Showing posts with label Intellectual Property. Show all posts
Showing posts with label Intellectual Property. Show all posts

Saturday, 14 March 2026

"Economic theory has identified four sources of economic progress"

In January Javier Milei explained to a room of Davos delegates to the WEF forum how the world works, and how economic progress and prosperity happens. This is an excerpt. [Milei's speech was originally in Spanish, and the English version at the WEF website has been transcribed by AI. I have edited slightly it for smoothness and clarity. Emphases mine]

As early as 380 BC, Xenophon pointed out that economics is a form of knowledge that enables men to increase their wealth while arguing that private property is the most beneficial vehicle for the life of individuals.

Xenophon ... [first] highlight[ed] the benefit of private property by stating that the owner's eye fattens his cattle. [Or as the English saying has it: "It's the master's eye that makes the mill go"]... Xenophon then delves into the dynamic realm, noting that efficiency also entails increasing wealth: that is, increasing the available quantity of goods through entrepreneurial creativity, namely through trade, innovation, and recognising opportunity. ...

"[T]he institution of private property deserves a separate chapter. By focussing on it, the Austrian School of Economics from Mises, Hayek, Rothbard, Kirzner and Hoppe to Huerta de Soto has demonstrated the impossibility of socialism, thereby dismantling the illusory idea of John Stuart Mill that postulated independence between production and distribution; a form of academic deafness that led to socialism, and cost the world the lives of 150 million human beings -- while those who managed to survive the terror, did so in absurd poverty.

In line with [those writers'] previous remarks, and consistent with Xenophon's second [point], economic theory has identified four sources of economic progress.

First, there's the division of labour, which was illustrated by Adam Smith through the pin factory example. At its core, this is a mechanism that generates productivity gains, manifested as increasing returns. Although its limit is determined by market size, the size of the market is positively affected by this process. However, it is also worth noting that this virtuous process is not infinite and that its ultimate limit lies in the endowment of initial resources.

Second, there is the accumulation of capital, both physical and human. With regard to physical capital, the interaction between saving and investment is crucial, highlighting the fundamental role of capital markets and of the financial system in carrying out such intermediation. On the human capital side, the focus should not be limited to education alone, but should also include the development of cognitive capacities from birth, as well as nutrition and health, basic elements for gaining access to education and the labour market.

Third, there is technological progress, which consists in being able to produce a greater quantity of goods with the same amount of resources, or to produce the same output using a smaller quantity of inputs.

Finally, there is entrepreneurial spirit, or rather the entrepreneurial function, which, according to Professor Huerta De Soto constitutes the main driver of the economic growth process. Because, although the three factors mentioned are important, without entrepreneurs, there can be no production, and living standards would be extremely precarious.

In fact, the entrepreneurial function is not so much focused on short-term efficiency, but rather on increasing the quality of goods and services, which, in turn, leads to higher standards of living. On this basis, what truly matters is to expand the frontier of production possibilities to the maximum extent possible.

Thus, dynamic efficiency can be understood as an economy's capacity to foster entrepreneurial creativity and coordination.

In turn, the criterion of dynamic efficiency is inseparably linked to the concept of the entrepreneurial function, which is that typically human capacity to perceive profit opportunities that arise in the environment and to act accordingly to take advantage of them. This makes the task of discovering and creating new ends and means fundamental, driving spontaneous coordination to resolve market imbalances.

Moreover, this definition of dynamic efficiency proposed by Huerta de Soto coherently and appropriately combines Schumpeter’s idea of creative destruction with North's concept of adaptive efficiency.

Naturally, given the role of the entrepreneurial function, the institutions under which it develops are of vital importance. In this regard, both Douglass North and Jesús Huerta de Soto consider one of the key functions of institutions to be that of reducing uncertainty.

So, while North presents them as a set of humanly devised constraints that structure social interaction in a repetitive manner, Huerta de Soto considers that these institutions, conceived by human beings, emerge spontaneously from a process of social interaction without being designed by any single individual, and that they reduce uncertainty in the market process.

As Roy Cordato points out, the appropriate institutional framework is one that favours entrepreneurial discovery and coordination. Accordingly, within this framework, economic policy should aim to identify and remove all artificial barriers that hinder the entrepreneurial process and voluntary exchanges.

Given the decisive influence of institutions on economic progress, this directs our attention to the importance of ethics, as societies that adhere to stronger moral values and ethical principles in support of institutions will be dynamically more efficient and will therefore enjoy greater prosperity.

Accordingly, the fundamental ethical problem is a search for the best way to foster entrepreneurial coordination and creation.

Therefore, in the field of social ethics, we conclude that conceiving human beings as creative and coordinating actors entails accepting axiomatically the principle that every human being has the right to appropriate the results of their entrepreneurial creativity.

So the private appropriation of the fruits of what entrepreneurs create and discover is a principle of natural law because if an author were unable to appropriate what they create or discover, their capacity to detect profit opportunities would be blocked, and the incentive to carry out their actions would disappear. Ultimately, the ethical principle just stated is the fundamental ethical foundation of the entire market economy.

So, what we've just demonstrated is that free enterprise capitalism is not only just but also efficient and also that it is the one that maximises growth.

[Full speech here]

RELATED: Here's Per Bylund at the latest Ludwig Von Mises conference explaining that it's entrepreneurs, not politicians, who change the world for the better.


Thursday, 6 November 2025

"An AI developer who trains on pirated or paywalled material can’t launder infringement through the word 'training' "

"Every few months, an AI company wins a procedural round in court or secures a sympathetic sound bite about 'transformative fair use.' Within hours, the headlines declare a new doctrine of spin: the right to train AI on copyrighted works. But let’s be clear — no such right exists and probably never will. That doesn’t mean they won’t keep trying. ...
"Fair use is a case-by-case defence to copyright infringement, not a standing permission slip. ... But AI companies are trying to convert that flexible doctrine into a brand new safe harbour: a default assumption that all training is fair use unless proven otherwise. ...

That’s exactly backward. The Copyright Office’s own report makes clear that the legality of training depends on how the data was acquired and what the model does with it. A developer who trains on pirated or paywalled material like Anthropic, Meta and probably all of them to one degree or another, can’t launder infringement through the word 'training.' "

Thursday, 25 September 2025

He's right, you know

"Leading British artists including Mick Jagger, Kate Bush and Paul McCartney have urged [UK Prime Minister] Keir Starmer to stand up for creators’ human rights and protect their work ahead of a UK-US tech deal during Donald Trump’s visit.

In a letter to the prime minister, they argued Labour had failed to defend artists’ basic rights by blocking attempts to force artificial intelligence firms to reveal what copyrighted material they have used in their systems. ...

“ 'The government’s formal position has exhibited a shocking indifference to mass theft, and a complete unwillingness to enforce the existing law to uphold the human rights stipulated by the ICESCR, the Berne Convention and the ECHR,' said the letter. ...

"Elton John, one of the letter’s signatories, said government proposals to let AI companies train their systems on copyright-protected work without permission 'leaves the door wide open for an artist’s life work to be stolen.' ”

Saturday, 13 September 2025

Never trust a lawyer ...

 ... even when they're (supposed to be) on your side.

Ted Gioia has the breaking news:

Authors win a big lawsuit against AI—but the judge says they may not be able to trust their own lawyers. 

He explains that the high-tech plagiarism modus of these "large-learning models" (LLMs) simply means that the models are "trained" on thousands of books, and millions of articles and blog posts. All written by an actual person. A person holding copyright in that work.

So when authors, in a class action, won an ironclad case again AI company Anthropic for violating their copyrights ...

 "some thought that this might result in “more than a trillion dollars in damages.” That would put Anthropic in bankruptcy and send a message to the entire AI industry: Don’t mess with creators!

Yay! 

But ...

Instead the lawyers negotiated a quick deal for $1.5 billion—and Anthropic didn’t even need to admit wrongdoing. But the penalty was so light that the judge has refused to accept it. Instead he expresses concern that the settlement will be forced “down the throat of authors.”

How is this possible? Their own lawyers negotiated the deal.

But listen to the judge. He admits that class members often “get the shaft” in situations like this. And he adds: “I have an uneasy feeling about hangers-on with all this money on the table.”

Simply put, lawyers want their commission more than they care about their clients. Or their case.

This is the sad reality of copyright litigation to protect human creators. My copyrights as an author have been violated and I don’t want a cash settlement—I want the stealing stopped. I want a Napster-style shutdown, and there’s legal precedent to support this. But what lawyer can I trust? They make money on a cash settlement, not on stopping AI use of my book.

Expect to see similar settlements in music copyrights. A few people will get a nice payday, but nothing else will change.

Wednesday, 10 September 2025

15 YEARS AGO: Getting property rights right: 'Mixing my labour'?

 Here's a NOT PC post from fifteen years ago correcting a major error: the importance and defence of your rights in property.

Despite scoring well in international surveys, which manage to award NZ high scores for property rights despite any real support, a recent Treasury report acknowledged "New Zealand is distinguished by having among the weakest protection of private rights in the OECD, a history of confiscation of private property rights, and a long-standing failure to recognise the protection of the basic human right of property rights."

On the rare occasion that property rights are mentioned, or even more rarely supported, proponents will talk about the rights being derived from something called "mixing one's labour" with the property in question. 

I hate to dump on John Locke, who famously made that claim, but that's no more accurate than Karl Marx's misbegotten notion that value is derived by the amount of physical labour mixed with a thing ...

WHERE DO PROPERTY RIGHTS come from? And what did John Locke get right?

It’s important to remember that the concept even of individual rights “is so new in human history that most men have not grasped it fully to this day.”  Indeed, only two centuries before Europeans arrived in New Zealand, to most Europeans as well they remained a complete mystery.

In accordance with the two theories of ethics, the mystical or the social, some men assert that rights are a gift of God—others, that rights are a gift of society. But, in fact, the source of rights is man’s nature. 
    “The Declaration of Independence stated that men ‘are endowed by their Creator with certain unalienable rights.’ Whether one believes that man is the product of a Creator or of nature, the issue of man’s origin does not alter the fact that he is an entity of a specific kind—a rational being—that he cannot function successfully under coercion, and that rights are a necessary condition of his particular mode of survival. 
    “The source of man’s rights is not divine law or congressional law, but the law of identity. A is A—and Man is Man. Rights are conditions of existence required by man’s nature for his proper survival. If man is to live on earth, it is right for him to use his mind, it is right to act on his own free judgment, it is right to work for his values and to keep the product of his work. If life on earth is his purpose, he has a right to live as a rational being: nature forbids him the irrational.” 

Flawed beginnings

But where do rights come from, what is their source? Some men assert that rights are either a gift of God or a gift of society -- that men are either “endowed by their Creator with certain unalienable rights,” or are endowed by legislators with certain contingent rights that they may alienate at any time of their choosing.

Neither is particularly compelling on its own.

Neither is it enough to say that because we own our bodies, then we must therefore also own all the products of our bodies—it should be obvious this is a species of begging the question.  Not to mention tremendously confusing for our bodily wastes.

And it’s not correct to say that the source of property is that the concept makes goods “non-rivalrous” –since this confuses a consequence for a cause: everyone knows whose goods are whose because folk do have various rights in those goods. But that doesn’t explain why they do.

John Locke famously argued that we acquire rights in the property with which we mix our own labour:

Though the Earth, and all inferior Creatures be common to all Men, yet every Man has a Property in his own Person. This no Body has any Right to but himself. The Labour of his Body, and the Work of his Hands, we may say, are properly his. Whatsoever then he re-moves out of the State that Nature hath provided, and left it in, he hath mixed his Labourwith, and joyned to it something that is his own, and thereby makes it his Property. It being by him removed from the common state Nature placed it in, it hath by this labour something annexed to it, that excludes the common right of other Men. For this Labour being the un-questionable Property of the Labourer, no Man but he can have a right to what that is once joyned to, at least where there is enough and as good left in common for others.

You see immediately that, right from the off, Locke virtually assumes his own conclusion: that every Man has a Property in his own Person means the concept of Property is already assumedBut he does take it some way further.

But what exactly does it mean to say that we have mixed our labour with something? Locke gives a 3-stage process for this:

  1. I remove something from the State that Nature hath provided, and left it in
  2. I mix my labour with it 
  3. By so doing, I “join to it” something I already own.

Thus and so, the thing I first espied in nature and then worked with is now mine. But that still leaves many questions.

  • First, why did I choose those particular things to remove from nature? What about them made them so special?
  • What does it mean to “mix my labour” with something? Does dropping my ham sandwich into a concrete block, asks Jeremy Waldron, make that block mine once it hardens? 
  • How much mixing might be necessary? Would walking across an uninhabited continent make it mine, as some Australian aboriginals have claimed?
  • What exactly do I “join to it”? Something tangible? Or, as Karl Olivecrona contends, something intangible like some “spiritual ego”?
  • If something tangible, then may it at some stage be removed? If something intangible (spiritual and perhaps permanent), must ownership rights continue in perpetuity, as tangata whenua sometimes says they do?
  • And why isn’t mixing what I own with what I don’t own a way of losing what I do own, asks Robert Nozick, rather than a way of gaining what I don’t? 

If I own a can of tomato juice and spill it in the sea so that its molecules (made radioactive, so I can check this) mingle evenly throughout the sea, do I thereby come to own the sea, or have I foolishly dissipated my tomato juice?

Fortunately, Locke himself gives some guidance. He gives examples of “mixing labour”: gathering nuts, growing vegetables and fruits, mining ore, drawing water, killing a deer, catching fish, hunting a hare, cultivating land for farming, sewing clothes, baking bread, felling timber, fermenting wine. (Never forget fermenting wine.) So labour is in this sense a goal-directed productive activity – “a rational (or purposeful), value-creating activity,” argues modern-day Lockean Stephen Buckle. “Tis Labour then which puts the greatest part of Value upon Land,” says Locke, “without which it would scarcely be worth any thing: ‘tis to that we owe the greatest part of all its useful Products.” In other words (the words of Adam Mossoff, from whom this short summary comes), 

Labour creates valuable products—and turns worthless land into valuable real estate—because “labour” in this context means production.

And production in Locke’s context is a moral virtue.

If it is a moral obligation for people to preserve themselves, then it follows as a corollary that the means of this preservation is a moral virtue. For mankind, the means of survival are produced goods, such as shelter, clothing and food. Production therefore is the moral action by which a man fulfils his fundamental moral duty: preservation of his life.

Labour in this context means production. And production means a rational (or purposeful), value-creating activity. The result being the fulfilment of a moral duty: the preservation of the labourer’s life.

But these are the words of two modern-day interpreters trying to understand Locke’s infelicitous metaphor, not those of Locke’s himself—which are nowhere near as clear. And they still don’t get us fully down to the root of our cause for which we’re searching.

What is the real root of your rights in property?

The real root of rights

THE ROOT OF ALL RIGHTS is the human need to take action to survive, and the means by which human beings each elect to achieve it. 

Individual rights are ultimately based on the needs of man’s life—they recognise man as a causal agent in his life, and frame the “moral space” within which he may take the actions as of right that are necessary to sustain it.  Unlike other animals we cannot survive as we come into the world; in order to stay alive and to flourish we each need to choose our own means of survival and flourishing (this needing to be first identified before it can be acted upon), and then to produce and to keep the fruits of our production (this needing to be kept so as to make our survival plan worthwhile). If our minds are our means of survival – as Julian Simon used to say, our Ultimate Resource – then property is the result of applying the creative potential of our minds to reality in order to enhance and promote our lives and those we love and interact with.

Other animals survive by acting automatically, instinctively; man survives by using his mind. Animals survive by repeating their actions of the past, by doing what worked yesterday; man survives by by looking towards the future, by using reason.

The protection of individual rights makes the world safe for reason.

The influence of reason shows up in the development of the individual’s conceptual ability to give a sense of present reality to his life in decades to come, and in his identification of himself as a self-responsible causal agent with the power to improve his life. This combination of ideas is what produced in people such attitudes as the realization that hard work pays and that they must accept responsibility for their future by means of saving. The same combination of ideas helped to provide the intellectual foundation for the establishment and extension of private property rights as incentives to production and saving. Private property rights rest on the recognition of the principle of causality in the form that those who are to implement the causes must be motivated by being able to benefit from the effects they create. They also rest on a foundation of secularism—of the recognition of the rightness of being concerned with material improvement.  
                                        (George Reisman, ‘The Philosophical Foundations of Capitalism and Economic Activity,’ in Capitalism)

So how exactly does reason “mix” with reality?  Consider that first question in the section above: why did I choose those particular things to remove from their “State of Nature”? What was it about those particular things made them so special? Carl Menger explains that what we are doing fundamentally in taking things from “the state of nature” is transforming things into goods on the basis of our human reason:

  Things that can be placed in a causal connection with the satisfaction of human needs we term useful things[“Nützlichkeiten”]. If, however, we both recognize this causal connection, and have the power actually to direct the useful things to the satisfaction of our needs, we call them goods
     “If a thing is to become a good, or in other words, if it is to acquire goods-character, all four of the following prerequisites must be simultaneously present: 
     1. A human need. 
     2. Such properties as render the thing capable of being brought into a causal connection with the satisfaction 
        of this need. 
     3. Human knowledge of this causal connection. 
     4. Command of the thing sufficient to direct it to the satisfaction of the need.  
        Only when all four of these prerequisites are present simultaneously can a thing become a good.

                                      (Carl Menger, ‘The General Theory of The Good,’ Principles of Economics)

This is the process by which resources are continually created where before there might have been none – how oil turned from bane to boon and desert turned to pasture. All four of Menger’s “prerequisites” require human reason—Menger saying bluntly that it is not primarily a property of the goods themselves that gives them good-character, “but merely a relationship between certain things and men, the things obviously ceasing to be goods with the disappearance of this relationship.” 

At the very first stage of productive labour then, we see that the “labour” that is most important here is not physical, but intellectual—intellectual effort directed outward to make nature more humane.

Labour is the means by which man’s mind transmits his designs and purposes to matter. It is man’s application of his bodily and mental faculties for the purpose of altering matter in form or location and thereby making the matter thus altered serve a further purpose. . .  
    The physical matter of which natural resources a composed is, of course, not made by man—it is nature-given. Nevertheless, the wealth-character of natural resources is man-made: it is the result of human labour. It is the result of the labour that discovers the uses to which the natural resources can be put, and of the labour that enable them to become accessible in ways that they can be used gainfully. Thus, it is labour [mainly of an intellectual character] that establishes the character of natural resources as goods, and thus as wealth.”  
                                    (George Reisman, ‘Wealth & Labour,’ Capitalism)

Hence:

The source of the goods-character of things is ultimately within us. Goods derive their character as goods by virtue of their ability to benefit human beings. 
                                     (George Reisman, ‘Wealth & Goods,’ in Capitalism)

We’re having a right-old relationship with our goods

And as Menger identifies above, it is the relationship that results between certain things and men that is the primary product of this intellectual labour. Because it’s important to recognise that property cannot simply be equated with objects. More accurately, property refers to a relationship—something tangible (or intangible) in which we have property.  “As long as this is understood, we may use the term ‘property’ to refer either to the object owned or to the relationship of ownership.” [Tara Smith.] It’s more accurate, strictly speaking, to say we have “property in” this or that than it is to say that this or that is property.

We frequently speak as if property denotes goods that a person owns. (‘Leave that alone, it’s my property.’)  Yet property does not refer to objects per se.  For an object is just that. . . An object qualifies as property only insofar as it stands in a certain relationship to some person.  
                                                (Tara Smith, Moral Rights & Political Freedom)

A man is said to have a right to his property, he may be equally said to have a property in his rights.  
                                    (James Madison)

Bear in mind that the right to property is a right to action, like all the others: it is not the right to an object, but to the action and the consequences of producing or earning that object. It is not a guarantee that a man will earn any property, but only a guarantee that he will own it if he earns it. It is the right to gain, to keep, to use and to dispose of material values. 
                                   (Ayn Rand, ‘Man’s Rights’)

And this relationship clearly does not accrue to every man. Because specific individuals have identified these specific things with which they have formed a goods-relationship –those goods being perhaps part of some multi-period production plan requiring the certainty that can only be given by right.

Because, you see, the stuff that sustains human life all has to be createdgoods have to be created--wealth has to be created.  All the wealth in the world that now exists in the world had to be created.  The very act of creating new wealth brings it into a property relationship with the creator.  

Because when we create new wealth, we create new valuesThose new values have an owner.

Individuals do not possess property rights simply because material goods are part of what life requires.  The other essential leg of the case stems from the origin of goods’ value.  
                                  (Tara Smith, Moral Rights & Political Freedom)

So the reason new values have an owner, is because without that owner those new values wouldn’t exist.

Mixing labour? Or rewarding good judgement.

So to return to our start and then reach a conclusion. John Locke’s brilliant analysis of how property rights are applied is undercut by his flawed argument for their justification—and particularly by his flawed metaphor of labour-mixing.  Tibor Machan amends the flaw and concludes as I have here that the fundamental justification for property rights is an entrepreneurial one--not based on a “labour theory of value,” where labour is identified only on its purely physical component, but on the crucially important identification of the role of the mind in production

It’s in this sense that we can understand Ayn Rand’s saying that at root “all property is intellectual property.”

John Locke advanced the theory that when one mixes one’s labour with nature, one gains ownership of that part of nature with which the labour is mixed. Thus, for example, if I gather wood from the forest for a fire, or for materials to build a shelter, I have a ‘natural right’ to what I have gathered, inasmuch as I have ‘mixed my labour’ with it and to that extent put some of myself into it. Since I have a self-evident right to my own body, including my labour, that part of nature that includes myself (i.e., my labour) is also mine. Though Locke held that nature is initially a gift from God to us all, he argued that once we individually mix our labour with some portion of it, it becomes ours alone.  
    This idea, though perhaps commonsensically compelling when limited to simple examples of physical labour such as gathering wood, has not carried wide conviction, mainly because the idea of ‘mixing labour with nature’ is too vague. Does discovering an island count as an act of labour—never mind ‘mixing’ one’s labour? Does exploring the island? Fencing it in? Does identifying (discovering) a scientific truth count as mixing labour with nature? What about inventing a new device based on scientific information available to all? Or trade—should the act of coming to an agreement count as mixing one’s labour with something of value? Challenging examples to Locke’s principle abound.  
    A revised Lockean notion has been advanced in current libertarian thought by way of a theory of entrepreneurship, an idea advanced at about the same time by philosopher James Sadowsky of Fordham University and by economist Israel Kirzner of New York University. The novelist-philosopher Ayn Rand, perhaps the modern era’s most fervent advocate of capitalism based on a theory of the inalienable individual right to life, liberty, and property, also emphasised the moral role of individual judgment and initiative or entrepreneurship. 
    “According to the entrepreneurial model, it is the judgment—no small matter in human affairs where instincts play hardly any role—that fixes something as possessing (potential) value (to oneself or others); and therefore the making of this judgment and acting on it—the alertness and attentiveness of it all—is what earns oneself the status of a property holder. The rational process of forming a judgment is neither automatic nor passive; neither does the process involve more than a minimum overt physical effort, but it is an act of labour nonetheless. What gives the judgment its moral significance is that it is a freely made, initiated choice involving the unique human capacity to reason things out, applied to some aspect of reality and its relationship to one’s purposes and life goals. One exerts the effort to choose to identify something as having potential or actual value. This imparts to it a practical dimension, something to guide one’s actions in life. Whether one is correct or not in any given instance remains to be seen, but in either case the judgment brings the item under one’s jurisdiction on something like a “first come, first served” basis.  
    For example, assume that George identifies some portion of unowned land as being of potential value. Having made this judgment, George now has rightful jurisdiction over the property, so that others may not (rightfully) prevent him from exploring it for oil or minerals, or simply using it to build a museum or a private home. His judgment may have been in error: the land may turn out to be infertile or otherwise unsuitable for his purposes. Even so, given that people require for their lives a sphere of jurisdiction, by having first made and acted upon the decision to select the land, he has appropriated it in a way that cannot be objectionable—indeed, is a prudent effort, at least.
  
                                        (Tibor Machan, ‘The Right to Private Property’)

Property creates new value

So ultimately, what we’re creating with our good judgement is new values.  By identifying and rearranging what nature has given use, we raise materials from a lower value (in relation to us) to a higher value (in relation to us); they move from being things to goods, from being materials to being resources. It is their creation as new goods that is the economic component. It is their creation as new values that is the moral component.

    Consider those things that people hold as property.  What makes the possession of these things desirable is that they serve human purposes. . .  All the things that individuals own … are valuable insofar as they contribute to the fulfilment of some purpose. . .  
    The point is, the goods that individuals own are valuable because of individuals’ efforts. [Individuals had to figure out, for example, that coal could be burnt to produce energy, how it might do so, what ends this might accomplish, and then proceed to locate, extract, transport, and burn coal under suitable conditions to serve those ends. Individuals had to figure out that rubber could be converted into tires, how to do so, why that might be useful, and proceed to harvest and treat the rubber in order to make it serve that function.] These goods are not intrinsically valuable.  Their value is not buried within them, like gifts in boxes, simply awaiting our discovery.  Things’ desirability does not precede individuals’ moulding resources to accomplish various purposes.  It is individuals’ deliberate employment of materials to serve certain needs that supplies things’ value.  Before that human contribution, naturally available resources hold merely the potential to be of value to people, if they are tapped in appropriate ways.  
    The relevance of all this to the defence of property rights is straightforward.  If objects’ value is the result of individual efforts, them objects are valuable only because particular individuals have worked in constructive ways to make things serve some ends.  When this realization is teamed with the egoistic premise that a person is entitled to live for her own benefit, it becomes clear that the value a person creates should be hers to keep and control.   
    Since human effort creates the value that any object possesses—since individuals are responsible for all of a thing’s value—it is appropriate to recognise property rights belonging to the individuals who generate the relevant value.  If a person is entitled to act to promote her own eudaimonia and through her actions creates something that is valuable to her, we have no grounds for denying her right to that product.  
                                 (Tara Smith, Moral Rights & Political Freedom)

Let’s spell out that last again: 

  • Individuals are responsible for all of a thing’s value.
  • that value is a recognition that these things serve individuals’ purposes 
  • it is appropriate to recognise property rights belonging to the individuals who generate the relevant value.  
  • If a person is entitled to act to promote her own eudaimonia and through her actions creates something that is valuable to her, we have no grounds for denying her right to that product.

As we see, this entrepreneurial argument for property is very far removed from the simple notion of “mixing one’s labour.”

And as we saw yesterday, and as explained especially by Ayn Rand and the Austrian economists, it is not just the individual who benefits from that right – though it is not the primary justification of any theory of rights, there is a general benefit from the private ownership of the means of production that can be achieved no other way.  Because in the same way that Thomas Edison’s cleaning lady benefits in her wage packet from the enormous productivity of her employer, so every individual in a division-of-labour society benefits from the creation, production and trade of these new values.

And that is good. And right.

Wednesday, 21 May 2025

Elton John: A.I. copyright changes are "criminal" — "committing theft" from artists.

It's been a very long time since I've praised Elton John ...

.... okay, in truth I've never praised the bald, bland, over-played jingle-maker.

But this morning, I come to praise Mr John, not to berate him.

The issue is so-called artificial intelligence (AI). And the rights of "content creators," from whose content the "learning models" steal without either attribution or payment.

The US is facing what Trump calls a "Big Beautiful Bill" that will add a staggering $3.8 trillion to the national debt. It also includes a 10-year exemption from regulation for artificial intelligence (AI)— a "safe harbour [that] would give Big Tech another free ride on the backs of artists, authors, consumers, all of us and our children." (No coincidence that Trump fired Shira Perlmutter, the Register of Copyrights, "less than a day after she refused to rubber-stamp Elon Musk’s efforts to mine troves of copyrighted works to train AI models." This, just after the Copyight Office finalised their report they've been making for 2+ years, concluding that Generative AI trained on Copyrighted works is probably NOT "Fair Use." )

Similar legal protection for theft of copyrighted works is being introduced in the UK, where Elton John has (correctly) branded proposed AI copyright changes there as "criminal" and accused officials (again, correctly) of "committing theft" from artists.

Should the government proceed with the plans allowing AI firms to use artists' content without paying, they would be "committing theft, thievery on a high scale," the music legend said. 

He's right, you know. Exempting 'Big Tech' from complying with copyright law simply hands the creative output of every individual to AI companies. 

For free.

"The danger is for young artists, they haven't got the resources to keep checking or fight big tech," John said in a BBC interview on Sunday. "It's criminal and I feel incredibly betrayed."

Betrayed because he supported Starmer on the back promises to support young musicians. Still, it's the first time I've felt sympathy for the world-class purveyor of middle-class muzak.  Because even tedious tunes best used for sleep still need to be written by someone before they'e copied by a prowling plagiarising-information-synthesis system (PISS) — and, if the plagiarising process is legalised, then every creator's work becomes fair game for misappropriation,

John's statements come in response to a controversial proposal that would ease copyright laws in the country, allowing AI developers to train models on any creative works to which they [currently] have lawful access. ...

Concerns around artist permission and compensation guarantees have brought John alongside an alliance of artists to gather support in an open letter to help warn of how the government's planned changes could affect creators.

The artists are calling on Prime Minister Keir Starmer to back amendments filed by Baroness Beeban Kidron over the so-called Data (Use and Access) Bill, citing an urgent need for "transparency over the copyright works ingested by AI models."

The open letter was signed by notable figures like Paul McCartney, Eric Clapton, Kazuo Ishiguro, Ed Sheeran, and Dua Lipa, along with over 400 signatories from groups including the National Union of Journalists, Getty Images, and Sony Music Publishing. ...

McCartney told the BBC that the proposed changes could disincentivise writers and artists and result in a “loss of creativity.”  

The former Beatle said: “You get young guys, girls, coming up, and they write a beautiful song, and they don’t own it, and they don’t have anything to do with it. And anyone who wants can just rip it off.”

“The truth is, the money’s going somewhere … Somebody’s getting paid, so why shouldn’t it be the guy who sat down and wrote Yesterday?”
“We’re the people, you’re the government. You’re supposed to protect us. That’s your job. So you know, if you’re putting through a bill, make sure you protect the creative thinkers, the creative artists, or you’re not going to have them.” ...

In December 2024, McCartney ... signed a petition, alongside actors Julianne Moore, Stephen Fry and Hugh Bonneville, stating that “unlicensed use of creative works for training generative AI is a major, unjust threat to the livelihoods of the people behind those works, and must not be permitted.”

John told the Sunday Times that he felt “wheels are in motion to allow AI companies to ride roughshod over the traditional copyright laws that protect artists’ livelihoods." 

This will allow global big tech companies to gain free and easy access to artists’ work in order to train their artificial intelligence and create competing music. This will dilute and threaten young artists’ earnings even further. The musician community rejects it wholeheartedly.”

Last week, disagreements over the Data Bill raised concerns about whether AI companies should disclose the data used for training models, as legislators pushed for stricter rules to help creators determine if their work was scraped.

However, the House of Commons has rejected certain amendments proposed by the House of Lords, including those requiring AI firms to obtain permission before using copyrighted materials.

It's said that it's no big deal. That any man's work is public property. That artists have always "borrowed" from each other.
Artists have been learning from each other for centuries. When you create, you expect that other artists will learn from you. You learn from myriad sources, including active & passive learning from other art, studying textbooks, and taking lessons. Much of this you (or someone) pays for, supporting the entire ecosystem. 
In generative AI [however], commercial entities valued at millions or billions of dollars scrape as much content as they can, against creators’ will, without payment, making multiple copies along the way (which are subject to copyright law), to create a highly scalable competitor to the training data. It is beyond belief that people suggest these should be treated the same. I feel increasingly confident that people only use this argument because other arguments for gen AI scraping are, incredibly, even worse.

As a creator himself, of tunes for which people willingly (and unaccountably!) pay money, Elton John recognises that the Bill “will allow global big tech companies to gain free and easy access to artists’ work in order to train their artificial intelligence and create competing music. This will dilute and threaten young artists’ earnings even further. The musician community rejects it wholeheartedly.”
"We're complaining about people's legacy, whether they're young writers, whether they're young playwrights, journalists, whatever; some people aren't like me, they don't earn as much as I do, but when they're creative and it comes from the human soul and not a machine — because a machine isn't capable of writing anything with any soul in it — [then you're going] to rob young people of their legacy and their income.

"It's a criminal offense, I think.

“I think the government are just being absolute losers - and I’m very angry about it, as you can tell.

“Big tech has so much money - and if you’re a young person and you’re fighting big tech, good luck. 

“I want the government to see sense; I want it to come back on our side. Because if they don’t, I’m going to feel like a suffragette.”
AI's developers have created something themselves. That's clear. But their creation, as they know, is an industrial-scale process for scraping copyrighted content, while leaving the artist's soul behind.
A hallmark of the AI developers is that they routinely discount, or even detest, the artistic soul, going so far as to both ignore it and then try to claim all of its enduring, exalted riches for themselves. They foolishly value mere money and market caps, whence, over the long term, it is the soul alone that is the best long-term investment, as the soul alone is immortal. It is the artist and creator who invests in the soul, it is the artist and creator who risks it all to express their vision, and it is the artist and creator who thus naturally and rightfully owns their art, and who owns the right to profit from it. ... 
“Hell is the soulless place where all art, music, literature, film, philosophy, religion, history, science, and poetry are generated by AI. Even Dante would be horrified.”  
The elephant in the room is that AI does nothing well, not even cheating. AI can only cheat as well as its creators teach it to cheat.


 

Friday, 2 August 2024

"What the U.S. system did was to democratise invention and innovation"


"The problem we have globally and historically is that innovation has usually occurred as a one-off, maybe as a flash of brilliance, but it hasn’t been able to be sustained or consistent because for most of human history and in most places in the world today, the conditions were not present to enable an investment in sustained and transformative innovation. ... What the U.S. system did was to democratise invention and innovation, to say we’re going to make rights available to anyone who can do something innovative and allow them to invest themselves, not as a hobby, not as a sideline, but as a living. ...

"[F]ive distinguishing features ... make the U.S. unique:
  • the American economic approach enables risk taking and failure, fosters competition and ensures goods and services can cross state lines, 
  • provides property rights, 
  • is based on the rule of law, and 
  • establishes markets.
  • mobilising resources and making them available for investment in new areas
“You have to set those conditions where you can access all of that private capital. And then you can use it for the high risk, the high-end deliverables that really change the world. You know, those technologies for energy that are going to tackle climate change, the new cures for HIV and cancers, the new modes of food production that will, you know, feed 8 billion plus and growing people around the world.
    "The rule of law in the United States has allowed markets to operate effectively and with dynamism because 'it took all the friction out of the system.' ... When we fail to provide rule of law whether it’s in a store or at the border or in intellectual property then the system starts to break down and we don’t have those dynamic benefits of a market economy.”

~ Patrick Kilbride in conversation with Gene Quinn on 'The Case for Market Economics, Innovation and Rule of Law'

Thursday, 2 May 2024

In intellectual property, words matter

Photo by Irina_drozd

"Words matter. ...  Intellectual Property (IP) policy can be ill-served by some habitually used but ... not descriptively accurate vocabulary. ...   
    "Here, in my view, are a few too frequently used and usually misleading words [that] misrepresent the IP system and are even less relevant to the economics of innovation and creativity. The use of these words has real-world consequences ...
    "Fortunately, there are better word choices available. Here are a few terms I propose should be permanently 'out' and potential replacements that I believe would help to counteract anti-IP narratives....

OUT: Reward (Synonyms: Bonus, Prize)
Even when promised in advance of the result, a reward is generally understood to be a discretionary bonus. This is distinctly different than a “right” that is consistently and reliably available whenever the necessary conditions are met.

IN: Right (Synonyms: Title, Claim)

Defined as, “Something that one may properly claim as due.” Also, “the property interest possessed under law or custom and agreement in an intangible thing….” ...

OUT: Incentive/Incentivise (Synonyms: Induce, Incite)

Provides “a stimulus, a motive, a goad, or a bonus.” Also, “To make someone want to do something… especially by offering prizes or rewards.”

IN: Enable (Synonyms: Facilitate, Empower, Equip)

“A person or thing that makes something possible.” IP rights enable allocation of resources to long-term, resource-intensive, high-risk investments. ...

OUT: Monopoly (Synonyms: Cartel, Syndicate, Oligopoly)

“A single seller in a market or sector with high barriers to entry, such as significant startup costs, whose product has no substitutes.” Does an exclusive ownership right represent a monopoly? More below.

IN: Ownership (Synonyms: Title, Proprietorship)

“The act, state, or right of possessing something.”

IN: Exclusive/Exclusivity (Synonyms: Incompatible, Undivided)

“Unable to exist or be true if something else exists or is true.” “Excluding or having power to exclude others, or something that is limited to possession, control, or use by a single individual or group.” ...
"The habitual – and I believe largely unthinking – use of the words 'reward,' 'incentive,' and 'monopoly' among IP professionals has contributed to fundamental misperceptions of IP rights and the IP system. These contribute to systemic misunderstandings of the economics of innovation and creativity. Dropping these words from our IP vocabulary will make policy discussions more accurate and understandable for policymakers, economists, and the public, and better policy decisions will result...."
~ Patrick Kilbride from his article 'Words Matter: A Proposal to Change the Vocabulary of IP'

Tuesday, 19 March 2024

Separating Information from Disinformation: Threats from the AI Revolution




In part one of this three-part series on so-called Artificial Intelligence (AI), our guest poster Per Bylund explained that AI's so-called large language models will not (cannot) evolve into artificial general intelligence as there is nothing therein that will give rise to consciousness. In part two he explained that neither is there any economic threat from AI —which doesn’t mean that AI will have no impact on the economy.
In part three, this final part, he distinguishes between what you should know, what you should ignore, and what real threats do exist ...

Separating Information from Disinformation: Threats from the AI Revolution

by Per Bylund

Artificial intelligence (AI) cannot distinguish fact from fiction. It also isn’t creative or can create novel content but repeats, repackages, and reformulates what has already been said (but perhaps in new ways).

I am sure someone will disagree with the latter, perhaps pointing to the fact that AI can clearly generate, for example, new songs and lyrics. I agree with this, but it misses the point. AI produces a “new” song lyric only by drawing from the data of previous song lyrics and then uses that information (the inductively uncovered patterns in it) to generate what to us appears to be a new song (and may very well be one). However, there is no artistry in it, no creativity. It’s only a structural rehashing of what exists.

Of course, we can debate to what extent humans can think truly novel thoughts and whether human learning may be based solely or primarily on mimicry. However, even if we would—for the sake of argument—agree that all we know and do is mere reproduction, humans have limited capacity to remember exactly and will make errors. We also fill in gaps with what subjectively (not objectively) makes sense to us (Rorschach test, anyone?). Even in this very limited scenario, which I disagree with, humans generate novelty beyond what AI is able to do.

Both the inability to distinguish fact from fiction and the inductive tether to existent data patterns are problems that can be alleviated programmatically—but are open for manipulation.


Manipulation and Propaganda


When Google launched its Gemini AI in February, it immediately became clear that the AI had a woke agenda. Among other things, the AI pushed woke diversity ideals into every conceivable response and, among other things, refused to show images of white people (including when asked to produce images of the Founding Fathers).

Tech guru and Silicon Valley investor Marc Andreessen summarised it on X (formerly Twitter): 
“I know it’s hard to believe, but Big Tech AI generates the output it does because it is precisely executing the specific ideological, radical, biased agenda of its creators. The apparently bizarre output is 100% intended. It is working as designed.”
What this demonstrates is that there is indeed a design to these AIs beyond the basic categorisation and generation engines. The responses are neither perfectly inductive nor generative. In part, this is necessary in order to make the AI useful: filters and rules are applied to make sure that the responses that the AI generates are appropriate, fit with user expectations, and are accurate and respectful. Given the legal situation, creators of AI must also make sure that the AI does not, for example, violate intellectual property laws or engage in hate speech. AI is also designed (directed) so that it does not go haywire or offend its users (remember Tay?).

However, because such filters are applied and the “behaviour” of the AI is already directed, it is easy to take it a little further. After all, when is a response too offensive versus offensive but within the limits of allowable discourse? It is a fine and difficult line that must be specified programmatically.

It also opens the possibility for steering the generated responses beyond mere quality assurance. With filters already in place, it is easy to make the AI make statements of a specific type or that nudges the user in a certain direction (in terms of selected facts, interpretations, and worldviews). It can also be used to give the AI an agenda, as Andreessen suggests, such as making it relentlessly woke.

Thus, AI can be used as an effective propaganda tool, which both the corporations creating them and the governments and agencies regulating them have recognised.

Misinformation and Error


States have long refused to admit that they benefit from and use propaganda to steer and control their subjects. This is in part because they want to maintain a veneer of legitimacy as democratic governments that govern based on (rather than shape) people’s opinions. Propaganda has a bad ring to it; it’s a means of control.

However, the state’s enemies—both domestic and foreign—are said to understand the power of propaganda and do not hesitate to use it to cause chaos in our otherwise untainted democratic society. The government must save us from such manipulation, they claim. Of course, rarely does it stop at mere defence. We saw this clearly during the covid pandemic, in which the government together with social media companies in effect outlawed expressing opinions that were not the official line (see Murthy v. Missouri).

AI is just as easy to manipulate for propaganda purposes as social media algorithms but with the added bonus that it isn’t only people’s opinions, and that users tend to trust that what the AI reports is true. As we saw in the previous article on the AI revolution, this is not a valid assumption, but it is nevertheless a widely held view.

If the AI then can be instructed to not comment on certain things that the creators (or regulators) do not want people to see or learn, then it is effectively “memory holed.” This type of “unwanted” information will not spread as people will not be exposed to it—such as showing only diverse representations of the Founding Fathers (as Google’s Gemini) or presenting, for example, only Keynesian macroeconomic truths to make it appear like there is no other perspective. People don’t know what they don’t know.

Of course, nothing is to say that what is presented to the user is true. In fact, the AI itself cannot distinguish fact from truth but only generates responses according to direction and only based on whatever the AI has been fed. This leaves plenty of scope for the misrepresentation of the truth and can make the world believe outright lies. AI, therefore, can easily be used to impose control, whether it is upon a state, the subjects under its rule, or even a foreign power.

The Real Threat of AI


What, then, is the real threat of AI? As we saw in the first article, large language models will not (cannot) evolve into artificial general intelligence as there is nothing about inductive sifting through large troves of (humanly) created information that will give rise to consciousness. To be frank, we haven’t even figured out what consciousness is, so to think that we will create it (or that it will somehow emerge from algorithms discovering statistical language correlations in existing texts) is quite hyperbolic. Artificial general intelligence is still hypothetical.

As we saw in the second article, there is also no economic threat from AI. It will not make humans economically superfluous and cause mass unemployment. AI is productive capital, which therefore has value to the extent that it serves consumers by contributing to the satisfaction of their wants. Misused AI is as valuable as a misused factory—it will tend to its scrap value. However, this doesn’t mean that AI will have no impact on the economy. It will, and already has, but it is not as big in the short-term as some fear, and it is likely bigger in the long-term than we expect.

No, the real threat is AI’s impact on information. This is in part because induction is an inappropriate source of knowledge—truth and fact are not a matter of frequency or statistical probabilities. The evidence and theories of Nicolaus Copernicus and Galileo Galilei would get weeded out as improbable (false) by an AI trained on all the (best and brightest) writings on geocentrism at the time. There is no progress and no learning of new truths if we trust only historical theories and presentations of fact.

However, this problem can probably be overcome by clever programming (meaning implementing rules—and fact-based limitations—to the induction problem), at least to some extent. The greater problem is the corruption of what AI presents: the misinformation, disinformation, and malinformation that its creators and administrators, as well as governments and pressure groups, direct it to create as a means of controlling or steering public opinion or knowledge.

This is the real danger that the now-famous open letter, signed by Elon Musk, Steve Wozniak, and others, pointed to: “Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilisation?”

Other than the economically illiterate reference to “automat[ing] away all the jobs,” the warning is well-taken. AI will not Terminator-like start to hate us and attempt to exterminate mankind. It will not make us all into biological batteries, as in The Matrix. However, it will—especially when corrupted—misinform and mislead us, create chaos, and potentially make our lives “solitary, poor, nasty, brutish and short.”
Per Bylund is the Associate Professor of Entrepreneurship and Johnny D. Pope Chair in the School of Entrepreneurship in the Spears School of Business at Oklahoma State University. 
He is the author of three full-length books: How to Think about the Economy: A PrimerThe Seen, the Unseen, and the Unrealized: How Regulations Affect our Everyday Lives; and The Problem of Production: A New Theory of the Firm. He has edited The Modern Guide to Austrian Economics and The Next Generation of Austrian Economics: Essays In Honor of Joseph T. Salerno.
His article first appeared at the Mises Institute blog.

Friday, 17 March 2023

ECONOMICS: The Physical Fallacy


"Many of the products which create a modern standard of living are only the physical incorporation of ideas – not only the ideas of an Edison or Ford, but the ideas of innumerable anonymous people who figure out the design of supermarkets, the location of gasoline stations, and the million mundane things on which our material well-being depends. It is those ideas that are crucial, not the physical act of carrying them out. Societies which have more people carrying out physical acts and fewer people supplying ideas do not have higher standards of living. Quite the contrary. Yet the physical fallacy continues on, undaunted by this or any other evidence."
~ Thomas Sowell, from his 1980 book Knowledge and Decisions -- commented on here by Don Boudreaux

Saturday, 3 July 2021

"The artist brings something into the world that didn't exist before..."

 

"The artist brings something into the world that didn't exist before, and he does it without destroying something else."

~ John Updike, from Conversations with John Updike