Bill Gates Calls for "Revision of Capitalism"(online.wsj.com)
online.wsj.com
Bill Gates Calls for "Revision of Capitalism"
http://online.wsj.com/article/SB120113473219511791.html?mod=djemalertTECH
47 comments
Some good points, although I would take a more nuanced view in some cases. For instance (and trying to keep this somewhat related to hacker news, lest it degrade into a political debate):
Intellectual property was and is a compromise designed to foster the private provisioning of what are essentially "public goods" (http://en.wikipedia.org/wiki/Public_good). It's easy to argue that the compromise has tilted too far in favor of producers, but abolishing those protections instead of limiting them might be a step too far in the other direction.
Intellectual property was and is a compromise designed to foster the private provisioning of what are essentially "public goods" (http://en.wikipedia.org/wiki/Public_good). It's easy to argue that the compromise has tilted too far in favor of producers, but abolishing those protections instead of limiting them might be a step too far in the other direction.
How is intellectual property a public good issue? It's easy to, for example, sell a book to a single person, with a contract written to protect the author (from distribution of copies, or whatever).
A public good issue is, say, when you build a dam that helps an entire flood valley, and people living there can get the benefit of your work without paying you, by refusing to agree to any contract with you. I don't see that an author faces that kind of issue.
Enforcing a contract is another matter, and has become very hard for some types of intellectual property, but that is different than a public good problem, in which no one is breaking the law.
A public good issue is, say, when you build a dam that helps an entire flood valley, and people living there can get the benefit of your work without paying you, by refusing to agree to any contract with you. I don't see that an author faces that kind of issue.
Enforcing a contract is another matter, and has become very hard for some types of intellectual property, but that is different than a public good problem, in which no one is breaking the law.
Books aren't the "problem": digital content is. Digital content is certainly non-rivalrous - if I download a copy of a movie, it's not affecting anyone else's ability to use their own copy. The tricker one is excludability. It's sort of possible with digital goods, but it doesn't work very well, and it appears to be working less well the more people get access to fast connections and lose their qualms about copying things.
It's a tough problem. People like Stallman would like to have the government step in and take charge (if I've understood his position correctly), but I think that's a terrible solution. You could just leave things to "Coasian solutions", which is what a lot of open source software seems to be (the Apache web server, for instance), but you would probably never get stuff like the things Apple produces in that case. Custom software, governed by contracts between two parties, probably wouldn't suffer as much.
It's a tough problem. People like Stallman would like to have the government step in and take charge (if I've understood his position correctly), but I think that's a terrible solution. You could just leave things to "Coasian solutions", which is what a lot of open source software seems to be (the Apache web server, for instance), but you would probably never get stuff like the things Apple produces in that case. Custom software, governed by contracts between two parties, probably wouldn't suffer as much.
OK, I just don't think that the difficulty of enforcing certain legal contracts, should be conflated with a public good problem. It's fundamentally a different kind of issue.
Music downloaders are not free riders. They've broken the law (at least the uploader has clearly broken his contract with the artist not to do this). In a classic public good case, like the flood valley and dam, the difficulty is that people who own property in the valley, and break no laws by continuing to farm there, benefit from the flood control that the dam owner can't prevent from affecting their property.
Which is only a problem because it gives them an incentive to get their neighbors to pay for the dam, while not doing so themselves.
Music downloaders are not free riders. They've broken the law (at least the uploader has clearly broken his contract with the artist not to do this). In a classic public good case, like the flood valley and dam, the difficulty is that people who own property in the valley, and break no laws by continuing to farm there, benefit from the flood control that the dam owner can't prevent from affecting their property.
Which is only a problem because it gives them an incentive to get their neighbors to pay for the dam, while not doing so themselves.
Actually copyright exists so that producers don't have to simply rely on contracts, and so that the people doing the copying have breached law and not just the person who breached their contract. The alternative is restricting access to copyrighted material via harsh contracts and supervised access.
As a copyright producer of both music and software I really feel copyright protection is moral and just. The damages awarded for copyright infringement for personal use are clearly ridiculous and should be seriously limited. Also I think both copyrights and patents terms should be reduced and the originality threshold for patents has to be increased. Each patent term should be determined separately with reference to how expensive something has been to bring to market and how novel it is.
As a copyright producer of both music and software I really feel copyright protection is moral and just. The damages awarded for copyright infringement for personal use are clearly ridiculous and should be seriously limited. Also I think both copyrights and patents terms should be reduced and the originality threshold for patents has to be increased. Each patent term should be determined separately with reference to how expensive something has been to bring to market and how novel it is.
Your argument in favor of copyright amounts to "As someone who benefits from foo, I support it," or (rearranged slightly) "I support foo because I benefit from it."
If copyrights are a proper balance, everyone benefits, because more things are created. Without the ability to at least make a living by selling IP, lots of things we currently enjoy/find useful might not exist.
That of course is not to say that the balance is a good one right now, still, it's not just the producers that benefit, it's the public who gets access to things the producer creates because he/she has a means to make some money from it.
That of course is not to say that the balance is a good one right now, still, it's not just the producers that benefit, it's the public who gets access to things the producer creates because he/she has a means to make some money from it.
I think you're over generalizing I don't listen to music so music IP does not seem to benefit me in any fashion. As to books Shakespeare freely coped from others works which breaks our concept of copyright and he lived without such protection. Yet he has been thought of as the greatest author the western world has ever known for a while.
In my option IP law does little to promote the creation of quality works instead it promotes churning out low quality crap because you must pay before you can view. IMO you could produce a much more effective system by limiting the High Definition version of a movie while not protecting a standard definition copy of a movie. Thus you could watch any movie for free but you would need to pay to see it in HD or in theaters.
You could do the same thing with books and movies. You're free to download a text file but if you want the pictures or fancy formatting you need to buy it. Ditto for low bit rate MP3 vs. lossless copies.
In my option IP law does little to promote the creation of quality works instead it promotes churning out low quality crap because you must pay before you can view. IMO you could produce a much more effective system by limiting the High Definition version of a movie while not protecting a standard definition copy of a movie. Thus you could watch any movie for free but you would need to pay to see it in HD or in theaters.
You could do the same thing with books and movies. You're free to download a text file but if you want the pictures or fancy formatting you need to buy it. Ditto for low bit rate MP3 vs. lossless copies.
No that's just my context. The extremely abridged version of my argument in that comment is that the alternative to copyright law is some version of contract law and controlled access. You can't force producers to freely release their work, and I doubt you want to stop people entering into contracts with each other.
Sure, good point, but consider that the IP laws that exist in the first place are an attempt to make property out of something where 'property' doesn't really exist in the physical sense. In the case of a book or a song in the era of records, it was a pretty good solution, as enforceable property rights were a pretty good way of encouraging people to produce material that even then could be copied without too much trouble. These days though, that compromise seems to be creaking under the strain of new technology, and is due for a revision.
I'm not sure what the answers are, but I still like the idea of looking at it as a compromise between producers and consumers that should give something to each one. Giving nothing to the producers will discourage production of those kinds of goods. Give too much power to the producers in an age where copying is so easy means using fairly heavy-handed and invasive government power to enforce their rights.
I'm not sure what the answers are, but I still like the idea of looking at it as a compromise between producers and consumers that should give something to each one. Giving nothing to the producers will discourage production of those kinds of goods. Give too much power to the producers in an age where copying is so easy means using fairly heavy-handed and invasive government power to enforce their rights.
As the music industry is now learning... music is a service, not a product. Its short run as a product (records, tapes, CDs) was an artificial creation that still made some sense when bound to physical media (a product). No one really has a good solution yet, but it seems that information really doesn't like being a product.
One of these days, information is going to be free, I promise you.
If I ever get a pet, I'm going to name it 'information' just so you can keep your promise.
Information is inherently free, dissemination isn't.
Upvoted, because what you said was strictly true and possibly insightful. (Is it still insightful whether the person who coined it actually had the insight that the statement implies?) I'm not really sure what you meant to imply, however, so I hesitated before upvoting.
Probably more information than you needed.
Probably more information than you needed.
Actually, I think it would have been more insightful for me to say interpretation isn't free. Dissemination matters, but the interpretation is primary.
Information is inherently free because information is basically numerical, and anyone can (potentially) think of any number. However, information is only useful when the numbers are correlated with actions or objects. It's this correlation that is truly valuable, and the creation of the correlation requires resources (i.e. time and energy).
Information is inherently free because information is basically numerical, and anyone can (potentially) think of any number. However, information is only useful when the numbers are correlated with actions or objects. It's this correlation that is truly valuable, and the creation of the correlation requires resources (i.e. time and energy).
One of these days information dissemination is going to be free, I promise you.
That day is today, actually. http://thepiratebay.org/
That day is today, actually. http://thepiratebay.org/
No, dissemination always consumes resources. I'm not just talking about the resources for sharing files, which are minimal. The real resources consumed are time and energy creating/discovering the information in the first place and putting it in a format that is usable. That's why people need some kind of guaranteed reimbursement for their discoveries and limited IP is a good idea.
I'm a little bit more concerned with software myself. Bands (good ones, especially) can perform to make money. Programmers can't, really. Locking everything up on a server, and only handing out web pages is one answer, I guess...
The uploader hasn't breached a contract under the current system. Copyright law makes contractual agreement unnecessary to the copyright holder. In essence, contractual terms are forced on everyone within the jurisdiction of copyright law regardless of any agreement by the parties to this so-called contract other than the copyright holder. In fact, even the copyright holder hasn't had a chance to determine whether or not agreeing to contractual terms is a good idea: he or she must explicitly declare relinquishment of "contractual" benefits to refuse the contract's terms, and the only means for negotiation of stronger benefits is a lawsuit.
There are not contracts that stand up in court under those circumstances. There clearly is no real contract here -- where "contract" assumes "agreement".
There are not contracts that stand up in court under those circumstances. There clearly is no real contract here -- where "contract" assumes "agreement".
Kudlow had a response to this:
http://corner.nationalreview.com/post/?q=YWI5ZDVjODBkZDI2YWM...
Excerpt:
It appears Gates is ignoring the global spread of free-market capitalism that has successfully lifted hundreds of millions of people up from poverty and into the middle class over the last decade or so. Think China. Think India. Think Eastern Europe (and maybe even France under Sarkozy). Gates wants business leaders to dedicate more time to fighting poverty. But the reality is that economic freedom is the best path to prosperity. Period.
The Heritage/WSJ 2008 Index of Economic Freedom clearly shows that free-market countries are prospering mightily. Per capita GDP is closely related to, and positively correlated with, market economies. The fact is that free-market economics is spreading like wildfire. State socialism is on the decline. Unsurprisingly, the study also shows that the least-free economies are mired in poverty. We're talking North Korea, Cuba, Zimbabwe, Iran, and others.
http://corner.nationalreview.com/post/?q=YWI5ZDVjODBkZDI2YWM...
Excerpt:
It appears Gates is ignoring the global spread of free-market capitalism that has successfully lifted hundreds of millions of people up from poverty and into the middle class over the last decade or so. Think China. Think India. Think Eastern Europe (and maybe even France under Sarkozy). Gates wants business leaders to dedicate more time to fighting poverty. But the reality is that economic freedom is the best path to prosperity. Period.
The Heritage/WSJ 2008 Index of Economic Freedom clearly shows that free-market countries are prospering mightily. Per capita GDP is closely related to, and positively correlated with, market economies. The fact is that free-market economics is spreading like wildfire. State socialism is on the decline. Unsurprisingly, the study also shows that the least-free economies are mired in poverty. We're talking North Korea, Cuba, Zimbabwe, Iran, and others.
This does not make any sense: Mr. Kudlov, who wrote this article for NRO is replying to non-existing arguments. Gates did not favor non-free economies, therefore there is absolutely NO REASON to mention Cuba and North Korea. Moreover, Gates did not argue benefits of free markets, why bring in China, India and Eastern Europe? Gates merely says "capitalism is great let's see if we can make it work better for the poor". Gates isn't even hinting that it should be done at someone's expense. Basically Kidlov did not even care to read the original article.
Thus, after removing these obviously misplaced sentences and paragraphs, NRO's article basically turns into a lonely link to WSJ without any corresponding commentary.
Thus, after removing these obviously misplaced sentences and paragraphs, NRO's article basically turns into a lonely link to WSJ without any corresponding commentary.
I completely agree with point 1 and 2, completely disagree with point 3, 4 and 5.
3 will lead to cheaper medicines in the short run, but much less research in the long run, which is bad for everybody.
4 is mostly a problem for western european countries with high unemployment like France and Germany. It's irrelevant to the world's poor, who don't work in the legal economy anyway.
Environmental policy is not especially harmful to the poor, and whether or not recorded facts genuinely point to a need for it will always be extremely contentious.
I'd add: better legal protection of property in poor countries, and less bureaucracy. A must-read in this area is "The Mystery of Capitalism: Why It Succeeds In The West And Fails Everywhere Else." Major eye-opener!
http://www.amazon.com/Mystery-Capital-Capitalism-Triumphs-Ev...
3 will lead to cheaper medicines in the short run, but much less research in the long run, which is bad for everybody.
4 is mostly a problem for western european countries with high unemployment like France and Germany. It's irrelevant to the world's poor, who don't work in the legal economy anyway.
Environmental policy is not especially harmful to the poor, and whether or not recorded facts genuinely point to a need for it will always be extremely contentious.
I'd add: better legal protection of property in poor countries, and less bureaucracy. A must-read in this area is "The Mystery of Capitalism: Why It Succeeds In The West And Fails Everywhere Else." Major eye-opener!
http://www.amazon.com/Mystery-Capital-Capitalism-Triumphs-Ev...
My feelings exactly, except I have little sympathy for the pharmaceutical drug cartels. There are a lot of other examples though.
I agree with some of your points. The most important problems to be tackled are corruption and political stability.
How do you figure that all of Gates' fortune was built on the back of legislative protection? Microsoft got in legal trouble for bundling IE with windows, for example. Which was the Government working to hurt MS in favor of its competitors.
Correct - MS' fortune came from the network effects of their system, but they had to be successful in the first place for those to work in their favor.
This book has some good history of "the early years", when it wasn't clear that MS would be the winner that took all:
http://www.squeezedbooks.com/book/show/10/in-search-of-stupi...
This book has some good history of "the early years", when it wasn't clear that MS would be the winner that took all:
http://www.squeezedbooks.com/book/show/10/in-search-of-stupi...
Copyright is legislative protection.
He could start by not sabotaging the One Laptop Per Child project.
One big problem with charity is that nobody cares until they are mega rich. The middle and lower classes don't have resources and don't feel the same moral obligations.
If the model is get rich then help people, then there's never going to be very many people doing it. The real heroes are the people who give to charity BEFORE they are wealthy. That model could change the world.
If the model is get rich then help people, then there's never going to be very many people doing it. The real heroes are the people who give to charity BEFORE they are wealthy. That model could change the world.
Oh so right you are!
Bill Gates should stop looking at the failings of capitalism in Africa and start looking at its successes in China. And then he needs to ask the 60 billion dollar question: What is the difference between Africa and China?
Chinese is a relatively stable country governed by one Communist party, while Africa is a vast continent with dictatorships, instability, pockets of wealth, religious wars, famine, etc...? Is that the answer?
I don't think the millions of Chinese peasant farmers will agree that capitalism is a success in China.
It beats the (somewhat) recently attempted (under Mao) alternative, despite its obvious imperfections.
As they are replaced by machines I suppose they wouldn't, no. As they move to industrial or commercial areas they probably will.
Over 90% of American farmers were replaced by machines. We seem to be better off for it.
Well, some rural communities report that the children were pretty distraught when they came home from school to find metallic replacements for their fathers, but a little bit more allowance money allayed their distress in most cases.
Success takes time. Capitalism is spreading in China -- but it isn't everywhere yet, by a long shot.
If MSFT as a company reaches a survival point where they have to release free software, it would be a nice touch for the code to be readable, well-written and nearly bug free.
Heh, one thing at a time dude.
If we can develop complex finacial instruments that manage to package up mortgage debts and sell them off then we can find a way to make capitalism work for the poor.
Ooh, magic! Capitalism already works for the poor!
Notice that in the more-capitalistic nations, the "poor" are richer than the "middle class" in less-capitalistic nations, in general.
Notice that in the more-capitalistic nations, the "poor" are richer than the "middle class" in less-capitalistic nations, in general.
Actually micro-credit works. The one supplying the capital needs to be fair about the rate they get in return though.
Here are some good starting points for helping the world's poor:
1) End the practice of propping up corrupt foreign governments with aid
2) Stop subsidising first world farmers and thereby killing the markets for the second and third world (including flow-on effects coming from ludicrous things like ethanol subsidy)
3) Governments cease support for rent-seeking measures like copyright and patents.
4) Abolish government-enforced wage floors which subsidise the low income earners at the expense of the genuinely poor by preventing business from finding employment for them.
5) Don't make environmental policy until recorded facts genuinely point to a need for it.
Everywhere around us the invisible hand of the state is interfering in our lives through pork-barrelling schemes that benefit those close to power at the expense of the rest. The big lie is in the claim that we have now is capitalism. Even in the United States, what we first world countries have now is better referred to as 'mixed economies'. They have elements of capitalism but are some distance from actual capitalism.