While I've seen a fair amount of evidence that current IP laws are too expensive, this is the first time I've seen a plausible economic case that copyright and patents should be abolished completely.

The basic theory behind intellectual property law is that it has a cost and a benefit. The benefit is that is an incentive to create new works and ideas. The cost is that these items literally cost more to the consumer, since he can only buy from a monopoly provider. If the overall benefit outweighs the overall cost, then the law is a good idea.

The book adds more complexity to this theoretical picture. Since inventions build on other inventions, patent laws can actually stifle innovation, as you cannot so easily build on or improve someone else's work. Even without laws, first mover advantage still gives an incentive to innovate. These factors change the balance somewhat. Boldrin and Levine admit that if patent and copyright laws are abolished original creators will suffer somewhat, but that this will be outweighed by the greater good.

If that argument was purely theoretical, it would be worthless. But the fascinating thing about this book is that they find a great deal of empirical evidence that this is true.

They look at cases like the repeated extensions of copyright terms in the last hundred years. If copyright laws really do give creators incentives to produce, they should have caused the number of works published to jump. In reality, no such thing happens. Conversely, they do show that the price of copyrighted works is much higher, by analysing in- and out-of-copyright books by the same author.

They also look at chemical industry patents from the early Twentieth century when the UK and US had patents and Germany did not: Germany dominated innovation. They compare the rush of innovation from before software could be patented, with the slower progress afterwards.

The bulk of the book is taken up with real-world evidence from a variety of situations, from the invention of the steam engine to the present. Even if some of the examples seem a little weak, the weight of evidence seems overwhelming.

The book's clearly written, though the tone gets a bit bombastic sometimes. Doesn't require any specialist knowledge. Well worth reading if you have any interest in the subject. MR review

What I'm Watching
Rented Primer on DVD: the 2004 ultra-low-budget SF movie that everyone's been raving about.

Wish I hadn't left it till the end of the rental-month to watch: could really do with seeing it again. Seemed dull at first but I ended up completely blown away by it. It's genuinely hard to follow things though: I'm pretty clued up about SF but I was barely able to figure out some of it. This is not a movie that makes any concessions to the dumb.

It is one of the very few movies I've seen where the technology (improvised garage-stuff) looks realistic, and the dialogue and the development process seem convincing too.

But it's not just technically accurate: it's genuinely creepy the way that the tension escalates and the relationship between the main characters disappears.

If you have any interest in SF at all, you have to see this movie. But don't expect to figure it out quickly.

Fortunately, while the movie doesn't favour the lazy and stupid, the Internet totally does. This diagram explains the plot, Wikipedia has more and this explains things in words. AVclub, Ebert, Peter Bradshaw reviews.

What I'm Watching 2
After liking Wall-E, thought it was worth borrowing previous Pixar Ratatouille on DVD. Not bad, fairly entertaining, but didn't really match up to instant classic Wall-E.

I think All Kinds of Stuff may have a point when he criticizes bland character designs in Pixar and other mainstream animators. I think Wall-E got away from this by taking a kind of industrial-design philosophy to the main characters. The human and animal figures of Ratatouille do seem pretty dull and characterless compared to the robots.

Is Finance the New Coal?
After reading this diary the thought came me. As codemonkey_uk points out, if you look at the long term, there is a pretty steady stream of bank failures, most of which are bailed out by the taxpayer. The accepted view is that this is necessary to protect the real economy. If normal businesses cannot borrow monkey to invest, they will start to suffer.

In effect, it seems that banking is not an independently viable business: it needs regular taxpayer support to survive.

However, even without taxpayer subsidy, it's likely that some smaller banking sector would survive. Perhaps it would be based on Islamic banking principles which seem to be less prone to credit crunches. Or stock and bond issues might substitute for some forms of capitalization.

Now thinking back, it seems to me that this is strikingly reminiscent of another industry in another period: the coal mining industry in 20th century UK.

Now just as with finance, it was argued -- and believed -- that coal mining was a unique sector, since large parts of the rest of the economy depended on the energy and heat coal produced. Therefore, coal mining needed special treatment and special subsidies. This book mentions some of the problems Chancellors faced when needing to bail nationalized coal mining out of occasional but expensive problems.

However, eventually someone turned up with enough boldness to challenge the conventional wisdom. Could it possibly be that the wider economy could survive without subsidized coal? There was only one way to find out: try it. It was a painful adjustment. But economically, the conventional wisdom was proven wrong. It turned out to be perfectly possible for the rest of the economy to survive with only unsubsidized, private sector coal.

In 1970, pretty much everyone would have thought it was essential. By 1990, almost no-one did.

So, is it time that we looked for a new Margaret Thatcher to try the bold experiment of a purely free market financial sector?

The adjustment process is likely to be painful. It may well cause a temporary recession. There will be inevitable dislocation to the workers. Thanks to their proximity to a vital resource -- coal -- Scargill-era miners were among the highest paid industrial workers in the country. After the subsidized industry failed, many of them never worked again. Yet overall for the economy, it was a good thing: we needed to adapt.

So too, their proximity to the vital resource of capital means that investment banking workers are also highly paid. So too, many of them may never work again. But sadly, in the creative destruction of capitalism, it is necessary for some to suffer.

The City of London has had a long period of prosperity: from the Big Bang of 1986 to the credit crunch of 2008. But that period may well be approaching the end of its natural life. The coal boom lasted longer, but other sectors have not. The great car-building boom only really lasted from the Fifties to the Seventies: why should the City boom last longer?

Whatever happens in America, I think over here it should be time for the financial sector to stand on its own two feet.

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Essays. Experimental philosophy. Libertarianism and virtue ethics.

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