The friction constituency

Having learned that both the Chamber of Commerce and the AFL-CIO support SOPA, it’s becoming clearer to me just how much of our economy is based on extracting rents from friction.

Both big business and big labor depend on it. Freer markets drive down the cost of goods as new entrants undercut incumbents. A freer market is very threatening to existing businesses, and I wouldn’t want it any other way.

Exploiting inefficiencies is not a bad thing — it’s a fundamental part of markets. Noticing these inefficiencies, and reducing them, is the main incentive for new business creation. The majority of benefits go to consumer, with lower per-user profits going to the new producer. Think Airbnb, Google, Skype.

I’ve historically been a big fan of intellectual property — it’s one of the main differentiators between first-world and third-world economies.

But… I’ve come to realize that intellectual property law often serves as a friction, and that some constituencies prefer it that way. Thus, broad incumbent support for SOPA.

Intellectual property should be defended primarily by its owners. This might mean DRM, but more likely it will mean creating a better consumer experience such that piracy is less interesting. (Piracy is a market phenomenon, so we should expect anti-piracy to be so as well.)

The law will have some role. But the government has shown itself to be generally incompetent, heavy-handed, or worse in this area.

It’s better for the consumer, and thus the economy, if producers of intellectual property are responsible for how it’s distributed, including measures they wish to take (or not take) to prevent unauthorized use. The market will judge those efforts.