The Conservative Nanny State
Dean Baker writes, in his book The Conservative Nanny State: The conservative nanny state plays a big role in allowing high CEO pay, because the corporation is itself a creation of the government. While nanny state conservatives donít like to call attention to this fact, in a free market corporations do not exist. In a free market, individuals can form partnerships and engage in whatever trade and commercial relations they please, but they cannot establish a new legal entity that exists independently of the individuals who own it. Only a government can create a corporation as a legal entity with its own rights and privileges, the most important of which is limited liability. Isn't this a very interesting observation? The private "corporation" which is supposed to be an integral component of the "Free market" system is itself a creation of the government - the very entity whose intervention the laissez-faire supporters pretend to hate! The gist of Dean Baker's argument is this - supporters of private enterprise are big-time fans of the government - they routinely use government intervention to "tune" the market in such a way as to support their crusades of greed - all the time lying to the public that they are opposed to all forms of government "intervention" in the functioning of the market. Of course, conservatives donít own up to the fact that the policies they favor are forms of government intervention. Conservatives do their best to portray the forms of government intervention that they favor, for example, patent and copyright protection, as simply part of the natural order of things. This makes these policies much harder to challenge politically. The public rightfully fears replacing the natural workings of the market with the intervention of government bureaucrats. This stems in part from a predisposition not to have the government meddle in their lives. In addition, the public recognizes that in many cases the market will be more efficient than the government in providing goods and services. The author hits the nail right on the head here - it's hard to make people understand the stupidity of certain ideas when they feel that it is part of the "natural order" of things - rather than being artificial, human creations. The government is not obligated to award patent and copyright protection; it only makes sense if these are the best ways to promote innovation and creativity. In fact, this is exactly how the U.S. constitution discusses patents and copyrights. They are not listed as rights in the Bill of Rights, like freedom of speech or the free exercise of religion; patents and copyrights are implicitly referred to in Article 1, Section 8, where the Constitution lists the powers of Congress. The Constitution says, ďTo promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.Ē The Constitution does not say that Congress must issue copyrights or patents, it simply has the power to do so, as a means ďto promote the progress of science and useful arts.Ē If Congress determines that there are more effective ways to promote innovation and creativity then it is not obligated to allow copyrights or patents, just as it is not obligated to levy taxes, if it determines that the country does not need the revenue. Copyright and patent protections donít just make Bill Gates and Microsoft rich. They also make Michael Jackson, Britney Spears, and Arnold Schwarzenegger rich. Copyright and patent protection support a $220 billion a year prescription drug industry, a $25 billion medical supply industry, a $12 billion recorded music industry, a $25 billion movie industry, and a $12 billion textbook industry. According to the International Intellectual Property Alliance, industries that rely heavily on copyright and patent protection accounted for $630 billion of value added in 2002, almost 6 percent of the size of the economy. Without this nanny state intervention, the protected products (e.g. software, recorded music and videos, textbooks, prescription drugs, and high tech medical supplies) would be sold at a small fraction of their current price, or in many cases would be available at no cost over the Internet. The promoters of the conservative nanny state claim that we would not have any innovation or creative work without these forms of government intervention. This is not true. There are other ways to support innovation and creative work; the question is, which mechanisms are the most efficient ones? ......... Of course, the nanny state conservatives donít want anyone raising questions about patents and copyrights. They want to promote the conservative nanny state creationist myth that patents and copyrights are part of the natural order of things, or at least that the economy could not exist without them. Read the book - it's worth it! Note: Dean Baker is the author of an interesting paper. Also, check out this Slashdot entry.