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Corrupt Banks, Corrupt Copyright Industry: Why Do They Get To Externalize Business Problems?

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Corruption

Corruption

We are in a trend where politicians believe that some business failures are everybody’s problem, but when the same businesses succeed, they get to keep all the profits. This is a ridiculous and counterproductive way to build a functioning economy, and it also threatens fundamental civil liberties. The banking industry and the copyright industry stand out as the most parasitic malcreants in this area.

The perverse arrangement where banks get bailed out by tax money every time they would otherwise go bankrupt has been accentuated by recent events – and how absurd it is that the banks get to keep profits for themselves, and get any losses covered by tax money.

In economy lingo, this is called externalizing – that you move certain aspects of your business outside of your organization, so that you don’t have to deal with them. Industry pollution, for instance, is a typical case of externalizing a problem: if you have toxic sludge as a byproduct of a manufacturing process, and can dump it in a nearby river, that’s externalizing, because you don’t need to pay for the cleanup. The taxpayers (and the killed river) does.

The fact that banks get to externalize losses creates horribly skewed incentive mechanisms where extreme risk-taking is rewarded, because there’s never any loss. There’s only the potential of huge profits. It’s a bit like if you were immortal and couldn’t hurt yourself – imagine what crazy stunts you would do that didn’t follow normal behavior of mortality? That’s the corporate situation that banks are in.

So is the copyright industry. They have a distribution monopoly on some pieces on knowledge and culture (which can, and should, be debated in itself). But unlike other monopolies, where the monopoly holder has to sue in a court of law, the copyright industry has managed to externalize the business problem of enforcing their monopoly – for it is a business problem – and gotten society’s police force to enforce their business rules on their behalf, by extending this business monopoly – the copyright monopoly – into criminal law.

In other words, non-support of a business model has been put on the same legal footing as harming a fellow human being – and this has been done by politicians who are dangerously clueless. They have allowed the copyright industry to externalize their business problems to let the taxpayers take the bill of enforcing an already-immoral monopoly.

That is obscene. That needs to end.

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About The Author: Rick Falkvinge

Rick is the founder of the first Pirate Party and is a political evangelist, traveling around Europe and the world to talk and write about ideas of a sensible information policy. He has a tech entrepreneur background and loves whisky.

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28

  1. 1
    NingúnOtro & @SameDoKan

    Survival is an utterly corrupt business everybody is in, even if unaware. Banks, governments,… are only instruments. Ah, and damn collateral damage.

  2. 2
    Morten

    It’s perverse for sure. But it is not surprising when the police is already more concerned with people playing poker, or not paying taxes, than they are with violent criminals. Why shouldn’t they also dabble in this business?

    The sole purpose of the law is to eliminate externalities. Allthough a negative externality is involved here, it is not really the problem to focus on. The big problem here is corruption and the lack of justice that occurs.

    Positive externalities are when a person creates something, but is not able to set the terms of use. A classic one is military defense, and another is lack of copyright enforcement. Negative externalities are when a person can lump the costs of his creations on third parties. Classic ones are theft, socialism, pollution of other peoples property etc.

    • 2.1

      Positive externalities are when a person creates something, but is not able to set the terms of use.

      The notion that a person who has manufactured something would get to determine how it is used is completely foreign to any modern economy or capitalism. They get to sell it or keep it. As long as they own it, they can control it. The same instant they sell it to somebody else, there is no right whatsoever to set any further terms.

      Thus, any “right to control use” is and was never naturally or capitalistically associated with the original manufacturer.

      • 2.1.1
        Morten

        I agree. However, the contract they made with the original purchaser is still valid, and anyone who aids in the breaking of this contract is still a criminal, just like a person who helps someone commit fraud. It’s all about premeditation and intent. Laws about copyright are not strictly necessary, they just make it explicit, and actually set a limit in time.

        And absolutely you can “sell” things and still set terms, and I don’t care if it was ever a part of something called capitalism. It is part of what is good and decent and the kind of society I want to live in. It just goes by another term; leasing, or renting. It’s terribly useful to be able to lease something. I a car lease actually transferred all rights of use, and not just some and for a limited time, a lease would be impossible. Contracts are the basis of negotiations and peaceful co-existence in any society.

        It’s not about the “right to control use”. It’s about the right to make private contracts.

        • _____

          Copyright is not a contract.

        • Morten

          You didn’t really read what I said. A third party can most assuredly be persecuted for aiding in contract breach, just as for aiding in other crimes.

          Are you suggesting that it should no longer be a crime to aid criminal behavior in general? Or only for information so that you can continue copying stuff and hating on anyone who makes money from creating or investing in information industries?

          Laws are there to define proper boundaries between property holders. Property laws is not supposed to be (except in the minds of those who are against it) a grant to do as you want, with no regard for others. Property exists because man needs it, the laws exists to define a set of proper boundaries. Boundaries are peace.

        • harveyed

          “and hating on anyone who makes money from creating or investing in information industries?”

          The “hating” part mainly comes not from you making money, but your urge to restrict others freedom for you to make money in your own favourite way. Restaurants don’t get royalties when I cook my own food, neither do they have any right to stop me from doing it just because they lose sales from me having the freedom to do it. Copying information is just as legitimate a hobby as homecooking is – at least in the eyes of the younger generations. You go together and cook food and eat – you go together to download the latest TV-episode. It is a totally natural hobby kind of thing to do in the eyes of the new generations.

          “Boundaries are peace”

          Are you high?

          There are very many examples where boundaries are a sign of restriction of freedom or outright oppression.

          By the way… “intellectual property” is not “property” at all, it is a restriction on the business of copying information. Copying or copy-right infringement is a business (be it commercial or as a hobby) and copyright monopoly is a restriction of the freedom of others to do said business.

        • Morten

          But you are missing the freaking point.

          It’s in no way about whether they lose customers or not. It’s about who created what, and whether that creation would exist without them. If it wouldn’t then they should own it, just like you should own you personal information and it should be protected from being spread around freely. That is also a “restriction” on the business of copying information.

          All property rights are a restriction on some business models.

          I actually am not too opposed to the reforms the Pirate Party proposes (subject to some changes), but I am most concerned about the reasoning behind it.

        • harveyed

          ” It’s about who created what, and whether that creation would exist without them.”

          Nope it isn’t. Not at all.

          The only thing copy right is : a bad excuse to get paid over and over again for old achievments without having to do any new work.

          “All property rights are a restriction on some business models.”

          Copyright has nothing to do with property. Copying does not destroy anyones’ property.

          “just like you should own you personal information and it should be protected from being spread around freely”

          Sure if the information is private it should be a crime to spread it around. But if it has been PUBLISHED, then it is no longer private. You gotta choose if you want X to be yours or if you want it published, you just can’t BOTH have Precious all for yourself AND give it away at the same time.

        • Morten

          That is what MY point was about. And if it in general was about loosing customers, then why don’t supermarkets sue each other for “taking” each others customers? Because they realize that they do not own customers, since they didn’t create them. However, if they were to take their goods instead, then they would sue. Their motivation would sure be that they could not get customers, but their justification for being in the right is that those goods would not be there if it were not for them.

          So what if copying does not destroy property? That’s like saying hacking does not cause people to get raped, so therefore hacking should be legal. (Btw. how do you justify it being illegal to hack a bank, or would that be legal to in you society? No things gets destroyed when you edit a few bits in their database, and besides you should be allowed to send any bits out your connection no matter what, the content is irrelevant).

          You avoid my point about how property is actually there to restrict certain types of business.

          We are actually discussing whether copyright(I really don’t like that name) should be redefined as some type of property. Just saying it isn’t is not bringing the discussion forward.

          I agree, if YOU make it public, then you cannot own it on the basis of it being private any more. If someone else does it, then you should still own it on that basis. However, that is besides the point, it was meant as an analogy. Similarly to that, you can also own certain information based on other reasons. This is not to convince you that it should necessarily be so, only that it does not go against any other property types.

          Similar to how you not being allowed to kill people with a knife you own, is not against you property rights , because property is about borders between people, not about doing what you want all the time.

        • harveyed

          “So what if copying does not destroy property? ”

          You made a statement about all property rights being and I responded by claiming that intellectual property has nothing to do with property but is a monopoly. Then you go all the way to rape to try and associate me with that. Dirtiest trick ever. I’m not gonna keep arguing with you if you can’t even keep higher standards than that.

        • Morten

          I apologize if you felt that way. It was not my intention at all to associate you with that.

          All property is a monopoly on that property.

        • @Morten:

          WTF? That’s deliberately conflating two diametrically opposite concepts.

          A monopoly is an unnatural limitation of property. Property is a natural limitation of objects (that they only exist in one copy).

        • Morten

          I was under the impression that property is the idea that the creator of value should be the one to decide the fate of said value., because he created it, to the extent that his control does not destroy the value other people have created., their lives, or their privacy.
          Monopoly however is an anti-concept, in that lots of people have different opinions on what it means. If we take your definition I disagree that there is something unnatural about setting limits. For example, in most of ancient human history, stealing from people outside the immediate group was not really considered to be something to limit and there was no opportunity to limit it, while after we realized the detrimental effects this had for every individual, including the thieves, in the long run, we started to limit such behavior in an organized manner. It’s basically the same as the tragedy of the commons, in that even if you realize the detrimental effects, if believable limits are not in place, it’s a race to steal first in order to get less screwed. Rational self-interested people will support such limitations and implement them. Being rational and self-interested is in the nature of human beings (as we can’t survive without rational thought, and all life is self-interested) just as eating grass is natural for a cow.

  3. 3
    Anonymous

    ‘this has been done by politicians who are dangerously clueless’

    they are only clueless over things like this and things that they are supposed to do, ie, REPRESENT THE PUBLIC WHO VOTED THEM INTO OFFICE!

    what these same politicians are not clueless over, what they know extremely well, is how to vote and for whom, when there are lots of monies being thrown around! in other words, they are very clued up on how to accept increases in their bank balances, received in return for favours that give certain industries, companies and individuals massive returns from whatever they want to rip the public off over! as for getting it to stop? there is no chance! the public cant get hardly anything stopped. look at what has happened over ACTA. yes, it was stopped for a short while, but all that is happening is that it is being brought back in, little by little, hidden inside other bills. soon all of what was in ACTA will be law anyway. and the ones to blame, the politicians, will never stop doing this because they are more concerned with personal wealth and praise from industry than doing what they are in office to do, what they are ‘officially’ paid for. and while it is legal to receive lobbying funds, politicians are only too happy to do whatever in return, simply because their job is so cushy, they dont want to lose it. having to actually do something to earn money would probably kill them! as usual, the biggest offender is the USA. now they are getting the EU to do the same thing. soon the whole world will be under USA control and that is going to be a very sad state of affairs, because no one will be allowed to do anything, have anything, even say anything. they are very fast turning into the very people they fear the most, terrorists!

  4. [...] Someone said: “We are in a trend where politicians believe that some business failures are everybody’s problem, but when the same businesses succeed, they get to keep all the profits. This is a ridiculous and counterproductive way to build a functioning economy, and it also threatens fundamental civil liberties.” …http://falkvinge.net/2013/04/22/corrupt-banks-corrupt-copyright-industry-why-do-they-get-to-external… [...]

  5. 4
    von

    Banks don’t get any and all losses covered by tax money. There is usually _some_ cost involved in receiving taxpayer money, where the government for instance takes preferential shares in the company, meaning less dividends for the shareholders until the government gets all its money back. But the losses are limited, yes.

    The concept that the owner takes all the profits, but is only liable for the losses up to a certain point, is called “limited liability”, and is a cornerstone of modern capitalism. The very point of it is to reward risk taking. Being against limited liability is an extreme anti-capitalistic sentiment.

    • 4.1

      This is a rather uninformed attempt at strawman argumentation (that is, you paint a false picture of what somebody says, then attack thsat picture).

      First, there may or may not be some cost in reconstruction. That’s not the point. In a normal scenario, if you run as catastrophic losses as the banks have, that corporation dies. There’s no reason banks should be treated differently from other limited liability corporations. The key difference is that the bank gets to continue to operate, usually under the largely same owner structure. There have been very few cases where banks have been entirely taken over by taxpayers, i.e. nationalized, as part of bailout.

      Second, this is not an opposition to limited-liability companies as such. Quite to the contrary; it is a call for a level playing field.

      Third, if I were against limited-liability companies, that would most certainly not be anti-capitalist. One person who objected to the concept of limited-liability companies was Adam Smith, author of The Wealth of Nations and known pretty much as the father of modern capitalism.

      Cheers,
      RIck

    • 4.2
      Morten

      Limited liability (when it is not agreed upon by the involved parties), makes for unnecessarily risky environments for human beings to live in. Because something might happen to you, but no one has any liability for it. At the same time it incentivises taking risks with third parties lives and property. Sure, you get a temporary spur of investments in a country that implements limited liability, but at the same time you are undermining the foundation of that society. Once the government gets involved in rewarding and/or punishing economical behaviour, I believe the economy gets unstable, you get booms and busts, etc. You might call that capitalist.

      I am a classical liberal. I believe private property(by the creator) and contractual agreements are the basis of a good society. According to you, I guess I am extremely anti-capitalistic. But who cares. I don’t primarily want a society that is called capitalistic. I want a just society.

  6. 5
    Max Pont

    The bankers have systematically bribed the top politicians. Wall Street is the biggest campaign financier in the US. The deal is, we will pay for your campaigns as long as you allow us to continue with reckless risk taking and business as usual. Next time there is a crash you should bail us out again. Even after the 2008 disaster, nothing has been done in the US to prevent a new crash. It will come, it is unavoidable.

    In Europe, leading politicians are given gold plated job offers with millions in salary as “advisors” to the bankers after they leave office. Tony Blair is now advisor to Goldman Sachs, so is the former Swedish former minister of finance Erik Åsbrink. The social democrat Thomas Östros is today top lobbyist for the Swedish bankers. And on and on and on. Its basically the same deal. If you are rough with us there will be no job offers after you leave office.

    Who knows what secret deals Cameron, Barroso, Merkel and Reinfeldt have with the bankers. It stinks.

  7. 6
    Mumfi.

    Well. No.

    Copyright is an agreement between the public and the creators. As such it is not entirely unreasonable that the public polices itself so that we keep the agreement.

    On the other hand the public should not agree to terms more stringent then the absolute necessary minimum that is required to entice the creator to do as we want.

    Also there should be an understanding that the only party of the copyright agreement entitled to an opinion is the public. The public is the _only_ stakeholder. All others are in the “take it or leave it” group.
    Don’t like the current copyright agreement? Don’t write the book. Simple as that.
    Then it’s up to the public to offer terms such that enough books get written to the public’s liking.

  8. [...] #banken wél telkens gered met belastinggeld, terwijl de winsten naar de aandeelhouders gaan? http://falkvinge.net/2013/04/22/corrupt-banks-… 11:15 AM – 23 Apr [...]

  9. 7
    Anon

    Banks are a business. A very corrupt one. If any business is run badly it will fail, close, have it’s assets sold to pay off debts and be replaced by another business that is run in a proper and profitable way. Let the banks fail. Better still, stop using cash and start using Bitcoin – starve them. I’m sick of them.

    As for the copywrong monopoly – it’s doomed. Welcome to the digital age.

  10. 8
    AZ

    ‘this has been done by politicians who are dangerously clueless’

    Here you are wrong Rick, they are not clueless, this is the business model the politicians use. They are not implementing these laws for free and if there is a future hearing the can play the “I didn’t know” card, and if you truly don’t know then you can’t lie:) So let someone else do the reading or pass the bill as it is written from the lobby, but don’t read it because then you can be held accountable:) Just look at the recent economic melt down, no politicians or banks were sued…. all that fraud and nobody responsible? (steal little and get big time, steal big and get no time:))

  11. [...] Původní zdroj: Rick Falkvinge, Corrupt Banks, Corrupt Copyright Industry: Why Do They Get To Externalize Business Problems? [...]

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About The Author

Rick is the founder of the first Pirate Party and is a political evangelist, traveling around Europe and the world to talk and write about ideas of a sensible information policy. He has a tech entrepreneur background and loves whisky.

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