Tech Policy Seminar

Very Little New Perspective

Perhaps I had too large of expectations, but I must say I was rather disappointed when I finished the book.  While his arguments were well reasoned for the most part, I felt that all of his arguments were ones I had heard before.  Furthermore, I'm pretty sure I have been hearing these arguments since the 90's, when the real discussions of IP rights and technology really began.  While this may be valuable for people who know little about these debate, I expected someone on the forefront of the field to give me more than IP rights are moral rights, and new technology changes nothing.   

Especially on that last point, it's hard not to view Mr. Merges as having his head in the sand.  Because even if the internet is really no different from the radio or the telegraph (which is already extremely silly), it does not follow that technology policy should not be adapting to deal with this new medium.  Because the internet is making IP rights more difficult to enforce whether he likes it or not, and collaboration and digitization of media is making it more difficult to identify who and what deserves rights in the first place.  Merges, although he discussed these problems superficially, did not really state how he thinks the industry should deal with it, except to say that original work should win.  Not a novel statement. 

I think his discussion on what constitutes originality was the most frustrating.  When he discussed sample artists, he seemed to paint the work that they do as somehow less original than other musicians, and therefore less deserving of protection.  But it isn't really that this work is less original, it's just that the kind of originality that goes into sampling and remixes doesn't work into the structure that he is trying to reinforce.  Furthermore, his statements that sample artists can just go to the public domain to get their samples and they rarely need a particular song to make it work is like telling a painter she can only use certain colors.  Sure, she can make something, but it doesn't mean there is no impact on her creativity or the quality of her work.  

His solution to pretty much all of the problems created by new technology is to rely on creators not actually using their right to enforce because it is too expensive.  This is not a satisfying solution, nor is it a new one.  Artists and other creators should be able to have a set of rules that apply to the time they live in and the technology they use, not the shifting whims of creative professionals.  As we discussed in class, this amorphous enforcement does have a chilling effect on artists that fear their work will be taken down or they will be sued if they include even a snippet of a copyrighted work.  Those people deserve real rules and real standards to work under.

I actually agree with Mr. Merges that IP rights need to be protected, both from a deontological and utilitarian perspective.  However, unlike Menges, I think the rules we establish for this protection need to adjust as our society and culture adjust.  This could mean shortening the amount of time it takes for a work to enter the public domain, adjusting the fair use doctrine, or even making copyrights easier to enforce (though I would be against the last option without first dealing with the first two).  It does not mean that we just continue with things the way they were before and let private enforcement fill in where the law is lacking.  

 

Different Concepts, Different Foundations?

I am willing to accept the idea that IP rights are based on something more fundamental than utilitarian concerns for efficiency. And I look forward to reading Merges’ discussion of his mid-level principles and end-of-the-line doctrines and rules. In particular, I am interested in what he has to say with regard to duration of IP protection and how it relates to the fundamental principles he pulls from Locke, Rawls, and Kant.

But like some of you who posted in the first group, I have some reservations about his arguments. Like Conor, I worry that he is cherry-picking from these authors’ writings and extending their subservient ideas to the modern world in a way they would think absurd. Noah pointed out problems of reconciling Lockean ideals with current contexts of software and online content.

It seems to me that the world of IP deals with conceptually different types of matter, and for Merges’ treatment of philosophical underpinnings, it might be a good idea to separate them. Nicolas referred to the two areas as arts and technology, or something to that effect. For me the conceptual difference is in the purpose of the intellectual endeavor or product. On the one hand, we have expressive content — works that are intended to express some idea, thought, personality, message, etc. For the most part, this is the domain of copyright — books, film, sculpture, photography. On the other hand, we have works intended to deliver some function apart from expression. You might call it technology, as Nicolas did, or functional innovation.

The two conceptualizations are not exclusive; functional items like an Eames chair may have aesthetic externalities attributable to some expression contained therein. IP law has struggled to deal with instances where the two merge — architecture, for example, or more recently, typefaces. So perhaps the law should attempt some measuring test, to place a contested work in one camp or the other. The creator’s intent may be the surest way to separate the two, but that comes with all of the evidentiary problems we are familiar with in dealing with intent in other areas of the law. A reasonable-person standard might work well enough. Extremely rare is the building the purpose of which is predominantly to express some idea; rather, a building is for inhabiting, and the expressive qualities of a well-designed house are subservient to its functional purpose.

Merges’ foundational principles should, I believe, apply differently to these two conceptualizations of intellectual property. Or in other words, I would expect the foundational principles for the two conceptualizations to be different. Lockean ideas work better for functional innovation — for example, the new technology that goes into electronic devices, or the improved algorithms that produce better software. When it comes to expressive creation, “sweat of the brow” theories like Locke’s are less relevant — and often expressly discounted by copyright laws.

Similarly, Kant’s autonomy principles argue persuasively for protection of technological innovation, but not so much for expression of ideas. If creation is part of human nature, then people will create as long as the benefits equal the costs. Most expressive work, in my opinion, requires less investment than technological innovation. (I recognize that this conclusion is susceptible to challenge. For example, one could argue that the most valuable expression requires larger investments of time and effort — and Asher’s idea of using emotional investment as a measure of rights creation might be useful here — but an extension of Nicolas’s argument could strike down that concern. What we seek from expressive material has more to do with perfection than innovation; one can only contribute to the pool of ideas because others have contributed as well.) If the costs of expression are relatively low — a few dollars for paint and brushes, a few hours to apply to them to canvas — then people will continue to produce expressive intellectual works without a strong property right in the product. A beautiful work of art carries enough personal enjoyment or reputational benefit for many an artist. I admit that a world without any protection for expressive intellectual property might result in a somewhat lower quality of expression — scholarship won’t be as thorough and insightful, film won’t be as engaging or effective. But people will still produce; those who master its form will still find ways to profit from their skill.

Perhaps the distinction between expression and function is irrelevant to the foundations of IP law. Both are abstractions from what was traditionally considered “property,” and there might be additional conceptualizations in play. But the philosophical underpinnings laid out by Merges don’t offer equal support to all kinds of intellectual property, and it might be useful to figure out what it does support. Highlighting different forms of intellectual innovation may lend more insight into what really justifies protecting them. And that in turn, could lead to more intelligible and effective doctrines and rules for things like architecture, typeface, or product design.

Interesting but without point?

    Professor Merges' discussion of Locke, Kant, and Rawls left me conflicted: on the one hand, I appreciated the dive into the past and the refreshing survey of these three great thinkers; I also admire Merges' ambition of trying to reframe the modern debate surrounding IP law and find answers at the foundational level; but, in the end, I was left with the same questions my classmates have had. Like Mr. Shaw, I wonder whether Merges isn't simply trying to shoehorn his theory of intellectual property into the historical works by cherry-picking ideas. Like Mr. Ni, I question whether Professor Merges' quest to find foundational principles for IP law is worthwhile. 

    While I must confess that I am not sufficiently familiar with the works of Locke, Kant, or Rawls, I kept getting the impression that Merges was overstating the relevance to intellectual property of the 17th and 18th century philosophers, by taking a fair amount of latitude in interpreting the works of Locke and Kant. This was confirmed by Merges' own occasional confessions that Kant's work isn't really focused on property at all. Mr. Shaw, who seems much more familiar with Locke's work than I am, aptly observed that the context in which the Second Treatise discussed property is "important because it presents a plausible explanation for Locke's theory of property rights." Merges does not even mention this context.

    What bothered me most is that, already in the introduction, Merges essentially tells us that the discussion of foundational principles is not relevant when it comes to shaping IP law from a policy perspective… at least insofar as we are stuck with an existing IP law framework. As a result, I was wondering what the point of the section was before I even started reading it. This was exacerbated by the impression described above that Merges was really only justifying his own theory of IP law through the works of great philosophers.

    Mr. Ni states in his post that he is what Merges would call a "skeptical positivist." I'm not sure what i was before, but after reading Merges' discussion, I think I would put myself in the same category. If the "foundational principles" used to justify intellectual property are not relevant to the normative debate of how we should make IP law policy, I'm not sure why we bother to come up with them. I would also probably reject Merges' position that efficiency is only a midlevel principle, and cannot serve as a justification of a system in and of itself. Perhaps I have been at this school too long. Who was my Elements professor?, I hear you asking.

    I would however like to respond to the argument Mr. Ni makes: Mr. Ni takes the position that "intellectual endeavors" should not entitle one to property rights over the fruits of those endeavors. While I appreciate Mr. Ni's illustration through the example of China, I do not think it warrants the conclusion he makes.

    Mr. Ni uses the example of China, where "everyone recognizes that IP law does not exist" (apparently because the system seems broken) yet innovation continues. But, for the following reasons, I am not sure that the mere observation that innovation exists supports Mr. Ni's conclusion:

- First and foremost, as Merges suggests, we don't actually have the tools to measure the effects of IP law on innovation. Who is to say that, were China to have a stronger IP law, it wouldn't in fact lead to even *greater* innovation? Simply because the country is innovating does not mean it has the best system.

- Second, Mr. Ni suggests that the government is at the root of a significant chunk of the innovation in China. Perhaps again in Chicago fashion, I am skeptical of the government's ability to decide what is most desirable, and a strong IP law allows the market to more efficiently make these decisions.

- Third, Mr. Ni observes that the "critics also fail to recognize that people guard against theft of their inventions." Yet this observation that people guard against theft of their inventions (I am assuming through secrecy measures) neglects to consider the cost of guarding against theft. If the cost of preventing others from copying is so high as to exceed the cost of enforcing a workable legal system, perhaps it is very inefficient.

    In conclusion, while I enjoyed reading about great philosophers, Merges' discussion of his foundational principles left me skeptical. Merges' discussion on midlevel principles, although much shorter, seemed to me much more important, and I look forward to the second half of the book, where I hope to find a more practical discussion of IP law.

 

Do we need to dive in philosophy to look for the foundations of IP?

At the beginning, Professor Merges’s book was like a breeze of humanity in a utilitarian society. I love to think that Intellectual Property’s (“IP”) purpose is to protect “creative works as a way of honoring and rewarding creative people”[1]. As Yohsuke notes “seems like a hope for the individual human possibility in this unequal society”[2]. Certainly, looking for foundations in philosophical doctrines give us hope; it makes us feel better to understand those rights as deserved by labor and effort, as a consequence of our free will.

After reading Locke’s chapter, just as Melanie, “I [felt] a bit foolish that I never really thought that property law might not center around this standard social utilitarian foundation before”[3], but … wait… I am still a fool!

Do we really need to “shift from social utility to fundamental rights”[4] as Professor Merges states? Do we really need to “identify the ‘optimal number’ of patented, copyrighted, and trademarked works”[5] in order to justify IP on economic principles? Does Philosophy achieve that precision? Is the lack of empirical (numerical) evidence enough to disregard utility principles as the base for IP?

Recognizing my own limitations, and the decade that has passed from the last time that I read something about Locke and Kant (first year of law school), I am not going to criticize the philosophical reasoning or how faithful the author has been in respect to Locke’s and Kant’s philosophical principles. I am leaving those topics to someone who can define “Categorical Imperative” without googling (not my case). Nevertheless, I can say that in my inexpert opinion this whole “trip” might not be necessary.

Even when there might not be “lock-solid proof that overall social welfare would decline if IP protection were suddenly removed”[6], I think that IP is based on economic reasoning. There I find its strongest and more unquestionable foundation.

Following Judge Posner’s argumentation, “in a world without patents, inventive activity would be biased toward inventions that could be kept secret”[7], inventions that involve minimum preparatory investment or inventions where the learning curve of the competitors allows the recoupment of investments without legal protection. In that world without IP there might be art and inventions, but certainly there are some of those that would not exist simply because of lack of incentives.

Furthermore, even when redistribution is not a matter of economics, many of the principles announced by Professor Merges like nonremoval, proportionality or dignity; and the rules that apply those principles, can be based in economics as a way of correcting the incentives that IP rights create.

For example, requiring that inventions are not obvious for patenting (nonremoval) is just a way to avoid overinvestment on ideas that can be discovered at low cost. In the same way, proportionality requirements are not more than a tool for limiting investments to an efficient level by limiting the scope of the right (and the profits of it). Finally, dignity and moral rights can be seen simply as non-pecuniary benefits to the inventor/artist, incentivizing more creations (not everything is money!).

If economic incentives and limits are not enough to satisfy the moral obligation of redistribution, we can certainly apply other principles and rules to achieve that goal (more limits or taxes), but this fact is not a proof that the existence of IP cannot be based on economics.

Even when economic incentives are usually clear, it can be argued that the Open Source Movement proves that IP is not necessary or that IP must be based on philosophical principles but not on economics. I do not agree; this situation can be explained by economics. Those open source programmers, apparently not motivated by economic incentives, do have economic motivations. The only difference is that those motivations are non-pecuniary or pecuniary in the long run (improve their own experience as users, recognition by their peers, long-run career benefits, etc.[8]). Those incentives might not be enough for everyone, but that only means that those programmers have a different utility function.

Assuming that people are rational, we need to create incentives for them to employ their labor, their effort and their will. Without those efforts the society will be worst off. From an economic point of view, IP is a necessary and efficient tool for creating those correct and unbiased incentives (at least for the majority of the people). Maybe there is no solid empirical evidence, but for me it seems completely rational, without appealing to philosophy.

As posted by Melanie “Merges is trying to put these conceptual ideas into an area of law that I don’t see how they fit (…) and I’m hoping the second half helps clarify some of these issues”[9] and helps me to understand why this philosophical perspective is necessary to solve those cases on the margins that supposedly utilitarianism would solve differently. “If anyone can help me understand it I would be greatly appreciative”[10].

---

[1] Robert P. Merges, Justifying Intellectual Property, Kindle Edition, 2011, Kindle Location 19.

[2] http://picker.typepad.com/picker_seminar/2012/01/a-theory-with-a-hope.html

[3] http://picker.typepad.com/picker_seminar/2012/01/help.html

[4] Merges, Justifying Intellectual Property, Kindle Location 130.

[5] Ibid., Kindle Location 118–119.

[6] Ibid., Kindle Locations 169–170.

[7] Richard A. Posner and Aspen Publishers., Economic analysis of law, Aspen casebook series (New York: Aspen Publishers, c2011.), 48. Almost all the economic arguments of this post are based on this book, even those that are not quotes.

[8] Ibid., 109–110.

[9] http://picker.typepad.com/picker_seminar/2012/01/help.html

[10] Ibid.

 

Rethinking Remixing

I am, generally speaking, a large fan of intellectual property. However, unlike Merges, my reasoning for favoring strong IP laws had always been almost purely utilitarian. While I recognized that IP creators deserve to be rewarded for their work, I never thought about a moral justification focusing on the creator instead of society as a whole. Thinking about IP rights in this sense, provides a new argument against those that favor the "remixing" culture and spread of fan fiction. This view, similar to the claim that "information wants to be free" has several noted supporters including Lawrence Lessig and is what I take to be behind Asher's proposal if people stop copyrighting everything there will be "better, faster, more meaningful artistic . . . productions." Not only do I feel that in many cases this statement is false, I also feel that it in some situations it should not matter if it is true.

    The situation I am going to focus on is derivate works that use characters created by another author. The way I understand the current debate, many feel that amateur created works like those posted on YouTube or written by fans online are somehow superior to the original creator's vision or at the least are a net positive for society. In my opinion this is plainly wrong. A huge benefit of letting the original author decide the story that he wants to tell is the resulting continuity and the rich canon that can develop. For example, if others had been allowed to write stories using characters from the Hobbit when Tolkien was still writing the Lord of the Rings, it is possible that another author could have beaten him to print with an unofficial sequel and essentially hijacked Tolkien's work. Middle Earth would without a doubt look very different. Even if one somehow thinks this would have been a better outcome, if we place the emphasis on the original creator, as Merges suggests, we should recognize Tolkien's moral right to determine how his work evolves. He is the one who brought the idea into existence and should be allowed to see it through to his final vision. This same logic applies today with popular works like Harry Potter and Star Wars. That's not to say other authors can't write stories using popular characters (sometimes these secondary authors actually have better ideas than the original authors). However, these authors should have to receive permission from the original creators to make sure they are not somehow interfering with the story he wishes to tell. This is what is currently done with the Star Wars universe, and not only guarantees that Lucas's vision is respected, but ensures that the works do not contradict each other. While some franchises, such as comic books, have dealt the problem of multiple authors using the same characters by creating multiple universes; it should really be up to the original author if he wants his vision to go down that path and create the additional consumer confusion.

While one might currently be able to tell the official derivate works from the fake, as authors begin to publish almost exclusively to the internet, and better technology allows amateur filmmakers to create Hollywood quality movies which are then posted to YouTube, there is likely to be consumer confusion about what is the official canon. One can already see this happening in China where unofficial sequels in the Harry Potter series are being published, sometimes by legitimate publishing companies.

Finally, recognizing an author's rights in his derivate works does not mean that authors who want to use already popular characters are without material. Many characters past their copyright can be used, for example see Pride and Prejudice and Zombies. In addition, fair use is broad enough to cover minuscule copying and parodies.

A Tale of Two Public Domains

While certainly ambitious (and verbose), Merges falls into the kind of semantic conflation that he is so concerned with resolving in others’ works. Perhaps the most problematic example of this is his discussion of the “public domain” as a vast, amorphous sea of ideas, tropes, archetypes, and extant works which all are (allegedly) free to draw from.

At first glance, Merges portrays the “public domain” as an ever-present, shapeless resource, from which creators blissfully pluck ideas, unburdened by the earthly constraints of IP protection. In an almost comically brief aside, he describes the public domain as a “vast trove of shared, unowned material that precedes and surrounds the individual creator.” This portrayal of the public domain verges on the ethereal; whatever inspiration a creator needs, he must merely turn his eyes to the public domain and away from the sacrosanct realm of protected works, and he shall find ample manna from heaven.

Overestimation problems aside, Merges’ treatment of the public domain displays a basic flaw. Although he speaks of the “public domain” as a unitary (albeit ill-defined) whole, in reality he seems to be conflating two separate concepts. On one hand, Merges speaks of the public domain of ideas – a kind of domain of creative inheritance. This is the public domain of ideas, aesthetic conventions (such as how to represent a nose in visual art), character archetypes, musical scales, understanding of the human condition, and other concepts that form a collective pool of shared knowledge. These can either exist absent a fixed format, or take shape through significant repetition in “heritage” works such as holy texts, philosophical treatises, and most popular culture. These are wholly outside the realm of intellectual property protection, as they are too amorphous and shared for any one person to lay claim to.

Separate from the domain of creative inheritance, however, is the legal public domain of works which have fallen out of protection due to the passage of time. Although a few obvious exceptions come to mind (the Bible and Shakespeare’s canon among them), this area is largely unused.

It might be useful to draw a distinction by example. The novel of The Wizard of Oz falls into this domain, while its backbone – the story of a girl who becomes lost in a fairy land – is as old as oral history itself.

As Marion points out, even creators are themselves consumers of popular culture. Scarcely a fantasy novel in print today could claim that it did not draw its pantheon of races from JRR Tolkein’s work, still in copyright. What they consume from the public domain, however, comes almost exclusively from the domain of creative inheritance, and not the public domain of tangible works. Those ideas which are directly descendant of a unique work tend to reach modern creators in a filtered format, having passed through several interpretations before being reformed in a modern novel or play. Consider, for example, the extensive history of the song “Feelin’ Good”. While most listeners recognize Nina Simone’s dark, soulful version of the song, that itself is merely a cover of the original Hammerstein number from Roar of the Greasepaint, Smell of the Crowd – and the subsequently famous version by the band Muse is a reworking of Simone’s version.

Although I’m generally of the opinion that the public domain always deserves closer scrutiny as a concept, Merges gives it particularly short shrift in his work. That area of the public domain which he seems most concerned with is so far beyond the possibility of IP protection that it hardly seems worth waving it as an example of how the current system doesn’t overly limit new artists. As our society moves farther away from handed-down stories and closer to their specific instantiations in tangible mass media, we should instead be focusing on the public domain of works, not ideas. 

A Thought Exercise

Robert Merges' Justifying Intellectual Property, or at least the first five chapters anyway, was a little frustrating. The premise sounded promising -- identifying the core princples driving the protection of intellectual property right in order to inform decisions going forward. He draws upon the works of philosophers Rawls, Locke and Rawls to explain the principles behind IP! He's going to apply them to situations in IP we're facing now! Great! Let's do it!

The problem is, I found myself left with basically the same questions I had when I started the book. How much is too much protection? What happens when these principles are at odds with each other? While the book identifies guiding principles, the hard questions seem to be left unanswered. Let's take the Kafka/Max Planck situation that many of us studied in Property --Kafka wished to have his unfinished works burned upon his death, and ordered Planck to do so. Should they be destroyed? Does not allowing this repesent an unacceptable intrusion upon Kafka's autonomy -- thereby being a potential hinderance to the development of works? Or is this a case of spoilation -- where destroying them would be a true waste? Or is this a situation where we should consider Gordon's Prodigious Waterbearers idea that he can no longer just "take back" his works because they sit there, taunting us with their potential? 

The book succeeds at drawing out lines of arguments regarding why IP should and should not be protected. However, these are all arguments that have been brought up again and again. The difficult question is not what the arguments are (utilitarianism, just deserts, distributive justice, etc.) but how to deal with the difficult cases when these principles seem to conflict and choices have to be made. In this, the book has not provided much guidance in how to balance out these principles. The idea that something being done for "for the good of society" sounds great, until you realize that identifying what exactly is good for society is not clear cut. 

I suspect Merges realized the difficulty of this as well. In discussing distributive justice concerns, he mentions that beyond mere medical necessity, there is an argument to be made (as put forth by Sen and Nussbaum regarding the human capabilities approach) that humans have other "needs" that constitute foundational needs that could be deemed a necessity for IP allocation purposes. However, saying that true necessity can override IP rights in some cases is the easy part -- determining what situations will warrant it is the hard part. The fact that what constitutes a true need for IP is unclear is what makes the determination difficult. 

The numerous provisos and principles he providies are in some ways a get-out-of jail free card. With enough of these lines of argumant and the power of rationalization, almost any argument could be made that one thing overrides another because of some aspect, making the outcome of any particular situation unpredictable. A Legal Realist would probably argue that the outcome, though steeped in philosophical justifications, will end up being a result of very different factors such as politics and personal biases. To the extent that predictability in law is considered good, having so many principles obfuscates what the "right" outcome should be. 

In the end, the first five chapters of Justifying Intellectual Property present a useful thought exercise. I am interested to see what comes next to get an idea of how application of these principles and justifications work, or if we are still basically left in the same position -- being able to understand the arguments, but still having little guidance on where to draw the lines. 

Keep the faith! Is that enough to justify the IP system?

What stroked me the most about Merges’ book is how the author started it. The author admitted something very hard to admit by people who defend the IP system: there is no empirical evidence that we are better off in a world with IP than in a world without IP (“I simply cannot justify our current IP system on the basis of verifiable data showing that people are better off with IP law than they would be without it”).

If that’s true, what is the support that Merges present? Believe it or not, faith! (or as Yohsuke said in his post, hope). Merges himself explain this:

“Here is an analogy: Say you and I are scientists, old pals from way back who have worked long and hard in the lab in our chosen field. Suddenly I am plagued by doubts about where nature came from, why it is the way it is. I read widely and decide there is some sort of unseen intelligence, some higher power behind the whole thing, that set the universe in motion. My doubts go away and I rejoin you in the lab. My day-to-day work does not change, but I am somehow more serene about the whole enterprise, I have found a grounding for it that makes sense to me. That’s what the normative grounding in Part I of this book is like-it helps me push on through foundational doubts.”

I have to admit that this confession of the author gives me serious doubts about the real support of his arguments (probably that’s why after reading the first 5 chapters I could say that I disagree with Raphael in considering this book “the best book I have ever read regarding fundamental justifications of Intellectual Property”). For me faith is not good enough to support a legal system like IP.

This scream for faith in the system may explain why Merges tried to find some justification for the IP system by using concepts elaborated by Locke, Kant and Rawls that don’t fit to the “world of ideas” (as Asher and Melanie points in their posts). In the next paragraphs I want to make some brief comments about two topics that arise from Merges’ book.

Locke and his idea of Labor

Using Locke’s theories Merges raises a kind of “moral” justification for the IP system. We can summarize his position like this: If every human being (naturally) owns his labor, we should recognize property to every creation he makes with it.

The first thing that we should take in account is that labor itself is not enough justification. Actually, the IP system recognizes it very clear. That’s why the system only gives protection to certain kind of ideas created by men, not to all. Indeed, there is an important amount of ideas developed by man (with effort and labor) that are not protected by IP. If Merges is right and “labor” is the (moral) justification for property rights, we should give protection to any idea (considering that the development of any idea requires some labor).

Probably because of the weakness of this justification, Merges smoothly introduce a “utilitarian” perspective. Even when Merges said that his justification is far away for utilitarianism, it is not. Indeed, Merges accept that Locke’s idea of “labor” as a justification for property relies in the incentives it creates: without property individuals are not going to have the right incentives to work (create new ideas in the case of IP) because they are not going to obtain profits from it.

About this Merges said:

“Few would bother laboring to recast, reshape, or improve them if that work had to be shared with all comers”.

“Crowning this labor with property serves two ends: it honors the effort involved and calls forth more of it.”

“My use may not take the information out of your hands; but it may take some money out of your pocket”.

“The need to survive and thrive therefore justifies removal from nature”

But, if the justification relies again in the goal of creating incentives for the development of new ideas, we faced what Merges himself already accepted: There is no evidence that without IP people are not going to have the right incentives to create new ideas.

As a matter of fact, reality shows us something different. A very good example is the music market. In this market, for example, the changes in the business model shows us that without IP we still can generate incentives for the development of new ideas. As Merges said, right now “(…) the de facto zone of freedom for consumers of IP (…) is really quite large (…)”, but still we can find people creating new ideas (and making profits of it!).

Even Merges accepts the need of changing the business model in the market of ideas, when he said: “Those who sell cultural products that significantly restrict freedom will either have to make those products especially attractive (to offset the loss of value to consumers occasioned by the greater restrictions), or change their policy on restrictions”.

Exclusion costs

Merges avoid any reference (unless in the first 5 chapters) to the costs of exclusion and administration of the system.

Any legal system needs enforceability to work. A legal system without enforceability is doomed to fail. The problem is that enforceability costs. And some time cost very much.

If we want to shape an efficient system we cannot analyze it in abstract. We must take in account the real possibility of applying it to the real world. In the case of IP we crashed against a wall: new technologies make almost impossible to enforce the IP system. The cost is too high and (as Merges accepted) we don’t know if the benefits of the system are higher than the costs.

It is important to notice that Merges accept this problem when he said that “(…) enforcement costs in IP can be very high; so it is often financial constraints that prevent holders of IP rights from enforcing them”. If that is true, how we can enforce a system like this?

 I don’t deny that is important to give people a way to make profits with their ideas (and so, create incentives for the creation of new ideas). But, is the property right system the only way? Probably the better way is to accept that the new era and the new technologies are leading us to a different approach. Maybe the solution is more a business model one, than a legal one.

 

Termination Rights: the Fulfillment of Kant's Autonomy Principle?

In Justifying Intellectal Property, Merges discusses Kant's understanding of autonomy and how this relates to an individual's right to possess and have control over property they have created.  A creator cannot have autonomy unless he or she can exercise ownership over their creative work, and profit off of this ownership.  Obviously, part of this right involves the ability to alienate his or her work. In many creative industries, the creator exercises this right to alienate by selling the copyright of their work to a distributor (such as a record label or a publishing house). 

All of this talk about autonomy got me thinking about the upcoming legal battle over the termination of artistic licenses.  For those who don't know, when copyright law was revised in the 1970's, a provision was included that allowed all creators of works of art after 1978 "termination rights" that allow them to reclaim ownership after 35 years as long as they apply two years in advance.  From a perspective that values autonomy, this seems great.  The artist gives up their right to license their work in exchange for a larger audience that (especially before the internet) only a record label or a publisher could provide.  However, since the distributor didn't add anything artistically to the work, and often has unequal bargaining power when drafting the contract for the rights, the decision of what to do with the work after a certain amount of time reverts back to the individual or group of individuals that we see as having the most right to exercise control over that work.  Full autonomy is restored to the creator, hurray.

Obviously the recording industry is not very excited about the prospect of losing a lot of valuable titles from their catalogs.  However, there does seem to be one bright spot for the industry.  The law states:

"A derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination, but this privilege does not extend to the preparation after the termination of other derivative works based upon the copyrighted work covered by the terminated grant."

Some commentators have taken this to mean that any work that is remastered, and therefore a "derivative work" would not be subject to termiation rights.  Which means that while the artists themselves can now make money off of their songs, they won't be the only ones.  This got me thinking about the post that Nick wrote about which is more valuable, perfection or originality.  Because here, it seems that the artist is on the side of originality, and the record industry on the side of perfection.  Obviously some "labor" in the Lockean sense, was put in to remastering these titles and making them perfect for the listener.  Does this mean that they can claim essentially equal rights to the perfected work as the artist can claim in the original?

I'm interested to read Merges chapter on the principle of proportionality, because this seems to be a classic question of who deserves more credit for the value that was created in these works of art.  On the one hand, the record industry took a risk on the artist originally, and so perhaps the fact that they properly jduged their talent, along with the time and money spent remastering, is enough of a contribution to merit a continued slice of the pie.  On the other hand, if we think the individual autonomy of the creator is most important, and that some of that autonomy is sacraficed because of unfair bargaining power in the original contract negotiations, perhaps we see termination rights as the righful conclusion.  After all, the record industry did get to profit off of the work and determine how it would be used for 35 years, perhaps now it is the artist's turn.   

This discussion also ties in to Merges talk of corporate holders of IP, as opposed to the individual.  I think he is right that corporations provide valuable resources to individual creative professionals, and that many of these professionals would not be able to do the work they do without their "corporate sponsors."  However, there is this gut feeling that more of the pie should be going to the actual creative individual or group of individuals, which I think explains why this change to the law occurred in the first place.      

Lesser Bloggers Address, Great Bloggers Pontificate

Robert's post very much resonated with me, if I were the anti-Merges I would expand it and use it as the 150 page intro to my book debunking IP generally. But I am not the anti-Merges. I'd like to take his post one step further and argue that we shouldn't even bother. 

The author expends many pages providing philosophical foundations to IP. Much of this reads like desperate grasping for me: a scholar who has spent his whole career working from easy assumptions finds those assumptions challenged by data, this scholar begins an ex-post search for deontological justifications from established titans of the philosophical field in an attempt to salvage his own philosophy. This direction was not convincing. 

The foundational justifications the author lays out also disproportionately focus on the “property” in “intellectual property.” Disregarding the intellectual enrichment one obtains from delving into the thinkers cited, I believe that ethical foundations to property rights are unnecessary. Property rights are necessary foundations for modern society as a purely realistic matter. This clear observation obviates any need to seek deeper deontological explanations. I am what the author would call a “skeptical positivist.” I’ve no objection to this, but I do find his beer-choice metaphor about people like me impenetrable and a little underhanded: I enjoy Weiss, Stouts, and Pabst equally, just at different times.

Back to business: the entrée of this discussion should be in the “intellectual” in “intellectual property,” that is, explaining why “intellectual” endeavors may entitle one to property rights over the fruits of those endeavors. My answer is that it shouldn’t.

Two things drive scientific/technological creativity: 1. Desire for profit. 2. The desire to solve problems. One thing in the end guards against the theft of the fruits of creativity and problem solving: jealous guardedness.

Allow me to illustrate: in ancient China there were no patents or IP, yet innovations were made, either out of imperial patronage or by necessity be they military or economic. For two thousand years it led the world in science and innovation. It is about to again. And again, there is essentially zero respect for IP in China.

 

I may sabotage my point somewhat by citing the fact that China is filing the second highest number of patents in the world after the US right now. But a cursory examination will show that many of these patent filings are spurious and essentially useless due to extremely skewed and politically motivated enforcement. The patent system in China is often used as a political or profit-making tool. A good example is an indigenous innovator who comes up with something, and begins to make a profit off of it. His factory manager steals the process, pays off the government officials in charge of the process, and pledges fealty to the government, promising to use the technology for national benefit. Thus, the patent system is hijacked by unscrupulous entrepreneurs who understand the government’s interests better than the innovator. This is manifested in the US in opportunistic patent poaching by large corporations, and endless patent litigation by individuals seeking to profit from patents. As always, the only winners are lawyers.  

Some might argue that private innovation in China is stifled by such phenomenon. They simply fail to recognize that not all innovators are unaware of the government’s incentives. Innovation continues unabated, and indeed, briskly in China, funded to a large extent by the government and in government directed institutes. In China, innovation may follow these steps: 1. the government decides something is desirable. 2. The government orders it be discovered/researched. 3. The government throws its unlimited resources behind the order. 4. The thing is discovered/researched/constructed. 5. Profit for all those involved through spin-off companies. One asks, what if people start infringing on the government’s discoveries? This is irrelevant, an authoritarian government cannot be infringed on.

The critics also fail to recognize that people guard against theft of their inventions. In China, extremely precious innovations are protected jealously, because everyone recognizes that IP law does not exist. Innovation continues. 

Another method of innovation comes from a conversation I had with a South Korean engineering scientist about China’s methods. The model is as follows: others innovate and sell into the Chinese market, Chinese entrepreneurs throw a thousand PhDs behind the thing to reverse engineer, improve, then sell for cheaper, outcompeting the foreign design. Yet it seems that no one has stopped innovating and selling into the Chinese market. Desire for profit, it appears, overcomes the lack of IP protections. Some may ask, wouldn’t this powerful ability to reverse engineer deter Chinese innovators? Sure, but I would respond that 1. This is just a risk people take. 2. Other things counteract, such as brand power and sophisticated marketing and business instincts, these have nothing to do with IP.

Economics, therefore, drive innovation, and IP law, whatever foundational justifications are proffered for them, will only become tools for the enterprising, with massive alternative incentives for innovation already supplied by the integrated economy, IP law is merely a mirage, subject to being hijacked for opportunistic profit-driven ends.

Against the reality of these factors, utilitarian or deontological justifications for IP become meaningless. The utilitarian one may have self-fulfilling effects, but deontological attempts can simply be ignored in favor of reality.

And that gets at the point I’m really trying to make: that in a world where practical people driven by utilitarian analysis see that they do not really have to care about IP (or even if for utilitarian reasons they see that they do), conjuring up sophisticated philosophical justifications for IP using 17^th – 19^th century continental and Anglo-Saxon philosophy is just a waste of everyone’s time.

Of course I do not advocate that the government do the opposite of IP: that of forcing everyone to share their inventions and processes behind those inventions in the public domain. I expect the government to do nothing. I do believe in fame for the originator. Credit where it is due. If the thing is big enough the inventor will be feted, if it is not big enough it is easier to guard its secrets and extract profit. But monopoly profits by government-enforced exclusion? No. 

I look forward to reading more about the mid-level principles, which seem more relevant in a world where IP rights already exist and self-perpetuate like some indestructible hydra.

 

 

 

A Theory with a Hope

Partly because of my lack of firsthand understanding of Locke, Kant or Rawls, I would like to talk about what I felt by following his argument to reveal the foundations of the IP law.

To me, the conception that the core of the property right should be solely attributable to individual effort (or will power) seems like a hope for the individual human possibility in this unequal society.  The achievement based on the societal contribution shall be subject to the redistribution.  Even raw talent or other inborn endowments are not vested per se, and their lucky owners must show his efforts to come to deserve the right.  The rich or gigantic corporations cannot be granted new property rights simply by utilizing their accumulated resources.  This gives me a whole different image of the IP right.

The IP right is not something that allows gigantic corporations to extract surplus from the weak individuals, but something that can establish an equal opportunity for all who make efforts.

To realize the IP law in compliance with the maxmin rule, proper redistribution will be necessary.  Given the intangible nature, we have broader options in realizing such redistribution.  In addition to taxation, we can easily design the IP right compared to the tangible property.  (Although we can, say, create the right of way or other burden on the land, the tangible property may not be as flexible.)  It may be more probable that we can create a justifiable system for the IP right than for the tangible property.

As Professor Merges admits, the boundary between the core and periphery is very blurry.  But we should note that his argument further roots in Locke’s idea of property.  At least, all of us are entitled to monopolize “ourselves”, and the property right is generated in connection with labor, that is, by making use of “ourselves.”  Of course, even such “ourselves” might be a creation of the societal interactions.  As the author suggests, being rich or poor may become a encouragement or discouragement to make efforts.  But don't we have anything “ourselves” at all?  Clearly, we do (or I badly wish so).  Although the range of protection may be narrow, there must be some protected area.  And its protection must be so solid that it could not be restricted on the basis of other people’s interest.  The protection given here is somewhat similar to a protection given to religious creed.  Then, it resonates to the dignity principle.

I felt that the first half of the book is filled with the author’s positive trial not to give up a property rule with the concept of justice, and perhaps with his respect to the dignity of people.

 

Help

Merges has caused me to rethink how I view intellectual property law.  I've never really spent time analyzing the philosophical underpinnings of property law.  I always considered property law to be a pretty straightforward balancing of societal interests and the need for some type of individual rights to encourage investment and creation and all that jazz.  But this is only part of the equation.  Merges talks about how important it was that courts started to shift from talking about property law in terms of social utility to fundamental rights, and how the whole efficiency equation is only a midlevel principle.  And I have to admit, I feel a bit foolish that I never really thought that property law might not center around this standard social utilitarian foundation before, until Merges attacks the basic assumption.  

But beyond this, I had some difficulty with Merges.  He talks about a lot of philosophers in a short amount of space, which was just too much for me to wrap my head around, especially given that I would have problems understanding individual philosophers he would describe before he moved on to the next difficult one.

For example, Merges talks about Locke's beliefs on property law regarding tangible property, then applies it to intangible property.  Locke talks about tangible property in regards to common resources, and then individuals adding labor to raw materials to turn it into something useful.  And this applies whether one is talking about turning an acorn into whatever a useful form of an acorn is, or whether one is turning some chords into a melody or some chemical formulas into a useful medication.  But beyond this, I don’t see how Merges successfully analogizes the tangible and scarce physical resources Locke talks about to intellectual property’s intangible resources.  And this is based on how I view intellectual property ownership.  Merges says on page 67 that “ownership. . . allows the isolated individual to project his talents, opinions, and unique personality into society at large.” 

Perhaps I’m just a cynic who is missing the point, but using the pop culture and Lord of the Rings and page 52’s lake example, protection of the arts seems to limit this projection.  J.R.R. Tolkien died 4 decades ago, and Peter Jackson is currently working on The Hobbit films.  But making a movie is a collaborative effort with all sorts of people with the power and the rights limiting the creative control that artists are able to exert, which is why the makers of Halo won’t allow the game to be made into a movie.  In an era when there’s so much conglomeration among film and music and television studios, I just don’t understand how Merges is trying to get his whole autonomy in intellectual property point across when it seems to go against it.  And that doesn’t even get to the other Lockean concepts I hate trouble using to “justify intellectual property.”  (Though I will say, I do think the fair use discussion regarding Rawls is important when discussing music here.)

Likewise with Kant, Merges talks about how Kant is about emphasizing the marriage of “pure inspiration” with “mental toil” to create property, whether tangible or intangible (p78).  And Merges says that property possession is not about grabbing stuff up as a means to an end, but the purpose of possession “is to facilitate some further use of the objects involved” (p79).  I see intellectual property in terms of patent law as encouraging the opposite of this.  Merges obviously has a lot more experience with patent law than I do, but every patent law case I’ve worked on seems to be about parties who patent every possible thing they can so that they can sue other people and try to get settlement money out of the people, even if they’re just patenting things that were used way before these guys came along to use it.  The ability to turn the page of a PDF on a touchscreen is even a patented technology.  And Merges’s discussion on costliness of enforceability and that just because has legal rights doesn’t mean they will hold up in court just didn’t work on me.  Especially in an era when it can be easier for a company to just pay for licenses and judges lack expertise to uniformly and acceptably rule on a lot of very technical issues.

For me, it’s like Merges is trying to put these conceptual ideas into an area of law that I don’t see how they fit.  I really struggled with the first half of this book, and I’m hoping the second half helps clarify some of these issues, but if anyone can help me understand it I would be greatly appreciative.

 

Merges's Methodology

In Justifying Intellectual Property, Robert Merges sets himself an impossible task.  First, he’s going to look to the philosophy of Locke, Kant, and Rawls for several foundational principles of property law; then he’s going to supplement those with some mid-level principles; and then he’s going to use those concepts to defend (or refine) current intellectual property law.  This is not a book that can be criticized for lack of ambition!

While I have a soft spot for arguments that are rooted in “great books” such as Locke’s Second Treatise, I found myself wondering whether Merges was being faithful to the authors he looks to for his foundational principles. My concern, in other words, is that Merges is simply cherry-picking ideas that are consistent with his theory of intellectual property rather than identifying universal or near-universal principles in their work. Part of what gives me pause is something that Merges, to his credit, acknowledges: particularly in the case of Locke and Kant, Merges is concerned with a very small portion of each author’s intellectual contribution. While it is true that both of these authors gave some thought to property, articulating a comprehensive theory on that topic does not seem to have been their primary purpose.

Take Locke, for example. It is widely accepted that his Second Treatise is a response to Robert Filmer’s Patriarcha—a theory of government premised on the divine right of kings—and by extension, the absolutist view of government espoused by Thomas Hobbes in Leviathan. It is in this context that Locke discussed property—context that is important because it presents a plausible explanation for Locke’s theory of property rights. The notion that property rights are the product of mixing one’s labor with the external world serves Locke’s political philosophy because it allows him to recognize “rights” that exist prior to the formation of government. In other words, property interests do not arise through the consent of others—be they fellow subjects or the government itself.

The fact that Locke did not articulate a comprehensive theory of property may not matter to Merges, as long as he is simply using Locke for the idea that property is a means of appropriating (and assigning responsibility over) things that would otherwise remain scattered and useless. But Merges seems to be after more than that—witness his focus on Locke’s sufficiency and charity proviso—and when it comes to the details, Merges seems to rely heavily on his own interpretation of various passages. The end result is that the ideas Merges claims to find in Locke seem to be as much a reflection of Merges’s IP theory as Locke’s original thought.

This may not matter too much if we agree with the principles Merges describesl; however, we should remember that the "foundational principles" Merges identifies in Locke were themselves subservient to Locke's political philosophy. Query whether a foundational principle should be a subservient one. 

 

Whose autonomy?

In the first half of Justifying Intellectual Property, Merges presents a philosophical alternative to the traditional utilitarian justification of intellectual property. According to Merges, the theories of Locke, Kant, and Rawls form the normative foundations on intellectual property. On top of this normative foundation, the midlevel principles of efficiency, nonremoval, proportionality, and dignity “provide a common policy vocabulary that bridges different foundational viewpoints.” But underneath the normative foundation Merges describes, it seems like even deeper assumptions are driving the analysis.

 

The application of Kant’s Universal Principle of Right provides an example: “laws secure our right to external freedom of choice to the extent that this freedom is compatible with everyone else’s freedom of choice under a universal law.” Merges finds that, for a sculptor, “full realization of his autonomy interest in the statue includes the right to make a living from carving and selling it. … It includes a desire to develop his talent, to earn a reputation as an artist, and ultimately to make a living as an artist.” This focus on the sculptor’s autonomy leads Merges to conclude that we should “resolve close cases … in favor of creators.”

 

But a Kantian analysis could lead to the opposite conclusion. Merges describes this scenario as if people are either creators or consumers, even though the reality is more complicated than that. In his discussion of J.K. Rowling, for example, Merges acknowledges that her claim of right is based in part on the societal contributions of mythology, in addition to the financial assistance she received from the state. She is not entirely a creator or a consumer – she is both. A statement that we should resolve close disputes in favor of creators could lead us to limit Rowling’s intellectual property rights since she is also a consumer.

 

In addition to oversimplifying the distinction between creators and consumers, Merges underestimates the effect of strong intellectual property rights on future creators. In his discussion of the position (based on Wendy Gordon’s reliance argument) that the ubiquity of IP-protected works raises society’s interest in IP-protected works, Merges looks for Prodigious Waterbearers and finds that “[t]here are far fewer … than many IP critics think.” Stating that “[m]ost contributions to culture are more like isolated drops in the lake,” Merges discounts the reliance effects of strong intellectual property protection.

 

But the cumulative effect of many isolated drops of water can be just as powerful as a single Prodigious Waterbearer. For example, documentary filmmakers often have difficulty getting copyright permissions from the necessary intellectual property rightsholders. (For an excellent explanation of the intellectual property issues documentary filmmakers confront, see the Duke Center for the Study of the Public Domain’s educational comic book Bound by Law.) A t-shirt logo, a television show in the background, or a cell phone ringtone is not a Prodigious Waterbearer that changes the cultural water level on its own. But if a documentary filmmaker has to seek permission for these sorts of uses, her autonomy as a creator is significantly limited.

 

The probable response to this is that there are already mechanisms in place to protect the autonomy of these sorts of second-generation creators. Merges refers to these mechanisms as “conventional tools [that] very often protect people’s reliance interest.” Fair use and the rule that trademark infringement requires a showing of confusion do provide some protection for second-generation creators, but frivolous lawsuit threats and cease and desist letters can render these protections meaningless. Given the cost of legally defending the use of a work (with a fair use defense, for example), second-generation creators are likely to limit themselves by staying away from protected works altogether – even when their use of those works would be legal.

 

According to Kant, “[t]he genesis of property is the desire of an individual to carry out personal projects in the world, for which various objects are necessary.” Merges uses that idea to justify strong intellectual property rights for first- but not second-generation creators. This suggests that underneath the normative foundations Merges discusses, there is a deeper substructure that favors private or common ownership of intellectual property. Given a Kantian concern for autonomy, the analysis could just as easily come out the other way.

 

Lesser Artists Borrow, Great Artists Steal

Mr. Merges does a serviceable job of justifying intellectual property to an audience that grants as a premise a kind of Enlightenment-inspired liberalism.  But so far, I don't think the book is very relevant to the current debate about the value of IP, given that many of IP's opponents don't identify with this liberal tradition.  If a critic of IP were to show how each of the proffered justifications (via Locke, Kant, and Rawls) were problematic, Merges would apparently be left defenseless -- and in this post, I intend to do exactly that.  I'll take the philosophers in the reverse order in which Merges referenced them.

Rawls

Merges' use of John Rawls to justify IP relies heavily on the idea that IP inures to the benefit of the least-advantaged.  It's not clear this is in fact true.  To make this claim, Merges first takes for granted that IP would be better for creative types than the absence of such a system, but IP opponents would surely contest this idea. They could point to the musicians' culture where riffs are passed along freely and unabashedly, or to Picasso's sly dictum that "Good artists borrow (ideas), great artists steal."  They could point out that people have vastly greater capabilities when they are able to share their ideas with more people, or that creative types are drawn to their fields in spite of notoriously poor income prospects. Merges loves high-minded philosophical talk, but when he grounds it all on the supposed incentives to create, I can't help but think he's settling into the same wan utilitarianism he ritually bemoans.  

Kant

Merges' treatment of Kant is similarly unsatisfying. He simply shoehorns all discussion of Kant's ideas of "will" into a ho-hum libertarianish conception of human motivation (again with the wan rational-actor utilitarianism!).  Although he does note -- in what I think is a strong argument against IP -- that abandoning IP could lead to more cultural exchange and therefore more creativity from the "will," in order to fully assuage the IP critics, he'd have to show that the increased ease of cultural exchange in an IP-less system would be outweighed by a reduced incentive to creativity.  Yet he offers no evidence on this score. 

I suspect that if Merges were pressed on his Kant-related "core v. periphery" ontology, he'd admit it to be a largely illusory distinction.  If one takes the view that cognition (which would presumably encompass "will") is largely embodied in an organism's environment, then the motive "core" appears to seep out into the environmental "periphery" in a way that undermines much of Merges' Kantian justification of IP, because agency is no longer located unambiguously in individuals.  Of course, this doesn't mean Merges' distinction can't be a useful heuristic, but the "rights" language into which he continually falls is not amenable to such a blurring, and he's too reliant on cloistering creativity into the "core" to credibly make this counterpoint anyway.  

Locke

Locke is perhaps the easiest target for IP critics, as he had a problematically-narrow view of what should be considered "labor."  He didn't think that Native Americans in the 17th century were making productive use of the continent's land, and so advocated for the reappropriation of it to white settlers.  We know the sad story: These colonists were ignorant of how to live within the native ecologies, and instead imported Old World agricultural practices to the New, which had predictably devastating effects on existing natural resources.  Three centuries (and countless irreplaceable forests, wildlife populations, and fish stocks) later, we now realize that perhaps "nonremoval" of the land from the public domain would have been a better idea.  Locke's mistake is not merely a curious artifact of history, but is instead emblematic of his philosophy's central flaw: Wielders of legal power can be expected to privilege their culture's conception of "productive work" over other conceptions that may be just as good or even superior.

Related Issues

Merges follows Locke into precisely this "our work is better than your work" trap. He has a hard time seeing the drawbacks of the current model of producing knowledge and art, where barriers to the flow of ideas often render the creative process more formulaic, less rhizomatic, and less integrated into the cultural and ethical lives of the broader population.  He assumes that cultures that monetize and wall off knowledge are superior to those that resist such commodification.  This assumption galls me -- especially when I remember the argument I discussed last week that humanity's most pressing evolutionary advantage is its increasing docility, which fosters a spontaneous connectedness that has been a wellspring of cooperative innovation.  (I've written related thoughts about this relationship between connectedness and scientific capabilities in a blog post here.)  

I'm also disappointed that Merges has so far been satisfied to talk merely about technological developments of the past, instead of trying to anticipate and prepare for the future.  What would Merges make of developments in artificial intelligence, where machines have already demonstrated a kind of scientific insight?   What about advances in camera and telepresence technology, which will make the experiences we share digitally more numinous and fuse our consciousnesses tighter, thereby distributing our "wills" into an ever-more-muddled "periphery"?  What about facial recognition software, or the steady miniaturization of the blog platform, which together point toward a more tightly interwoven intellectual culture?  Strahilevitz's book was interesting because it trained an eye on the horizon for these and other socially disruptive technologies.  Given the jarring technological changes many people expect in the next decade, I worry that Merges' book is, in a way, already antiquated.  

Prodigious (Numbers of) Prodigious Waterbearers

                In his analysis of Locke’s sufficiency proviso, Professor Merges takes a minor detour to confront an argument raised by Wendy Gordon.  He paraphrases an article of hers which highlighted circumstances under which a creator’s appropriation of what he himself has added to the public domain can violate Locke’s sufficiency proviso.  Glossing her argument, Merges introduces the example of the Prodigious Waterbearer—an individual who toils to raise the water level of a lake, only to then withdraw his contribution and return the lake to its original status.  Though the Waterbearer of this example would merely be appropriating the product of his own labor, he would still deprive others of “as much and as good” as he had access to originally, because members of the community may have come to rely upon the altered geography of the lake.

While expressing general approval for Gordon’s core thesis, Merges sharply confronts the attempt by some scholars to extend her reliance argument into a broadside against expansive individual creators’ rights.  In particular, he asserts that (1) few works actually implicate reliance concerns and (2) there are “significant legal and practical limitations on IP owners who attempt to remove or pull back their works from the common stock.”[1]  He later lists these limitations as including “First Amendment principles, IP doctrine, self-interest, and enforcement costs.”[2]  However, as Professor Merges himself later implicitly recognizes, these objections are sapped of force in the online and software contexts.

As I see it, each of these contexts is typified by an abundance of standards necessary for interoperability, a repetition of standard software patterns, and the widespread use of equivalent algorithms.  Time and again we’ve seen Prodigious Waterbearers engaging in precisely the behavior that Professor Merges dismisses as a rarity.[3]  This is hardly a novel point: without standards, the Internet would grind to a halt.  Indeed, in his discussion of “disproportionate leverage,” Professor Merges recognizes the risk of inequity posed by such practices.[4]

Given the abundance of works that implicate reliance concerns in the Internet/software context, we must weigh heavily upon the “significant legal and practical limitations on IP owners” if we wish to save this broad swathe of intellectual property from violating the sufficiency proviso.  Where does this leave us?  Clearly, it demands recourse to a broader literature assessing whether these restraints on IP owners are up to the task.  More generally, though, it seems to chip away at the validity of Merges ecumenical resolution to the debate over conflicting fundamental principles in intellectual property.  We need legal limitations (“IP doctrine”) that are tailored to prevent a widespread violation of Locke’s sufficiency proviso—a key figure in Merges’s fundamental principles.  However, those limitations are informed not by Lockean provisos, but rather by the Rawlsean mid-level principles—in this case primarily proportionality and efficiency.  I would be surprised if legal limitations designed to accommodate mid-level principles were effective in responding to these deeper Lockean concerns.

 

---

[1] Robert P. Merges, Justifying Intellectual Property 55.

[2] Id.

[3] See, for example, Unisys’s attempts to profit from the GIF standard; Phil Katz’s unsuccessful move to patent the widely used zip file format; intellectual property complications surrounding the asf and mp3 standards.

[4] See the discussion on page 131 of the Supreme Court’s rejection of patent ambushes, in which patentees seek to extract fees from companies straitjacketed by their foolhardy investment in patented standards.  See also page 150, in which Professor Merges references earlier publications in which he has decried similar attempts to exert “disproportionate leverage.”

Justifying Property Intellectually

In the first five chapters of his book, Merges lays the philosophical groundwork for what I suppose is to follow in the second half of the book. Fundamental to this groundwork is the idea that there should be a "one-to-one mapping" between owners and assets (both tabgible and intangible). Merges does a great job of progressing through the "orders," but unfortunately his whole argument is predicated on the first-order belief that Locke's labor theory of property applies to contemporary issues in intellectual property. It does not. Merges' argument that we can seemlessly apply traditional notions of property to more conceptual forms of property does seem to comport with theories proposed by Locke, Kant, and Rawls individually, but when taken together, the argument is not nearly as strong. 

Kant proposes that humans have a desire to shape and control things external to the self, and that this powerful desire justifies the allocation of property interests. If true, humans desire to control not only tangible goods, but intellectual ones as well. Humans throughout history have sought to comprehend the world, creating art and science in the process. But if we are to award individuals with the "labor" of these intellectual pursuits, we must be very clear as to what labor entails. Merges gives some examples highlighting the difference between "labor" and "mixing," but avoids the more critical analysis of labor. He fails to properly define labor outside the basic idea that it is the individual's personhood invested in an object through his ability to work. So how do we understand what role the "medium" plays in modern labor? Merges writes: "the medium is not the message, the individual is." So whose labor is the labor of a man's machine? Let me be more precise. Take the example of a music producer. The music producer purchases an Apple laptop computer. He then purchases the music composition software (Garage Band) that comes at an additional cost to Mac purchasers. He then uses the musical instruments supplied by the software program to create an electronic song. He adds no instrument of his own. Ignoring more complexities that can be added to this hypothetical, where do we want to assign the property right in this situation? Is our decision affected by how much time and labor the music producer took in writing the song? What if the producer was able to simply write an algorithm after which the software wrote out the entire composition? Merges would advocate the principle of "waiver" here (that the software makers would waive certain claims to the music produced on the software in exchange for expensive licenses), but music is entering a stage where computers are capable of doing almost everything a human is capable of doing (aside from mimicing the natural emotion with which humans are able to play instruments). When we reach the point in the near future where a music producer will be capable of composing thousands of songs in a year with the help of advanced music composition software, do we want to allow him the intellectual property right for each of those compositions? For Kant, the answer would be yes because for him "legal ownership is central to human freedom." The problem with this scenario is that most of the labor is being done by a machine that an artist owns and employs.

Locke could have never envisioned the capacity of the computers of today and tomorrow. Neither could Kant. They have beautiful ideas about property as it pertains to humans that operate in a physical world. Kant was right that we do want to control our environments, but he just didn't know that we could employ the help of machines to do that job for us. I would propose an alternative theory for intellectual property rights to the one proposed by Merges. I would replace the word "labor" with something along the lines of "human emotion," such that the concept would fall in line with the idea of "labor of love." Labor cannot mean the same thing today as it did when these philosophers wrote. In the West, the majority of economic activity is derived from the service sector. We want a property regime that allows this sector to attain maximum efficiency and minimal waste, but do do so, we must avoid assigning property interests for things that are produced almost entirely by machines. Essentially, only humans should be allowed property rights. That would be my first critique of Merges' argument in the first five chapters of this book.

I do however, agree with almost every one of Merges' philosophical arguments for protecting current intellectual property rights assuming any property regime is accompanied by a Rawlsian theory of distribution: "that society retains the right to claims some of the moeny that flows from individual creative works." I concur too with Merges' idea that society shapes the individual's creative capacity (as exemplified by the huge impact the Harry Potter books have had on modern pop culture). Therefore, I believe that we must strike a proper balance between rewarding the individual's "labor of love" and simultaneously, rewarding society at large for everything it does to shape our art and culture. Such an idea is in line with Gordon's idea that original creation can "shift the baseline." Because we have thousands of years of baseline movers and shakers, it would be naive to give the "Desert" to a single individual, especially in light of the fact (and I do take it as fact) that true innovators don't need incentives to produce intellectual property. Fritz Machlup's study supports this. 

Property rights are clearly very important here as in the rest of the world. Hernando de Soto, who investigated the role of property rights in developing societies found that the establishment of well-regulated property regimes is the means of prosperity and growth, and that it must precede all of development. Hume would agree. I agree. What will be very interesting, is to see how this concept plays out in the internet world where a new society is being built around new ideas of ownership and information. Are (intellectual) property rights as important in this medium as they have been in the other mediums? Surely, one issue we will have to deal with is the speed and method by with which IPRs can be obtained. Need our music producer go through the lengthy process of obtaining a copyright for his electronic song before he uploads it to Youtube where it will be remixed, retooled, and rereleased within days or even possibly hours? What about for all one thousand songs? What gives? Maybe we will see not so much a change in the legal framework as a change in the social conceptions of that framework. Maybe we will stop trying to copyright so as to allow for better, faster, more meaningful artistic interactive productions. This video sheds some light on where we may be headed. 2,000 Person Digital Choir (I doubt all these people claim a property interest in the final product).

Patent Pools... what waste... or not? But then again... yes? No? Filtering the antitrust noise away...

Before I turn to the analysis of what I find an intrinsically interesting point, I would like to underline that “Justifying Intellectual Property” is by far the best book I have ever read regarding fundamental justifications of Intellectual Property  (a subject I have given many hours of thought in the past).

 

The point I would like to address today is the issue of Patent pooling. I will first shortly analyze the concept of Patent Pooling. After that I would like to apply a very interesting point raised by Merges, to the concept of patent pooling. I am talking about the theory put forward by Locke that Property should not lead to waste[1]. Thirdly, and perhaps not surprisingly, I will shortly elaborate on what I think of antitrust regulation as a possible regulatory answer to the redress of waste created by Patent Pooling.

 

Patent Pooling. 

 

In general legal literature, patent pools will be defined in two ways:

1. A first way is to define a patent pool as a “consortium” of two IP-owners, who license one patent they jointly own[2] to one single licensee[3].
2. A second, more interesting type of Patent Pooling is “the aggregation of intellectual property rights which are the subject of cross-licensing, whether they are transferred directly by patentee to licensee or through some medium, such as a joint venture, set up specifically to administer the patent pool.”[4]. Key is to understand that patent pools can be created by one entity. Nevertheless, they can (and often are) be created by different holders of Patents as well. All of those holders will, under common agreement, assign their respective rights to one entity through licensing (and cross-licensing) agreements[5].

 

In this post I will focus on the second type of patent pooling. Why? One reason is that I personally see some applicability when reading Merges’ view on Locke’s theory of property. Another reason is because patent pooling is as of these days highly controversial and very often criticized (in many cases from an antitrust point of view). And in that sense I think it is interesting to try and think of patent pools as being waste (or not?) when applying Locke’s theories.

 

Patent Pools as Wasteful Property?

 

A first question we need to ask ourselves is if patent pools are made, conceived or “invented” to make sure pooled patents are never used? Well, in my opinion the answer is obvious: No! No! No![6] Unlike what many conspiracy theorists might think, at the center of the concept of patent pooling lies a goal of furthering commerce and free enterprise. This happens in two ways. Insofar as the pool of patents is what I would call a “homogenous” one[7], the transfer or licensing of all the different, non-interchangeable, patents would imply a lowering of the transaction costs. Secondly, patent pools allow for a better and more commercial valuation of patents. This is so, in my opinion, because patent pools (which are in fact no different from bundled consumer goods) are more easily marketable. Hence, they are more easily scrutinizable in value by a free and competitive market.

 

If this is the end-goal of patent pools, it is hard to apply a theory that would state that patent pools suppress all new technology, or have such an effect. And in that sense, referring to Merges’ discussion at page 57 of the book, we cannot see patent pools as a wasteful way of appropriating. At least, I do not accept arguments stating that losses in potential that would come with pooling and bundling patents (homogenously) lead to waste. In other words, although patent pooling can create severe limitations (even more than the creation of single patents), as long as they are put to use (licensed, exploited, etc.)… they cannot be seen as wasteful (Merges, 58). In my opinion, and perhaps more controversial, the same can be said for the refusal of patent pool holders to unbundle and license the constituting elements of the pool apart from one-another (Merges, 58)[8].

 

Interim conclusion.

 

What I personally conclude from the above is that Patent Pools act no different than single patents. Put it differently, from a waste point of view, a patent pool should be viewed no different than a single patent. Why is that? The answer boils down to what one understands as “waste” under the Lockean theory.

In that I share Merges’ point unqualifiedly! Indeed, a correct interpretation of Locke’s waste theory boils down to the status of unused property. Not more, not less. As Merges states, it is not about frustrated demand (nor unused potential); rather it is about unused property.

In regards to Patent Pools, this leads me to a few conclusions and standpoints:

1. The creation of patent pools… is that a waste? From what I have argued above… it is clear that the pooling of patents forms no waste.
2. The refusal to license is not a waste under Lockean theory. It bears no difference that a refusal is one that relates to a single patent or a pool of patents.
3. A third part of my conclusion relates to the refusal to license unbundled constituting patents of a pool. Does refusing to unbundle and license a part of the pool lead to a non-usage? This is obviously debatable. I will, however, take the stance that it does not. It merely impairs on the potential for the usage of the property and would only lead to frustrated demand.
4. Finally, and this has to be closely linked to the previous point, we must also think about waste when we have heterogeneous patent pools constructed of totally unrelated elements that bear no point pooling other than behaving in such a way as to make the servicing of specific market demands impossible. Is this waste? This one is very hard to argue around… it all depends on the state of mind of the patent pooler(s). What was their goal? An answer to that should reasonably give an answer to the question whether or not there is waste[9].

 

 

Patent Pools and Antitrust.

 

I find it very hard not to, and apologize for, always link(ing) back to Antitrust Law. This being said, as is clear, innovation, property and antitrust policy can never be seen apart from one-another. Both legal theories, in many ways, contradict each other. The most intrinsic contradiction is that one of them tries to eliminate monopolies, while the other creates them. How about stating the obvious, right?

 

What is equally as obvious, notwithstanding the fact that many analysts tend to forget this, is that there is one common turf for both legal theories. In my opinion it is a very important common interest. Both legal theories namely have as a goal the creation of a level playing field and a free market where innovation and enterprise is stimulated in a competitive way. Antitrust regulation and Intellectual Property laws (more specifically Patent law) are “aimed at encouraging innovation, industry and competition”[10]. Let’s, please, keep this in mind.

 

This being said, what I would like to argue is that good policy on the matter of Antitrust/IP should perhaps be influenced (to a larger or lesser extent – depending on the analyst) by fundamental principles of Intellectual Property. In that sense I believe that Locke’s waste-theory is a part of that. The central question is then: how far apart is the conclusion I came to in regards to patent pooling and waste distanced from current antitrust policy[11]?

 

An element I shortly highlighted above was the problem that could occur when patent pool holders would refuse to unbundle (both in particular and isolated cases, as well as generally). I argued, and stand by my point, that I see no Lockean waste in this course of action (as far as patent pools are homogenous of course). Contrary to what I seem to think is a clear slam-dunk on the waste-side, the same is not true for competition policy. Refusals to license, refusals to unbundle and the like form one of the most controversial elements of antitrust policy.

 

So, finally, how does antitrust policy stand towards the concept of patent pooling as such (and not its derivative problems such as unbundling, refusals to license, etc.)? I have to restrain myself of heading into another very long discussion on the subject. A subject that I find extremely interesting. One thing is clear… the answer to the question if Patent Pooling can be seen as waste in the Lockean sense of the word, is one that is clearly negative. The same does not go for antirust policy. There the answer is far more complex[12] and for that matter far from negative. Quite a pity!

 

To conclude:

Waste theory and antitrust policy do not closely fit on top of each other… I think that is a “waste” because the waste-theory is in my opinion quintessential for a good understanding of the economics of Intellectual Property. In the sense, of course, that it gives a good explanation for why monopolization through IP protection is very different from monopolization as put forward in Section 2 of the Shearman Act. It is up to other, in my opinion less material, elements of Intellectual Property fundamentals to better influence antitrust policy.

 

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[1] I acknowledge, after having read Merges, that the discussion still exists as to the proper manner to interpret Locke’s standpoint on wasteful ownership (see Merges page 57 e.f.). I will, however, not get into this discussion and take the findings of Merges as a given.

[2] It shall come, as no surprise that the joint ownership will in such cases not be a mere coincidence. Rather it will exist for causes of pooling and jointly licensing technology.

[3] See to that extent, J. Clark, B. Stanton and K. Tyson, Patent Pools: A solution to the Problem of Access in Biotechnological Patents?, p. 4 (http://uspto.ba0.biz/web/offices/pac/dapp/opla/patentpool.pdf).

[4] Ibid.

[5] G.Colangelo, Avoiding the tragedy of the anti-commons: collective rights organizations, patent pools and the role of antitrust, page 29, available at www.ssrn.com.

[6] Please apologize me for quoting a great inspiration for the way I look at freedom, Dame Margaret Thatcher. This being said, this is the kind of freedom I stand for.

[7] With that I mean a patent pool that is an aggregate of patents that “fit” together in a certain sense. For example, a patent pool collecting all patents needed to create an IPad, or to license Microsoft Word to an end user. I will later, reluctantly, underline that the only way in which we can see patent pooling as wasteful in the Lockean sense of the word, if an only if the pool is made up of completely unrelated patents with the absolute goal of NOT furthering innovation.

[8] Just to be clear, pooling of patents can in my opinion clearly be seen as a way of creating a new form of property. Not property in one creation of the mind, but the property in a bundle of interplays between labor and the public goods.

[9] The same reasoning would, perhaps even more convincingly wasteful, apply to the refusal to unbundle heterogeneous patent pools.

[10] Atari Games Corp. v. Nintendo of America, Inc., 897 F.2d. 1572, 14 USPQ2d 1034 (Fed. Cir. 1990). See also: J. Clark, B. Stanton and K. Tyson, Patent Pools: A solution to the Problem of Access in Biotechnological Patents?, p. 4 (http://uspto.ba0.biz/web/offices/pac/dapp/opla/patentpool.pdf).

[11] In the full and unqualified understanding that waste is just one single element of the fundamentals of Intellectual Property theory as displayed in Merges’ Justifying Intellectual Property. The end-conclusions of this post must therefore not be exaggerated.

[12] See in that regard a delightful paper: J. Newberg, Antitrust, patent pools, and the management of uncertainty, available at http://www.ftc.gov/opp/intellect/020417joshuanewberg.pdf.

 

 

What Determines the Success of a Product? Novelty v. Perfection

What makes a particular creation a grand success?  To me, this is the (so far) unanswered question in the philosophically minded first half of “Justifying Intellectual Property.”  Professor Merges focuses, in his discussion on creators, on the oft-debated proportions of how much society and an individual, respectively, contribute to a particular creative work.  This is so far beyond my knowledge that I instead ask two related questions.  First, how much of the success that a particular creation has hinges on the creation itself, and how much depends on what we might think of as circumstance?  Second, does the distinction between a novel product and an alteration of an existing product give us any guidance in making intellectual property guidelines if the two products have the same market effect?

 

In short, I think we answer the first question very differently depending on the field, whether we are wondering about the arts or the hard IP of technology companies.  Merges gives due credit in his discussion of Jo Rowling to both her fortunate upbringing and her particular will in completing the first Harry Potter installment.[1]  This distinction creates a compelling basis for his apparent endorsement of tax revenue from her income flowing back through the British state.  But it is not clear to me that we understand what makes Harry Potter sell so dramatically more than “His Dark Materials,” or any other fantasy series for that matter.  In other words, I think Merges needs to address the question of to what extent Rowling deserves her own reception, and to what extent it is the result of a fortunate context.[2] 

 

Furthermore: compare, for fun, Salvador Dalí and Pablo Picasso.  I believe that Pablo Picasso was consistently at the forefront of multiple artistic waves in Western Europe (cubism, surrealism, at least), but that other artists (Braque, for example) were almost equally responsible for the developments of those waves.  I believe also that Salvador Dalí essentially spawned a painting form that was never actually recreated by another artist.  A little crazy, I know, but pretend for a moment that I am right.  Clearly each was a genius and both were incredibly successful.  But we must believe that some artists are successful because they create something totally novel (for me, Dalí) and some because they perfect a form that is already in existence (for me, Picasso).  They are both entitled to the same level of intellectual property protection, but should they be?  Generalizing away from the high arts, we can recognize that both novelty and the perfection of an already existing product can generate huge success and both are often protected by intellectual property schemes.[3]  But do we value both kinds of creation equally?  Might that distinction affect the way we distribute any resulting prosperity?

 

To bring this discussion home, we might discuss any of the hugely successful technology products we see everyday.  We might think that Google perfected e-mail, or that Apple perfected the cell phone.  We might also believe that Microsoft did more of the grunt work behind the popularity of personal computers, and we remember when AOL brought many of us e-mail for the first time.  But Apple and Google are reaping arguably more of the benefits from perfecting and releasing their products in the context of already-budding industries.

 

That might be fine if we value the perfection of products and the novel creation of products similarly, and if we think the same proportions of individual will and societal backdrop go into each type of creation.  Personally, I do not, and I do not think I can justify intellectual property without a stronger protection for novel paradigm shifts than for perfections and compilations—even if they have identical market effects.   I believe this comes intuitively from a sense that what makes a novel creation successful is a larger proportion of individual will or talent, and that a larger proportion of societal context and fortunate circumstance makes perfection and compilations successful.  This may be empirically wrong.  Either way, I think the distinction between novelty and perfection merits some consideration in any justification of intellectual property.

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[1] Talk about a fortunate upbringing: http://en.wikipedia.org/wiki/Bill_Gates#Early_life

[2] Two caveats. I was an avid Harry Potter reader and think that Ms. Rowling is great. And I recognize the dangers of blogging about proportionality when it is the title of the next chapter in our reading.

[3] Dalí : Microsoft :: Picasso : Apple?

Toward a New Perspective on Privacy

I share Mr. Strahilevitz's optimism regarding the potential for information technologies to reduce pernicious forms of discrimination. But it can't be denied that life in such an information-rich ecosystem would be nearly unrecognizable from our current cultural vantage point.  People are already very skeptical of sharing information about themselves, although Mr. Strahilevitz makes a strong case that this would be better for them in the long run.  So the question is, how can we make people more comfortable with opening up?

I worry that the way people are accustomed to defending their interests legally will be a main impediment to progress in this area.  People who go to the legal system for some sort of redress usually do so because they think that some right has been violated, and although there is no right to privacy per se, this kind of thinking is very attractive to people.

If we're to make optimal use of the information revolution, we need to combat this idea that privacy is an inherent good.  To this end, I'd like to sketch out some ways of thinking about privacy that I think are useful.  Privacy is often seen as an end in itself, but instead should be construed as instrumental, and less or more important in given contexts.  It matters a lot more, for example, to people when people in their communities are more likely to judge them for their actions: Gays and lesbians had a much greater interest in keeping their sexual orientation private before it became more socially acceptable.  I think changing the context in which discrimination operates by cultivating a sense of inclusion among people would go a long way in this regard.  But this will in turn require a new perspective on what makes humans valuable to each other. 

A main source of pernicious thinking about privacy comes, I think, from the law's repeated insistence on treating people as individuals instead of as loci of human experiences embedded in social networks.  In our modern information economy, a great many people earn their livelihoods from the products of their mental work; but the social element of mentation has long been vastly underplayed by the law.  I worry that, as long as the law treats thoughts as emanating from individual intelligences, people will always clutch at their privacy in attempts to protect their livelihoods, thereby reducing the amount of information available for anti-discriminatory uses.   Some anthropologists believe that, although Neanderthals had larger brain capacities than modern humans, the latter outcompeted the former because increased juvenilization made us more docile, and thus more willing to cooperate -- especially in intellectual endeavors.  Although our brains have shrunk, the story goes, our social intelligence has grown because of our willingness to share information with each other.  I think the law can help this evolutionary trend along, but to do so, it must be prepared to cast off Englightenment-era thinking about where thoughts come from, and what humans really are.  

Is Tennis Really That Popular?

One of the joys of encountering a new social theory is that it affords one the opportunity to reevaluate stale phenomena from a different perspective. Professor Strahilevitz’s discussion of inclusionary voids launched me on just such an inquiry. His treatment of the manipulation of club goods reminded me of a rumor that I heard and unthinkingly believed when I first came to the University of Chicago. The story goes like this: Long ago, Hyde Park was dotted with outdoor basketball courts. These courts were widely used by the local African-American community, a fact which upset the segregationist aims of the City and the University. The powers-that-be responded by uprooting the basketball courts and replacing them with tennis courts.

This rumor has much to recommend it. It explains the otherwise mystifying concentration of tennis courts in the area. It rests on several seemingly true assumptions: the University actively fought regional integration (we’ve all read Hansberry v Lee); urban basketball is popular among young blacks; tennis is not popular among young blacks.[1] We can easily recast these same intuitions in Strahilevitz’s framework. The basketball courts were an inclusionary amenity that enhanced the value of the surrounding neighborhood for the predominantly African-American population that enjoyed the sport. Conversely, the same courts were an exclusionary remedy for the local white population.[2] By replacing the basketball courts with tennis courts, the authorities furthered their segregationist aims by simultaneously: (1) creating an inclusionary void for the African-American community, (2) creating an exclusionary amenity for that same community, and (3) creating an inclusionary amenity for racists and tennis-lovers. For a segregationist city planner, this seems like a pretty good tactic.[3]

After some research, I have tentatively concluded that the rumor is not true. My curiosity piqued, I spent the late afternoon today poring through old maps in the Map Collection at the Regenstein Library.[4] I’ve determined that there were 3 tennis courts and no outdoor basketball courts in the area in 1936.[5] This trend apparently continued until the urban renewal program of the 1950s, at which point Hyde Park underwent a drastic transformation aimed at reducing urban blight. At that point, several blighted areas were replaced with new city parks. None of these parks featured outdoor basketball courts. Two of the new parks (54^th and Drexel and 54^th and Kimbark) were slated to have tennis courts, and tennis courts were also to be added to an existing park at 49^th and Kenwood. Later, additional tennis courts were constructed at various other locations. As far as I can tell, none of these tennis courts were built in the place of existing basketball courts.

So, what does this tell us? First, the very existence of the rumor supports the proposition that we all have inchoate intuitions about the efficacy of exclusionary amenities and exclusionary vibes. After all, the rumor’s attraction hinges on the plausibility of a city planner adopting these tactic (in Chicago, at least). Second, even with the rumor dispelled, the actual history gives us an important lesson in how urban renewal projects can effect gentrification through the creation of inclusionary voids. While no basketballs courts were destroyed to make way for tennis courts, the City plans for reforming Hyde Park featured no basketball courts. Thus, while Meredith holds up the urban blight of DC as an opportunity for the installation of FiOS as an inclusionary remedy—Hyde Park should be held up as a cautionary tale of how urban renewal can be used to accomplish exclusionary aims.[6]

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[1] At the risk of ruining the narrative—this is likely not very accurate at all. A handful of Hyde Park Herald articles evidence the popularity of tennis courts among the wider South Side community.

[2] This is a slightly deviant use of the term. Strahilevitz generally uses it to refer to club goods that effectively tax those who don’t use them. By my thinking, in an urban environment with limited space and limited government resources, the decision to allocate land and parks money to a basketball court rather than, say, a swimming pool amounts to the levy of both an effective and actual tax on the local population. This is somewhat equivalent to Strahilivetz’s example of the church in the Catholic town bordering Ave Maria.

[3] This raises an interesting secondary point. While I lack empirical basis to actually reach any conclusions, I wonder if government planners haven’t used exclusionary amenities and exclusionary vibes to establish their exclusionary aims. If so, this would point to an odd disconnect in the government mind. I take Strahilevitz to argue that the regulation of exclusionary amenities is lacking at least in part because government actors are unaware of the phenomenon. But if government actors are actually using exclusionary amenities to achieve their aims in other contexts, then it seems odd that they would be so ignorant.

[4] I scanned some of the maps, but I need to reprocess the images (and shrink them) before I can post them here. I’ll post some in the comments later this evening or tomorrow.

[5] This is hardly surprising given the fact that basketball was significantly less popular in the 1930s than it is now. However, a discussion of the changing popularity of basketball—and the shift in the demographics of basketball enthusiasts—is beyond the scope of the present discussion. Suffice it to say that basketball was less popular and less racially homogenous in the early 20^th century.

[6] A similar argument can be made w/r/t the radical reduction in drinking establishments in the Hyde Park community over the last 80 years. (I have a map showing the amazing number of bars along 55^th Street in the 1930s). I would imagine that the elimination of venues for public drinking creates a highly effective inclusionary void for

Stealth Marketing

- Another Form of False Feedback

As Professor Strahilevitz points out, in using the reputation system, we should note that there are some people motivated to provide false feedbacks.  When he talks about such false feedbacks, he focuses on cases where valuators provide unduly low evaluations due to their discriminatory views.  Ryan’s example of “ratemyteacher.com” may be another example of such a falsely negative evaluation of the subject.  However, we should also beware of another type of information distortion, which may be as problematic – falsely positive information, or stealth marketing. 

- Intentionally Dishonest Reviewers

According to Wikipedia (or precisely its chache, due to the blackout), stealth marketing “is a subset of guerrilla marketing where consumers do not realize they are being marketed to.”  The word itself can include a wide range of activity, but let me take an example from a recent scandal involving the Japanese largest restaurant reviewing site called “Tabelog”.  It was reported that some reviews at Tabelog were actually posted by advertising agencies (Tabelog denies its involvement in the activities by these agencies).  Tabelog is an anonymity-based website, and we cannot tell which reviews are generated in the course of such marketing backed by restaurants.  Even if many of the reviewers are sincere as Professor Strahilevitz says, there may be those intentionally dishonest.

- Algorithm and Counter-algorithm

Shortly after the news, a geek created a website (http://crazyworks.jp/stlg/) which has a function to “guess” which restaurants on Tabelog are employing stealth marketing (please understand that restaurants with red texts in the column on the right are suspects of stealth marketing).  This website uses a very simple algorithm.  It basically regards a restaurant as a suspect, if (i) it receives more than 5 high-rated reviews, and (ii) many of those reviews are posted by reviewers with few past review posts (implying that the accounts might have been newly created for the purpose of marketing).  This website is a good example of an algorithm to exclude outlying reviews that are likely to be distorted.  However, we should note that counter-algorithm can be also invented, and such an invention can be encouraged especially when economic motivation is involved.  In this regard, such an algorithm should be held secret when false information is generated by commercial motivation, so that the counter-algorithm cannot be created.  On the other hand, the algorithm should be disclosed in case of a peer review at workplace, so that racist employees will learn to evaluate their minority colleagues equally in the hope of having their opinions more highly weighed.

- Fighting Stealth Marketing

Falsely positive information should be excluded as well as falsely negative information.  However, even if law prohibits such stealth marketing, it may be difficult or costly to enforce it.  Given that the reviewing website is anonymity-based, to detect a money backed reviews are far more difficult than to detect or prevent identity theft.  As Ryan suggests in the conclusion of his post, giving up the anonymity might lead to a solution (stealth marketing will be literally impossible).  But disclosing their names may discourage reviewers from posting reviews.  Alternatively, to scrutinize the reliability of each reputation system can be a stopgap measure.  Maybe we should not too much rely on the reviews on Tabelog, while we might be able to rely on the personal information disclosed in LinkedIn to some extent (given that the users are using the website with their names for the purpose of networking, to place accurate information there might be important to gain a job opportunity, or obtain professional trust from their “connections”).  Conversely, as Professor Strahilevitz suggests, in designing a reputation system, it is also possible to create a system encouraging participants to provide accurate information.

 

Race and exclusion and social meaning

I find affirmative action in a college admissions in intersting topic that has come up frequently in posts in the context of Strahilivetz's book.  Nicolas Steenland and Angus Ni discuss the "Lowell effect" and how the policies have disproportionatelly impacted Asian Americans.  Which leads me to the question of what are the goals of these affirmative action policies?  And are they being reached?

The short answer to the first question is diversity.  And this is something Strahilivetz discusses at length, and what the benefits are to a society that becomes more inclusive to avoid historical homogeneity.  The benefits can be seen in a variety of scenarios, whether it be a college campus having people from a variety of backgrounds and viewpoints sharing among each other and growing as adults, or even appellate judicial panels that have an amplifier effect when all share similar ideological beliefs and how panels are affected when members have a mixture of political viewpoints.

But affirmative action in college admissions is not only to increase the value of one's education through heterogeneity, but also to "level the playing field," which is a phrase I don't like.  Perhaps it could better be described as an attempt to equalize opportunities.  Regardless, it's unclear whether that goal is reached, especially given the discussions of Nicolas and Angus.

Nicolas mentions the "cut-off" method some universities use, where people that reach a certain class rank in high schools can achieve admittance into college.  Texas used to use such a system, which scholars argued achieved overall greater diversity than a system that uses race.  

There are a few reasons for this, and they have to do with the same principles that come up over and over again in the book.  Using imperfect proxies for imperfect exclusionary mechanisms leads to imprefect results.  I discussed this in my last post regarding using golf as an imperfect way to exclude based on income and race, and it also came up in discussions on criminality as proxies.  

But in terms of academic opportunities, race is only one of many traits that are used by schools as an imperfect means to achieve diversity.  James Heckman is an expert on the inequality that exists in America.  He finds that half of the inequality in the present value of lifetime earnings is due to factors determined by age 18.  This is also the age around when college admissions is determined.  Which is why I worry that an equalizing opportunity policy that takes place around this time just happens too late to achieve the change desired.

Factors that determine a person's education capabilities and opportunities are affected by things like socioeconomic status, geographic location, type of household, level of education attained by a parent or guardian, and the like.  This impacts things like how involved a parent or guardian is in one's education, from helping out with homework to being involved in the school system to exercising school choice, which has a huge effect on how well someone does in school.  Such factors also have a racial component as Heckman finds in his article "Schools, Skills and Synapses."  There is an education gap, much like Strahilivetz's discussion of the incarceration numbers, where different groups of people are affected by societal factors to varying degrees.

Andreas Baum elaborated on this "tricky issue" in his post, where he recognized that "even when we eliminate discrimination based on proxies which we find unacceptable, we still end up with the problem of discriminatory effects."  Yet affirmative action in college admissions seems to go about it the opposite way.  And by using race as a proxy for these societal advantages, while it does work in benefitting some it doesn't attack the heart of the issue in as successful a way as the high school class ranking system.  And as Nicolas and Angus pointed out, it also creates what I see as problems with the system.

This problem I see with affirmative action I also see with the incarceration and criminal background discussion we've had in class, online, and that Strahilivetz has in his book.  I can not get past the question of what kind of social meaning is attributed to race when things like affirmative action or mandatory criminal background checks are instituted.  I understand that things like race and exclusion are delicate topics and incredibly complex, which is why I applaud Strahilevitz for discussing so many of these complexities in such an informative way.  But I worry that when any type of classification is used in an attempt to correct for inequalities, whether they bring new harms, much like the harms brought to tenants with the change in landlord-tenant law that Conor Shaw pointed out.

My concern really came to a head on page 180.  There Strahilevitz was discussing the inequalities in the criminal system, and how a welfarist or utilitarian should support his terms of view when he asked "Why shouldn't we help decision makers identify these particularly desirabe individuals [black non-criminal offenders versus black criminal offenders] with greater ease?"  Upon reading that question, so many answers came to mind.   Because we don't want to support what is honestly a racist system.  We don't want to justify peoples racist opinions.  

Asher's example of a UCLA student who was almost charged with a sex offense for peeing in a public is a perfect example.  What kept that student and not others from having to register as a sex offender is bluntly put as advantage.  That person was a very advantaged individual in the view of society overall.  So society treated him differently.  He used what means he had to protect himself from a sex offender label.  Others who don't have that advantage are in such a higher risk of switching from desirable to undesirable that the question posed by Strahilevitz is so much more frightening.  When that line is so thin, to then use systems that seem to give it so much more power, that is unsettling to me.

Now I am not saying that I don't support criminal background checks.  I'd like to know whether my neighbors or murderers or sex offenders as much as anyone else.  But my worry is that the more things like criminal labels are weighed by decision makers, the more the information becomes available, the more inequality that results.  And while having criminal background checks leads to more hiring among African American males, I worry that by having such a check sends a signal that this group is deserving of suspicion, and that's such a harmful signal to send.  I just don't want the sorting that Stahilevitz proposes to justify racism and a broken societal system.  And while Strahilevitz openly mentions during the discussion regarding incarceration that he's setting aside other measures to fix inequality, I worry that in the real world, proposals like mandatory background checks won't just be an aside to other measures, but will replace them.  And I worry about the type of legitimacy that some people could inappropriately read into mechanisms like the ones Strahilevitz proposes.

Bundling-bis...

Just like many others before me, I should compliment and thank Prof. Strahilevtitz for the swift and eclectic way in which he has succeeded to underline, discuss and promote a little popular debate. And indeed, although I have a terrible time fully adhering to it, many forms of exclusion are repulsive. Yet again, just like Strahilevtiz correctly underlines, others are desirable. Anyhow, enough pleasantries.

 

I was enchanted as well as stimulated by Pedro’s post on tying and bundling. This is a very delicate subject in antitrust policy. Bundling or tying can be controversial from a consumer protection point of view. Moreover, in the EU[1], antitrust laws can be hostile towards the forbidding of bundling[2], as well as being hostile towards excessive bundling at the same time. Quite a schizophrenic situation!

 

The unbundling of a club good (exclusionary amenity) based on anti-trust laws? Is that, then, what we want? What would the unbundling of a club good look like? Let’s say that the inclusionary amenity of a residential building is a pool. This amenity has an inclusionary effect on all those appreciating sipping a cocktail while reading a book (but then, at home, and not in Barbados). This would, of course, mean a higher price of realty in such a building. This higher price, and the fact that some people would not appreciate having a pool, or not value it that much to pay the extra price for it, could in itself form an exclusionary effect to the amenity[3]. Unbundling that could look something like allowing non-residents to come and swim in the pool in return for a reasonable fee. How to think about that in the background of Strahilevtiz’s story? This is not really relevant for this post. But one way to look at it, is to inquire as to the willingness of tenants and owners to let outsiders in their building, using their amenities. There is a sense of free-rider ship to this. But again, this is next to the point I am trying to make.

 

So, unbundling… is that good? Is that economically valuable? We should remember that bundling or tying has obvious economics of scale working for it. Suppliers of bundled products are namely able to offer their products at steeply reduced prices[4]. This is an advantage of tying and bundling that has to be preserved in my opinion. It is hence desirable (and applaudable) to see antitrust laws that recognize this feat. Regulatory language providing that bundling should lead to a (financial) advantage for consumers should be read in such a way. And in that sense, bundling on the market for consumer products, just like excluding through amenities (both inclusionary and exclusionary – they are opposites) is far more justifiable given economic context, than bouncing someone out. Why? Just as I argued in my previous post… Exclusion through amenities is not an exclusion per se, a mere but rising of the barrier. One just has to raise its own bar if one does not wish to be excluded.

 

In the case of consumer products, a reduction in price has to be set off against the higher barrier to entry. How is that so? The cheaper price you get the base product for should be deducted from the extra barrier (the exclusionary amenity) that is the bundled good. In other words, the size of the consumer welfare might very well be so large as to fully do away with a barrier to entry created by an exclusionary amenity. Put it differently, let’s say you are rehabilitating from an intense car crash. Your therapy consists of learning to walk again. A good thing to do as part of learning to walk again, and create new muscle tissue, is to do so in a pool. You could buy a pool. Great idea! Not so great if you are barely insured, had to sell your home to pay for the basic treatment, etc. Another option (and agreed, there are more) is to pay a relatively more expensive rent in abuilding that has a pool as part of its amenities. The relative cost of the pool, deducted by the saved costs of living close to the place where one has his treatments, reduced by the cost of having found a roof over ones head… leads to a severe lowering of the barrier to entry in my view. And the same argument could be made for the person that highly values owning an IPhone, but who is not willing to pay 715USD (taxes  included) for an unlocked ine, but is ready to pay 90USD[5] and having a plan by AT&T added to it. The consumer welfare (at least in the mind of our IPhone-lover) has outpaced the barrier of the added AT&T-plan.

 

Finally, another positive externality of allowing socially acceptable bundling, is that it allows for more consumers to gain access to more products. As well as it allows for producers of consumer products, to create new and better products.

 

It is all, in fact, a question of wealth redistribution. And as long as such redistribution is socially viable, it should be welcomed as much as possible, even though it excludes or includes. This being said, even in the circumstances I am aiming at in this post, information availability will still have the effect of excluding some. It has often been my experience that the bundled offers (most often in technological products such as mobile phones, tablet PC’s and the like) are those that carry with them lot’s of “fine print”. Not very desirable from a consumer protection point of view. Those that do not want to take the time to surmount the costly information-seeking activity of reading all the fine print, and those who just don’t understand it, are actually excluded. Consumer organizations such as the Belgian “Test-Purchase” may be very material in lowering the information-cost and hence raising the social value of tying (for example through memoranda comparing all different bundles). This, I believe, would be one kind of the “information Policy” that might influence private actors, which Strahilevitz[6] would (rightfully) like to see some more.

 

Just as I argued before, exclusionary amenities should be regulated very differently from bouncer’s rights. Why? As I said, they create positive externalities that have to be set off against the costs of exclusion. Adding this story today, I can conclude it by saying that a regulator has to act only when the net effect of the abovementioned subtraction is a positive one. Applied to tying, unbundling can only be allowed, I think, when not separating a club good and a basic good would lead to social loss. Another question is, of course, who and how to monitor this. And more importantly, who should pay for that monitoring?

 

To finish, a quotation from Perdo’s post:

“… Should we analyze only the effects of the conduct and sanction homogeneity? In my opinion, none of these solutions is viable without a huge margin for error and the resultant inefficiency (sanctioning desirable conduct or not sanctioning undesirable conducts reducing deterrence).

If we cannot find an efficient framework maybe it is a better idea just to leave the market to work. After all, if heterogeneity is such a desirable good and discrimination is so despicable, the market should choose the first and sanction the latter…”

 

I could not have said it better.

 

R.F.

 

 

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[1] Which, I have to say, has a very different approach to Antitrust law.

[2] Let me take another example that quite close to me. Belgium had, for a very long time, rules prohibiting the bundling of goods to sell them to consumers. Only in very rare occasions would you find exceptions to that rule in the laws of Belgium. This rule, which made no strict economic sense, was abolished by the European Court of Justice in ’08, stating that it runs against the principles of consumer protection and competition law not to allow bundling (under certain circumstances I might add).

[3] Another interesting point of analysis is to what extent inclusionary amenities form exclusionary ones at the same time.

[4] Think of the Blackberry you can have for 10 USD with an added phone-plan (costing you 50USD a month).

[5] Without having checked if this is a realistic price, of course.

[6] See for example page 196 of Strahilevitz, Information & Exclusion. 

 

Information Access and Exclusion

In the second half on Information and Exclusion, Professor Strahilevitz describes how information can be used to combat some forms of undesirable exclusion. Easier access to criminal records or a reputational histories would reduce reliance on race as a proxy, since people would be able to make exclusionary decisions based on (ideally) more complete and accurate information. For example, the taxi driver would be less likely to discriminate against the African American customer if the driver had ready access to information that the potential fare had no criminal record and an excellent reputation in the community.

 

But who would have access to this new information system? Are some people more likely than others to be able to take advantage of the anti-exclusion benefits? The benefits of the sort of information system Strahilevitz proposes will accrue primarily to people who live in areas with the economic and technological resources to support the system, and to people who have the time to take advantage of the system. If the line between the information-rich and the information-poor is drawn along the same lines as the exclusion we’re trying to eliminate, this is a problem.

 

In her post about fiber-optic internet service (FiOS), Meredith noted that “[m]aking high-speed internet available to residents in poverty-stricken areas … could function as an inclusionary amenity,” since it would both encourage heterogeneity in urban housing and allow the current residents more economic and educational opportunities. Making high-speed internet available in poverty-stricken areas would also help those residents benefit from the potential information resources Strahilevitz describes. The sort of information system Strahilevitz proposes will require significant economic and technological investment. Based on the history of the deployment of other information technologies – like FiOS – it is possible that people who could benefit most from the anti-exclusionary effects of information would be among the last to receive those benefits.

 

In Aaron’s post, he discusses the possibility of “information overload” and the importance of having a searchlight policy with a “narrow beam.” This is especially important given the different levels of access people have to online information. If someone has nearly constant access to the internet – with Wi-Fi at home, a high-speed network at work, and a smartphone everywhere else – she will have an easier time keeping up with a steady flow of information throughout the day. In contrast, if someone only has access to the internet through time-limited use of a computer at a public library, she will need to be much more efficient in how she approaches information search and retrieval. These different levels of access to information are often related to socioeconomic status, so poorer segments of society may benefit less (if at all) from online information that is provided as a solution to undesirable exclusion.

 

This post is not meant as a criticism of Professor Strahilevitz’s argument, but rather as a reminder that any proposal that relies on information as a tool – especially as a tool to combat discrimination – must address the problem of ensuring access to that information in the first place.

 

It's not one-size-fits-all.

The second half of information and exclusion presents a number of ways in which information policy can shape the mode of exclusion. For this post, I thought I’d go through each chapter and summarize what seemed to be the most important points and offer a few thoughts along the way. 

In Chapter 7, Strahilevitz offers two ways to remedy exclusionary amenities: (1) unbundle the amenity from the other communal goods; or (2) force the bundling of exclusionary and inclusionary amenities. The caveat is that we may yet want to allow minority groups to use exclusionary amenities when they are demonstrably innocuous.

I thought this chapter was extremely interesting—especially when Strahilevitz mentioned the possibility that diversity itself could be an inclusionary amenity (i.e. a community might engage in some sort of affirmative action for the purpose of attracting individuals who would like to be part of a heterogeneous group). Even more interesting is the notion that individuals might strongly support amenities that they have no intention of using simply because those amenities will attract a more diverse group of members. The idea is a powerful one—and suggests that policymakers can have a big impact just by framing the debate. The decision to create an amenity should not just be based on the calculation of the direct utility of that amenity to each community member; rather, the indirect effects of the amenity—such as a propensity to create a heterogeneous community—should be considered too.

In Chapter 8, Strahilevitz introduces the reputation revolution and offers several ways in which the “kinks” in reputational information could be fixed. Here, the tone is relatively optimistic. There is good reason to believe that the increased accuracy and availability of reputational information will have positive effects; greater transparency and opportunity for feedback can create the conditions under which social cooperation thrives. One of the real insights of this chapter, though, was the importance of considering the reputational consequences of changes in substantive law. The example given is the ban on self-help eviction in landlord-tenant law, which moved parties to a formalized eviction regime that created a record. That record was then used by landlords to exclude tenants who had previously litigated. 

That last point seemed to me to be almost underserved by the book. Strahilevitz’s argument is not just that there are alternatives to command and control policymaking; rather, it is that direct changes in formal rights may create an easily identifiable class of persons who can then be excluded entirely from the system.

Chapter 9 introduced the concepts of curtains and searchlights—important alternatives to the traditional carrot and stick. Curtains make potentially observable characteristics obscure, while searchlights make legitimate or informative characteristics more observable. Here, Strahilevitz introduces some simple rules of thumb: if animus-based discrimination is more of a problem than statistical discrimination, then curtains, not searchlights, are appropriate. Second, to improve the quality of information, introduce feedback mechanisms and filter outliers. Such tools prevent reputations from being hijacked.

With respect to searchlights, I think it is important to stress that the term is meant to refer to areas in which the government can make certain characteristics easier to identify. Some earlier posts seemed to imply that searchlights were simply any government policy that favors disclosure of any type of information. 

Although the book at large stays away from sweeping normative claims, Chapter 10 addresses how different normative preferences may influence the decision of whether to make available or how to structure information. As such, if we are concerned about the welfare of a group subject to statistical discrimination, we should limit the antisorting strategies to those cases in which the employers are underestimating the correlation between a group classification and a undesirable characteristic. While external policy preferences (such as an interest in post-conviction rehabilitation) may counsel against more information, we should look for direct subsidies to counteract the potentially damaging effect of accurate, accessible information on certain groups. And finally, if we think that implicit or underlying prejudice remains, a kind of Rawlsian reputational affirmative action may be necessary.

This chapter is extremely important, as it addresses many of the objections that arose in our discussion last week. Resistance to the reputation revolution may be strongest in those who have the most to lose through greater transparency. There also may be policy preferences—such as remedying the effects of past discrimination—that counsel against the release of certain types of information. The purpose of the book is not to suggest that these concerns are irrelevant; rather, the suggestion is that we need to think about who bears the costs of each information regime and whether those costs are consistent with our policy preferences. Furthermore, there may be ways to offset the impact of a searchlight regime on a particular group by providing direct subsidies or other benefits. 

As is implicit from my post, I thought the book was excellent. It steered away from grandiose claims and instead provides modest (and sometimes qualified) suggestions for thinking through the exclusionary implications of information regimes. Strahilevitz suggests that there is rarely, if ever, a one-size-fits-all approach; however, using the terms and insights of Information and Exclusion, a policymaker or community association would be well placed to consider the implications of various information and exclusion regimes. 

Reevaluating Who Cares

After reading the first six chapters of Professor Strahilevitz's book, I found myself asking the question: who cares? This question was founded on the assumption that the mechanisms used for exclusion would continually get more difficult to detect, more tailored, and more "reliable." Essentially, the fact that exclusion was "advancing" was all the more reason to refrain from trying to stop the natural development that would take place anyway, and to refrain from attempting to differentiate between the mechanisms being employed. The end would justify the means so to speak. However, I do believe the second part of Professor Strahilevitz's book offers some really meaningful insights into why we should care. I also believe, these answers inherently bring about many new questions that we will have to deal with: most importantly: ISN'T THIS ALL SIMPLY A FORM OF SELF-EXCLUSION AND NOT EXCLUSION AS WE TRADITIONALLY DEFINE IT?

Strahilevitz offers a solution to the exclusionary amenity problem, believing that "where there are substantial concerns about the use of exclusionary amenities to promote homogeneity, the law might demand the coupling of exclusionary club goods with inclusionary amenities." (124) This statement leads me to believe we need to reframe the issue: instead of viewing the excluders as the such, we should view them as the excluded. Implicit in Professor Strahilevitz's argument throughout the second half of the book is the assumption that those being "excluded" want or need something that the excluders' possess, and that whatever it is that they possess is better than what the rest of society has to offer. Restated: let the excluders exclude, what they have to offer cannot possibly be as great as the sum of the alternatives. Strahilevitz says "given society's interest in promoting diversity among communities, as well as diversity within communities, there are arguably instances in which the law should promote the use of exclusionary amenities." Here, Strahilevitz is essentially arguing that society has an interest in creating paradise (no problem there), but to get there we must exclude sometimes? If we really want perfect diversity in our communities such that we obtain between-group and in-group diversity, one would think that we should bar all forms of exclusion and allow society's inhabitants to self-select into perfect diversity. I tend to think such a scenario is impossible. So what about allowing some exclusionary amenities? By condoning some exclusionary amenities, I believe Strahilevitz refutes his previous statement that society's interest is in promoting perfect diversity (unless we are speaking about diversity for diversity's sake, and not true, natural diversity), and so he brings us back to the question of who cares? Who really cares about the exclusion that is taking place? Professor Strahilevitz is one of the most brilliant people I have ever heard in a lecture room, and is an academic worthy of all the praise he receives, but I think academics sometimes tend to take ideas to their logical extremes, making the idealogical arguments seem impossible. Community diversification is one of those ideas. We should not seek diversity for diversity sake. If diversity should take place, it should be through inclusionary principles and not exclusionary ones.

Either we ban ALL exclusionary principles, including even those based on race, gender, etc., or we reframe the problem and argue that those in society who seek "homogeneity" are excluding themselves from the diversity the remainder of the population currently enjoys. Most of society has created an inclusionary approach to "community" because they cannot afford not to. I don't know about others, but I would prefer to be a part of the larger inclusion than the smaller one. Some people will argue: "you can't tell me you would rather live in a gang-riddled ghetto with poor health and safety standards than a quiet residential golf community." To that I would respond that I would not, but not because of the differences in people, because of the differences in circumstances. If the government wants to solve problems of exclusion, it should not focus on the forms of exclusion as Professor Strahilevitz discusses, it should focus on the reasons for exclusion. 

I believe Strahilevitz gives some great accounts of why we should care about the concept of exclusion (ie lawyers being excluded from New York rental housing because they are too smart), but in the context of the internet, I still believe we should not care about exclusion. The example of red apples in a grocery store is perfect. Let's allow apple producer's to reduce the reliability of the signal of redness. That will only create incentives for consumers to develop improved "technologies" that are more closely correlated with taste. Maybe there's an iPhone app that can detect the ripeness and deliciousness of a particular apple. Maybe internet reviews of grocery stores will divert customers from red-infusing farmers to "au natural" farmers. Whatever it is PEOPLE WILL WIN THE WAR. Let the excluders continue to exclude, whether it be in reputation based review-websites (US News Rankings), pricing structures (Amazon's customer price discrimination), or even computer-generated personality assessments (mobile computer phones capable of recognizing subjects and determining important characteristics). The technologies will develop such that those who exclude, will be left out of the inclusion that is taking place everywhere else. And for all of the areas where we may care about exclusion, because of its really significant and proximate effects, we should focus on the underlying factors for why people exclude and address those as opposed to how they exclude. We should address poverty, not the Chapel at the heart of a Christian community. 

I want to finally address Jessica's post concerning the preservation of opportunities for a "fresh start." Strahilevitz is quite right as Jessica proposes, in advocating the reputation revolution. Such a revolution, as I've stated earlier is a way that the people win the war. Discrimination that is traditionally carried out through imperfect proxies can be reduced by improving the proxies, but by how much? Jessica seems to believe that limiting information histories to 7 years or something of the sort will help prevent "over access" and will allow for people to create "fresh starts" for themselves. Such an idea is a beautiful concept and one that I believe Professor Strahilevitz would support. However, I also think we should understand what this reputation technology is before we make too many recommendations: it is an online identity, and a reliable one at that. If we allow people to hit the "refresh" button every so often, the reputation function is not as strong, and eventually it loses its power. I believe we either want to accept the power of the technology and limit reputational access (as Strahilevitz discusses with regard to medical records) or we reject the power of the technology and allow people to define their online identity as they see fit. I would accept the former at the expense of the latter proposition, unless we maintain a comprehensive "reputation" of people's real-world identities in a protected government database. I just don't think that the future holds much of a place for physical forms of record keeping, so I will propose the former. 

 

The Public/Private Distinction: Leaving that Discourse Behind

[Responding to Angus, Christian]

 

“The study of law consists of two branches, law public, and law private.  The former relates to the welfare of the Roman State; the latter to the advantage of the individual citizen.”[1]  The public-private distinction is foundational in Western law, but we need to be careful, when employing it, to recognize its limitations.  I’ll discuss one context—education—in which the public/private distinction is actually less helpful than it initially appears, and in which we might instead turn to information policy to move beyond it. 

 

Education is in some ways the classic public good.  It is universal, compulsory, and probably represents the place where we as a society have agreed to spend the most time together regardless of our differences.  Yet, as we all know, the image of diverse primary and secondary education is often pretense.  Majority or well-off groups (usually whites) have found methods, though privatization, religious schools, or residential habits, to limit minority enrollment at their schools.[2]  Efforts at combating these trends, mostly through busing, have either failed or dwindled.[3]  Taking a step back, private parties are succeeding in excluding certain groups from a theoretically public good through the combined use of practical difficulties, vibes and amenities.  Maybe that’s fine, but the public/private distinction is not very helpful if the government’s stated job is to facilitate the integration of schooling.

 

Affirmative action is an obviously hot topic, so excuse me in advance.  If our goal is integrated high schools and colleges, then the plans affecting Asian-Americans and others in places like Florida, Texas, and California (where large state schools employ class rank cut-offs, often in lieu of technical affirmative action) might interest us for a reason not mentioned by my colleague and friend Angus.[4] In other words, one effect of the cut-off might be to incentivize relatively well-off groups, like whites and (maybe?) Asian-Americans, to avoid racially monochromatic high schools.[5]  This may be unfair to students below the cut-offs, but it could be more successful in incentivizing integration of secondary education than was Brown or the busing movement. 

 

I say all this to go back to the private/public distinction in Roman law.  I think by concluding “education is public” it might immediately follow that these de facto affirmative action programs are for the good of the country, and by concluding “education can be private” we then allow for the advantage of the individual.  But the public/private debate in education could go either way, so maybe we should look at the problem instead through the lens of information policy.

 

What information should the government organize and provide in the realm of education?  Tentatively . . . most of it.  Privacy and proxy concerns abound, but if we take the empirical evidence referenced last week (by Conor?) and in the book seriously (that employers with criminal record access actually hire more minority employees), and expand it hypothetically to college admissions, we might be much less worried about them.   Ultimately, the government might not need to consider public/private distinctions as much when it is regulating through information policy as it does when it regulates bouncer’s exclusion and the like directly.

 

In summary I think professor Strahilevitz does a good job in limiting the public/private distinction in his book; whether the reasons above have anything to do with that, I am not sure.  Hooray information.

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[1] Justinian’s Institute, Book I Title I: “On Justice and Law”

[2] http://press.princeton.edu/titles/8043.html, for further reading

[3] Most interestingly, http://en.wikipedia.org/wiki/Swann_v._Charlotte-Mecklenburg_Board_of_Education and the history after Swann.

[4] http://www.browndailyherald.com/2.12237/without-affirmative-action-asian-admission-rates-rise-1.1671413#.TxRnqGNWoQ8, though the cut-off tactic is obviously not limited to big state schools. [Angus might or might not be comforted to know that Emory University, my own alma mater and a top 20 University, accepts 41% white students, 33% Asian-American students, and 9% black students... in a city that is over 50% black]

[5] Indeed this is happening, at least for Asian-Americans. http://www.americanthinker.com/2005/08/asian_americans_and_affirmativ.html. Also, disclaimer: I intend, when referring to "(maybe?) Asian-Americans" as well-off, to refer specifically to their apparently high academic qualifications for college admission.  I mean in no way to say that Asian-Americans enjoy the same privileges or advantages as whites in America in any broad sense, and that discussion is not at all the target of my post.

Information and Exclusion, Re-Applied

Race becomes an unavoidable subject when half a book is focused on the word “exclusion,” since racially based exclusion is the most obvious and visible form of exclusion. The book makes no pretense of this, lets talk about it.

North America, being a pluralistic society, is in the essentially unique position of being faced with massive sociological issues associated with the reality of race. The book postulates that the intelligent management, dissemination, and availability of information can help society deal with issues associated with race, let us examine this further.

It is well known that many Universities practice discriminatory undergraduate admissions practices against Asian students, requiring higher SATs and GPA than Caucasian students. The presumption is that the Asian work ethic emphasizes extremely hard work and rote learning, which make Asian students especially adept at taking standardized exams and excelling at relatively easy pre-secondary education. The assumption is that this puts students of other races at a disadvantage. (In Canada, where colleges do not practice any form of affirmative action or discrimination, elite universities, such as my Alma Mater the University of Toronto, have huge Asian student populations, leading to articles such as these: http://www2.macleans.ca/2010/11/10/too-asian/) The recent tigermother hullabaloo has only entrenched these notions further.

Having gone to UofT, where the phenomenon is visible, I am inclined to agree with the presumptions above. I understand that intelligence is not necessary to excel at High school, which is intellectually undemanding enough such that sheer hard work can easily substitute if one takes the right courses. But a few problems arise when one practices affirmative discrimination to counteract Asian families’ tendencies to make their children work harder:

First, shouldn’t hard work be encouraged and rewarded? If someone worked hard enough because they want to attend a fine university, shouldn’t their drive and determination be appreciated? Second, presumably universities themselves, which pride themselves on their academic standards, also have confidence in the rigor of their regimes of instruction and examination, which presumably requires both hard work and intelligence, and would weed out those students that only possessed one of (either) the two criterion? Third, does insulating other students from the competition presented by hard-working Asian people actually benefit them? Does the school have an interest in maintaining a “party culture” that would be diminished by the presence of too many Asian students? Would the presence of Asian students even do this? Perhaps it would be good to expose hardworking Asian students to a good time, such that they realize that hard work isn’t everything? Fourth, how would one distinguish between Asian students in tighermother families versus Asian students who are not? Fifth, by cutting hardworking Asian students out of top universities, the system simply drives them to lower-tier schools, where they still work as hard (and perhaps not even as hard as they would have to at a top school), and put students of other races in those schools at a disadvantage. Wouldn’t admitting them into the top schools, where they compete against each other, be better of the rest of the student population? Further counter arguments (many of which are permutations on arguments made by anti-affirmative-action groups) abound. All of these things result from using an inaccurate, stereotypical, and generalized proxy to isolate for characteristics that span across race and culture. The schools simply do not have enough information. 

In this situation, the manipulation of inclusionary or exclusionary amenities would supply meager assistance for the schools. The attraction of top universities is their academic reputation, and short of downgrading that, their attractiveness to hardworking Asian students would not change. But all of the above concerns would be resolved if more information were to be made available. If the schools know exactly what sort of family background each applicant came from, their work ethic, and can precisely measure their intellectual capacities, racially based selection would diminish. Of course, at some point, the information seeking would run into privacy concerns, as they always do when complete information is the desired level of knowledge.

That privacy concern is in the end, the one problem that information-based social policy-making will always run up against. I would postulate that rather than mandating the total public availability of information about individuals in the hands of the state (not that we shouldn’t do so for some sets of such information), we should allow individuals the choice of making any information they desire public, and give them the platform to make ANY kind of information they chose to make public about themselves. Each institution that must make exclusionary choices should also be allowed to design their own platforms to most efficiently solicit/extract information about an applicant that would be relevant in making a holistic admission/exclusion decision, subject, of course, to identified boundaries (for example race). A quick reading of pages 130-131 makes this scheme seem close to becoming technologically possible, and implementation may simply occur without any state incentivization. 

 

False Information on the Internet

    Strahilevitz acknowledges the fact that as employers and consumers increasingly "Google" individuals before hiring them or doing business with them, we have to be aware of the problems false information can bring on community rating sites. While it might not be that big of a problem for a restaurant or an eBay seller to deal with a few negative reviews, assuming that the public realizes that not everything on the internet is true, a negative review directed at a person, especially one that is accusatory of the person's character, can completely ruin that individual's career. For example, on the site ratemyteacher.com one can find all sorts of reviews, supposedly written by former students, which accuse teachers of being child molesters, racists, sexists, etc. Although many of these reviews are false, having been written by students unhappy with their grades; unfortunately some of them are true. Thus, while a future employer might dismiss one negative review as an outlier, what is a teacher to do if a group of students decides to try to ruin his or her career by making a series of false accusations? In addition, does a school have a duty to investigate each claim that a possible employee or one of its current teachers is sexist . . . a racists . . . a child molester?

    While Strahilevitz correctly assumes for the most part people are honest with their reviews online and that is why community review sites can function, this may not be the case when dealing with a group of high school students. Furthermore, even if programs are getting better at identifying, and in many cases removing outlying information, this does not solve the problems of a group of students, or an individual posing as a group by using multiple accounts, attempting to torpedo a teacher's career. Furthermore, since sometimes these accusations end up being true, it is not clear that outlying information should be removed before being looked into by the proper individuals.

A problem today for many good teachers accused of bad conduct is how to clear his or her name. The path is currently not easy, as merely obtaining the information about an anonymous user's identity from a site owner may require a lawsuit in which the teacher must show that his need for the information outweighs the poster's right to be anonymous. The irony is that in filing the suit, the teacher would essentially be brining even more attention to the accusation. Furthermore, even if the teacher were able to sue the student for defaming him, it is likely that the student and his or her family are judgment proof. In addition, the site owner is not liable under current law. Thus, the teacher is caught between a rock and a hard place. If he does nothing the accusation remains on the internet for all to see. If he tries to remove it, he shines the spotlight on the accusation and takes on legal fees he may not be able to recover. In my opinion, the easiest way to deal with this problem is to hold the website owner liable to the teacher if he does not require that all users register with a student email and hands this information over to the school administrators upon request. While this may reduce the likelihood that students will be honest with their reviews, if numerical ratings are detached from comments, students could safely rank the teachers, without fear of the consequences. Although there is much to be said about the anonymity on the internet, lawmakers should recognize that in some cases the harm caused by allowing individuals to post blatantly false information should rule against anonymous postings. While making the decision on where to draw the line is complex, perhaps a good starting point would be when the posted information accuses an individual of crime.

Exclusion and private relations: Let’s be honest…

In his book Professor Strahilevitz describes the mechanisms that could be use to exclude and in which way each of them could be considered as substitutes (imperfect substitutes, but substitutes at the end). His findings are interesting from a public policy perspective because it shows us the problems of the antidiscrimination regulation.

As Professor Strahilevitz explains, regulation only prohibits what we could consider an “open” exclusion, like exclusion by bouncer’s rights or advertisement. Nevertheless, the regulation has no problems to accept “less open” mechanisms of exclusion (indirect exclusion), like the exclusionary amenities or vibes.

This scheme of regulation leads us to some questions. Why the regulation was design in this way? Why we only have concerns about “open” exclusion?  What are the effects of this kind of contradictory regulation?

I think that the first problem is that the regulation doesn’t make a very important distinction for any antidiscrimination system (neither professor Strahilvitsz in his book): Who is making the exclusion? Indeed, we can think in a different treatment for exclusion in the context between private relationships and relationship with the government.

Even if we disagree with some kind of exclusion (race, religion), we must admit that people should have the right to exclude others in their private relations, even because of features that we consider inadequate (race, religion).  No regulation can make people go against their own preferences and forced them to build relations with people of different races, religions, or beliefs. It’s clear that the government can’t make such exclusion when is providing education or social welfare. But, why the privates can’t do that? An example (to be honest, an extreme one) could help us to see this aspect.

In some countries where the prostitution is considered a legal activity, the places where these services are provided have the right to make direct exclusion between their consumers because of race. The explanation is quite obvious: These kinds of services are clearly related with personal features and preferences, something regulation can’t disregard.

This same idea could be applied to other cases (not as extreme as prostitution). Why the regulation should prevent people to exclude accordingly to their own preferences? If we can understand that such provision should be applied for public housing, it doesn’t have to be the same for private housing. As a matter of fact, some European countries (like Germany) make this clear distinction: While government is not allowed to make any exclusion, privates can do it in their relations (for any reason).

The prohibition of exclusion in private relations only leads us to a simple consequence: we are not going to eliminate exclusion; we are only going to make it more costly and inefficient. Indeed, the exclusionary amenities are only the response for a demand of exclusion. Every time we found an unsatisfied demand, we will see how it finds the way to satisfy their needs. That’s why, in some way, the exclusionary amenities works like a black market: With this mechanisms people obtain the same result (indirectly), but in a more expensive and inefficient way. Expensive because people have to pay for a service or good that in other context they probably wouldn’t buy (bundle effect). And inefficient because the regulation is only raising the price for exclusion (as a tax, but without its benefits).

In the other hand, a regulation that only focuses in the supply is not going to solve the problem of exclusion. Indeed, the problem of exclusion is a problem of demand, not a problem of supply. That’s why if regulation prohibits exclusion in private relations that is not going to eliminate the problem. Privates are going to find the way to satisfy the demand in other ways (same logic of black markets). In this sense, I preferred the idea of Professor Strahilevitz of inclusionary strategies; for example, using inclusionary amenities. The benefit of these strategies is that they attack the real problem: the demand for exclusion.  Indeed, probably these strategies are a better way to spent government’s resources, rather than imperfect prosecution. 

 

    The first part of Professor Strahilevitz's book focused on defining the different types of exclusion and setting up his thesis that the availability of information affects the method of exclusion that will be used. In contrast, the second part of the book takes a predictive and normative tone, suggesting ways that the government (through law) can help reduce discrimination through the disclosure of information.

    While Professor Strahilevitz makes a very strong case for his predictions, something struck me about his argument that reminded me of our in-class discussion: even when people cease to rely on proxies such as race, gender, or age, in favor of more directly relevant data, we may still observe a discriminatory effect.

    As an example, Strahilevitz notes that "28 percent of African American males, 16 percent of Hispanic males, and 4 percent of white males [will] be incarcerated at some point in their lives." Setting aside the idea that we should eliminate discrimination in the justice system or pervasive socio-economic disparities among people of different race--both of which factors likely contribute heavily to these skewed numbers--, one disheartening conclusion is somewhat inevitable: even if we discriminate based on what we consider a socially acceptable criterion, it will have greater, and therefore discriminatory, effects on members of certain classes. We can all agree that basing hiring decisions on incarceration is better than using race as a proxy, but even so it will lead to discrimination by race.

    This is a tricky issue. Do we care about discriminatory intent but not about discriminatory effects? That can't be right.

    Professor Strahilevitz discusses the example of the jury selection process. Even if we have a voir dire system that prevents lawyers from determining people's race, if we discriminate based on criteria like education, prior incarceration, or income, rather than race, gender, and age, each factor may affect members of one race, gender, or age disproportionately. 

    Depending on the factors used, one might see different results. If the lawyers wish to strike all people with criminal records, if we accept the statistics cited by Professor Strahilevitz, they are likely to remove a greater proportion of African American males than white males. If the lawyers wish to strike high-income or highly-educated jurors, this may have a different impact, though maybe less pronounced. Because eliminated jurors are replaced randomly from the jury pool, the result is a jury bench that no longer reflects the distribution of people in society, but tends to favor the majority at the expense of minorities.

    Incidentally, one could solve the problem in the case of jury selection by altering the process through which replacement jurors are selected: rather than drawing them randomly, one could draw them from a pool of jurors that share race, gender, and age characteristics of the eliminated juror: if a lawyer wishes to strike a middle-aged white female juror, any replacement will have to be a middle-aged white female juror. Presumably, such a system wouldn't be too difficult to implement. But such a system wouldn't be very easy in the employment context.

    My point is that even when we eliminate discrimination based on proxies which we find unacceptable (race, gender, and age for example), we still end up with the problem of discriminatory effects (otherwise we would have to question why these factors are being used as proxies in the first place).

In Praise of Arbitrariness

In Information and Exclusion, Professor Strahilevitz writes about the competing interests between privacy and anti-discrimination laws given that additional information can help to tailor information in a way that prevents over-exclusion based on more troubling (and legally protected) characteristics such as age, race, or gender. He states that "the tradeoff makes privacy law and institutional arrangements that obscure information about individuals' reputations far more problematic than courts and theorists presently suppose." With additional information, those looking to exclude can move the magnifying glass away from traits such as age, race or gender and onto other traits -- perhaps sorting by those that are more gemane to what they are seeking to exclude. In the context of anti-discrimination laws, then, more information seems to make a lot of sense.

However, it seems we should still be mindful of other consequences of information and the ability to sort. As businesses such as Amazon are able to tailor their recommendations to people more finely and as people are able to get more information about the people around them through social media such as Facebook prior to engaging in interaction, people are getting more of what they think they want -- and lost in the process perhaps is the ability to be pleasantly surprised by something.

There's a Rolling Stones song that tells us that sometimes you don't get what you want, you get what you need. However, with the influx of information and technology, people are able to fine tune their sorting much more to make sure they only get that they want. Getting your news via RSS, permits people to only get the news that corresponds to their specific interests (if they set it up correctly) instead of having to sift through a bunch of headlines and perhaps discover something that expands your horizons. In much the same way, having access to more information about people allows you to "sort" people very specifically, but perhaps it means we're also losing something in the process. 

Furthermore, just as reading news with only one type of political slant serves to amplify one's beliefs in that direction, being around people that are similar to you likely amplifies your current traits and interests and therefore probably hinders personal growth. It has been argued, too, that recommendation models such as Amazon's has served to block out less mainstream products and purchasing options, resulting in a general convergence toward a marketplace where majority rules more than ever.

The ratings sites and mechanisms mentioned in the book, too, likely all lead to users and people's over-reliance on that data (see U.S. News Law School Rankings) and a general convergence on a single view to the exclusion of lesser-held opinions. While search costs are reduced when information is boiled down to a single data point, perhaps we only think minimizing search costs is the top priority when really doing more research and exploring would be better for us.

The problem, then, with more information is that just as it can be used to implement diversity it can also be wielded as a tool that results in much greater and likely too much homogeneity. 

Then again, from a legal perspective, to the extent we are concerned about social implications of a plethora of information, much of the information governed by laws such as privacy laws (criminal records, etc.) are probably those that are more useful in an anti-discrimination context rather than a social context. Most of the "social" information -- such as interests, occupation, socio-economic status -- is probably conveyed voluntarily in a way that is often outside the bounds of privacy laws anyway. To the extent we are concerned about preserving the marketplace, the impact of privacy laws and other policies on things like ratings or purchasing history may have somewhat more relevance; the more aggregation of data that is allowed, the more the problem of homogenization is exacerbated.

My point is, there is something to be said about arbitrariness, though I leave fully open the possibility that other considerations will and should be given greater creedence. Still, as the legal landscape of tech policy is shaped by technology and the information revolution, we should remember the valor of rolling the dice and being surprised.

Searchlights

Prof. Strahilevitz notes a few ways in which governments might use searchlight strategies to help cure information asymmetries. Health inspection data helps consumers decide where to eat based on cleanliness of the restaurant, which from a public policy perspective is probably a better criterion than many others, as it should have a direct effect on the amount of food-borne illness. The SEC mandates disclosures which allow investors to make decisions based on hard data instead of rumors and intuitions.

While the increased amount of information may help decision-makers make better decisions, if not managed or presented effectively it could actually reinforce poorly informed decisions. One can imagine the deluge of information that do-good government agencies could over time develop and throw at consumers and providers to help them make decisions — without accounting for those people’s ability to process the information and employ it effectively. So a good government information policy should employ a searchlight with a narrow beam, to avoid information overload.

Another issue — which Prof. Strahilevitz duly notes — is that well-intentioned searchlights can be used to discriminate in ways we don’t like. Powerful information can be dangerous in the wrong hands. For example, a recent article in The Economist took a look at some new research into flu viruses. Researchers tinkering with bird flu have created a variation that can be more easily transmitted than previous forms of the flu. Officials fear that terrorists could use the research to create “the atom bomb of biological warfare.” Therefore, the National Science Advisory Board for Biosecurity is asking research journals to severely limit its publishing of the research, so as to prevent ready access to a potentially devastating virus. This is a form of a curtain that the government is trying to draw around the sensitive information. Suppose the government was instead shining a searchlight on the research for other reasons; perhaps, for example, pharmaceutical companies who increasingly rely on leading research to produce their yearly vaccines could clamor for more information about the results of studies done by researchers. Government officials cave to the pressure and establish a database of ongoing flu research. While pharmaceutical companies may use the information to provide a better product and make better decisions, terrorists can use the same information to build a super-virus and hold the world hostage.

I don't know how these two points affect government policy with regard to technology. Government may use the searchlight tool to cure statistical discrimination -- for example, by shaming an Internet service provider who refuses to provide service to minority neighborhoods. But when is information too extensive to be useful to decision-makers? When is the ambient light provided by private actors bright enough to negate the government's searchlight? And when should government restrain its searchlighting impulse?

FiOS for all!: "Tech colonies" as a tool of urban revitalization

In 2009, I, a then-resident of Washington, DC, was overjoyed when I heard news that Verizon planned to deploy fiber-optic internet service in the District. Five minutes of impatient Googling soon uncovered the truth; due to a variety of concerns, FiOS would not be available in the inner District (where I lived) until 2013 at the earliest. Part of the delay was due to the logistical nightmare of ripping up streets to lay down new cable. Much of it, however, stemmed from the fact that demand already existed in the easier-to-reach residential and aerospace corridors in suburban Virginia.

An aside, for those who have never visited: Washington, DC is a vibrant, historic, and deeply troubled city. Though it has made significant strides in the past two decades, it is one of the most racially and economically segregated cities in the country. The city was the epicenter of the civil rights movement in the 1960s and 70s, and a combination of riots, social upheaval, and white flight left the city with a predominantly African-American population and an unsettling poverty rate. Between 1960 and 1970 the percentage of the District’s population that was African-American jumped from 53.9% to 71.1%, where it hovered until the most recent census (at which point it dropped to about 50%). ^[1] DC's black population is concentrated primarily in the northeast and southeast quadrants of the city. (The northwest quadrant – often derisively referred to as “Upper North-White” – is largely Caucasian.) Poverty, while always an issue, has recently become even worse; in 2009, 26.8% of African Americans in the District lived below the poverty line. ^[2]

The District has had some success with the urban pioneer model of gentrification, though it has not been without controversy. The largely African-American U Street corridor, once home to countless jazz clubs, black-owned businesses, and the capitol’s African-American social center, has become the new “hip” place to live for young white urbanites. ^[3](Tellingly, the first thing a visitor sees upon exiting the U Street subway station is a Starbucks.) Traditional, real estate-driven gentrification has become a symbol of racial tension within the city, and any new attempts to revitalize communities should be done with an eye toward lifting the boats of existing residents, rather than sweeping them aside.

Making high-speed internet available to residents in poverty-stricken areas (such as the southeastern Anacostia neighborhood, recently a target for redevelopment) could function as an inclusionary amenity which avoids many of the pitfalls of traditional gentrification. Such a process typically results in the displacement of a neighborhood's original residents as property values rise. However, the availability of high-speed internet would allow the existing population more economic opportunity to form small businesses and improve educational opportunities, even as the amenity attracts new demographics.

There's compelling evidence to show that the attraction would indeed be strong: residents of the northern Virginia suburbs face a heavy tax burden compared to their urban neighbors, and less access to public transportation. Moreover, downtown areas of the District offer a wide variety of nightlife, as well as the "edgy" appeal of living in economically disadvantaged neighborhoods. The availability of fiber-optic internet could spur business development in depressed areas and lure young, tech-savvy residents out of the relatively bland, family-oriented suburbs and into blighted neighborhoods as “urban pioneers.” Rather than artist’s colonies, Washington could thus promote a network of “tech colonies”  that combine access to valuable technological commodities with low taxes, affordable housing options, and “Skid Row” appeal. 

However, it’s unlikely that this would attract more long-term residents or those with families; decades of urban blight have left the inner District without many basic amenities. DC’s public schools are famously low-achieving, and maintaining a car in the District is a hair-raising (and costly) experience. The District contains only a handful of full-service grocery stores, and those tend to cater to the very upper (Whole Foods) and very lower (corner-store discount grocer) ends of the income spectrum. However, if DC does manage to lure young, tech-savvy professionals into its blighted areas, this could likely shift over time.

DC’s population also exhibits a high turnover rate, which could work to its advantage. Because many young professionals are tied to the government, they often cycle out with administrations, or as they transition to new points in their career. The youth population of DC is highly mobile, and tends to stay for only a few years. Because of this rapid turnover, generational shifting in neighborhoods is accelerated, and if a “tech colony” does take root, dramatic effects could be achieved in a short period of time.

Of course, the dangers of gentrification are inherent in any attempt to “revitalize” neighborhoods.   While not perfect, high-speed internet may end up providing the most socially equitable path for neighborhood redevelopment.

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[1] Historical Census Statistics On Population Totals By Race, 1790 to 1990, and By Hispanic Origin, 1970 to 1990, For Large Cities And Other Urban Places In The United States (US Census Bureau)

[2] District of Columbia: S1703. Selected Characteristics of People at Specified Levels of Poverty in the Past 12 Months (US Census Bureau)

[3] Surviving Gentrification Along the U Street Corridor (Grassroots Media DC)

Unbundling Exclusionary Amenities?

As stated by Professor Strahilevitz “[t]he aspiration of this book has been to shine the light on exclusionary practices that have long been shadowed”[1]. In my opinion, this objective has been achieved successfully. The organic treatment of bouncer’s rights, exclusionary vibes and exclusionary amenities in different situations made me realize how exclusionary practices have evolved from the crude and simple rejection to a sophisticated nudge (vibes) or to an efficient market’s tool for exclusion (rising costs by the use of amenities).

Anyhow, even recognizing the efficiency of the different exclusionary tools in achieving their purposes and understanding our first impulse to regulate them, we should always remember that “[e]xclusion is sometimes quite valuable, it is oftentimes inevitable, and it has always been misunderstood”[2]. We cannot avoid all kinds of exclusion and, even regarding unlawful discriminations, overregulating the market may produce pervasive results.

Regarding exclusionary amenities, the author suggests unbundling such amenities from the desirable good[3]. Is that necessary or even recommendable? As an antitrust remedy, unbundling is applicable to dominant firms who are transferring their market power from one product to another by “bundling” or “tying” the sale of both of them, making it impossible or unreasonable (bundling discount) to acquire only the product that the consumer really wants. Selling two products together, even with discounts and by a dominant firm, is not always an antitrust violation. Antitrust laws require something more[4]; even more than simply intention or purpose.

Should we apply the requirements of antitrust laws to regulate unbundling of exclusionary amenities? Should we require that the desirable good (tying good) is not available by itself in the market and that no competitor can provide it at a competitive price? Should we require that the seller of the goods be a dominant firm (has market power)? Certainly we cannot apply those requirements, because in unlawful discriminations we are not worried about the effects on the market of a specific good; but we are worried about the negative externalities of the discriminatory behavior: psychological harm, inequality of opportunities, social outrage, etc.

If the requirements of antitrust laws for unbundling are not applicable, what rules should control the use of such amenities? Should we sanction and unbundle all club goods? Should we investigate the intention and private thoughts of developers? Should we analyze only the effects of the conduct and sanction homogeneity? In my opinion, none of these solutions is viable without a huge margin for error and the resultant inefficiency (sanctioning desirable conduct or not sanctioning undesirable conducts reducing deterrence).

If we cannot find an efficient framework maybe it is a better idea just to leave the market to work. After all, if heterogeneity is such a desirable good and discrimination is so despicable, the market should choose the first and sanction the latter. Definitely, for the market to work there is a need for information. If we want the market to sanction the unlawful use of amenities or club goods, consumers need to learn the complex strategies for exclusion, and, from this point of view, Professor Strahilevitz’s book is a great beginning. It “searchlights” the correct direction.

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[1] Lior Jacob. Strahilevitz, Information and exclusion (New Haven [Conn.: Yale University Press, c2011.), 198.

[2] Ibid.

[3] Ibid., 123.

[4] For a complete explanation about tying and bundling discounts: Herbert J Hovenkamp, “Discounts and Exclusions,” SSRN eLibrary (2005), http://ssrn.com/paper=785966.

 

Making Sure the Future Still Allows for Fresh Starts

In the second half of the book, Strahilivitz does a good job of laying out why we should support the reputation revolution.  Since exclusion is going to happen anyway, and statistical discrimination is a fact of life that is difficult to regulate, open access to people’s history will be beneficial.   The more information we have, the less deadweight loss will be associated with inefficient proxies.  Assuming this is true, and the end of privacy is both beneficial and imminent, it seems that from a policy perspective we now must determine how we will regulate this open access to people’s individual histories.  Strahilivitz touches on what I think is one very important aspect, that is limiting certain information to certain markets (such as medical records to medical industry actors and employment evaluations to future employers).  This will not only make people feel more comfortable, but it will also ensure doctors, employers, etc. are candid in what they have to say.  If we implement a public online data bank, this would be an important restriction.

 

The other thing I kept thinking about while reading was the case of the nineteen-year-old kid who doesn’t truly understand how a credit card works.  Or the employee who gets a bad review because she had a horrible relationship with deranged boss.  Shouldn’t these people have the opportunity to have these things off their reputation record?  After all, a person’s credit score can be rehabilitated after a bankruptcy and their insurance rates decrease after so many months of being accident free. This is done because we as a society generally believe that people can change the way they live their lives and should not be tied forever to a bad decision they made when they were younger.   It seems that if the regime Strahilivitz is proposing were to be implemented, a similar ability to move forward from past transgressions after a certain number of years would be vital to making sure people aren’t being wrongly excluded. 

 

Under a system where only your last, say, seven years of history are documented, most of the benefits of information access that Strahilivitz discusses would still exist.  It is unlikely that only having access to seven years of information would cause people to revert back to statistical discrimination.  At the same time, there would be the added benefit of people knowing that their actions today will not haunt them for the rest of their lives.

 

A drop off date would not be necessary for all kinds of information, just that which would be used to exclude people.  Since producers are not usually looking to exclude any customer, there seems little harm in keeping a person’s purchasing history and particular tastes around.  More likely than not, the producer will throw out old data it perceives it to be useless anyway.  And since the government would likely not get into the business of storing our Amazon histories, it seems there would be little difficulty in distinguishing between consumer and non-consumer information.

 

I should say that I don’t know how I feel about a public data system that is online.  Part of me sees this whole regime as a way to make discrimination less expensive.  However, if one is going to be created, it seems that some safeguards would need to be in place to make sure that people have a chance to change their paths in life.