
Intellectual Ventures Paid Consultant To Get Unions To Fight Patent Reform - yanw
http://www.techdirt.com/articles/20110316/23442113522/contract-dispute-reveals-that-intellectual-ventures-paid-consultant-to-get-unions-to-fight-patent-reform.shtml
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RickHull
A good way to frame this behavior that makes clear why it is revolting:
<http://en.wikipedia.org/wiki/Rent-seeking>

The economic concept of rent is where a firm in an advantageous position uses
that position to extract wealth without doing anything productive. Much of the
divisiveness between the two dominant U.S. political parties can be explained
in these terms:

The Left thinks that corporate privilege enables rent-seeking behavior (e.g.
finance), while the Right thinks that government privilege enables rent-
seeking behavior (e.g. regulatory capture, public sector unions).

It may seem like all economic activity is rent-seeking, and this is true to an
extent -- everyone wants to sit back and let prior work bring in income today.
Competition is what checks rent-seeking -- such behavior often goes hand-in-
hand with a monopoly position, which is why you see it where there is heavy
government involvement (e.g. patents, public sector services).

What I would like to see is the calling-out of rent-seeking behavior from both
sides. This is the way forward to a more united, wholesome, just economic /
political system.

~~~
yummyfajitas
_...everyone wants to sit back and let prior work bring in income today_

This isn't rent seeking. This is simply enjoying rents from value creation.
Rent seeking is when actively seek out rents by engaging in
unproductive/harmful activities in order to continue receiving rents.

For example, getting a patent to prevent others from building similar works is
rent seeking [1]. Or forming a union to prevent others from undercutting you
is rent seeking. Similarly, creating regulatory requirements that crush small
players (e.g., Walmart's attempts to raise the minimum wage, Phillip Morris
attempts to increase tobacco regulation) is also rent seeking.

[1] Of course, patents might still be beneficial if the rents extracted are
smaller than the value created which would not otherwise be created in the
absence of patents.

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noonespecial
Just once I'd like to find out that reality doesn't turn out as rotten as I
can possible imagine it. To hear somewhere, someone, on some board said, "ya
know, we've made enough this quarter, lets _not_ make giant asses of ourselves
by usurping and corrupting the system that allowed us to do so."

~~~
berntb
Move to my native Sweden, it is a not-so-capitalistic economy which is clean,
with very little corruption and backroom dealings. Just ask the politicians.

But before you go, I wonder if you might be interested in buying a bridge to a
really good price...?

(At least you get to find out _some_ of this stuff in the US. In many other
countries the 'ol boy's clubs are just too tight. I think I'll send money to
WikiLeaks, even though they seem a bit weird.)

Edit: Thanks, dexen. Sigh, I aimed for humorous and informative, not
sarcastic. (I can't upvote you, since my "avg" is too low after questioning
news sources which people claimed were good without having references. I
probably came off as sarcastic then, too.)

~~~
dexen
Be aware the sarcasm of your post is easy to miss with cursory read.

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rwmj
What's amazing is how little money was involved. $30K / month, about $360K /
year. In return, millions in extortion fees and a huge drag on the economy.

~~~
yummyfajitas
It's also rather likely that unions and patent holders have some shared
interests, so I doubt this is solely about the money.

Both patent holders and unions are rent seekers. Strict patent laws make
monopolies/oligopolies easier to form, and unions find it easier to extract
rents from monopolies/oligopolies than from competitive markets.

In a monopolistic/oligopolistic situation, the monopoly can extract rents from
customers, and the union can demand their cut. In a competitive market with
many players, profit margins will be thinner, and it's likely that the non-
union shops will undercut the union shops. So this move might be as much about
shared interests, or at least shared ideology, as it is about money.

~~~
gjm11
Is it actually true that unions find it easier to extract rents from
monopolies or oligopolies than from competitive markets?

Imagine that all software without exception is made by Microsoft. Then (near
enough) all software developers have to work for Microsoft. That gives
Microsoft a lot of bargaining power against its employees, unionized or
ionized. The only way in which the Universal Programmers' Union is better off
in this world than in the real one is that Microsoft (having a monopoly) may
be under less pressure from the market to sell its software cheaper, and
therefore may be better able to pay rent to the unionized programmers. Fair
enough, but is there any actual reason to think that that outweighs MS's gain
in bargaining power over its employees? (Which exactly parallels the gain in
bargaining power over its customers that makes it better able to afford to pay
what its employees demand, if that seems worth doing.)

~~~
yummyfajitas
A monopoly and a union have equivalent bargaining power. The union members
have only vastly inferior substitutes for employment (e.g. Dairy Queen), and
the company has only inferior substitutes for labor (temps). It's in both of
their best interests to eventually agree to split the rents.

In a competitive market, there is less rent to split (e.g., 5% profit margin
instead of 15%) and there is always a third possibility: the unionized
employer goes bankrupt and only non-unionized employers remain. So producers
(as a class, not any individual one) get to survive, while the union (as a
class) is destroyed.

But don't take my word for it. Go take a look at the world. The primary
bastions of unionization seem to be monopolies or oligopolies: the government,
Big 3 automakers (in their heyday, at least), cable companies and the like.
Unionization also declined (outside the government) as the country became more
competitive.

Think about what nearly happened to the auto industry. Consumers suffered with
crappy overpriced cars, and the Big 3 + unions enjoyed their rents. Then the
market became more competitive, and absent government intervention, the
unionized part of the sector would have died. The unions seem desperately
afraid of this effect in education which is why they fight tooth and nail
against charters/vouchers.

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nikcub
This made me angry at first, and then I thought that IV were being smart and
doing what everybody else does in a political fight: attempt to exert
influence by paying for it.

I am more inclined to blame the representatives who make legislative decisions
based on who is funding them .

~~~
Devilboy
The Reps need the money. More money means more ad campaigns and better chance
to stay in power. The system is to blame I think. Not enough oversight or
regulation?

~~~
anamax
> Not enough oversight or regulation?

More of the same is bound to work...

When there are benefits to buying legislation, legislators will be bought.

If you don't want govt to be corrupt, you can't ask it to run things.

As they said in "WarGames" - the only way to win is to not play the game.

~~~
jordan0day
Hrm -- this seems a little too... nihilistic? I mean, I agree, the system is
highly flawed and quite possibly broken, but it's the system we live in. If we
don't like the system, we can either withdraw from it completely, as you're
advocating, or at least try to change it for the better. If you withdraw, it's
only going to get worse.

~~~
VladRussian
It seems Gandhi didn't think so.

~~~
anamax
What was Gandi's big success?

He had four big campaigns. One was Hindu-Muslim unity. Another was to block
the import (into India) of British textiles. The third was ending
"untouchability". The fourth was to get the UK out of India.

The latter succeeded, but since the UK couldn't afford to be in India and its
PM at the time was an anti-Imperialist, it's unclear how much effect Gandi
had. As to the others ....

However, he does get good press.

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tzs
Let me try this again, more verbosely, since I appear to have overestimated
the audience when I tried to ask this more concisely:

So? How is this different from what pretty much every other company large
enough to afford lobbying (Apple, Google, Microsoft, IBM, Red Hat, Amazon, Wal
Mart, Comcast, and a gazillion others) does?

There's only one interesting (in the sense that it is at all out of the
ordinary) thing in that article, and no one has mentioned it.

~~~
ChuckMcM
Put it in an different context,

Lets say you were married, lets say you had an affair, lets say that the news
of this came to light and your spouse yelled and screamed at you.

How do you think they would answer the question: "So? How is this any
different from what every other person who has had an affair?"

The answer is that the question itself is flawed, whether or not other
companies attempt to game the system is irrelevant if the gaming itself is an
insult.

We know people will attempt to manipulate society and governments to their
ends, we can all be offended when they do so in an attempt to enrich
themselves at the expense of the greater good.

~~~
tzs
What gaming of the system?

There's a company. They have an opinion on a piece of proposed legislation.
They present their arguments to another organization and ask the other
organization to support their position.

That is not gaming the system. That's ordinary participation in the political
process.

~~~
ChuckMcM
"What gaming of the system?"

If an organization objects to legislation and presents those objections
themselves, its fairly transparent what they want and why.

When an organization attempts to inject objections to legislation through an
obfuscated channel (in the above case unions) to both take advantage of the
political capital of unions (on which many politicians rely for campaign
contributions) and to avoid the obvious conflict of interest that would come
out of a company that makes its living as a patent troll objecting to patent
reform. That is 'gaming' the system.

Note that gaming isn't illegal, its just politics, but as someone once said,
"Maneuvering the system for the public good is leadership, maneuvering the
system for the public good and your personal benefit is public - private
cooperation, but maneuvering the system for your benefit and harming the
public good in the process, well that's just dirty politics."

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allertonm
"They also asked him to try to keep Intellectual Venture's involvement in
derailing patent reform quiet, since top investors in IV, such as Bill Gates,
supported patent reform."

Stay classy, IV.

------
VladRussian
one racket talks to another.

------
tzs
So?

~~~
dexen
Are you American? I'm not, but it seems to me unions are important force in
american politics.

From time to time, news surface how unions surprisingly stand up and take
strong stance on something unrelated to protecting the empoyees. <weasel
words>Which makes some suspect corruption</weasel words>. This story seems to
validate that.

~~~
tzs
Depending on who you believe, patents are either a vital component of keeping
companies innovating and profitable (which is good for employees), or they are
dragging companies down and making them waste money working around bad patents
and dealing with patent troll lawsuits (which is bad for employees).

Either way, they seem within scope for unions interested in protecting
employee interests.

~~~
dexen
You seem to believe there are only two sides to the discussion. There are
three, actually: two very vocal partizan sides, and a third side doing actual
research. Scientists have spoken on patents and other forms of Intellectual
Property protection. I believe [1] in science, do you?

\----

[1] in the _figurative_ sense ONLY. Science is not matter of belief; nor the
beliefs I hold personally have anything to do with science.

