In short, [proponents of more aggressive copyright enforcement] made unrealistic demands on reality and reality did not oblige them. Copying only got easier following the passage of these laws—copying will only ever get easier. Right now is as hard as copying will get. Your grandchildren will turn to you and say “Tell me again, Grandpa, about when it was hard to copy things in 2012, when you couldn’t get a drive the size of your fingernail that could hold every song ever recorded, every movie ever made, every word ever spoken, every picture ever taken, everything, and transfer it in such a short period of time you didn’t even notice it was doing it.”

I’ve found myself stressing this to reporters who call to ask about what we should do “instead” of SOPA and PIPA, because the framing of this entire debate remains mindblowingly shortsighted. In five years, regardless of anything Congress does now, the current round of garment rending over “rogue websites” is going to seems as comically quaint and irrelevant as old jeremiads against the libidinous excesses of jazz dancing and Elvis lyrics. The big, dumb, obvious technological fact that an awful lot of smart people seem reluctant to grok is this: Copying and sharing information is vastly cheaper and easier than it has ever been at any time in human history. It is also vastly more difficult and expensive than it will ever be again.

This weekend I finally upgraded to the latest version of Mac OSX, Lion. Owing to some weird decisions by Apple, I had to install it from physical media: An 8 gigabyte “thumb drive,” which is really rather misnamed, because it’s actually about the size of two wooden matchsticks. The year I was born, that amount of data storage space—without any software—would have cost more than the office building you’d need to house it. The year I got my drivers’ license, it would’ve cost about as much as a good used car. In 2012, 8 gigs of storage is the kind of thing you give away as freebie conference schwag—like a logo-embossed pen, except a good deal smaller. If I decide to use it for something else now that I’m done installing the OS, it will easily accommodate about 4 feature-length films in high definition. IBM recently announced a breakthrough in storage technology that could increase current capacity by a factor of 100 within a few years, which means instead of just carting half our music libraries around with us in our pockets, we’ll have entire music libraries, and high-def video libraries to boot.

One of the features I noticed they’d added in Lion is Airdrop, which establishes an ad hoc peer-to-peer WiFi connection with other nearby Apple devices. This isn’t particularly useful for my desktop, since anyone who’s actually in my apartment is probably already on my home WiFi network, but one can imagine it being awfully handy for mobile devices. “What am I listening to? Hang on, I’ll beam it over.” For transfers outside physical proximity, the next generation wireless data standard recently approved by the International Telecommunications Union maxes out at about a Gigabit per second. In practical terms, that means about a minute to transmit  an uncompressed music CD (and much shorter for, say, MP3s at the bitrate you get from iTunes) or 90 seconds for a high-definition TV episode.

Existing online social networks, with near universal adoption in many social circles, already provide a trust infrastructure for limited sharing that will make these kinds of transfers almost impossible to police—or even reliably detect. In a world where every teenager in the country is carrying a pocket-sized server, and encrypted wireless VPN relays can run out of palm-sized cubes, an enforcement strategy based on raiding data centers is just going to look cute. Legislators who think “the Internet” means “the Web,” who are too fixated on the problems some lobbyist is complaining about right now to think two steps ahead, are in for a rude awakening. They’re in the grip of the enforcement fantasy: The misapprehension that technology is going to stay still long enough for traditional, targeted law enforcement approaches to effectively limit the scope and scale of copying.

That’s not to say that nothing can be done to avert a near-future world of largely unregulated and unregulable copying and sharing. If we were willing to implement  a comprehensive scheme of innovation-stifling technology mandates and pervasive surveillance so absolute as to  make the People’s Republic of China look like Burning Man, it could at least be delayed. But I assume that the United States is not yet prepared to completely betray its basic principles to safeguard the profitability of Friends reruns.

If we’re not willing to be China, though, then all these discussions about “what we’re going to do” about piracy are just the wonky equivalent of fanboy debates about whether Wolverine would beat Batman in a fight, for all the bearing they have on reality. What are we going to do that makes a long-term difference? Nothing. Anyone who wants to copy stuff without paying for it can do so easily, and it only gets easier and faster from here. Finding this morally outrageous or throwing a tantrum about the deep unfairness of it all won’t make it less true, though the tantrum might break a vase or two.

A slightly more Zen approach would be to “accept the things you cannot change,” as the coffee mug has it, and take the opportunity to step back and reevaluate. We have a legal structure for incentivizing creativity that makes copying and public performance the key points of regulatory intervention. There isn’t some deep moral reason that it’s these points and not others. There are lots of other ways to enjoy creative works without paying the creator, after all: Borrowing a copy, buying used, watching at a friends house, DVRing the broadcast and skipping all the commercials, incessantly singing (to yourself or with a friend) that catchy tune you overheard in the cab. Nobody tries to claim those are “stealing,” mainly because we’ve decided not to try to regulate those activities.

We decided to regulate copying instead, because copying was a lot easier and cheaper to regulate when we wrote the copyright statutes. Copying a book or record on a mass scale, unlike lending or singing in the shower, was not the kind of thing an ordinary person had the necessary equipment for—and the equipment tended to be bulky enough that you could usually track it down without having to pry into a lot of homes (and bathrooms). But the thing we decided to regulate because it was rare and expensive is now as cheap and ubiquitous as all the other stuff we didn’t regulate because it was cheap and ubiquitous. The good news is, most people are still glad to pay for the content they really like, if it’s provided in a convenient form and at a reasonable price, even when they can (or did!) easily copy it free. But maybe that’s not enough, and there are other points of regulatory intervention that will help creators internalize enough of the value of their output to make the investment worthwhile. That’s an actually productive subject of inquiry, but it’s not one anybody’s putting much effort into as long as they remain in the grips of the enforcement fantasy.

Now,  Brad Plumer reports, there’s research suggesting that online review sites like Yelp are cutting into chains’ bottom line by providing an alternative solution to the information problem. The combination of peer-produced online reviews (which cover local diners along with the big-city restaurants) and mobile, location-aware Internet devices has made it incredibly easy  to figure out where you can find the nearest restaurants with good reputations, wherever you might be. Under conditions of uncertainty, the chain represents a rational maximin strategy. As ubiquitous connectivity and peer-production of information reduce that uncertainty, the chain becomes an unnecessary hedge.

Yet it’s not just chain restaurants that have thrived by using standardization and branding to solve a consumer information problem: Branding and marketing generally often serve much the same function. Frequently, generic or store-branded products (soda, cereal, ibuprofen) are literally chemically identical to the more recognizable name-brand product, and only cheaper because they haven’t been saddled with the overhead of a costly marketing campaign designed to signal quality. (Think of the traditional argument for the evolution of peacock feathers: To survive while paying the high overhead cost of such a gaudy display signals genetic fitness.)

Imagine, then, what effect it might have if, five or ten years hence, augmented reality using sophisticated image recognition were as ubiquitous as Internet-enabled phones are becoming in the developed world. Imagine that, for nearly any product consumers encountered, some kind of aggregate rating—based on whatever criteria the individual has determined are most important—would simply appear, with minimal effort. Simply looking at an aisle of products—or even passing shops on the street—I might effortlessly learn which were deemed most satisfactory by people with tastes similar to mine. My incentive to take the time to rank products would be provided by my desire to give the system a basis for determining which other user’s rankings were most likely to be relevant for me. (Think here of Netflix recommendations or other type of social filtering, where contributing ratings enables the system to make better predictions about what I am likely to enjoy.)

With such information more directly available, marketing would become far less relevant to the buyer—and a far less worthwhile investment for the producer. Products, of course, would still need to be distinguished in some way, but a seller with a superior product would be far better able to compete without investing in a costly national marketing campaign. Advertising might be initially important in raising awareness about a new product and building an initial pool of reviews, but its salience would rapidly diminish.

That’s one way things might go, at least. The picture is a bit complicated because today we often “consume” the brand, and not just the product itself. That is a company like Nike might invest a great deal in slick marketing partly in order to create a series of public associations with their logo, so that part of what I’m buying when I purchase their sneakers is what (I hope) the Swoosh signals about the sort of person I am—or how I see myself, at any rate. But this seems like a major consideration in a relatively limited number of product areas, such as clothing (precisely because it’s displayed on the person). If that’s right, the “Yelp Effect” in world where augmented reality technology has been widely adopted could dramatically diminish the broader cultural prominence of corporate logos and brands.

Harry: OK, folks, snack time. I’m thinking we should order a couple pies from that new gourmet pizza place.

Darrell: What, Mama Solyndra’s? That place is so overpriced! Let’s just go with some chips and salsa from the corner store; I was planning to make myself a sandwich when I get home anyway.

Mary: Show of hands? [The group votes.] Bad luck this time, cheapskate, Mama Solyndra’s it is.

Barack: OK, everyone throw in, I’ll call for a couple extra-larges. Oh, and Harry brought the beer, so everyone chip in for that too.

Darrell: Hmph, alright, alright, lemme find my wallet.

Half an hour later, the food arrives.

Darrell: Let’s see, I guess the pesto and ricotta looks like the best…

Mary: Woah-ho-ho there Grabby McGrabberson! What do you think you’re reaching for there? As I recall, you didn’t think Mama Solyndra’s was worth it. You wanted us to tighten our belts and cut our snack spending. And now you want a slice? Guess that was all a lot of empty talk—what a hypocrite!

Darrell: Hey, I still think we should go with chips next week, but I threw in like everyone else, so unless you feel like returning my $10…

Harry: What are you, a comedian? You know the rule. We all vote on what we’re getting, and everyone splits the check.

Mary You’ve got some serious chutzpah! Sitting there with a slice in your hand, and you’re still talking about how you want to gut our pizza budget? Well actions speak louder than words, Darrell: If you had any integrity, you’d drop that slice right now.

Barack: You are looking pretty hypocritical there, Darrell. I don’t know how you expect anyone to take you seriously when you start badmouthing Mama Solyndra’s next time.

Darell: What? You guys, I said I don’t think it’s worth it. I wouldn’t have bought any if we were getting single slices, but it’s not like you gave me a choice about paying in! Now I’m not even supposed to enjoy any of the food I got outvoted about paying for?

Mary: Not really; it just means that from now on, you have to shut up about how overpriced it is and start voting for Mama Solyndra’s.

Fade to black.

I recently did a diavlog with my friend Tim Lee on the new BloggingHeads spinoff site TechHeads, during which I had a thought that seems like it might be worth spinning out. We’re all accustomed to seeing horror stories about ludicrously broad, bad technology patents that have given rise to a wasteful arms race between real tech companies and patent trolls. A growing body of scholarly literature suggests that two decades of software patents, in particular, have been a hindrance rather than a net plus for innovation, and I think it’s worth thinking a bit about why that’s especially likely to be the case.

It has probably always been the case that our intellectual property policy has been skewed by a romantic vision of the lone genius in his workshop crying eureka! as some radical breakthrough strikes—when real innovation is more a matter of gradual, cumulative evolution. But I suspect it’s also true that one kind of innovation is more likely when you have a small number of pioneers working in a new field. A Newton or an Einstein born today wouldn’t be as likely to make similarly earthshattering contributions, partly for the simple reason that Newton and Einstein already did it (you can’t write the Principia twice), and partly because with thousands of people making small, incremental additions to our knowledge pool, it’s harder for even a genius to outpace them in a single bound. But we still want our genius—an identifiable individual to credit with the latest leap forward.

The thing is, as technologies mature, and innovation is more likely to proceed by a series of increments that shouldn’t be individually patentable, it also becomes much harder to police the quality of patents, which makes it more likely bad patents will slip through. To see why, consider the old economist’s aphorism that “division of labor is limited by the extent of the market.” That is, the more people are connected in an extended system of economic cooperation, the more specialization becomes possible. Robinson Crusoe has to be a generalist—has to know how to produce everything he’s going to consume. In a small isolated village, most people need to be food producers first and foremost, and a few others can focus on providing other necessities. In a globally networked marketplace, an incredible amount of specialization is possible—which is why, notoriously, there’s almost no type of porn so bizarre or niche that someone hasn’t created a website dedicated to providing it.

When my parents were children, “computer programmer” was not even an occupational category. Now we have thousands upon thousands of people who specialize in working on very specific types of software: Web applications or encryption or databases or first-person-shooter games. Crucially, an innovation developed by one person can be circulated to a whole community almost instantaneously—which makes it less likely that we need a “genius” to make huge innovative leaps because small components of his big idea, if they do already exist, are scattered across obscure journals in other languages where he’ll never encounter them. Predictably, this enables an enormous amount of very rapid progress.

It also makes it a lot harder to evaluate patent quality. Patents are not supposed to just be a pointless monopoly granted to the first person who happens to file a description of a particular invention with the Patent Office; the justification for granting the monopoly is that it (in theory) elicits innovations that would not exist but for the incentive a patent provides. To that end, patents are only supposed to be granted for inventions that are “non-obvious.” But of course, “obvious” is a relative term: You wouldn’t want to give an industrial engineer a monopoly on some minor improvement to a production process just because it might not be obvious to me. The standard, rather, is whether it would be obvious to a person “skilled in the relevant art” applying reasonable diligence and effort.

The more highly specialized professionals are in rapid communication with each other, the more likely it becomes that you’ll see innovations that are “obvious” because they involve combining various disparate kinds of incremental prior innovative steps, but which don’t have “prior art”—meaning nobody has taken that exact step before, because it required a bunch of other pieces to be in place before it was viable. So searching for “prior art”—if that means exactly the same preexisting invention—becomes a less reliable guide to what is “obvious” in the relevant sense. But as specialization increases, it also becomes vastly more difficult for a patent examiner with broadly relevant training (engineering and electronics, say) to use his own understanding and expertise as a guide to what is truly “obvious” to someone trained in the specifically relevant domain (say, engineering mobile cellular data networks). It’s increasingly unreasonable to expect even the smartest and most diligent examiner—even assuming away all the bureaucratic and institutional incentives to err on the side of granting patents—to judge the “obviousness” of innovations across an ever-proliferating array of subspecialties.

As specialization increases the number of eyes on each particular type of problem, it also shifts the degree of non-obviousness that makes the granting of a patent monopoly a wise bargain for society. As I suggest above, when a small number of people are working on a problem, and in only sporadic communication, then you’re more likely to need someone to make a big leap to hit on an innovation rather than relying on the accumulation of many small incremental insights. (Perversely, patents may create an incentive to keep quiet about those incremental insights along the road to a functioning, patentable idea.) But sheer numbers also make it vastly more likely that someone—and more likely many someones independently—will arrive at even less-obvious ideas. If only 1 in 100 people working on a type of problem would hit on a specific solution, it seems a stretch to call it “obvious.” But if there are 10,000 people working on the same class of problems, that’s still 100 independent inventors.

That very much changes the shape of the problem patents are meant to solve. If you’re in a market with a dozen other players, then in the absence of a patent monopoly, your inventive might be to take measures to keep that one-in-a-hundred innovation secret so your competitors can’t copy it. (Send me your raw materials and I’ll apply my new improved production process behind closed doors, rather than making a machine to sell.) The public loses the benefit of learning how the invention works because secrecy is an effective alternative means of maintaining a monopoly. If there are a thousand other players in the same market, the perverse secrecy incentive drops away, because you can be reasonably sure lots of other people are going to hit on the same invention, and it’s likely that your costly efforts to maintain secrecy won’t actually leave you with a monopoly, or even ultimately prevent the knowledge of how the invention works from getting out.

More specialization, in short, means that society can get the benefit of even less-obvious innovations without having to pay the cost of an inefficient monopoly grant. Needless to say, the greater the efficient standard of “non-obviousness”—the larger the logical leap it makes sense to require from “prior art” to a new innovation before that step becomes patentable—the harder it is for a non-specialist examiner to correctly apply that standard.

So there’s an irony here: As a sector becomes more innovative, as even “good” patents become less necessary and more likely to hinder rather than spur innovation on net, and as the economically efficient “non-obviousness” standard for patent issuance rises, patent examiners necessarily become less likely to be able to discriminate effectively between good and bad patents. In other words, the circumstances under which it is efficient to be granting fewer patents are the very circumstances under which patent examiners lose the ability to accurately judge “obviousness,” and therefore become more likely to grant more patents. No wonder it’s such a mess.

In early July, the bankrupt tech company Nortel put its 6,000 patents up for auction as part of a liquidation. A bidding war broke out among Silicon Valley powerhouses. Google said it wanted the patents purely to defend against lawsuits and it was willing to spend over $3 billion to get them. That wasn’t enough, though.

The portfolio eventually sold to Apple and a consortium of other tech companies including Microsoft and Ericsson. The price tag: $4.5 billion dollars. Five times the opening bid. More than double what most people involved were expecting. The largest patent auction in history.

That’s $4.5 billion on patents that these companies almost certainly don’t want for their technical secrets. That $4.5 billion won’t build anything new, won’t bring new products to the shelves, won’t open up new factories that can hire people who need jobs. That’s $4.5 billion dollars that adds to the price of every product these companies sell you. That’s $4.5 billion dollars buying arms for an ongoing patent war.

Perhaps this is an obvious point, but it’s worth dragging it out explicitly: The very existence of such massive trade in “defensive patents” is, in itself, pretty strong evidence that there’s something systematically quite wrong with the American patent system—because a patent that’s useful for “defensive” purposes is very likely to be a bad patent.

As everyone acknowledges, there’s a large deadweight loss involved in the creation of any patent system (and intellectual property more generally), because it prevents people from making free use of an intrinsically non-rivalrous good: Information. The static loss is, in theory, supposed to be outweighed by a dynamic gain: The incentives created by the patent system lead to the creation of new inventions that would never have existed but for the inventor’s ability to fully internalize the value of that invention.

But now think about how defensive patents work. Companies aren’t buying them—or buying into the services of companies like Intellectual Ventures—because they provide otherwise unavailable technical insights. The point, rather, is to acquire (or have access to) a bundle of patents that any potential litigant who sues you is likely to be “infringing” in their own products. Like nuclear weapons, the point is not to actually use them—but only to be able to threaten to use them if anyone else should deploy theirs against you.

This only works, however, if other companies are almost certain to have independently come up with the same idea. A patent that is truly so original that somebody else wouldn’t arrive at the same solution by applying normal engineering skill is useless as a defensive patent. You can’t threaten someone with a countersuit if your idea is so brilliant that your opponents—because they didn’t think of it—haven’t incorporated it in their technology. The ideal defensive patent, by contrast, is the most obvious one you can get the U.S. Patent Office to sign off on—one that competitors are likely to unwittingly “infringe,” not realizing they’ve made themselves vulnerable to legal counterattack, because it’s simply the solution a good, smart engineer trying to solve a particular problem would naturally come up with.

Needless to say, every patent granted for an idea that any number of suitably skilled engineers could have (and would have, and did) come up with is a patent that probably shouldn’t be granted—a pure deadweight loss that’s actually compounded by the squandering of resources on the “arms race,” with no compensating dynamic gain. Actually, there’s probably a dynamic loss: You end up creating a huge incentive for smart and skilled people to spend their time and energy not coming up with a brilliant idea that nobody else would have, but instead trying to be the first to put on paper ideas that are obvious (to a properly trained and up-to-date person) but haven’t been locked down yet—the solution, again, that almost any professional would have come up with once they were actually trying to implement the relevant technology. A sector where investment in defensive patents is so massive, then, is a sector where—even if some of them do genuinely add value—patents are probably doing more harm than good on net.

Update: Conveniently, via Techdirt, some empirical support for this idea comes in a new paper by Stanford law prof Mark Lemley. Rather than being produced by a lone genius who must be granted a monopoly to encourage creation of a benefit we’d otherwise do without, major innovations are typically independently arrived at by many people or groups nearly simultaneously. They are, as the saying goes, ideas whose time had come.

It may be a bit inconvenient to keep up unhinged appearances over time, however, when you’re sharing closer quarters than Nixon and Khrushchev, especially if you sometimes need to collaborate on less hostile terms now and again. But of course, the folks involved in the detailed negotiations didn’t want their counterparts to think that they were crazy either: It was that other guy, Nixon, who they had no choice but to obey. Ideally, you want to be seen as rational yourself but accountable to a madman, at least on the specific point the threat is about.

Fast forward to 2011. Informed conservatives generally seem to agree that the debt ceiling has to get raised one way or another. They may all agree that large cuts in both discretionary spending and entitlements are desirable and, in the long run, necessary. But they also, however grudgingly,  allow that implementing all those cuts immediately and abruptly, in the middle of a recession, risks economic implosion and unnecessary suffering. Hitting the ceiling is not automatically the same as a default, but that doesn’t mean it’s a good idea either. That makes it hard to use the debt ceiling as leverage to extract concessions on those necessary spending cuts unless Democrats believe that Republicans are genuinely willing to court catastrophe. But under normal circumstances, it’s almost impossible to make any progress pushing back against the long-term economic problem created by promising ever more benefits financed with debt. So if you can’t lock in spending cuts in a situation like the current one, where the debt is politically salient, good luck getting them any other time.

But Republicans are in luck. Because the base doesn’t think a failure to raise the ceiling could have serious negative consequences as long as the right’s pundit ecosphere continue to insist it won’t (and those who get an attack of bad conscience can be written off as victims of leftist brainwashing). Assuming that messaging is sticky enough to be hard to reverse before the deadline, the threat suddenly gets a lot more credible. “Yes, we know it’s dangerous to walk away without reaching a deal—but the folks who determine whether we win our primaries and keep our seats don’t. So we’re going to have to walk away anyway unless we get everything on their wish list.” It’s a little risky, of course, because you can’t have them so out of touch that they don’t accept any deal you make, but if it works it suggests a method to the madness.

Suppose that, back in the 70s, DARPA had developed two revolutionary networks. In addition to the precursor to the Internet we all know and love, they had also developed a teleportation network enabling small, inorganic objects to be instantly transmitted via miniature wormholes from any point on the network to any other point. The effect can even be time-limited, so that objects will snap back to their original locations after a predetermined number of minutes, hours, or days has elapsed.

Among the many areas of life transformed by this technology is the entertainment industry. People quickly realize how inefficient it is that all our homes are packed with books, DVDs, and CDs that we’re legally entitled to be reading, viewing, or listening to as often as we like—but in practice only really make use of for an infinitesimal fraction of the time we own them. 

Libraries and video rental stores already take advantage of the fact that most people are happy to read a particular book or movie once, then let someone else enjoy it. But the teleportation network, combined with the power of the Internet, suddenly allows millions of individuals to make their personal copies of these works available for instantaneous loan to others. Every book, movie, or album you’re not currently using, or just about to, is listed publicly as available for borrowing. (Maybe borrowers feed their credit cards into the system, to ensure that you’ll be bought an immediate replacement if your copy should be damaged while on loan.) The massive waste of letting a book or DVD sit unused on a shelf for months or years for every few hours it’s actively enjoyed is suddenly eliminated—to the delight of everyone but the companies in the business of selling those books and movies.

Since the system doesn’t involve copying, but only the transfer of physical objects, it is plainly legal under the First Sale Doctrine: No copyright is even arguably infringed at any point in the process. Because it’s so obviously legal, nearly everyone participates in the system. Possibly some small fee is paid into the system by those who borrow vastly more than they loan out, and transferred to those who do the most loaning. Over time, this evolves, so that when a work is in high demand but short supply, people who don’t want to wait can pool small amounts of money to buy a shared copy (to be resold once everyone’s read/heard/seen it as much as they care to). 

This proves understandably vexing to copyright owners, who find that many fewer copies of each book, DVD, and CD are sold once large numbers of potential buyers are able to get all the satisfaction they wanted from a single, widely-shared copy. The MPAA and RIAA launch a major public relations campaign attempting to persuade people that “lending is theft,” which prompts widespread public ridicule and is, predictably, an enormous flop. Reluctantly, creative industries begin looking for new business models that will allow them to thrive in the changed technological context, while policy makers contemplate whether alternative incentive mechanisms are needed to ensure that creative works continue to be produced. 

Obviously, this fanciful scenario isn’t exactly analogous to unauthorized file sharing, which allows many different downloaders to simultaneously use each particular work—though it’s not clear how great a practical difference this would make, given that each copy still sits fallow most of the time it’s in any individual’s possession. It’s actually not far off at all from a “cloud storage” model we could see emerge over the next few years, however, provided each privately-purchased song, movie, or book can only be used or accessed by one device at a time. (Access might be allowed only to devices incapable of making a permanent copy—though nothing physically prevents me from making a personal copy of a book or CD I have borrowed from a friend.) Henry Farrell points out that it’s also almost exactly the model Zediva is employing for remote DVD rentals (in contrast with the more familiar Netflix streaming).

A situation like the one I’ve imagined might be considered a major policy problem, and it might not.It might have less effect on sales than BitTorrent does in our world, and it might plausibly have more because of higher rates of adoption. But if it were a policy problem, then the problem would have nothing at all to do with the moral properties of “illicit copying,” nor would jeremiads against “theft” from artists be relevant, or likely to be regarded as anything but risible. 

The policy problem would just be this: New technology had multiplied the number of people who were able to enjoy each copy of a work—in itself an obvious and enormous benefit—reducing the number of people prepared to buy individual copies of those works, and calling into question whether the traditional business model predicated on mass individualized sales would continue to supply enough revenue to incentivize production of (enough) new works. Here is a solution no sane person would propose to this problem, if it were a real problem: Prohibit people from using the teleportation network to loan books and movies to their friends, and monitor it to ensure they did not do so.

Some readers, of course, are probably bouncing in their chairs with eagerness to interrupt that my thought experiment is quite irrelevant: In our world, people are shamelessly copying rather than loaning works. True enough. But there’s nothing morally special about copying. It’s a method we regulated to solve an incentive problem, because given the available technology in 1909—when statutes first sought to control “copying” rather than “publication” and “sale”—that was the most efficient point at which to regulate in order to solve that problem. If technology had evolved in order to make mass loaning, rather than copying, instantaneous and frictionless and easy, the underlying problem wouldn’t be any different. Any moral baggage “copying” has picked up is a pure artifact of the chance fact that “copying” is what it seemed to make sense to restrict given early 20th century tech.

So here’s one way to think a little more rationally about copyright policy: Pretend that instead of BitTorrent, we’d invented the Teleporter Library. Then think about what business or policy solutions would make sense in response. It’s a neat way of clearing from consideration a lot of charged rhetoric about “stealing music” that should have been irrelevant all along.

Addendum: Taking the Teleporter Library notion seriously on its own terms, and not just as a kind of allegory about IP, it’s worth noting that in some ways, it would put many consumer goods suppliers in the position our content industry is currently in. Maybe it would continue to make sense for everyone to just continue to own (say) their own screwdrivers and such. But there are a lot of things we only need (at most) a few hours of the day, or even a few days of the year. Some of these things we might nevertheless have various reasons for wanting to own (I don’t want to hook up and then disconnect a dishwasher every time I run it, even if it’s only every other day) but many would more sensibly be shared. Just glancing around my apartment, things I would probably “subscribe to” rather than own in a world of nearly-free teleportation include: Luggage, a printer, a bicycle, toaster, blender, vacuum cleaner, television set, Playstation (and Rock Band controllers)… hell, even my sofa, reading chair, and coffee table don’t really get used more than a few hours a day—and some days not at all… though in the latter cases the convenience of just flopping into them after a long day without waiting even a short time for a “download” might weigh in favor of owning. I can imagine you might see an increase in investment in innovation as each Teleportation Library competed to distinguish its catalog of subscription appliances—and maybe appeal to the broad group of people who’d pay a few extra bucks to have a fancy espresso machine for their dinner party, even though they’d never dream of buying one.

Notwithstanding the stereotype that libertarians care about little other than low taxes, I don’t write much about tax policy. But I was reflecting today on Nozick’s coyly Marx-inflected comparison of taxation to compulsory or stolen labor—which however overblown as rhetoric got me thinking about how different types of people might respond to the same tax incentives differently. Often you’ll hear opponents of high taxes make an Atlas Shrugged–style argument to the effect that people will be less productive if their take-home pay is decreased, diminishing their incentive to work ever harder for that marginal dollar. Perhaps unsurprisingly, proponents of higher taxes tend to associate that opposition with selfish materialism—the obsession of people with no higher concern than maximizing their bank balances.

But it seems perfectly plausible to me that tax incentives could work quite the other way as well. As a writer and geek, I’m surrounded by folks who could probably be making a good deal more money doing something else, but have chosen journalism or activism or wonkery because they enjoy it, find it interesting and important, and so on. Many people without particularly expensive tastes just want to find intrinsically enjoyable work that will allow them to maintain a middle class standard of living—and if that threshold is met, cannot easily be induced to trade leisure time, or the non-economic rewards of the job, for even relatively substantial sums of money. Folks like this, in other words, are income satisficers for whom the marginal utility of an extra dollar drops off quickly once they have enough to afford some fixed set of amenities. Those requirements can, of course, change over time: I’ll sometimes see a writer who was making a comfortable living writing as a childless single decide—perhaps with a twinge of regret—that with a baby on the way, that it’s time to take a higher-paying corporate job and open a college fund for Junior.

For folks like this, the conventional prediction about the effects of taxation may be quite reversed: Since they are highly motivated to achieve some relatively fixed acceptable income level (assuming the cost of sustaining their lifestyle remains constant), but their interest in money past that point drops off sharply, raising taxes may actually cause them to increase effort or productivity in order to keep hitting the same target they achieved with less work at the lower rate. Something similar might happen in a double-income household (assuming two satisficers with comparable thresholds): If they can make it on one income, they prefer that one partner stays home with the kids, or takes time out of the workforce pursuing a dream of starting a business or launching a new career or, hey, going on American Idol… even if they’d be substantially wealthier with two incomes.

If this is true of a significant number of people, it might sound like a great debating point for advocates of tax hikes: a too-good-to-be-true, tastes great and less filling combination of more tax revenue for the government and more economic productivity! But of course, the folks at the top of the income distribution—the ones paying the bulk of the taxes—are also most likely to be the ones who do care about making a lot of money, and most likely to have the accumulated wealth to sustain their lifestyles even if they are (or, as they age, have become) satisficers.

Intuitively, it’s lower down the ladder you’d expect to find to find the income satisficers whose behavior is more susceptible to being shifted by tax incentives in this way: People who, having met their income threshold (at the lower tax rate), were either taking a good deal of their “compensation” for their jobs in the form of the intrinsic satisfaction of the work, or who had opted for less-demanding jobs that left time for their hobbies or other projects. By the narrow criterion of GDP, this might seem like a good thing: You’re getting the slackers off their butts and mobilizing fallow productive capabilities! But it also seems a little more unsettling from a moral perspective, because it’s more clear that what you’re taking from people is time—time away from the people and projects they love. For the folks at the top, this might not be something we lose much sleep over: Don’t want to give up your leisure time? Well, settle for a marginally less opulent lifestyle (though the cost of that choice in GDP terms is also especially high). For satisficers in the middle whose tastes and expectations are more modest, though, that seems a little colder, because it’s more likely to force a choice between a significant sacrifice of personal time and job satisfaction or a more conspicuous drop in living standard.

Get further down the income ladder, of course, and the argument looks different: You’ve got people who may not be paying much in taxes (though, of course, everyone pays sales taxes) but might be getting by, thanks to public assistance, with one job (rather than having to look for a second, or for outside income), or as a student, or on unemployment while they look for a job that suits their skills rather than just taking the first one that comes along. This is, in fact, exactly the argument you sometimes hear for the benefit of a generous welfare state to creativity and entrepreneurship. In other words, your J.K. Rowlings and assorted indie rock bands can make it on the dole for a couple years while they hone their skills, rather than having to spend every spare hour scrambling to survive; the prospective entrepreneur can take a risk starting a small business without fearing he’ll be wiped out; the out-of-work programmer waits for the market to rebound so she can get a coding job instead of moving out of the Valley to work retail. At the bottom of the income ladder, of course, the whole satisfice/maximizer distinction becomes irrelevant, because pretty much nobody (maybe excepting a few extreme ascetics) “satisfices” in grinding poverty. The further down the ladder you go, the more likely it is that the people situated there would already be deploying any excess earning capacity if they had it—but some combination of market conditions and personal barriers to work just leave them without much choice. Under current economic conditions, that’s presumably a whole lot of people. Still, if you find the safety net argument plausible at the bottom, and a decent chunk of the population are satisficers, it seems similarly plausible that there’s a flip-side phenomenon corresponding to lower tax burdens as you move into the middle.

Maybe this is just my perception, but it seems as though—for all politicians gear their public rhetoric (as opposed to their policies and private assurances) to appeal to the middle class—arguments about tax policy and economic justice tend to focus on the extremes. That is to say, the super-wealthy and those who are just barely scraping by. Both are groups we tend to think of as earning about as much money as they possibly can—one by disposition, the other as a matter of necessity—which tends to reinforce a picture we have of people as income maximizers. But I bet that’s not a terribly accurate picture, and it would be interesting to see some empirical research geared toward figuring out just how much variation there is in our dispositions, and to what extent, especially in the broad middle, people are satisficers at one threshold or another, or tax-rate-insensitive maximizers, or who knows what all.

Talking more explicitly about the range of economic dispositions might make us more apt to think of taxation as much in terms of effects on time and satisfaction as on bank balances. It also might give a little pause to those of us who suspect we probably could be making a good deal more money doing less interesting work (or with less free time) than we currently do. Political ideology aside, I’m as likely as the next guy to feel distaste for the high earner who fails to give more than a pittance to charity and carps at higher taxes: It seems obvious someone that well off should be doing more to help the needy. But what about the journalist and the academic and the non-profit staffer who could be high(er) earners but prefer their compensation in the non-taxable form of leisure and job satisfaction? I don’t think I’d much like being a consultant or practicing corporate law, but I like to imagine that I could probably do one or the other competently, have a hell of a lot more income to transfer to the needy, and still keep a comparable or higher material standard of living. I don’t look as greedy as the guy who fails to share the wealth, because I’m deriving my utility from a less readily quantifiable and transferable source. But if that’s partly a matter of choice (it’s hard to say, since for all I know I’d actually be awful at better-paying professions) is there all that much moral difference between us? (Those of you who think “libertarian pundit” is already about as immoral as it gets, kindly restrain yourselves.)

What I’m calling varying dispositions (“satisficer” and “maximizer”), an economist might say are just arbitrary groupings of personal utility functions, or of indifference curves between income and other goods. And probably there’s already an economic literature elaborating (or falsifying!) with rigor and precision these various crude thoughts. But in popular discussion—and especially moral discourse and conversations about economic justice—it seems as though we more or less treat people as being a good deal more uniform than they are in their pursuit of income versus other goods. (Maybe because those conversations are mostly conducted by people who might be bothered by the ethical implications of acknowledging the gap between their potential and chosen-actual earnings?) For readers in search of the agenda shoe dropping: I haven’t thought it through enough to have a sense of whether it would tend to push us in a more or a less libertarian direction if we did take more explicit account of this kind of interpersonal variation. But it would probably be more interesting.

[F]or all the horrors of the current recession it’s been managed much better than the Great Depression of the 1930s was. Progress is happening. The only way to make more rapid progress on the science of macroeconomic stabilization would be to have many more recessions so as to gather better data. Paul Krugman emphasizes that to understand the problems facing the American economy today you have to focus on the special economic properties of a large economy in an liquidity trap. But (fortunately), human history isn’t littered with examples of such a situation, so it’s challenging for him to compile a quantity of data sufficient to persuade all of his colleagues.

This isn’t a perfect analogy, but the problem made me think of forest management, it’s long been understood that attempting to wholly prevent forest fires is usually a bad idea—the dry growth builds up until the fires you don’t manage to prevent quickly rage out of control, to far more devastating effect. Instead, we have periodic “controlled burns.” I suppose live vaccination is another example of the same idea: Deliberately expose enough of the population to a weak pathogen at staggered intervals (sometimes causing mild symptoms) and a serious epidemic becomes much less likely. (Though this, too, creates the same trade-off a level up: When an epidemic does happen, the society that’s done a good job at prevention may be ill-equipped to respond.)

Obviously, it would be perverse for any number of moral and practical reasons (not to mention a political non-starter) to suggest deliberately creating small economic crises, whether the purpose was to gather data, experiment with different policy responses, or create some kind of general vaccine effect (whatever that might mean). But it might be worth counting this as one possible cost of policy designed to preserve macroeconomic stability. The nature of the problem, alas, is that it’s probably impossible to estimate the magnitude of the cost very well, precisely because you don’t the counterfactual.