Wednesday, May 30, 2012

Optimal intellectual property protection (part 1)

You often see stuff from the MPAA and RIAA about how piracy is destroying all artists' livelihoods always forever.  The natural solution to this problem is to somehow end piracy through legislative penalties.  So what does that look like?  Let's look at some horribly skewed and biased numbers!

Apparently, there's a man named Stephen Siwek who is happy to produce research showing the devastating effects of copyright infringement.  He isn't very creative about names though; one might even think he plagiarized himself.  But don't take my word for it, look at the names of his two "studies":

For the RIAA:   The True Cost of Sound Recording Piracy to the U.S. Economy
For the MPAA:  The True Cost of Copyright Industry Piracy to the U.S. Economy

It's a little tricky, because the Sound Recording Industry is a subset of the Copyright industry, and, actually, so is the Software Industry, which I won't discuss here.  Both these studies have some important characteristics though.

  • They assume substantial full price substitution rates.   In fairness, I read through the "Sound Recording" report, and found that its estimated substitution rate is 60.7% for physical piracy and 20% for digital piracy.  The 60.7% is absurdly high based on my brief survey of the literature, but the digital piracy number is actually on the low end.  The most recent research (admittedly using a sample of U. Penn undergrads... not exactly a representative demographic in any way) puts it (and physical piracy, incidentally) at between 15% and 30%.  Of course, some researchers show no effect on physical sales and slight positive effects for online and concert sales (that's on an international sample, but its methods are a little harder to follow and its credentials aren't as towering).  The "Copyright Industry" report only says "less than one", a value it claims is "conservative" on the grounds that some internal industry "estimates" claim that it is exactly one.  Furthermore, each lost purchase is imagined to have replaced one at full price and new.  
  • They calculate losses in the global market. So piracy in China is lumped right in and used to justify stronger copyright enforcement in the U.S.  I mean, maybe fair enough for treaties, but in general? 
  • They show "total economic output lost".  This goes beyond lost sales to include the hypothetical economic impacts up and down the supply chain of the copyright industry. 
  • They neglect the obvious economic benefits to consumers of receiving goods for free. This seems particularly relevant given their lost sales model of substantial purchase substitution, and their insistence on evaluating macroeconomic effects.  Every dollar not spent on frivolous entertainment is available to be spent elsewhere, in some other industry (or in the same one, for that matter).  Effectively, they are assuming that people choose between purchasing music and "pirating while putting the money they save under a rock".
  • They rely substantially on confidential and industry provided data.  Well of course they do; how else could you produce credible looking studies without any means of verification?  Well, I guess they aren't that credible looking.
  • They include both physical and digital piracy.  Bootlegs, bit-torrent, mix-tape? All the same.
Anyway, the number Siwek comes up with for the cost of worldwide, savings-burying, any format, substantial pirated-copy-to-lost-new-sale substitution, all-copyright-industry piracy is:  

58 billion dollars.

So, that's a lot of money, I guess.  By contrast, if a naive but mathematically capable person tried to estimate the cost of pre-screening all copyrighted content on youtube alone through manual human curation they'd come up with something between $441,029,692 and $36,829,468,840 per year. Ahem:

37 billion dollars.

And that's just youtube! Imagine all the streaming sites and content lockers...  Plus, the comparison is unfair because youtube doesn't host software or videogames--both major contributors to that headline number.  If you chop out Software and Videogames from the 58 billion total estimate you are left with 19.256 billion dollars of loss per year (approximately, since they don't actually break this out by industry I have to do some funny stuff--basically I multiply the total loss by the percentage of direct loss in the music and media industries: 33.2%)

Now, those numbers are quite silly.  Also, they naively ignore the existence of Google's Content ID system, which basically does this automatically in software.  One might imagine it is substantially cheaper than any of the estimates of human manual labor curation.  The point (for tonight) is merely that anyone with a bit of time and some trumped up numbers can make pseudo-reasonable apocalyptic claims about the cost of enforcing or not enforcing copyright.  Next post, a closer look at the genuine economics and law of the situation.

Contrarian Confessions

I've noticed that as I anticipate my move to San Francisco my views have been skewing more conservative / conservative apologist than usual.  It's not that I'm becoming Republican; that would be ridiculous.  Rather, I seem to be unconsciously prepping my internal devil's advocate in anticipation of being immersed in a much more liberal environment.  I fully realize that this is conclusive evidence that I am a broken and perverse creature.

Friday, May 25, 2012

Why do we disagree? contd.

The recent debate over the student loan rate hikes is a great example of the ways in which fundamental policy agreements can be obscured by other issues.  In this case, Republicans and Democrats agree that student loan rates should not double this year.  If these were the good old Bush Years that would be the end of it because, as Cheney allegedly said, "deficits don't matter", but nowadays everything but tax cuts for the rich have to be paid for.  Which leads us to the confusing state in which the Democrats have blocked the Republican bill preventing the rate hikes, and Republicans have reciprocated.  Democrats like to pay for things with tax increases on the wealthy, and Republicans like to pay for things with "dynamic scoring" and/or imposing further financial burdens on the poor and middle class.

Problematically, this issue has been spun by both sides as evidence that the other wants to impose rate hikes on students.  The general public has a natural bias towards not giving a shit about accounting unless the political classes are really insistent that it matters, so politicians preferentially phrase disputes as policy disagreements.  But a disturbing number of bills fail due to the same fundamental disagreement over how much money the government should spend, and where it should come from.

From my perspective, this is doing it ass-backwards.  You figure out what you want to do, then you figure out what it should cost, then you figure out whether it is worth doing, then you figure out how to pay for it.

The Republican strategy is to pick how much they want to spend, and then eliminate social programs until they get far enough below that spending number to give some tax cuts to the rich.  The Democratic strategy is to pick policies and pay-fors in an ad-hoc manner, which would be fine except that you lose sight of the greater context that way and you have to have two debates for each policy, one for policy and one for pay-for.  A better strategy would be to work out a bunch of things you want to do each year, prioritize them, and pay for all the ones you can afford. But that would require a fair amount of consensus about a) priorities and b) how much can be afforded, and we have neither.  Please can we get a parliamentary system?

Monday, May 21, 2012

Notre Dame is suing the government on the HHS mandate... and that's fine by me

The Catholic Church's displeasure with the HHS contraceptive mandate is common knowledge, so it is no surprise that the University of Notre Dame--"where the Catholic Church does its thinking"--is filing a lawsuit opposing it.  Regular readers of this blog might be expecting me to get huffy at this point and start arguing about how wrong the whole thing is, but, readers, prepare to be surprised.  I am totally okay with the lawsuit, and the reason is simple: the lawsuit is against the finalized January rule, which includes none of the compromises I think make the HHS mandate acceptable.  The compromise rules are still in the "open to public comment" phase through June, and, as Jenkins stated in his email to ND:
Although I do not question the good intentions and sincerity of all involved in these discussions, progress has not been encouraging and an announcement seeking comments on how to structure any accommodation (HHS Advanced Notification of Proposed Rule Making on preventative services policy, March 16, 2012) provides little in the way of a specific, substantive proposal or a definite timeline for resolution.   Moreover, the process laid out in this announcement will last months, making it impossible for us to plan for and implement any changes to our health plans by the government-mandated deadlines
Okay, so I do take issue with the notion that there's little in the way of a specific substantive proposal in the March 16th public comment document.  I've read it, and it is tediously specific.  It isn't the full exemption I suspect the University is gunning for, but I think it represents a morally valid compromise because it incorporates all the stuff I've talked about in my billion other posts on the subject.  Since the University only has a year to comply, and there's no sure reason to believe that the accommodations will be finalized by that time, it is in the best interests of the University and of religious freedom writ large to sue and at least obtain a stay until accommodations can be implemented.

Also, I think that the lawsuit could clear up some interesting muddles in the area of religious freedom.  I rather suspect that in this case the right of people to privacy regarding their sex lives will trump the rights of religious organizations to force their agenda on non-conforming individuals if this makes it to a high court.

Sunday, May 20, 2012

Government: what's it for?

A quick one, for the record.  Here's what I think government is for:
  1. organizing broadly beneficial collective action that doesn't arise from commerce 
  2. preventing people from harming one another (including things like breach of contract, infringement on civil rights, &c)
So basically, to convince me that legislation is applicable, you have to show that either a) people are harming each other or b) the market is failing to provide something of broad societal utility.  Also, the legislation has to help.  Is there anything else government is for?  Are my criterion too permissive?

Saturday, May 19, 2012

Who are the prominent liberal crazies?

I've noticed recently that many of my conservative friends spend a lot of time disavowing beliefs commonly associated with the extremes of their party--creationism, Obama birthplace conspiracies, and the gold standard being particularly common examples.  I've noticed, however, that though these ideas are pretty clearly wrong if you care to look at "facts" or "the world" or "logic" they tend to enjoy support from fairly prominent Republicans.  Sarah Palin is a creationist. Ron Paul is all about the gold standard, and despite the release and vetting of every form of birth certificate known to man, Obama's birthplace is still treated as suspect by many Republican lawmakers.

In the interest of balance, I was trying to figure out what the extremist ideas on the liberal side of the spectrum were, and who was giving them voice.  But I can't find anything even close to comparable.  Is this my bias, or are Dem's just more grounded in reality?

Thursday, May 10, 2012

Delightfully Wonky

I thought I was going to have to do it myself, but this slide-deck from the White House puts together the graphical evidence about economic performance under Obama quite nicely.  Highly recommended for people who want to get a sense of context for the economy.

Tuesday, May 8, 2012

HHS contraceptive mandate debate: summarized

I just got asked for a summary of the HHS contraceptive mandate debate.  I've written quite a bit on the topic previously, but since the situation (and my understanding of it) evolved over time, I thought it would be worthwhile to pull together my previous posts and some final commentary.  It's worth noting that while the Obama Administration and USCCB seem committed to their final stances, the rules are open for public comment through June, and will only be finalized in August.

The mandate

As part of the Affordable Care Act, all health insurance plans are required to cover preventative care without co-pay, but the definition of such care was left to the executive branch.  On the recommendation of the National Academy of Sciences, the Obama Administration included birth control--in particular female birth control, like the pill--in preventative care.  This means that all insurers must cover contraceptives without co-pay. The full text of the most up-to-date proposal for the mandate can be found here:

The objection

Catholic institutions objected on the grounds that contraception is against the teachings of the Catholic Church.  They felt it a breach of religious freedom that they were required to pay for products the primary use of which they considered to be immoral.  As the Obama Administration has responded to this objection the complaints have changed.  The most recent statements by the USCCB can be found here:

The response

The administration, gradually, made the following adjustments/clarifications to address the conscientious objections:
  1. The mandate only applies to non-Church organizations, such as Hospitals, Charities, and Schools.  Parishes and other institutions who primarily hire and serve Catholics (or people of other objecting faiths) are exempt.
  2. Insurance organizations must not charge the insuring institution for additional contraceptive coverage.
  3. For self-insured institutions (most large catholic organizations), the cost of the contraceptive coverage would be born in full by an external entity, rather than by the institution itself.
  4. (A clarification) The cost of insurance plans with full contraceptive coverage is actually lower than the cost of insurance plans without full contraceptive coverage.

Some links to articles on the subject

My thoughts

Since no Catholic institution will have to pay for contraceptive coverage (free from insurers, and free from insurance managers for self-insured institutions), there is no violation of conscience.  Since US law recognizes rights of reproductive freedom and privacy, allowing institutions to inspect employees' sexual practices in the provisioning of healthcare (for instance to cover the pill for ovarian cyst treatment but not contraception) is arguably a violation of employee rights.  And since I conceive religious freedom as essentially individual rather than institutional and no individual is coerced by this law, I can find no valid religious-freedom argument against it.  The case is further undermined by the governments subsidy of health insurance: taking the government's subsidy means taking the strings attached too.  I do think that it might be reasonable to fine non-compliant institutions the exact amount of government subsidy as another means of exemption, but even that butts up against employee rights in an uncomfortable way.

My previous thoughts (in chronological order)

These kind of shift around as the situation and my view of it shifts, but the in series they follow all the important points of argument, and the comments often include useful insights or counter-arguments.

Sunday, May 6, 2012

Why do we disagree?

This question matters.  It determines the scope of debate and helps us understand differing viewpoints.  It is also answered with confusion or misinformation with hilarious frequency.  I'll touch on how to think about these disagreements and briefly highlight some examples of confusion in the tax and voter ID debates.  Anyway, why do we disagree?

In politics, it seems to come down to a few things:
  1. Differing, empirically testable, ideas about the world (facts)
  2. Differing, empirically testable, ideas about how the world works (models)
  3. Differing ideas about the proper values and goals of society 
  4. Differing ideas about the proper powers of government
or, if you like:
  1. What is the world like?
  2. What can we do about it?
  3. What should we do about it?
  4. How shouldn't we do it?
None of that is terribly controversial, but I think that people often confuse the origins of their disagreement.  

I often, for instance, hear conservatives saying that the government shouldn't raise taxes on the rich, but depending on who you talk to, the answer to why varies a lot.  For some it is "because they are job creators", but for others it is "because it isn't fair".  These world views have the same conclusion, but different implications.  We can, to some extent, test the proposition that raising taxes will mean less job creation.  If a person genuinely believes this to be the primary reason not to raise taxes on the rich, then empirical arguments are the most appropriate forum of discussion.  For the "it isn't fair" person, the proper arguments are philosophical--diminishing marginal utility, &c.  Of course, people often convolve many different types of reasons, or simply hold positions as an aspect of group identity, but the basic point still stands.

Now, I don't think it is impossible to convince people to change their positions in 3 & 4 type disagreements, but it's substantially harder.  It is, however, possible to give people better access to facts, and in many cases that changes the nature of the discussion for the better.

Presenting evidence of the extremely low incidence of voter ID fraud, for instance, seems to have shifted the debate from "we need to curb rampant voter ID fraud" to "it is right and proper for voters to show ID in order to vote".  In other words, the debate has shifted from an empirical one to an ideological one.  From my perspective, that is good, because ideological questions are the only valid questions to ask voters in my idealized constitutional anarchy model of government.   Voters are, in fact, quite bad at discerning which facts and models best reflect the real world.  But, they are excellent at determining what they think are good goals to focus on as a society, and what they think are categorically unacceptable ways of achieving those goals.

I'll have more on practical applications of this idea, and ways in which it might help move the debate forward in a later post.