Copyright Law and Utilitarianism
By Arnold Kling
Richard A. Epstein has written an interesting essay on copyright law. He concludes,
But for years now, my own private campaign has been to insist that the strength of the natural law theories rested on their implicit utilitarian (broadly conceived) foundations, which require some empirical evaluation of why given institutions promote human flourishing and through it general social welfare. Under those tests all legal rules are imperfect adjustments and tradeoffs between competing goods. Quite simply, any system of private property imposes heavy costs of exclusion. However, these costs can only be eliminated by adopting some system of collective ownership that for its part imposes heavy costs of governance. The only choice that we have is to pick the lesser of two evils. There is no magic solution for liberty or property that creates benefits without dislocations. But once we recognize that trade-offs are an inescapable feature of social activity, we could conclude that a sensible system of copyright is not such a bad trade-off after all.
Epstein says that a “sensible system” includes limited duration and fair use. In my mind, this begs the question of whether a “sensible system” includes lawsuits aimed at song-swappers.
I am reminded of this nifty analysis by Zimran Ahmed.
[The] market for music is $2,857M smaller than it would be in an efficient market. This is equivalent to a copyright tax rate of about 12% (income tax efficiency is about 20% I think). So, for CDs, you can claim each additional year of copyright costs society $2,857M in dead weight loss.
But this is just for a single year. Copyright currently lasts for authors life plus 70 years (and counting). So, let’s treat this as a 140 year annuity of $2,857M at a 5% discount rate. Calculating the present value gives you: 19.978 * $2,857M = $57,078M. This is the present value of the cost to society of a 140 year copyright tax.
My own view is that in the context of music, “copyright” is a phony issue. The real issue is the commitment of music companies to outdated technology–the CD–which after twenty years of Moore’s Law is a hopelessly inferior medium for distributing music. Because it allows music companies to impose huge deadweight losses on society in order to preserve their obsolete technology, copyright law does not meet the utilitarian standard for a “sensible system.”
For Discussion. How could government facilitate the adoption of innovative technology in music distribution without undermining private property and the incentive to create?