How Not to Argue for IP

At TechCrunch, Paul Carr argues for why the UK needs, if not exactly the draconian new digital copyright currently under consideration, at least something very much like it (but with stronger procedural guarantees for accused file-sharers).

Never mind all the arguments from principle against the legitimacy of copyright law. I’ve done that to death here.

But what really caught my eye was his utilitarian arguments.

“For all of our fears of ‘chilling effects,'” he writes, “the fact is that the Internet is shitting all over the intellectual property rights of the UK creative industries (industries which account for 7.9% of the nation’s GDP).” And those industries “generate £112.5 billion in revenue for the British economy.”



Aside from the whole issue of IP’s legitimacy, arguments like these make me want to pull my hair out.

Guess what? If there’s a head-on train collision, every penny spent on replacing or repairing the trains, paying the insurance claim on the cargo, hospitalizing or embalming and burying the human victims, and paying damages for any tort that happened along the way, will count as a net increase in GDP.

By definition, anything that anyone can charge for adds to the GDP by the amount people pay for it. So the more stuff is enclosed with charges for admission, the higher the GDP will be.

In Theories of Value and Distribution, the Marxist Maurice Dobb used a classic example of artificial property rights: the state granting to a class of people the right to erect toll gates across highways and pockiet the proceeds (not to fund highway maintenance, mind you–just to take the money for themselves).

Under marginalist economics, any production input with a price has “marginal productivity” equal to what it adds to the final price of the good. So under that orthodox paradigm, the toll-gate owners would have “marginal productivity” equal to whatever cost the toll added to total production costs and prices, and economists would be stroking their beards and intoning learnedly about the “service” the toll collectors perform in not impeding traffic on the roads. And of course, GDP would increase by the amount of the tolls.

In other words, anything anyone can do to make it more costly to produce anything, to increase the amount of money you have to pay to receive a given good or service, or in general to increase the cost of living our daily lives, will show up as an increase in the GDP. It’s what Thorstein Veblen called “capitalized disserviceability.”

If highway subsidies cause the neighborhood grocer to shut down so that you have to take the freeway to go to the chain supermarket on the exit, and as a result you’re unable to live without a car, you’ve experienced a net reduction in quality of life to the exact amount of the time you have to spend working to make payments on the car and pay the insurance premiums, plus the extra time you have to spend driving — not to mention the increased insecurity that comes from having yet another non-discretionary subsistence good in your life that depends on the whim of an employer. But the GDP has gone up by the additional amount you had to pay for all that stuff you didn’t have to pay for before, despite having a higher quality of life. You’ve done your part to increase the GDP, you old altruist you!

If someone could figure out a way to bottle air, sell it to you, and criminalize directly breathing from the atmosphere as “airlifting,” or if they could contrive some new mechanism for collecting a toll every time you tried to move a spoon from your bowl to your mouth, GDP would probably rise a hundredfold.

If your main concern is the size of GDP, it’s easy: just find some way to use government to muscle in and force people to pay you for something they were getting free.