Homeland Security Mission Creep: “Intellectual Property Crime”
Posted by Kevin Carson on Jul 15, 2010 in Commentary • 13 commentsIn recent columns I’ve examined how the extraordinary powers granted to the national security state post-9/11 for “fighting terrorism” have been used for much broader purposes: namely, increasing the state’s control over its own citizenry, and suppressing economic threats to the corporate interests that control the state. As we’ve already seen, this mission creep includes the use of police state powers to suppress anti-globalization activism, and the use of the “Drug War” to control the domestic population while protecting the black market drug profits of the terror state and its allies.
Yet another example is enforcement of so-called “intellectual property” law (which is not a legitimate form of property at all and is in fact utterly repugnant to the principles of a genuinely freed market).
As before, we take the scholarship of USAF Col. Jennifer Hesterman as a paradigmatic case. Col. Hesterman treats “intellectual property crime” as an important component of the phenomenon she studies: the intersection of transnational crime with the funding of terror networks. In her monograph “Transnational Crime and the Criminal-Terrorist Network,” she defines “intellectual property crime” as “the counterfeiting and pirating of goods that are then manufactured and sold for profit without the consent of the patent or trademark holder.” IPC, she says, “is more lucrative than drug trafficking, is less pursued by law-enforcement agencies, and the penalties if caught and prosecuted are far less severe than those for other criminal activities.”
On her personal blog, Counter Terror Forum, she celebrates the increased dedication of federal law enforcement resources to combating IPC.
“IPC,” she writes, “is a lucrative criminal activity with low initial investment and high financial returns, possibly even higher than drug trafficking. For example, a Nintendo game costs $0.20 to duplicate and is resold for $20 at flea markets on online, thus recognizing enormous profit for the criminals.” Hence “IPC… generates unbelievable amount of profit.” She quotes figures estimating counterfeit goods trade at $450 billion annually, resulting in US business losses of $200 to $250 billion.
I believe she’s getting it backwards. As with the drug trade, the main reason “IPC” is so lucrative is IP law itself. The real “intellectual property crime” is that Nintendo, with the help of coercive enforcement of monopoly privileges by the state, is able to charge an enormous sum of money for a game whose marginal cost of reproduction is twenty cents. The seller of “pirated” goods or knockoffs makes money by arbitrage: they compete by eliminating a major portion of Nintendo’s markup, but can still (thanks to competing with Nintendo’s price) charge a significant — if lesser — markup. As with the drug laws, if copyright law were eliminated, both Nintendo’s markup and the markup on the knockoff goods would evaporate, and the game would sell for marginal production cost.
So if the U.S. national security state really wants to eliminate black market funding of terrorism, all it has to do is repeal the drug laws and “intellectual property” law. But when it comes to this, the U.S. government, Disney and Al Qaeda are all on the same side.
In any case, the primary focus of U.S. copyright enforcement — and particularly recent increases in enforcement efforts — is against digital “piracy,” on behalf of such parties as the RIAA and MPAA. Such “piracy” is not lucrative at all — in fact the copyrighted work is downloaded free of charge. So the claim that crackdowns on file-sharing will result in less money for terror networks just doesn’t meet the smell test.
However transparently self-serving the “counter-terror” rationale, though, the national security state is indeed ramping up its enforcement efforts against (primarily digital) “intellectual property crime.” Following a “piracy” summit in December at which Joe Biden (formerly Senator from MBNA and now Vice President from Disney) compared digital file-sharing to a “smash-and-grab” at Tiffany’s, in February Attorney General Holder announced a new “IP task force” at the Justice Department. And last month Biden announced the dedication of fifty FBI agents to anti-piracy enforcement, while Homeland Security boasted (from Disney’s offices!) of raids on nine movie-sharing sites.
Al Qaeda must be shaking in their boots.
C4SS (c4ss.org) Research Associate Kevin Carson is a contemporary mutualist author and individualist anarchist whose written work includes Studies in Mutualist Political Economy, Organization Theory: A Libertarian Perspective, and The Homebrew Industrial Revolution: A Low-Overhead Manifesto, all of which are freely available online. Carson has also written for such print publications as The Freeman: Ideas on Liberty and a variety of internet-based journals and blogs, including Just Things, The Art of the Possible, the P2P Foundation and his own Mutualist Blog.
"The real “intellectual property crime” is that Nintendo, with the help of coercive enforcement of monopoly privileges by the state, is able to charge an enormous sum of money for a game whose marginal cost of reproduction is twenty cents."
Well, to be fair, Nintendo does the development which has enormous costs. This is a glaring hole in a lot of anti-IP arguments. Personally, given the "public goods" nature of information, I would like some sort of mutual aid solution for R&D. I had an idea for a business model which was kind of done by kickstart.com. I'll have to post my idea soon.
I'm familiar with the argt that sunk capital outlays aren't covered by marginal cost, but I believe they're adequately answered by arguments like those by Mike Masnick and Kevin Kelly that you use free content to promote scarce services that *can* be turned into a revenue stream (i.e. recoup the cost of developing software by offering support and customization, recoup cost of recording music from concerts and concessions, sell "Freemium" versions that save buyer transaction costs of tracking down copies of guaranteed completeness and authenticity, etc.).
Indeed, that would certainly help. I'm concerned, however, that such revenue streams may not be sufficient. Suppose some is able to make great music, but finds it unbearable to perform live. Isn't the music in recorded form valuable enough to warrant compensation for itself?
Now don't get me wrong. I oppose IP laws and think there are better ways of solving the problems than through unenforceable laws, but I would just like more careful consideration of all the different interests involved. Here's my position on the issue.
[...] Homeland Security Mission Creep: “Intellectual Property Crime” by Kevin Carson [...]
Sure, Chris, if the content producer can get people to chip in for it. Radiohead tried collecting online, donations for a free download, and averaged a buck or two per download of the album. That doesn't sound like a whole lot, but considering they did away with all the costs of physically reproducing and distributing an album it's mostly revenue free and clear. But there's also the iTunes thing, which as I understand it derives its value from the ease of finding an authentic copy of exactly what you want, which is worth a dollar to a lot of people.
You don't have to be against copyright law to be concerned about Homeland Security getting hold of the anti-piracy portfolio. It's one thing to have the RIA sending out lawsuits. Homeland security can send you to Guantanamo. If their argument that proceeds of counterfeiting support terrorism gets traction, then the guys who run torrent trackers might find themselves charged under the Patriot Act with material support for terrorism.
The RIA doesn't have guns. Homeland security guys do.
When we talk about developement costs, we never talk about the fact that all development uses masses of free work done by others.
Good article Kevin.
Readers should also be aware of the article on Saturday's (7/17) antiwar.com site, where Kevin's article is linked, that Homeland Security evidently shut down the WordPress ISP servers under some sort of as yet unexplained "national security" pretext. So this IP threat isn't fictional, it is here now.
How does the US govt differ from the Chinese? The Chinese are at least open about censoring the Internet. I guess we can also throw the 1st amendment into the garbage bin…
Re WordPress, apparently they shut down all 73,000 WordPress sites hosted by Blogetery. They refused to say why, just that "law enforcement" told them it was imperative to do so immediately. I'd really hate to see it happen, it being all illegal and all, but I wouldn't be surprised if retaliatory DOS attacks became more common in response to this sort of thing.
cipher terror & horror, or just political censorship,total horseshO!Ot,aka propaganda
It’s the old confusion between mala in se and mala prohibita, “crime” being, in this case, a matter of who says…
A very good parody on the FBI anti-piracy ad here
[...] a recent column (“Homeland Security Mission Creep: ‘Intellectual Propety Crime’“), I wrote that file-sharing had apparently become the latest “terrorist [...]