The Agenda

Jerry Brito on Copyright as Cronyism

Jerry Brito argues that there are parallels between America’s copyright regime and renewable energy loan guarantee programs, which conservatives and libertarians have rallied against during the Obama years as a manifestation of crony capitalism:

Without copyright, there would still be books and songs written and movies made. It’s just that we think there wouldn’t be enough. So, the government offers a subsidy in the form of a monopoly over one’s creations in order to incentivize more creative output. (To be clear, the government is not recognizing an existing property right, it is granting a privilege. Please see Tom Bell on this point here and here.) The same questions we have about renewable energy present themselves here: How do we know we wouldn’t have “enough” creative works without copyright? And assuming we know that, how do we know the right amount of incentive to offer? Is a 14 year term, as the Founders legislated, enough? Is life of the author plus 70 years too much?

More worryingly to conservatives and libertarians, it is Congress who decides these questions. It decides how much protection to grant, and it picks winners and losers (music over fashion, composers over performers). As a result, we see in copyright some of the most transparent rent-seeking on display in Washington. A concentrated content industry seeks longer and longer terms, and greater and greater protections and enforcement, at the expense of a dispersed public. It’s a recipe for giant inefficiency and massive loss of consumer welfare.

Patrick Ruffini and I made a related argument in “Innovate or Legislate,” i.e., we argued that firms built on business models undermined by copyright infringement were seeking intrusive and expensive enforcement efforts that might prop up these business models but that could not be justified on grounds of public interest or cost-benefit. But Brito’s argument is clearer and more convincing. 

There are, however, other ways of looking at copyright. Gabriel Rossman writes in with the following:

Have to disagree with you, and by extension Brito, on copyright as cronyism. With something like Solyndra, you have direct allocation to specific recipients. With the Copyright Term Extension Act (CTEA) you have a shift in the rules that benefits an entire class. The green energy equivalent of CTEA wouldn’t be Solyndra but a carbon tax, or tax rebates for solar, etc. This is significant because indirect and mechanically applied subsidies are qualitatively different from direct grants. This is one of the main themes in Paul Starr’s The Creation of the Media — that is, an indirect and mechanical subsidy (e.g., widespread literacy or postal discounts for periodicals) is much less vulnerable to cronyism and rent-seeking than a direct allocation (e.g., government printing contracts or direct underwriting).

That’s not to say that CTEA is just hunky dory. All I’m saying is that it’s not as egregious as if it were allocated on an ad hoc basis. One difference is that the political economy of changing regulation has a collective action problem for the rent-seekers, whereas seeking earmarks is a private good for the rent seekers.

Brito was looking for constructive criticism of his analogy, and I think Rossman has provided it.


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