Tag: national academies

Copyright, Innovation, and Empiricism

If you like innovation, and if you’re interested in intellectual property, you probably already know about the Committee on the Impact of Copyright Policy on Innovation in the Digital Era. That’s a group assembled by the National Academies to, well, analyze the impact of copyright policy on innovation in the digital era.

Long-standing consensus holds that copyright, by creating artificial scarcity in information goods, allows creators to enjoy rewards from their creations sufficient to justify creating them. In other words, copyright’s incentive structure encourages creation and innovation, the end result being more and better information goods for the society to enjoy.

Information technologies such as digitization and the Internet are rejiggering the balance that copyright is supposed to strike and casting doubt on the consensus about copyright in some quarters. Technological change has driven down the cost of producing and distributing many creative works quite dramatically. This improves the profitability offered to creators by copyright’s protections, so maybe less such incentive to create is required. Except that the same technologies also permit copying of works on a quite large scale, which reduces the benefits available to creators.

Copyright violation is utterly rampant today. You probably violate copyright law many times a day (subject to arguable fair use rights) when you forward around emails with jokes, pictures, and videos in them, for example. The copyright violations that “matter,” of course, are the ones that undercut the living of those who have made production and distribution of copyrighted works their business or source of financial support.

A further complication: Copyright may do more than simply encourage new creation. It may impede the development of new works because creators can’t use existing copyrighted works to create more. Artists today can’t stand on the broad shoulders of artists from the 1960s, ’70s, and ’80s. If they are to riff on existing cultural themes, they have to use the shoulders of artists from the 1860s, ’70s, and ’80s, whose works are in the public domain.

This is the thicket into which the committee wades. Happily, it’s holding the copyright consensus up to the light and doing some empirical study of the role that copyright has in innovation. Gathered at a Web site for the project are a series of papers that authors presented at a panel last week, including:

These are but a few of the many subjects that economic study should explore if we are to fully understand the effects of copyright and other intellectual property laws. There’s no time like the present for the studying to begin.

Reforming the Insane Tax Code

We’ve got an IRS Commissioner who doesn’t even do his own taxes, and is not embarrassed about it. We’ve got complex deductions that nobody understands, including the government, as the Maryland nurse with the MBA found out. We’ve got a Treasury Secretary and other high appointees who apparently cheated on their taxes. And we’ve got the Democrats hell-bent on greatly increasing the power and responsibilities of the overwhelmed IRS with their health care bill.

Now, more than ever, it’s time to scrap the current income tax and put in a flat tax. Or at least we could take a big jump in that direction with a “Simplified Tax,” as discussed in a new National Academies report. Get rid of all almost all deductions, exemptions, and credits and drop individual rates to 10 and 25 percent. While we’re at it, let’s drop the federal corporate rate to 25 percent or less.

For more on the two-rate tax idea, see my Options for Tax Reform and Rep. Paul Ryan’s American Roadmap.