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Let’s pause for a moment to contemplate the forest. Any government measure that inhibits competition—including from self-employment and worker-owned firms—harms consumers and workers by raising prices and reducing bargaining power. This doesn’t necessarily mean they are poorer than previously, but it means they may well be poorer than they would have been in a freed market.
IP in the Spotlight
Intellectual property deserves special attention. Property rules evolved to avert conflict and facilitate flourishing in society because physical objects, unlike ideal “objects,” are scarce and finite. Two people cannot wear the same pair of socks at the same time, but they can use “the same” idea at the same time. Ownership in ideas equates to control of people and their use of their own physical property.
I just wish to underscore the obvious monopolistic and anticompetitive effects of IP law, which by the way the U.S. government imposes on foreign countries as the price of access to our market. (Curiously, we call these “free trade” agreements.) Patent law has been romanticized as a protection for the independent inventor from big business, but in practice it accomplishes quite the opposite. Entrenched holders of patents can use the courts to bludgeon upstarts who act in ways the holders construe as patent infringements. The pooling of patents by big companies can create de facto cartels. This has a chilling effect on competition and innovation. (For more, see David Levine and Michele Boldrin’s free-market analysis, Against Intellectual Monopoly.)
One last word on IP: We live in an extraordinary time when in many industries the relative cost of physical capital is plummeting—think of what’s happened with computing power—and the relative value of know-how—human capital—is exploding. The value of many firms is now more in the minds of personnel than in the machinery. The departure of a couple of employees can represent a potential competitive challenge to an incumbent firm—unless it can control those employees through IP law.
Anger at Bankers
Occupy Wall Street has the banking establishment in mind especially when it rails against the 1 percent. Steve Jobs was a 1 percenter, and so are many sports and entertainment figures, but they are not the objects of anger. Rather it is Goldman Sachs, Bank of America, and JPMorgan Chase that get the brickbats. There is a sense that Wall Street is up to no good.
In light of the last several years, this is an entirely justifiable attitude. Big, well-connected players in banking and finance were at the heart of the housing and financial debacle, in partnership with the government, of course. Free-market advocates should hold no brief for any of them. It is important to understand that throughout American history no industry has had a cozier relationship with politicians at all levels than banking and finance.
The 1 percent as we know it is not the product of the market. Corporatism has played a large role. In a freed market, there certainly would not be income equality—people are too different to expect that. But the distance between the top and bottom would likely be much less dramatic and mobility greater. Abolishing all privileges and finding reasonable ways to rectify past injustices would put America on the road to freedom.
Sheldon Richman is editor of The Freeman, where this article originally appeared.
Bonus Reason.tv video: "Peter Schiff Speaks for the 1 Percent at Occupy Wall Street."