Thursday, October 29, 2009

Good Monopoly, Bad Monopoly

I think this morning's WSJ article about cosmic legal rights is meant to be at least a bit comical; if we can't laugh at lawyers, who can we laugh at?

Experts in contract drafting say lawyers are trying to ensure that with the proliferation of new outlets -- including mobile-phone screens, Twitter, online video sites and the like -- they cover all possible venues from which their clients can derive income, even those in outer space. FremantleMedia, one of the producers of NBC's "America's Got Talent," declined to comment on its contracts.

The terms of use listed on, where people can post to message boards among other things, tell users that they give up the rights to any content submissions "throughout the universe and/or to incorporate it in other works in any form, media or technology now known or hereafter developed."

Lucasfilm Ltd., Star Wars creator George Lucas's entertainment company that runs the site, said the language is standard in Hollywood.

"But, to be honest with you, we have had very few cases of people trying to exploit rights on other planets," says Lynne Hale, a Lucasfilm spokeswoman.

Of course, there's also a serious edge to this story, as it's illustrating the 21st century version of a land grab.  And it makes me reflect on something I thought about a bit when I was reading about the economic and political history of Argentina.  Because one argument for why Argentina is today so fucked (to put it succinctly) -- in spite of the fact that they were as rich as the US per capita at the turn of the last century -- is that they chose the wrong tactic in distributing their newly conquered agricultural hinterland. 

The history is remarkably similar to that of the US.  Argentina had it's own sort of manifest destiny, and it expanded to cover as much of the southern cone as it could, eradicating the indians living on this "wilderness" along the way (in one of history's great branding exercises, they actually called it the 'conquest of the desert', which is kinda brilliant if you think about it).  The land was great for farming, and the introduction of better transportation, refrigerated shipping, etc ... turned the country into an agricultural export powerhouse by 1900. 

There was one major difference between their history and that of the US though.  In the US, once we had wiped out the natives, we just let people move out West and squat.  Settlers didn't have to buy the land, they could just go claim it by living on it and making it 'productive' (the indians, of course, were completely wasting this stuff).  By contrast, in Argentina, they divided up the land and auctioned it off.  Wealthy folks in Buenos Aires and British investors bought most of it, and the concentration of ownership was remarkable.  In fact, it still is to this day.  These investors hired folks and put the land to use of course, planting crops and building railroads for easy export, and just generally getting their money's worth out of it.  But the inequity of the initial distribution meant that the rewards of this new production accrued disproportionately to the investors, so income remained as remarkably concentrated as it had been in Europe.  This seems to have led to a feedback loop where wealthy Argentines and Brits controlled the political process, and ... well ... when the winners get to write the rules of the game, they tend to keeping winning -- Argentina set up laws that were ruthlessly free trade, and legal rights that strongly favored creditors and international capital.  The elite group controlling both the economic and political game didn't see any reason to invest in eduction and industrialization when they could get both of these from the UK, and with vendor financing to boot. 

In other words, the initial circumscription, division, and auctioning of the land, led to quasi-monopolistic control of the productive resources, which led to almost total monopolization of political control.  Once you have a closed monopoly of that sort, you have guaranteed stagnation -- what monopoly do you know of that invests in its future?  Why bother.

Very simple, and the analogy of Lucasfilm pre-extending their rights throughout the universe is obvious enough.  But this is where it gets interesting.  Because you can actually imagine another type of 'monopoly' that is creative.  This kind of monopoly works precisely by not circumscribing the territory in advance.  In fact, it opens up new territory in an unlimited fashion.  It can be just as much of a monopoly -- it may be the absolutely dominant force opening up this virgin land -- but it only remains a monopoly so long as it is expanding faster than everything else.  It's a sort of self-organizing monopoly that forms the base for a new exploration.  The best example I can think of today would be something like Google, or the internet in general, but what I'm really trying to get at is a sort of principle, like language, or DNA, or something like that.  The world evolves a coherent lingua franca that allows for new creativity to radiate in all directions, rather than defining at the outset what will be possible and who will own which piece of the results.

Hopefully, our luck will be better than Argentina's.  At least it's easier to make more ideas than to make more farmland ... at least for the moment.

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