A Look at Incentives
Tuesday, December 30th, 2008 by Patrick RossAs readers of this blog will know, I recently had an op-ed run in U.S. News & World Report on proposed decriminalization of unauthorized file-sharing against an op-ed by Lawrence Lessig, and I linked to both on this blog, although for some odd reason Professor Lessig on his blog chose only to link to his own editorial, ignoring mine.
I received no feedback on my arguments from the professor, but have received many unsolicited comments from others out there, and I’m grateful for each one. There is one I would like to focus on in particular, though. It is from an MIT-educated economist with a background in academia, think tanks and civil service. She is one of the smartest people I know, and has not professionally studied copyright industries or the economies within those industries, so she brings an unbiased approach to the subject.
She does consider herself a student of incentives, however. She wrote to me of the significant time she has invested in studying the role incentives play in the economy, and having read both editorials, she said this:
I agree with your point that the potential for profit creates incentives for creativity and innovation, and Prof. Lessing fails to provide an adequate explanation of how his proposed legal regime would incentivize writers and musicians to keep creating.
That is something I have written for some time, but I lack the advantage of being an accomplished economist. Instead, I am a creator who surrounds himself with creators, and the feedback I get from these artists and creators is that their legal rights over their works is a true incentive to create.
In my response to the economist, I said this:
Everywhere I go I meet artists who don’t feel entitled per se to be paid for their work; rather, they enjoy the right to pursue greatness in their work and seek the rewards important to them (money, acclaim, popularity, etc.). They cherish the right the law gives them to make choices as to which rewards to seek; copyright law enables those choices. It seems our whole society, and from my amateur perspective our economy, is built on freedom of choice, of both supplier and consumer. The Lessig camp focuses only on consumer choice, I try to focus on both, recognizing that encouraging supply helps satisfy demand.
Oh, readers of Professor Lessig’s piece will note he analogizes unauthorized file-sharing to sipping an alcoholic beverage during Prohibition. That is an argument he also makes in his book Remix and in media appearances promoting his book. Here is what the MIT economist had to say:
I think Lessing’s prohibition argument is specious. Prohibition was an outright ban on consuming or producing alcoholic beverages. The current legal regime is not a ban on consuming or producing music or other creative works, but a ban on “stealing” them.
I have ignored this argument of Professor Lessig because it just seems too silly to acknowledge, but the comments posted on US News & World Report suggest some are taking it seriously, so I’m glad to post this articulate rebuttal.
January 6th, 2009 at 12:03 pm
There is an important point about the incentive theory that I rarely see mentioned, but I think that it is really crucial. And that is to ask what, specifically, is that activity that the exclusive rights granted by the Constitution supposed to promote. The usual argument is that it promotes creativity: i.e., authors and inventors will create works because the exclusive rights granted by Copyright and Patent shows them that they can profit from their creation. While this is undoubtedly true, it misses an important element of the equation. The fact is that while the profit motive is surely important to many creators, many others also create works of authorship or inventions not to make money but because they have in innate urge to express their creativity. This fact is used by the copyleft to denigrate the incentive model, but the reality is that it is here that we can see what the exclusive rights of Patent and Copyright actually promote: the wider dissemination of these creative works. Because while it is true that many people may chose to paint, write poetry, or tinker with inventions in their garage for the sheer pleasure that they derive from those activities, it is the posibility of financial return from those activities that incentivises the creators to promote their work to the general public and not simply share it with family and friends. Thus the exclusive rights derived from the constitution promote Science and the Useful Arts not just by allowing creators to profit from their work, but by encouraging them to exploit their work by disseminating it as widely as possible, for the maximum profit.
And it is equally crucial to point out that while everyone (or, at least, many people) possess a certain degree of creative skill, there are a few extraordinary individuals who have the ability to create tens, hundreds or even more extraordinary works. For these individuals, we, as a society, should want them to be able to support themselves solely through their creative endeavors, so that they can devote their full efforts to creating and not have their creative activities relegated to a mere hobby, as such activities are for most of us.