Arnold Kling

Great Put-down

Arnold Kling, Great Questions of Economics
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Bob Frankston blogs a classic put-down of the movie industry lobbyist Jack Valenti arguing for hardware restrictions to prevent copying.

If $200,000,000 movies are so important, then Valenti should ask Congress for a direct payment. It's certainly better than creating the necessary mechanisms to police the use of bits.

This is an instance of the problem I discussed in Asymptotically Free Goods. When something costs very little (copying and distributing digital content), the cost of excluding people from using the good can be astronomical. We will pay a huge regulatory tax on computers and consumer electronic products if they have to meet the anti-copying specifications of the movie industry. In Dan Gillmor's words,

The movie studios would turn powerful PCs into little more than expensive DVD playback machines, crippling PCs for other valuable uses.
Instead, Frankston says, it would be cheaper to pay a direct tax to the government and have the government hand that money directly to movie creators.

Discussion Question. Could you actually develop a system in which movie companies were rewarded out of a central prize fund (perhaps based on the popularity of a movie), so that they did not have to worry about copying?

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