#SOPA and #PIPA Prove: Corporations Are Dangerous To Our Constitution, Our Freedoms, And Our Government

Monday, 2012-January-23 at 08:28 1 comment

#SOPA and #PIPA Prove: Corporations Are Dangerous To Our Constitution, Our Freedoms, And Our Government

Background

The year was 1776. In the British Isles, Adam Smith published the work that still defines much of the framework for economics. In the North American colonies, a small group of individuals published the American Declaration of Independence, a document whose ideals we still aspire to, but never have made a priority.

 

King George III (http://whoknowswho.channel4.com/people/George_III) and Prime Minister Lord North sought to retain their power over the colonists (http://www.number10.gov.uk/history-and-tour/lord-north/), who were aggravated over taxation and the power of a monopoly, the British East India Company.

 

It is no surprise then, that the Declaration of Independence, the Articles of Confederation, and the Constitution all fail to mention corporations at all. We know that they were aware of the supposed benefits of corporations. Yet they chose to ignore them entirely in setting up the new country’s governance.

 

Benefits

Unlimited Lifespan Allows Resource Accumulation

Corporations are not constrained by the natural life (and death) of any particular person, so that their lifespans may be as close to infinite as is possible for a human institution to attain. Corporations typically combine resources and talent from many different individuals. These two factors give corporate-style organizations a significant advantage over individuals and families, as they effectively gather and retain quantities of resources that far exceed what most individuals and families can attain without a corporate-style organization.

 

Division of Responsibilities

Corporations often reach the point where their financial backing, management, and talent (labor) come from nearly distinct groups of individuals. Since division of labor is the primary proven way to sustain and advance human economy and society, they tend to do better financially than comparable partnerships and sole proprietorships do.

 

By dividing up responsibilities, authority, and rewards, corporations spread benefit among a larger group than the previous aristocracy and feudal societal structure did. Corporations, by virtue of their tendency to gain more and more financial and other resources, can afford to undercut non-corporate competitors on price or to bundle additional products and services into a single price.

 

Location Non-specificity

If Joe, the owner of Joe’s Pizza, wants to open another location halfway across the country, he generally needs to depend upon some close friend or family member to manage the operation for him. A corporation still needs to place trusted individuals in charge of such expansions, but there is a larger pool from which to draw.

 

Corporations are well-suited for geographically-dispersed operation, even to the point of setting up “international” operations in foreign countries. In the past two or three decades, many corporations have even sought to transcend nations, calling themselves multinational or even transnational corporations. In a MNC/TNC, a corporation is no longer “American, with significant operations overseas” but becomes rootless, with no intrinsic loyalty to any nation or government. This allows them to freely move operations wherever their leaders feel will bring the most profits, the cheapest or most compliant workers, the most reliable suppliers, the least taxation, the least regulation, or other such goals.

 

Negatives

No Morals, Regulation Required

However, not every effect of corporations is beneficial. Corporations are naturally amoral. Over time, they tend to lose any scruples which they formerly may have had. Thus, it becomes necessary, whenever corporations are allowed to exist, for governments to regulate their behavior. Corporations need to be regulated. They need to have limits set by the government for what they can and cannot do.

 

Anti-Competitive

Frequently, people who claim to be in favor of free markets will speak disdainfully of labor unions, believing that unions are merely cartels, meant to prevent hard-working people from reaping the rewards that are due them as well as raise the price of labor to unsustainable levels. Frankly, anyone who says this is ignorant, for corporations themselves are merely mercantilistic cartels which seek oligopsony power to force suppliers (including suppliers of labor, otherwise known as employees) to take artificially low prices. (Mercantilism: http://www.newworldencyclopedia.org/entry/Mercantilism#Domestic_policy).

 

Further, this anti-competitiveness extends to prices paid for raw materials, services, and even the land, buildings, and equipment that corporations rely upon to generate their profits with. Is it any wonder that so many suppliers for that big blue discount chain have closed their domestic production facilities in order to utilize foreign production facilities without enforceable environmental, labor relations, child labor, or wage and hours regulations.

 

However, because of something known as regulatory capture, over time, regulations often become tools that the regulated corporations use to stave off competition and restrict supplies, and even force customers to buy from “certified” companies instead of independents, leading to higher prices and higher (or at least, guaranteed) profits

 

Harms Economy

Corporations in general exist primarily to limit competition, eliminate free markets, and to achieve monopolies and monopsonies. This is because of a mandate to maximize shareholder returns, which generally means the highest possible profits (and a predictable level of profit each quarter). Profit is maximized when all or nearly all substantial competitors have been absorbed, put out of business, or enmeshed into a common cartel.

 

Again, it was Adam Smith who wrote something to the effect that the way to tell how well a nation’s economy was doing is to examine the lives of the common people. We don’t evaluate North Korea’s economy by the lifestyle its recently-deceased dictator led. Instead, we look at satellite photos that show that NK’s residents do not appear to have electricity available to run lights after dark.

 

Domestic mercantile economic policies hurt the general populace because they are deprived of the price reductions and product development that a modern market-based economy brings. Instead, people are confronted with government-endorsed monopolies. Remember: monopolies are always bad. Government-endorsed monopolies mean that the monopolist is supported and shielded by the government in its efforts to thwart competitive pressure, often even including suppression of replacement goods.

 

Furthermore, monopolies tend to be unresponsive to customers, the same way that monopsonies are unresponsive to suppliers. In either case, the corporation recognizes that the other party has nowhere else (or almost nowhere else) to go.

 

When De Beers controlled the market for diamonds, it did not matter what you dug up, if you wanted to sell it, you had to go through them. Likewise, if you wanted to buy, the merchants all got their diamonds from De Beers. (See Wikipedia for more about De Beers. http://en.wikipedia.org/wiki/De_Beers)

 

Copyrights And Patents Are Grants Of Monopoly

Copyrights and patents give one party exclusive control over the production, reproduction, or distribution of a particular product. Such laws give that party the power to invoke government powers to prevent and penalize the production, reproduction, or distribution of that particular product by competing enterprises.

 

Copyrights, Patents, And The Constitution

We have always been taught that these are good things. They are even enshrined in our Constitution. (See previous article here: http://lnxwalt.wordpress.com/2009/08/01/copyright-as-presently-defined-is-unconstitutional/ ) However, I am faced with the reality that monopolies are always bad for society as a whole. While I realize that the intention (as written in the Constitution) was that creators and inventors should enjoy monopolies for a short period of time, and that those rights to create, reproduce, adapt, modify, and distribute would thereafter belong to the body public, I question the benefit of the system as they apparently envisioned it.

 

The unconstitutional, corporate-controlled mess that these things evolved into should be scrapped.

 

Abusing Monopoly Power

The Robbers In Adamantium Armor (otherwise known as the Recording Industry Association of America, or RIAA) is comprised of mega-corporations in the recorded music industry. Together with their counterparts in movies (MPAA) and software (BSA), they have continued to seek extensions to the length of the term that copyrights last, they have sought the power to prevent reuse and remixing of content, and they have sought ever more draconian punishments against those accused (not necessarily proven) of infringement.

 

I haven’t time to document the many times that the copyright abuse industries have sought to sue or prosecute someone for illegally downloading content when it was clearly not possible (person had never had a computer, never had Internet connection, etc). Nor will I document all the DMCA takedown notices filed against dancing toddler videos because of a song in the background. These kinds of actions characterize a schoolyard bully, particularly one who knows some secret that the school principal does not want revealed.

 

These copyright abusers sought to obtain the right to shut down much of the Internet merely based on accusations. Former senator Chris Dodd, director of the MPAA, recently threatened to stop “campaign contributions” (better known as bribes) to politicians who refuse to stay bought. ( http://www.techdirt.com/articles/20120120/14472117492/mpaa-directly-publicly-… ) I think we have allowed these creeps to go too far. It is time to take the battle to Hollywood.

Counterattack

Joel Spolsky wrote something very relevant and very important since I started working on this post. It inspired me to write a little bit here: http://lnxwalt.wordpress.com/2012/01/22/on-sopa-pipa-and-copyright-maximalism-how-we-must-respond/ )

 

I agree with Mr. Spolsky. In fact, I am laying part of the foundation here for restricting or even eliminating copyrights and patents entirely.

 

No Or Limited Corporate-owned Copyrights and Patents; No Corporate Lobbying

First of all, a common-sense reading of the relevant section of the Constitution supports ending copyrights and patents–at the latest–soon after the individual creator or inventor dies. The founding fathers were very aware of corporations and monopolies, having fought a war in part because the British East India Company had obtained a monopoly on sales and distribution of tea in the new world. Yet, they refused to express any recognition that corporations had any claim to patents or copyrights, or even that corporations should be allowed to petition the government for redress of grievances (e.g., the right to lobby).

 

I believe this was intentional, and that the Constitution, properly interpreted, forbids lobbying, campaigning (e.g., the currently active “super-pacs”), and contributions by corporations and corporate-style entities. This, of course, means that the Supreme Court erred in the Citizens United case.

 

Mercantilism Failed 150-300 Years Ago; Let It Go

We have already seen that domestic mercantile policies harm the economy. They hurt individuals, families, and small businesses. Picking a certain group of businesses and shielding them from competition and changing tastes & technology is a fool’s errand that is destined to fail. In the meantime, it will hurt musicians, actors, writers, songwriters, photographers, artists, painters, inventors, and other creative individuals, because Hollywood is infested with corporations.

 

Copyrights and patents do not have a sound basis for continued existence.

 

As a FLOSS advocate (free/libre and open source software), people will say that copyright is what makes free software licenses (like the GPL and the Apache license) possible. Advocating for the end of copyright will necessarily end software freedom. To this, I say that most such licenses don’t even require that source be provided to end users. All other requirements of such licenses are meant to limit the impact of copyright. If copyright is eliminated entirely, merely the availability of source will grant users all the rights that any FSF or OSI approved license grants.

 

Well what about “innovation?” Aren’t copyrights and patents necessary for innovation to occur? In a word, no. Invention, or creation, occurs when someone sees a need and figures out how to fulfill that need. Innovation is merely the repurposing of those inventions. So when you read about patents on things like rounded corners on tablet computers, realize that all they did is take something that was already available in a competitors’ product and repackage it in their own. If you want to see more innovation, take down the barriers to repurposing, so that smaller, locally-owned businesses can compete without fear of legal conflicts with deep-pocketed corporations.

 

Well, without copyrights and patents, how will artists, musicians, inventors, and other creators be rewarded for their work? If you’re asking this question, you haven’t met many college art students, especially in the first few years after graduation, before they give up and try something different. Musicians know that most of them make their money on performing, just like they did before there was such a thing as recorded music. Painters make most of their money when people attend exhibitions of their works and purchase originals or prints to take home with them.

 

Inventors make money when their product is produced and sold in the market–or when a potential competitor-slash-investor buys the rights from them–and the end of patents will not change this.

 

The current system primarily benefits lawyers and corporations. Sure, big content companies lift a limited number of “stars” to unprecedented wealth. But their wealth comes at the expense of many thousands of equally talented performers who are not smiled upon by the corporate brass and never get the exposure or promotion. And even then, most of the reward for their work goes to the corporations’ wallets, not the performers’ wallets.

 

As I said, there is no sound basis for the existence of copyrights and patents.

 

Having said all this, I must admit that photographers will take a hit to their income once they can no longer depend on “stock photo” licensing. Even there, many of them are already suffering, as former customers (generally corporations) forego paid licensing and rely upon image-sharing sites (e.g., Flickr) for their photo needs.

 

This is just the beginning. There is much more to write, but I need to be at work in a few hours.

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On SOPA, PIPA, and Copyright Maximalism: How We Must Respond [Getting Rid of IP] Even Bad Guys Are Going ‘Open’

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