pre-exists the first amendment. And the First Amendment did not explicitly repeal the protection of copyright. So unless this is just a argument based on what freedom of speech should entail, I don't think this is what the First Amendment was intended to accomplish.

It may be objected that the person who originated the information deserves ownership rights over it. But information is not a concrete thing an individual can control; it is a universal, existing in other people’s minds and other people’s property, and over those the originator has no legitimate sovereignty. You cannot own information without owning other people.

As for the economic case for property rights, that case depends on scarcity, and information is not, technically speaking, a scarce resource. If A uses some material resource, that makes less of the resource for B, so we need some legal mechanism for determining who gets to use what when. But information is not like that; when A acquires information, that does not decrease B’ share, so property rights are not needed.

Of course an MP3 file of a song can be reproduced infinitely without any problem. However, it takes humans real time to produce a song. And people's time is scarce. Increases in productivity and standard of living are due to people using their time more effectively. If the true benefit to the society of a intellectual property is not internalized to the creator of it, then there will inevitably be less of that property created than is optimal.

Some will say that such rights are needed in order to give artists and inventors the financial incentive to create. But most of the great innovators in history operated without benefit of copyright laws. Indeed, sufficiently stringent copyright laws would have made their achievements impossible. Great playwrights like Euripides and Shakespeare never wrote an original plot in their lives; their masterpieces are all adaptations and improvements of stories written by others. Many of our greatest composers, like Bach, Tchaikovsky, and Ives, incorporated into their work the compositions of others. Such appropriation has long been an integral part of legitimate artistic freedom. (In any case, whatever protection innovators may need can be achieved through voluntary means, such as contract or boycott; there are many successful historical examples of this kind of remedy in copyright cases.)

First, just because great artists made great art in the absence of copyright does not mean that copyright would not improve things. The question is whether those artists would have created even more or even greater art with copyright protections in place. Or whether there might have been more artist creating art, but because they knew the benefits of their creation would not be internalized, they did something else.

Also, historically, there were ways to limit the spread of a piece of work, and therefore, better internalize the benefits of it. At the time of Mozart, if you wanted to enjoy his symphony, you couldn't download an MP3; you had to go to the symphony. The benefits of intellectual property were internalized, even in the absence of property.

The argument that copyright may stifle creativity is the strongest. But as the movie Avatar demonstrates, even with copyright, we have plenty of story borrowing. And copyright does not last forever, (although it is extended every time the copyright on Steamboat Willie is about to expire). This is where knowing IP law would be helpful. But I understand you can still use someone else's copyrighted material if you do something transformative with it. You can still do parodies of copyrighted material. You can use those materials for literary criticism. There is a fair use exception to copyright. So I think Shakespeare still could write his plays today because Copyright protections are not absolute.

Protect copyright through contract? I doubt that will work. Once a electronic file gets out, there is no way to trace it back to the original purchaser who promised not to share it. And I doubt Boycott would be effective enough to properly internalize the true value of a product. Think file sharing.

Though never justified, copyright laws have probably not done too much damage to society so far. But in the Computer Age they are now becoming increasingly costly shackles on human progress. Consider, for instance, Project Gutenberg, a marvelous nonprofit effort to transfer as many books as possible to electronic format and make then available over the internet for free. Unfortunately, most of the works done to date have been pre-20th century – to avoid the hassles of copyright law. Thus, copyright laws today are working to restrict the availability of information, not to promote it. More importantly, modern electronic communications are simply beginning to make copyright laws unenforceable, or at least, unenforceable by any means short of a government takeover of the internet – and such a chilling threat to the future of humankind would clearly be a cure far worse than the disease.

Intellectual property rights are a luxury we can no longer afford.

Copyright restricts project Gutenberg printing books, because if the second someone wrote a book it appeared on project Gutenberg for free, many of the books people write today would not be written at all.

I'm not convinced. But there are more thoughts by the same blogger here.

There is one argument against patent law that I do find somewhat persuasive: the gridlock argument. Each technological innovation unintentionally infringes like 100 different patents. And there is no good way of tracking down each patent to make sure you are not violating one. And even if you did track down all of them, negotiating with each patent holder means the transaction costs of innovating legally are probably not cost effective. Podcast on the book, Gridlock Economy, here.

On the whole though, while I think IP law should be reigned in, we still need it to encourage innovation.