Artistic Freedom Vouchers

In response to Roderick’s Round II comment on intellectual property, I don’t see that he has a viable alternative mechanism for financing work that I think we agree must get done. The idea of voluntary payments is intriguing, but can we do that in a way that insures that sufficient funds are devoted to the task?

I have a proposal for an “artistic freedom voucher” which would be a refundable tax credit (e.g. $100) that could only be used to support creative or artistic work. Potential recipients register in the same way that charitable or religious organizations register for non-profit status. The condition of getting the money is that you are not eligible to receive copyright protection for any work produced for a substantial period of time (e.g. 3–5 years) after receiving money through this system.

Obviously this is not entirely voluntary. You are taxing people to pay for the voucher (with some element of redistribution), but where the money goes is entirely up to the individual. My expectation is that a vast amount of uncopyrighted material circulating freely over the web would quickly crowd out the copyrighted material, but what actually happens would of course depend on market outcomes.

I don’t know if this story offends libertarian sensibilities, but at least in my book it involves much less intervention than the copyright system.

Returning to drugs, I do think it’s important to have an efficient funding mechanism; I do want to see more research into lifesaving drugs. I am not convinced that Roderick’s mechanisms are workable or efficient.

To my mind its essential that research be fully open. Innovation will proceed much more rapidly if researchers can quickly benefit from the results of their colleagues. It is not open now, and I don’t see how it would be open with the mechanisms he has described.

This raises a second point. I don’t think that we can accurately award credit for the inventers/innovators of a particular drug or scientific breakthrough and I hate to see us waste a lot of effort trying. Science is an inherently social process, with every researcher building on the work of their predecessors. We can always pick someone out as the person who published the key paper or got the important patent, but very often the person getting credit may just be taking a small step building on the work of others who have done the heavy lifting.

This is why I prefer a system where researchers are paid upfront, with opportunities for advancement and even large prizes based on their performance. But, I hate to see a situation where their compensation is entirely dependent on being able to claim credit either for a patent or through some other process (like the ones described by Roderick). This will lead to a situation in which people who are good at claiming credit get well-compensated, and considerable resources are devoted to the effort.

On final point on my proposed funding mechanism: I really do want to see drugs sold at their marginal cost. We should not have situations in which people struggle with paying the bill for drugs that are made expensive through patent protection or any other mechanism. The drugs are cheap to produce and they should be sold cheaply.

It doesn’t make sense to make the patient bear the cost of drug research just because they happen to be the one needing a drug. It makes much more sense to treat this as a form of insurance. You pay for the research in advance—in the event you need the drug, you get it at its cost of production. We could do this an entirely voluntary insurance system, except I don’t know how to prevent free-riding in this story, hence my use of the tax system.

Anyhow, I hope that we can spark more interest into alternative mechanisms of financing innovation and creative work. The current system is an outrage from both an economic and moral perspective and it’s hard to believe that we can’t do better.

Also from this issue

Lead Essay

  • In this month’s lead essay, philosopher and libertarian theorist Roderick T. Long draws a sharp contrast between corporatism and libertarianism properly understood. He argues that liberals, conservatives, and even libertarians have all been guilty to some degree of obscuring this difference, and that the quality of our political discourse has suffered accordingly. He suggests that libertarians should guard themselves against falling into the trap of “vulgar libertarianism,” in which all things good spring from business, and particularly from business as usual. Corporations, he argues, should be no more free from scrutiny than any other institution in society, and often businesses have done more than their share to hamper free economic relations in the industrialized world.

    One implication of all of this is that the truly free market is farther away than we imagine. Long suggests several ways in which a freed market would be different from what we see around us today. Notably, nearly all of these differences are to the benefit of the consumer and the small or start-up business. These likely outcomes of laissez faire suggest new grounds for left-liberals and libertarians to revise their thinking on economic issues and on politics more generally.

Response Essays

  • In his response to Long, Matthew Yglesias argues that although corporations naturally seek to win special privileges from the state, libertarianism is far from the obvious solution to the problem. Instead, he reiterates the charge that libertarians often act as corporate apologists and suggests that the net effect of any “free market” advocacy will tend strongly toward corporate power. Liberals may have much to learn from libertarians on certain issues and in some policy areas, but the laissez-faire solution to corporate political influence is unworkable.

  • Steven Horwitz offers several examples of so-called “de-regulation” that only served to benefit corporations, while leaving the government, and therefore the taxpayers, to shoulder the risks of the market. He argues that market competition is a form of regulation, albeit a kind worth wanting, as it forces corporations to respond to consumer demand and punishes them when they fail to meet it. He takes issue with Long’s lead essay by arguing that “playing defense,” that is, defending today’s corporations when they act consonantly with a fully freed market, is a valuable part of libertarian advocacy. One must nonetheless take issue with these same corporations when they violate the principles of laissez faire and distinguish carefully between these cases.

  • In his response essay, Dean Baker declines to tally up a “score” of how well libertarians, or other groups, have defended a truly impartial, laissez faire economy. Instead, he suggests intellectual property as an obvious area where libertarians must challenge corporate power to distort the market. Patents that make health care more expensive and copyrights that artificially restrict whole areas of our culture are obviously concessions to corporatism, and the “extraordinary abuses” undertaken to enforce these privileges should be vigorously challenged. Although libertarianism has been skeptical of both patents and copyrights, Baker suggests that this is an area deserving still further attention, and one in which liberals could perhaps become solid allies.

  • The discussion this month has focused to a greater than usual degree on the activities of certain Cato Institute policy scholars. The editors thought it appropriate to solicit responses, and we present them here in their entirety.