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Sunday, August 14, 2011

Geolibertarianism and Patents

Georgism isn’t so much an alternative to libertarianism as a flavor of it — called geolibertarianism (aka Green Libertarianism). The basic idea is just this:

Keep all you make. Pay for all you take.

All persons have an equal right of access to the natural commons of the Earth, which is air, water, land, minerals, wildlife, spectrum — everything that is not created by persons. The best way to protect Earth’s scarce resources is with the the free market. For the market to be truly free, people must not only enjoy the full benefits of their actions, but also pay the full costs. With green pricing, each person pays the full costs he imposes when he depletes, pollutes, congests, or monopolizes the commons. Green pricing creates permanent and automatic incentives for conserving the Earth’s shared resources.

Geolibertarians favor taxes/fines only on aggression — e.g. polluting, depleting, congesting, or monopolizing the commons. In practical terms, this means

  • policing negative externalities through green pricing (e.g. pollution taxes)
  • protecting unowned natural resources with severance fees
  • financing club goods (e.g. highways, bridges, pipes, wires) through usage/congestion fees
  • financing public goods (e.g. streets, flood control, national defense) by taxing the extra land value they create

Those who hold land (monopolize a site) have its value increased by local public services. Public services that can’t be supported by user fees should be financed only by recovering the extra value they create in the free market for land. This encourages efficient land use (infill, mass transit, mixed use, more open space) and creates pressure to defund public services that the community does not actually value.

How to apply geolibertarian principles to IP like patents? One way is through a patent value tax. The policy would for a limited fixed term grant exclusive rights to profit from an invention, in exchange for an annual tax that is a fraction of the inventor’s declared value for it, with that fraction increasing linearly to unity by the end of the patent’s term. Anyone may buy the patent by paying the current owner more than owner’s declared value, as long as the buyer also pays the incremental patent value tax.