Subject: Re: Examples needed against Soft Patents
From: Ben Tilly <btilly@gmail.com>
Date: Mon, 27 Dec 2004 14:53:31 -0800

On Mon, 27 Dec 2004 19:28:21 +0900, Stephen J. Turnbull
<stephen@xemacs.org> wrote:
> >>>>> "Ben" == Ben Tilly <btilly@gmail.com> writes:
> 
>     Ben> What you're missing is that what you're calling "protecting
>     Ben> our own existence" actually *IS* a public good.  It is
>     Ben> something that we want, but which would (if it was delivered)
>     Ben> be delivered to all, regardless of who actually contributed.
>     Ben> It does not matter whether we're looking for a handout, a
>     Ben> limit to government interference, or clean air.  The social
>     Ben> dynamics are the same.
> 
> Sure.  But Russ is right: if from the group's point of view it's worth
> organizing to protect themselves, then they should, and normally will.

Can you offer me concrete examples where groups have actually
done so?  I know of plenty of examples where groups did not
manage to organize even though the threat was clear, resulting
in major disasters.  Some of the starkest examples involve the
collapses of renewable resources due to a tragedy of the
commons overconsumption, whether we're talking about Easter
Island running out of trees (were it not for the arrival of
Europeans the last native survivors would have died out) or the
collapse of the Atlantic fisheries a few years ago.

> The fact that free riders benefit is of interest only to those who
> habitually build walls around their gardens just to spite their
> neighbors.  But the fact that you can look at my garden won't stop
> _me_ from cultivating it.

This statement misses the critical point.

If there is a small group within the large group that can
reasonably provide the public good, for whom it is
worthwhile to do so, then the public good generally will get
provided.  The problem comes with public goods where no
small subset of the beneficiaries are in a position to provide
it.  Then, no matter how beneficial it may be for the entire
group to provide it, generally the good does not get
provided.

> There are four factors that are important to justify the (practically
> important) conclusion you reach:
> 
>     (1) network externalities in consumption (the small group can't
>         form)

This is only true if your definition of "consumption" includes the
possibility of a consumption that consumes nothing.  (I believe
that the traditional economic definition does - but a naive
reading of the phrase very well could not.  The first response
that I typed up certainly missed that point, then I realized my
mistake...)  That is, the analysis applies even with something
like information orsoftware where my use does not diminish
what is available for others to use.

In that case then this assumption is built into the definition of a
"public good".  Conversely accounting directly for the role of
network externalities allows one to analyze situations with a
good that is not a pure public good, but has some network
externalities.

>     (2) transaction costs tend to dominate benefits of organizing
>         large groups unless network externalities are strongly
>         positive

Not necessarily a factor.  Even if you assume that there are
no transaction costs, the problem remains.

The difficulty is that every individual may be better off trying
 to be a free rider than they are contributing to a solution.
All may agree that they'd be better off if everyone contributed
a little, but all are also aware that their individual contribution
won't be the difference between a solution and a non-solution,
and so each tries to avoid contributing.

The easiest case is when a single individual would personally
benefit enough to justify providing the good, then supplying
the good becomes easy - that individual does it.  This is how
most free software development has proceeded.

Somewhat trickier is when a small group can supply the
good, but none can on their own.  Then they can negotiate
out a solution, but will constantly be battling the fact that each
is under pressure to "cheat".  Negotiations will therefore get
complex.  Think OPEC for a classic example.

When no small group exists, then you've got the problem in
spades and no general solution exists.  Sometimes it has
been solved though.

One possible solution is for the group to settle on a structure
where everyone is _forced_ to contribute.  The obvious
example is when the government levys taxes.  Sure, my tax
dollars aren't the difference between government doing or
not doing anything that I want.  But my personal benefit for
paying them is obvious - I get to avoid jail!

Another solution is to find a way to organize where everyone
benefits in some direct way from contributing, and incidentally
the common issue is dealt with.  An example of this is how AAA
manages to lobby for public goods that its members want (like
better roads), but members are members for reasons (like
roadside assistance) that have nothing to do with the public
goods that get provisioned.

You can view both these solutions as being fundamentally
the same, just varying whether to create individual motivations
through a carrot or a stick.

>     (3) competition (and thus shrinking the pie) from free riders

It is not that free riders shrink the pie, it is that people would
individually be better off trying to be free riders themselves.

>     (4) the dynamics of political organization are such that if we as
>         a subset cultivate our gardens together, we will typically
>         lobby the government for protection from "rose-eat-tulip"
>         competition, and probably for direct subsidy as well.

And this is an endemic problem with no good solution.  I
applaud when Microsoft tries to nail the top spammers in
the world.  I curse when Microsoft tries to manipulate the
anti-trust system to its own benefit.  What is happening is
that Microsoft is big enough to be motivated to address the
provisioning of certain public goods - but it solves ITS
problems, not necessarily MINE.

Other examples abound.  For instance most countries in
the first world (with Canada being an extreme example)
are able to scale their militaries back because they rely on
the USA supplying the public good of geopolitical stability.
But then they are left with no recourse when they disagree
with the USA on how the USA should use its army...

Cheers,
Ben