Man Without Qualities

Wednesday, December 11, 2002


Winterspeak demurs from a prior post (at least I think this is the post, but Winterspeak's link is to another post):

Musil, incorrectly assert[s] how IP in the public domain too can get "overgrazed". Answer -- someone can use it in a way that gives it negative connotations and so reduces its value. Urgh. Musil gives the example of a Cole Porter song that was parodied in the toilet cleaner add, and cites the harm done to the Cole Porter estate as a result. The argument is really tortured, because the song actually was under copyright and the Cole Porter estate (productive artists all) did not charge the toilet cleaner company enough to make up for subsequent loss of sales.

Yes, that's exactly what happened - and that's the problem. Alternatively, the Cole Porter estate would have placed a restriction on use that would have prohibited the toilet bowl ad. But in either case (that is, higher royalties or more use restrictions), the license wouldn't have come into existence, since the licensee would not been able to realize enough from the toilet bowl ad to pay to the licensor to compensate for the damage done to the residual value of the song.

In general, each user of common property will use it to maximize his or her own returns, and doesn't care about what damage done to residual value. The insufficient license terms (which did not impose enough owner control to preserve the residual value of the song) simulate the effect common ownership of the song (i.e. no enforceable copyright) in the sense that the license allowed the song to be used by a licensee who did not care what the residual value would be and didn't pay for the damage done to it. In the absence of an enforceable copyright, every property user is in the position of such a licensee.

The situation is mirrored in the case of real property. If one leases one's house to a renter who is free (because of an inadequate lease) to party hardy without paying for damage and therefore doesn't care about the residual value of the house after the lease ends, one will end up with a seriously run down house. If the house were made common public (i.e. the property rights nullified), every user of the house would be in position of such an uncontrolled renter.

Ever notice how some people treat the property located in public parks?

Winterspeak also notes: The whole "overgrazing" idea comes from a story called "The Tragedy of the Commons". The economic lesson behind this has been so mangled by so many people that I refuse to ever refer to it again. Just be warned, if someone refers to something as being a "Tragedy of the Commons", 90% chance it's not.)

"The Tragedy of the Commons" or the "Overexpoitation of the Common Pool" is now often used broadly to refer to any systemic reduction in economic value stemming from inadequate private property rights. That is to say, it is a term that has entered the language and has become cut loose from its original moorings in large measure because the effect is so common and important.

One who doubts how important and widespread the "The Tragedy of the Commons" really is might consider reading the highly entertaining Soviet novel, or watching the wonderful movie, "Heart of a Dog."

Comments: Post a Comment