22 september 2005

The anti-competitive origins of intellectual property rights (The Flemish Beerdrinker)

In this paper Bob Hunt, an economist with the Philadelpia Fed, writes that an increase in intellectual property protection was enacted when American producers of semiconducters found out they couldn’t compete anymore with Japanese companies. And concerning copyrights we have Hal Varian who writes:

The origins of copyright date back to seventeenth century England. Prior to the invention of the printing press in the late fifteenth century, the English royalty controlled information dissemination by punishing dissenting authors. After the arrival of the printing press, the locus of control shifted to the publishers, and royal declarations required printers to display their names, cities and dates of publication on each work. Several publishers banded together to form the Stationers Company, which in 1662 was given the exclusive right to practice the "mistery or art" of printing, in exchange for the obligation to publish only those works approved by Parliament. The Stationers were given the right to enforce their monopoly by burning the books and presses of any unauthorized competitors. In order to keep track of authorized works, the Stationers created a registration scheme which was a precursor to the system of copyright registration. The English censorship laws expired in 1694, and the Stationers lobbied for relief from the harsh competitive environment in which they found themselves.(...) It was not until 1891 that Congress passed an international copyright act. The arguments advanced for the act were virtually the same as those advanced in 1837. However, the intellectual climate was quite different. In 1837 the US had little to lose from copyright piracy. By 1891 it had a lot to gain from respecting international copyright, the chief benefit being the reciprocal rights granted by the British. On top of this was the growing pride in homegrown American literary culture and the recognition that American literature could only thrive if it competed with English literature on an equal footing. Although the issue was never framed in terms of "dumping" it was clear that American authors and publishers pushed to extend copyright to foreign authors in order to limit cheap foreign competition-such as Charles Dickens.

Maybe there are good arguments for the increasing protection of IPR’s. I don’t know. But i do know that i have a healthy suspicion for laws that are the result of lobbying by producers seeking government protection from competition. Consumers and society tend to lose. Adam Smith already knew that:

People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or some contrivance to raise prices.

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