Wednesday, August 31, 2005

Copyright/Patent as Tax

I have been recently thinking about a hypothesis, which argues that copyrights/patents are just taxes. Below is a rough sketch of my hypothesis, which will eventually be worked into a paper (and continually edited as this paper develops).

Taxes allow governments to redistributes wealth, taking capital from one party and transferring it to another parties. With the growth the internet, the importance of capital is beginning to lessen, replaced in importance by information.

Information can be employed by different people (and/or entities) for different purposes. However, to maximize the usefulness of a given piece of information, it must be transmitted to the user who will derive the most benefit from it.

Once an individual or entity in need of a given piece of information receives the information, they will use that information to do one of two things: (1) produce more information; or (2) use such information (in conjunction with other information) to produce a product, either tangible or intangible.

To maximize, from a macro-level, the amount of new information produced, information should ideally be allowed to spread freely without restriction. This idea is similar to the economic principles advocating for low taxes on capital, which argues that tax on capital should be minimized so that capital can be allocated efficiently to its optimal use.

If information is allowed to spread freely without restriction, then information production will be maximized. By maximizing the amount of information produced such information will invariably be used to produce new products which will benefit society.

Old rules, which lock-up information, prevent information from being allocated efficiently. One such lock on information, is an excessive copyright/patent regime. These laws can be viewed as taxes, since they allow the government to allocate which parties will be able to use a given piece of information. The more excessive the copyright protection the greater the resdistributive effect.

In today's trend to expand the current copyright/patent protections, we run the risk of over-taxing this information, and thereby damaging our economy and society.

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