Against Intellectual Monopoly

would be enough to provide
an incentive equivalent to that currently provided by patents - ironically,
subsidies of nearly this level are already available in addition to patents,
especially in the pharmaceutical industry, as we documented in the previous
chapter.32 Indeed, the offensive sight of the government using taxpayers'
money to subsidize research and then awarding it a private monopoly
reaches absurd heights in academia, where in recent years the mantra of
private-public partnership has taken hold. A more ridiculous form of public
subsidy for private monopolies is hard to imagine.
    Like monopolies, subsidies can lead to rent seeking and have distortionary
effects, so they should scarcely be a first resort. Some economists, such as
Paul Romer, painfully aware of these negative side effects, have proposed to
avoid some of these distortions by narrowly targeted subsidies - for example,
to graduate students, who, the evidence suggests, are key instruments in the
process of innovation. Others, such as Andreas Irmen and Martin Hellwig,
suggest that broad subsides to investment in general- interest-rate subsidies,
for example - are likely to be the least distortionary. Yet others, such as
Michael Kremer, suggest that prizes awarded after the fact create greater
incentives to innovate. Nancy Gallini and Suzanne Scotchmer go further
and compare various subsidization methods in their recent work. Their
technical analysis is beyond the scope of this book, but the bottom line
remains: various intelligent forms of subsidizing basic research and even
applied invention exist, and an appropriate mix can be found that would
greatly improve upon patents and copyright.33
Social Norms
    Social norms are not a topic in which we are especially expert. Still, it is a
relevant topic: property rights are never enforced only by the law-and-order
system, or even by costly private monitoring of other people's behavior.
Broadly accepted and well-functioning property right systems rest also, one
is tempted to write primarily, on a commonly shared sense of morality. I do
not litter my neighbors' yard with all kinds of small pieces of garbage, not just
because they mayyell at me or prosecute me, but, first and foremost, because
I would be ashamed of myself for doing so. The same is clearly true for the
day-to-day enforcement of the "small" aspects of intellectual monopoly,
such as copying books, movies, and music, downloading materials from the
Internet, making copies of movies we own for friends to watch at home, and
so on and so forth. Plainly, enforcement of current intellectual monopoly standards is, to a large extent, a matter of which social norms are accepted
and will be accepted, and what is considered, by the average citizen, morally
acceptable or not.

    Eric Rasmusen has thought quite a bit, and quite originally, about the
issue of social norms and intellectual property. Consider one of his not-soparadoxical paradoxes:
    Video rental stores and libraries, of course, reduce originator profits and hurt
innovation, but that is a utilitarian concern. What is of more ethical concern is that
whenever, for example, someone borrows a book from the public library instead of
buying a book, he has deprived the author of the fruits of his labor and participated
in reducing the author's power to control his self-expression. Thus, if it is immoral
to violate a book's copyright, so too it would seem to be immoral to use public
libraries. Libraries are not illegal, but the law's injustice would be no reason for
a moral person to do unjust things. The existence of children's sections would be
particularly heinous, as encouraging children to steal.34
    By following the same commonsense logic, he comes to the following sensible conclusion:
    To entirely deter copying would require a norm inflicting a considerable amount of
guilt on copiers, since legal enforcement of copying by individuals is so difficult. To
partially deter it would be undesirable for two reasons. First, it would generate a large
amount of disutility while failing to deter the target misbehavior. Second, it would
reduce the effectiveness of guilt in other situations, by pushing so many people over
the threshold of being moral reprobates. At the same time, the benefit from deterring
copying by individuals, the increased incentive for creation of new products, is
relatively small. I thus conclude that people should not feel guilty about