On Fri, 28 December 2001, "Paul L. Allen" wrote: > > TPOG reminds me of the curate's egg: good in parts. It contains flaws > which make me wonder about the validity of its conclusions (not that > the conclusions are necessarily incorrect but that their derivation > cannot be validated). > > For starters you seem to have fallen prey to Marxist belief that value > is conserved in a commodity transaction. You allow for a slight > discrepancy between buyers' and sellers' markets without pondering the > consequences of that. You are not alone in that because the use of > money in transactions obscures facts a little. > > Consider a barter between a sheep farmer and a pig farmer whereby they > exchange a pig and a sheep of roughly equal meat content and which > took roughly equal amounts of labour to rear. According to you this > is an exchange of roughly equal value. Now consider that the sheep > farmer has tried raising pigs but doesn't have the knack of it: he > could raise 10 sheep with the amount of labour that it takes him to > raise one pig. Also, since he eats mutton and lamb every day the sheep > farmer is more than a little bored with sheep and craves the taste of > pork which to him is of much greater value because it is a welcome > change and because it would cost him 10 times as much effort to raise. > The pig farmer is in the mirror position. > > So, far from exchanging goods of approximately equal value, each has > gained immensely by the transaction. Each has obtained something he > prizes in exchange for something that to him is of little value. Each > has profited thereby. The profit may be notional, but if each were to > raise the animal he has difficulty with rather than exchange with each > other the cost of those animals would have been far greater. In this > case, each has expended far less labour to obtain the animal. > > The use of money obscures this fact a little. However, for any item you > can name you will find some people who think that the monetary price > is a bargain and willing to pay much more; you will also find some > people who think that the monetary price is excessive and would not > purchase unless it were half the price. The monetary price of any > item reflects not just its cost of manufacture, distribution and a > profit margin but also what people are willing to pay. Retailers find > that the elasticity of demand allows them to pick a price that > maximizes return. Too low means more sales but these are more than > offset by lower profit. Too high means greater profit but this is > more than offset by reduced sales. Any monetary value attached to an > item is at best an approximation to some statistical mean. > > To consider another aspect. Apples, flour and sugar each have a > specific subjective value to a person. Each person has a different > subjective value which determines whether or not the objective value > asked for those items is one he is prepared to pay. A good cook may > purchase those items and turn them into an apple pie whose value many > people will deem far higher than the cost of the raw goods and the > labour involved simply because his apple pie is far better than those > made by anyone else. In contrast a bad cook can take those > ingredients and turn them into an apple pie that is inedible garbage > that nobody would pay for. > > The idea that value (or "energy" as you call it) is conserved is > false. It is not an objective metric in the first place (what you > treasure I deem trash) and it can be both created (by a good cook) or > destroyed (by a bad one). Any analysis that starts with the > presumption that value is an objective metric which is conserved is > fundamentally flawed. Marxism started out with that premise and the > result was economic collapse of a large empire. > > The next problem is with the history of IP rights. Historically, > trade secrets were all there were and they were not granted by > governments but coined by the simple process of finding a new way of > doing things and keeping it secret. Naturally this applied more > frequently to the processes of manufacturing something than the item > itself. It is difficult to conceal what a bicycle looks like but it > may be possible to conceal the process by which the steel is drawn > into tubes suitable for making the frame. > > Historically, patents were introduced to *entice* those who > successfully kept secret their trade secrets into revealing them with > a promise of a limited period of protection. It offered them a > gamble. They could keep the trade secret and hope that nobody else > figured out how they did it (a risk because what one man can think of > so can another) or they could reveal the secret in return for guaranteed > protection for a number of years. It was never the intention to make > them a gift, as you claim, since those who had successfully kept trade > secrets for a long time and could reasonably expect to keep them for > much longer still had no need for a "gift" such as that. It was an > offer to gamble. Whether or not a person chose to gamble depended on > his assessment of the risks and the payoffs. A subjective value > decision. > > It is debatable if the grant of a patent fits your own definition of a > gift exchange. The purpose of creating a system of patents was indeed > for public benefit since it was hoped that by releasing a trade secret > which one person might never take any further that others would be > able to expand upon it and create new techniques and inventions that > they would not have thought of had the original secret not been revealed. > But the reason a particular individual would decide to apply for a > patent rather than keep something a trade secret is not to benefit the > public but to maximize revenue from that technique or invention. > > It is also my recollection (which I have not checked) that the penalty > for revealing a trade secret applies ONLY to those who gained > knowledge of that trade secret DIRECTLY from the holder of that > secret. I.e., an employee may not reveal his employer's trade secrets > and there are penalties for doing so. Should somebody else stumble > across the idea independently and tell the world about it, that is > without penalty. If you have seen court decisions which say otherwise > then it is my understanding that they are wrong. > > Finally, and this is unpardonable, your strong belief that contracts > should apply only to items which are leased for a period of time and that > outright purchases should not have a contract. It is true that many > purchases have no need of a WRITTEN contract. However, the ESSENCE of > contract law is that there is a "mutual exchange of considerations." > The exchange of money for goods IS a contract between two parties even > if there is no accompanying paperwork. It transfers the right of > ownership in exchange for money, for a deed or for any other consideration. > Contract law is quite clear that there must be a mutual exchange of > considerations for contract law to apply. Contract law does not apply to > gifts or to promises because those are unilateral. > > Any exchange of goods for money (or other considerations) may have written > terms and conditions which both parties must agree to. This is not > something that is designed to treat one party unfairly (although it > may be abused that way) but a simple fact of law. In US jurisdiction > in particular, contractual terms may be stricken by a court unless they are > equitable to both parties (UK law is less particular about this and is > concerned primarily with whether or not both parties understood the terms to > mean the same things and were fully cognizant of their implications). > A properly-drawn contract PROTECTS people from the other party to the > contract defaulting in some way on that which they should have > delivered. > > -- > Paul