 I just got it going. Okay, record has been set. Today is Monday, October 24th, 2011 in the year of some of your boards. And this is the bonus lecture. It wasn't intended, but we wanted to cover some things we would have otherwise had time to get to. A few preliminary notes. If anyone has any questions, feel free to type them in the chat window. Let me make sure I've got my settings right here, all participants. Okay, Ken says video with a question mark. I'm not sure what the question is. My video is showing here. Can people see video and hear me? Everything okay? Slide is visible. Thank you, Jesse. Ken can't see me, Danny. Huh. Danny, are you there? Any clue? Yeah, if you don't have video, go to view, panels, manage panels, and then add the video panel. Okay. You don't mean me, right? You're just the participants, correct? I don't need to do anything, do I? Okay, I'm assuming I don't need to do anything. I'm going to pause this video for just a second. Her does. Okay, I'm pausing the video now. Oh, you're in L.A. in Louisiana. Very good. I packed in the word L-A-G-N-I-A-P-P-E earlier in the chat window, which is pronounced Lannyab in Louisiana, which means a little something extra, which is tonight's lecture. It's just a little extra because we were going to go five lectures, and it turns out that we weren't coming close to covering everything I had sketched out in the notes. So I thought we would cover some more tonight. I will put up a final exam later this week, I think, and it will only cover things I covered for the first five lectures. Per is saying in the chat, I think you're going private per. You need to go to all participants. So you as well lead tape, and you guys are talking privately. Jackson88 is also the host privately, so you guys should send to all participants. But Per is saying panels doesn't have video as a choice. I'm not sure what to do about that. Maybe Cam or Danny can give you advice on that. Anyway, you're just seeing my face, so not a big deal. I hope as long as you can see the slides. So let's go right into it. Does anyone have any questions, comments, suggestions, requests, questions? Initially, which I'd be happy to discuss or address. Cam, Per is saying that panels doesn't have video as a choice, so he's apparently not able to enable the video window from the instructions that Danny gave earlier. Go to view panels, manage panels. When I go to it, but I'm now the host, so I can see it, but I don't know how others can. If I need to start over, just somebody let me know. Otherwise, I'm going to plow on ahead. So today's Monday, October 24th, October 11th, 2011. On a side note, I went Friday to San Francisco and attended on Saturday the Open Science Summit in Miltonview at the Computer History Museum. It was fantastic. And I was on a panel on intellectual property and I found the scientists there. It was a great audience to give them Austrian libertarian ideas about intellectual property and openness and property rights. I found them very receptive and it was refreshing to talk to non-limiterians actually. So this issue on slide 15, this is where we left off last lecture. And again, if anyone has any questions from something we haven't covered yet, feel free to bring it up here in the comments. I'll try to get to it tonight. This issue here is something – this is the way I've begun to frame this issue in response to a lot of questions and debate and what I found is confusion about this issue. There are two sort of fallacies that I believe even libertarians sometimes suffer from in their reasoning. And I had them italicized here on slide 15. Number one is, if you sell it, you own it. Or if you can sell something, that must mean you own it. And number two, if you own something, that means you can sell it. Now I think these are both actually imprecise formulations of normative or legal principles. And I think getting them wrong can lead you to the wrong conclusions about other things. So let me go through those and tell you what I mean and what I think about it. So most people in, like, arguments about intellectual property, they go by this sort of metaphorical or overly literal interpretation of the metaphors around, say, the Locke and Homesteading idea, right? So Locke would say that the reason human beings own things in the world is because first you own yourself, which he doesn't define. I would say you own your body, which is a piece of a scarce resource. So yourself is not owned. Yourself is a cluster of identity or agency or personality associated with a body. But you don't really own yourself. You are the self that owns a scarce resource, namely your body. You own it because you have the best link with it because of your direct control over it and your intimate connection with it, the identity between yourself and your body. Okay? So, but Locke would say you own yourself and therefore you own your labor and therefore you own things you mix your labor with. Now, I think his basic argument is correct, but it relies upon too much imprecise metaphors. It actually has a step in there that's not necessary. I think it actually is wrong to say that you own your labor. Labor is just an action you perform. So to say you own your labor would be the same thing as saying you own your actions. So if I'm running down the road, the action I'm engaged in is jogging or running. Do I own my running? Would that even make any sense? If I take a breath and I'm breathing, do I own my breathing? These are imprecise formulations and it doesn't really make a lot of sense to talk about ownership of things that are not scarce, like processes or events or actions. Rather, it is just the reason it seems to be intuitively true that we own our labor or our actions is because we own our bodies. And this gives us the ability, the practical ability to control what actions we perform. If you have an unmolested, undisturbed right to control your body, then you can perform actions. So the right to own your body implies the right to control your actions, but it's just an implication of it. And if you say you own your body and you own your labor or you own your body and you own your actions, it's sort of double counting because owning your body already implies that you can engage in whatever actions you want. So just like the right to free speech is not an independent right. If it was, as I mentioned earlier, it would give you the right to invade other people's property rights. Like you could be on a shopping mall which is privately owned on their territory, on their premises, and you could assert your right to free speech and give a speech to everyone there even if the owner didn't want you to. And in fact, that's what the courts have ruled because they don't respect property rights either. But if you respect property rights, then you see that that's really all there is, is property rights. So the right to your body is complete. It implies the right to take actions, but there is no separate right to action, just like there's no separate right to labor. If you thought there was a separate right to labor, then you could argue that if you mixed your labor with something to create a useful idea, then you've mixed your labor to create something that you own that too because your labor is embodied in this useful idea. And that would give rise to the idea of intellectual property, et cetera, which as we've seen undercuts property rights. The problem is Locke's idea that you need to own your labor to justify owning property. So he goes, you own yourself or your body, therefore you own your labor, therefore you own what you mix it with. Well, obviously this is actually not true because what if you spit in the ocean? Does that mean you've mixed something you own, you're spit with the ocean and you own the whole ocean? No. So mixing labor, mixing something you own with something else doesn't always give you ownership of that which you mix it with. Maybe you lose your ownership of the thing that you discard. And likewise, you don't need to own your labor in order to own something that you mix your labor with. Rather, it's the mixing of your labor with an unowned resource that gives you the ownership of it because it establishes the best connection to it, the best link to it. That is, you're demonstrating that you were the first one to use the thing, to embroider it. So if you think of it that way, you have the right to a piece of property that was previously unowned that you were the first one to appropriate from the Commons because you have a better connection to it because you're simply the first owner. That argument, which is the essence of the Lockean argument and the Libertarian argument, does not require you to assume that you own your labor. It just assumes that you have a better connection to the thing. So this entire middle step of Locke's argument that you own homesteaded goods because you own your labor is unnecessary, and as I just showed, it's insufficient in certain cases too. So it's both unnecessary and insufficient, and it also is overly vague and metaphorical and leads to error. Now, when you make this point to people, sometimes they'll say, well, obviously you own your labor, otherwise you wouldn't be able to sell it. And clearly, if you sell your labor, such as in an employment contract, then that shows that you must own your labor, otherwise you couldn't have sold it. So here the confusion, I think, arises from a failure to be scrupulous in understanding how Libertarian property rights come to play in the idea of contracts. As I said, if you really understand that all rights come down to property rights, which is Rothbard's argument, then his theory of contract comes right out of that, which, as I've explained earlier, his theory is basically that contracts are not binding promises. Contracts are just ways that owners of scarce resources can transfer the title or the ownership of these things to someone else. So if you understand it that way, every contract is just one or more transfers of title to property, and if there's more than one, they're usually related. So for example, in a very simple exchange, I exchange my chicken for your pig. I own the chicken, you own the pig. We each exchange that for the other contemporaneously. So I give you the title to my chicken if you give me the title to your pig and vice versa. So these title transfers, there's two title transfers here. That's an exchange. It's an economic exchange and it's a legal exchange of title to two different things. But contracts and exchanges do not have to be bilateral in this way. They don't even have to be what we call in the civil law onerous, which means for profit. They can be gratuitous, which means a gift. So for example, I can give you my chicken as a gift. The title to my chicken transfers to you. That's a one-way transfer of title. It's not even an exchange. It's just a one-way transfer of title. My title goes from me to you. Now you're the owner of the chicken. And there are other contracts too that can be onerous or done for a financial or pecuniary reason, but they're only a one-way transfer of title. So for example, if I agree to, if you agree to pay me $100 if I paint your fence, then really what we've agreed to see, we have to distinguish between economics and law. The economist views that as an exchange and that's fine. The employer is exchanging some of his titles to his money in exchange for getting something that he values, which is my performing an action or performing labor, performing a service, painting the fence. So economically, he's exchanging his title for something that makes him more satisfied. But of course, in that broad sense of satisfaction, you could call even a gift contract an exchange. If I give my nephew $100 as a gift because he's been a good boy or because I want to reward him for being a good student or I want to encourage him to go to college or whatever, then I'm getting something for that. I'm getting satisfaction from knowing that I'm helping out someone I love or improving my relationship with him, something like that. But an employment contract in legal terms is not an exchange. It's actually a one-way transfer of title. But it's not a gift. It's onerous, which means it's based upon the desire of the employer to achieve something of value to him economically, and that is your performing of the services. But so what he does is he makes his transfer of title not a present transfer of contemporaries exchanged like the pig in the chicken example. Instead, he makes it a future title transfer, and all future title transfers are necessarily conditional because the future is uncertain, and you can place conditions on it. The condition could just be the time, like, I will give you $1,000 tomorrow, or it could be I will give you $1,000 tomorrow if you have painted my fence tomorrow. So you just set up a trigger or a condition on the transfer of title to the property, and then that gives me an incentive to go paint your fence because I know that's the only way I can trigger the transfer of title to me, trigger the payment to me. So I go paint the fence, the employer receives the service he wanted, and he transfers the money to me. But you can see there was only a one-way transfer of title. He didn't receive any ownership of anything he didn't own before. He doesn't own my service. He now has an improved object that was improved by the performance of my services. But it's a mistaken metaphor to say that I gave him ownership of my labor. That's actually not true. My labor is something I do with my body. So you can see that if you view these employment contracts, you're not really selling your labor in the legal sense. It's really a one-way title transfer of money to me, conditional transfer of money if I perform something. Another example is suppose I tell you, I will give you $1,000 if it rains tomorrow, and if it doesn't rain, I won't give you $1,000. Now the rain serves as a condition or a trigger for the transfer of title of some of my property to the person I made this little bet with. But of course neither one of us owns the rain or the weather. So that's just an example that triggers, just because there's a conditional trigger or a condition that triggers the transfer of title doesn't mean that the thing that triggers it was an owned thing. So the only reason people can say that labor contracts are exchanges and there are sales of labor is because they're looking at it as an economist and they are relying in the legal sense on metaphors. So actually it's not true that if you sell something, you own it. Or you could say that in reality these types of examples they point to are not actually examples of things that you sell. I'm not really selling my labor. That's just a metaphor. Or it's talking about the economic reality of the transaction. It's not legally what's going on. There is no title being transferred from the laborer to the employer. Brian Mooney asks a question, is it possible to own or buy happiness? I've heard that marketing experts are not selling a new car or beer but are actually selling an emotion. If you buy a ticket to a movie, you don't own a movie but you receive entertainment value. I think that's a more economic way of looking at it. It's more explaining the motivation for your parting with title to the money you gave them in a legal sense if you give a movie theater $16 for a movie, you're not really buying a movie and you're not really even buying the entertainment. What you're buying is a temporary right to use their property but using their property in a way that would allow you to receive subjective satisfaction by gaining information or gaining entertainment. So legally you actually are not really buying happiness or buying value or entertainment. Now a related confusion is the converse of the first fallacy which is if you own it you can sell it. Now my impression is that this relates to the debate about voluntary slavery and inalienability. That is whether there are some rights that are inalienable. Now all rights are property rights and the only thing that can be subject of a property right is a scarce resource and there are two fundamental types of scarce resources in the world. Our bodies and everything else and I've already explained why according to at least the Hoppe and Rothbardian in my view of property there is a fundamental difference in the nature of ownership of our bodies and the nature of ownership of things that we acquire with our bodies. We own our bodies for a different reason than we own things that we homestead. We own our bodies because of the direct link to our bodies, our ability to control our bodies and the special intimate relationship we have with our bodies. But we as body owning actors as homesteading agents own things that we homestead because when we homestead these things that are previously unowned we become the first user or owner of these things. And that gives us a better claim than anyone else because anyone else that comes later is a latecomer and a latecomer has to have a worse claim than the earlier claimant. Otherwise no one could own property because someone could take it from the second guy or third guy or so on. It's almost like the Misesian regression theorem of money where he traces the value of money back to the first day before it was used as money and was just at a commodity value. By the same logic anyone that owns something has to believe he owns it and has a better claim to it than anyone that comes later. That means the person who came before him had a better claim to it than he did unless they gave it to him contractually. So if you go all the way back you see that the first owner has a better claim than anyone. That's why homesteading works. But the point is that there's a difference in how we own our bodies and how we own other scarce resources. And because of this difference, as I would argue and as Rothbard argues, and as Hapa believes, I don't know if he's written on it but he, in private discussion, he's told me he agrees with this. If you try to sell your body to someone else, that contract is not enforceable. But if you sell something that you own, like an external resource that you homesteaded or purchased from another homesteader, then that contract is enforceable. Now why is that? Well, let me put it this way. What is the other view? The other view would be the view of what I think is a minority of libertarians, people like Walter Block and some other people I know, who argue that in theory you could even sell your body. And the problem is their argument for this is that, well, you're a self-owner, we all agree that we're self-owners. And if you own something, you can sell it. So they go with this just sort of basic principle that they think that ownership implies the right to sell. But that's not a fundamental characteristic of ownership. The fundamental characteristic of ownership is the right to control or to use. So if I have the right to control my body or this bottle of water, that means that other people cannot use it unless, hold on a second, did my video just freeze? Okay. I think my video froze. I've had this happen before. I'm going to have to hold on a second. Let me figure this out because I'm the host now. Danny, are you still there? Danny may have stepped out. That may be how I'm going to record. I'm afraid. Okay. Hold on a second, everybody. I might have to log out and log back in. I'm going to pause it. Hold on a second. So what I was trying to say was Walter Block is a good friend of mine. He tries to argue in favor of – so Walter Block, when he argues in favor of body alienability, he just keeps repeating, well, you own your body, right? And I say yes, so you can sell it. So what he's doing, I think, is he is using a characteristic of some types of property and assuming that it applies to all types of property. It is true that if you own something like an object that you homestead, you can sell it, but that doesn't mean that that's an essential part of ownership. Ownership simply means the right to control something. Now, my view, and I think it's compatible with that of Rothbard, who didn't elaborate on this in exactly the same way, is that the reason you can sell something that you own, like that you homestead it, is because of the way you came to own it. Basically, it's the idea that if you homestead an unowned object, like a stick or a tree or a piece of land, then the reason you own it is because you were the first ones to possess it and you possessed it as an owner. You put borders up around it and you held yourself out to the world as the owner. But if you undo that and you just abandon it and walk away from it and erase your borders, then you no longer own the thing. You return it to the state of commons where it could be homesteaded again. And that means that you can acquire something and then you could unacquire it. So something that you acquire as a homesteader, you could unacquire. And if you can do that, then you could use that ability to sell something or to donate it to someone. For example, I could hand my friend this bottle of water that I own and when they're in possession of it, I could say I hereby abandoned my claims to that bottle. So for a split second it becomes unowned and then it becomes re-homesteaded right away by the new possessor. So in this way, the fact of how you come to own a scarce resource that was previously unowned, something you acquire as an external thing, could be undone. And that way you could sell these things. So the right to control implies the right to sell something if it's a type of thing that you acquired. But the right in our body is not the same thing. You don't acquire your body because acquiring requires a homesteading agent. Without a body, you're not a homesteading agent. You're not wandering around the world as a disembodied spirit looking for things to homestead. And the first thing you happen to homestead is a body that you jump down into. Even if you believe in a soul and these kinds of things, still the concept we have as living humans in a physical scarce world just downs up with our bodies. In other words, my identity, even if it's a disembodied soul or even if it's a legal personality or an agent that is not the same as my body materialistically, right? There's an intimate connection between who I am and the identity of my physical body, the body that I control. I won't even say it had it because that implies physicality to the soul or to the identity. But my identity is the identity, the legal person, that is the one that has direct control over this body. I couldn't homestead it without a body. I'm not a homesteading agent unless I am identified with a body already. So we don't acquire our bodies by being homesteaders. We have rights in our bodies because of our intimate connection to our bodies, which gives us a better claim over them to everyone else. So because you didn't acquire your body, there's no way to unacquire it. You can't just say words and say, I give up my claim to my body. It's not true. So you can see these two fallacies, if you can sell something, then you must own it. It's not true because you can sell your labor in an economic sense, even though you don't own labor. You own your body, which gives you the ability to perform labor. And if you own something, it does not mean you can sell it. It only means you can sell it in the case of homesteaded goods. So these are two interesting and related fallacies, and I think understanding what's wrong with them can help clear up lots of confusions and deepen your understanding of property rights. Tony Cape. Rothbard said if we could legally sell ourselves in the slavery, but we could never alienate our body and change our mind later, and that it would be improper to try and force the slavery contract thereafter. Actually, I could be mistaken, Tony, but maybe you can try to look this up. But I don't think Rothbard did say we could legally sell ourselves in the slavery. Rothbard says you cannot legally sell yourselves in the slavery. I actually agree with Rothbard. Rothbard said that because the will is inalienable and you always are the practical owner of your body, then the contract of slavery is like impossible. I think there's a few problems with his reasoning, but I think he was on the right track and basically correct. He did say that if you don't pay a debt contract like you owe money to someone, that that's a type of implicit theft and could theoretically justify debtor's prison. But that's not the same argument, and I think that one has problems. Lee Cape says what about indentured servitude? Well, if I understand exactly what that is, it's like a type of partial voluntary slavery or limited or temporary voluntary slavery. No, I think that kind of contract would be unenforceable in the sense that if you have an indentured servant and he wanted to quit his job, he's always free to quit his job. I don't know what you call the, not the owner, but the master of the apprentice. The master would have no right to use force against his body to keep him from leaving. Now, he could probably sue him for money damages if they agreed to that. Like you say, look, you come to be my apprentice for seven years, I'll pay you minimal wages, but in exchange, you'll give me services and I'll give you training. And after seven years, you'll be free to go. But if you leave me after three or four years, you need to pay me a penalty. Like you have to pay me back for what I spent on you. Actually, that kind of contract is common in today's world. For example, my wife and I one time lived in Philadelphia and were relocated by Koch Industries, who was her new employer, to Houston, and they agreed to give her a sign on bonus and relocation expenses. She had to sign a contract saying if you leave less than one year after you start, you owe us that X thousand dollars of money back, the sign on bonus and the relocation expenses. So it gave her a disincentive to leave before one year, but she was free to leave, but then she would owe them money. So you can see that's just a transfer of title to money. So if you can negotiate that fine. Now back in the apprentice world, when that was common, I don't think that the indentured servants would have any resources to realistically repay the owner. So the owner would have to take the risk. He'd have to treat his employees good enough, his servants, his convicted servants good enough as to where they wouldn't want to leave. So just as in today's world. So Lee Tate says, right, but what could you still, you could still sell yourself into a term of slavery? Well, according to my belief and Rothbard's know, you do not have the right, you don't have the ability to alienate rights to your body, which is what you would have to do to give the master the right to use force to coerce you from leaving or to punish you if you did leave or tried to leave. So no, I think you cannot. Cam says, you can't sell yourself, but you can rent yourself out. You see, this is actually, literally, you can do neither one. You can't sell yourself or rent yourself out. This is why I addressed the first one, the first penalty, if you can sell it, you own it. See, so you're saying you're selling yourself temporarily, you're selling your labor, so that implies you can sell yourself permanently. Well, really, when you rent yourself out, that's just another way of saying someone has agreed to pay me money if I do certain things. Now, I have the practical ability to choose to do or choose not to do those actions because I own my body. So because of my ability to withhold that service or to perform that service, the owner of the money agrees to transfer a title to me to reward me to incentivize me to engage in the action. But I'm not really renting myself out technically in the legal sense. All right, let's go to slide 16 now. So someone asked earlier in the last discussion about Rothbard's argument for why you shouldn't be able to sell yourself. Now, Rothbard's argument, I used to think it was a little bit off, but now I think it was actually correct because I've read it recently and studied it even more closely. It's in his ethics of liberty. What he says is that because there's an impossibility of alienating your will, you always practically control and own your body, and therefore it's impossible to sell yourself in the slavery. Now, my previous view was he was a little bit confused here because, number one, it is clearly possible to own other animals, including humans, even though they have a will. So for example, you can own a horse or a dog even though it has a type of will, right? Owning it simply means you have the legal right to administer force to that animal to be able to coerce it or compel it to do what you want. Likewise, if you have a prisoner who, let's say there's a criminal who's trying to attack you and you use force against his body, you are claiming a type of master-slave ownership over his body to punish him or to repel him. You are using force against his body even though he's not literally consenting to it, right? Even though he has a free will, or if you punish him later or if you jail someone who's a standing threat, you're imprisoning them, you're using force against them, and while you do that, you might have to use a whip or threats of force to compel him to obey your orders and to stop making trouble or to do whatever you want. So, and that would be legitimate in some circumstances according to libertarian theory because it's legitimate to use force against a criminal aggressor. It's legitimate to use force to restrain a standing threat or even to punish someone that committed a crime. Clearly, the fact that you have a will doesn't mean you can't be owned. So, I always thought, well, what's wrong here, that the impossibility of alienating your will is not a grounds for inalienability in law. Or it's the fact that the person who promised to be someone's slave never committed aggression and therefore the would be, I hear some background noise. I don't know where that's coming from. Maybe everyone can try to make sure they have everything muted. But the more I read this, what I think Rothbard was saying is basically compatible with my argument. My argument is that you haven't committed an act of aggression by promising to be someone's slave. So if you change your mind later and try to run away, the would be master's use of force to compel you to stay is itself an act of aggression. Because remember, the use of force against someone else's body is permissible only if it's in response to aggression. If it's not in response to aggression, it is aggression. And the master in trying to punish a slave for trying to leave is committing aggression because he's not responding to any aggression committed by the slave. And I think Rothbard was saying that. I think Rothbard was not talking about the context of aggressors. He was assuming peaceful people who had not done any criminal act. And what he was saying was that because it's impossible to alienate your will, then if you promise to be someone's slave, then because you still have the direct ownership of your body, you are still the owner of your body. You have the best claim to it. And therefore, if you try to leave, it is aggression to use force against you. It's aggression for the master to use force against you. So I actually think Rothbard, he didn't unpack it and elaborate on it, but I think that was his argument. And I have some links here to some elaboration on these ideas, which I've talked about in some other blog posts. And actually, these are two articles here. Okay, any other questions before we go on to the next page? I'll go on to slide 17 now. Now, there is one thing I think Rothbard was wrong about, and that was his actually misapplication of his own brilliant title transfer theory of contract, which, as I said, flows from his rigorous adherence to the idea that only property rights are real rights. All rights are property rights. He talks about the case where someone who owes money, like let's say you borrow money from someone else. Like let's say I borrow $1,000 from Walter Block, and I'm supposed to repay $1,000 with interest in one year, let's say 10% interest. So I'm supposed to repay $1,000 with $100 interest in one year to Walter Block. Well, actually, I think it's actually slight misdescription to say I'm repaying the money. I'm not repaying the money. What's happened here is there's been a bilateral exchange of title. Walter Block has transferred now $1,000 of existing current money that he owns to me now. And he's done it 100% unconditional transfer because I need to be able to spend that money. That's why I'm borrowing it. I can't spend it unless I own the money. And in exchange, I have given him a $1,100 future dollars of my future patrimony or estate. Now, that $1,000 in the future is less valuable to Walter Block now than the $1,000 he's giving me now because, well, not the $1,000 in the future will be less valuable because for two reasons. Number one, there's a time preference. People prefer things now to later. I prefer $1,000 now than $1,000 in a year. And also, the very existence of this $1,000 in the future is uncertain, right? It might not exist. The world might not exist. Walter might not exist. I might not exist. I may not have the money. So the only way he's going to part with $1,000 now in exchange for money in the future is if it's more money. Both because of time preference and because the goods he's receiving in exchange are uncertain. He may not get it. There's a risk he's taking. That's why I have to pay him $100 extra. In other words, I have to pay him $1,100 in the future in exchange for his $1,000 now. So there's two title transfers. He's giving me $1,000 now. I'm giving him $1,100 in the future. But that $1,100 is necessarily the transfer of an uncertain piece of property that may never come to exist because I may be bankrupt in one year. So when the one year arrives, if I have $1,100, then it automatically transfers to Walter's ownership. If I refuse to turn it over, now I'm in possession of property he owns and now I'm committing a type of trespass or theft or conversion. So I would be an aggressor then. So he's entitled to use force against me to take his $1,100 from me. But if I'm penniless, if I'm bankrupt, I don't own any $1,100. There is no $1,100 in existence that I own that can transfer to him. Now, Rockwell says that if I fail to repay that $1,100, well actually I'm not repaying it. I'm just supposed to pay it, right? The original $1,000 is not repaid because I've already spent it and I was supposed to spend it. It's a new $1,100 that if I own it, it becomes Walter's. But if I don't own it, how can it be stolen? Rockwell says that it's implicit theft. Now, I've talked to Walter Lockett and I said, well what's the implicit theft of? Is it the implicit theft of the $1,100 that does not exist? Or is it the implicit theft of the original $1,000 that you transferred to me a year ago? And there's two possibilities. And Walter admits, well, I agree it can't be the current $1,100 because it doesn't exist. Rather, it's the implicit theft of the original $1,000. Well, how can you make it retroactively theft if it wasn't theft? Walter gave me the money, full ownership, to spend. The very nature as Hoppe elaborates in his Theory of Socialism and Capitalism, the nature of property rights, the purpose of property rights is to establish practical rules, normative rules that tell people in society who owns what now so I can use it now and so I can avoid committing trespass now. So we can all know, in principle, for a given resource like the $1,000 who owns it. If you have to wait for a future condition to determine who owns it, it can't be used legitimately. But it doesn't make any sense to say that the $1,000 title wasn't established on the day it was loaned to me and we had to wait a whole year to determine who owned it because if that was the case, I wouldn't have been able to spend the loan. So the original $1,000 was not stolen. And an event that happens a year later cannot go back in time and retroactively make that original transaction to me theft because it wasn't theft. That's why failure to repay a loan if you're bankrupt is not theft at all. And that's why Rothbard is wrong to say that you're committing an act of implicit theft and therefore debtor's prison would theoretically be justified. I think Rothbard sensed there was something wrong with this. And so he said even though debtor's prison would be theoretically justified, it would be disproportionate to punish someone that way for a mere theft of money. So it's not really punishable by force. So I think he sort of admits that it's not theft by giving up, by saying that it's categorically disproportionate to punish. He basically thinks you can't punish someone for failure to repay a loan, which to my mind means it's not theft because Rothbard thinks if it is theft, you can punish. Tony Cape says if you're not penniless and you could repay it, in other words, if it does exist, then is it theft? Yes, you might have missed it. I just addressed that. I explicitly said it is theft because if the condition to transfer the title occurs, which is the day arrives, the one-year date from now arrives, that was the original condition. I said to Walter, in one year, if I have $1,100 that I own, then it becomes yours. Now, some people say, well, what if you don't say if? Well, the if is necessarily there. The condition, if I own it, is necessarily there because I cannot transfer to you something that I don't own. For example, if I said to you I hear if I transfer to you ownership of the moon, well, implicitly that transfer assumes that I own the moon. In other words, the transfer can only happen if I actually own the moon or the thing that I'm saying that I'm transferring to you. So the if I own it is always an implicit condition of a transfer of title. And because the transfer of title is a future transfer of title and because the future is necessarily uncertain, then there is a necessary, unescapable, unavoidable, conditional aspect to any future title transfer. It's always conditioned upon the thing existing and the transferor having ownership of it, which means if I don't own it, then I can't transfer it to you. And you knew that when you entered into the original agreement. You accepted that condition because it's inescapably part of the nature of future title transfers. But if you do own it, when the condition happens, when the day arrives, then automatically the ownership of $1,100 of my estate switches to Walter, the payee. And he can reclaim it. He can say, you're holding $1,100 of my money handed over. If I refuse to hand it over, it's theft. It's no different than if he loaned it to me for a second or let me hold it for him and I refuse to give it back. Or if I stole it from him and refuse to give it back. It's no different from that. Okay? Any questions about that? I think these are two of the most – these last two or three slides are some of the most fascinating and interesting to me to get straight because it clears up so much. Jackson says, it seems to me you've implicitly promised to pay back Playblock $1,000 by title transfer in the future. Black has an expectation you will pay it. Without that expectation and a reasonable belief that it will be satisfied, he won't transfer it now. And then there's another question of bankruptcy. Well, first of all, I agree with that. But the truth is, even if we have today's type of contract enforcement, there's still a possibility that whoever you loan money to won't be able to pay you back, right? Loans go bad all the time. Debtors or sometimes go bankrupt and are unable to repay. And yet they still get loans. So I think it's salt that loans won't happen. It's just you have to get an – you do have to have an expectation that it will be repaid and your expectation is based upon what you know about the debtor and his plans for the money. If I say, loan me $1,000, I'm going to use it to start a business and I expect to make a profit, right? And here's how I'm going to do it. And you expect my plans and you check my reputation and you ask me questions. And you're basically an investor with me. You're letting me invest these funds. You're an entrepreneur with me in my venture. And if it's successful, I will repay you. And you're assuming a lot of things. You're assuming I have an incentive to not run off with the money and I have an incentive to try to make this business work. I think there's no problem with that at all. But for me to take that risk, I have to expect to receive more money at the end, which is why the interest rate arrives from. That's why there's interest. There's interest both because of time preference and because the future is uncertain. Now, I think you're actually imprecise here when you say you promised to play black $1,000. No, I've promised to pay him $1,100, not $1,000. $1,100. $1,000 wouldn't induce him to part with $1,000 now because he's giving away $1,000 he owns now for $1,000 in the future, which is less valuable because of time preference and whose existence is uncertain. So no, it has to be more. And you're using the words that are common to conventional theories of contract promise and expectation. Conventional contract theory is based upon the idea that if you make a promise that leads the other person to reasonably rely on it or expect that you'll perform, then the law will enforce that promise as a binding obligation. But Rappart's entire contract theory says that's all confused, and I agree with them. It's confused for many reasons. Number one, as Rappart said, a contract is not about a promise, it's about a transfer of title. Now, the word promise might be used to set off a transfer of title, but it's not because it's a promise. It's because it was just language that communicates that I fear by transfer title to my future property to you in parentheses if I own it. It has to be there. That sentence has to be there. And the idea of expectations is totally irrelevant for legal theory because it's circular reasoning. It's based upon the idea of what's called detrimental reliance, detrimental reliance, or promissory stop-all. It's called in some formulations. That's based upon the idea that if someone reasonably relies on your promise, then the law will make that an enforceable promise. But as Randy Barnett has pointed out, if you go to RandyBarnett.com, look at some of his contract articles like a Consent Theory of Contract and others. I think he's got one called Beyond Reliance. He points out that the reasoning is circular because what you're saying is if someone relies reasonably on your promise, then the promise should be enforceable. But of course, if the law, as a general matter, enforces promises, then it's reasonable for the promisee to rely on it. So it's circular, right? If the judge were to say, I'm not going to enforce this contract, then people going forward would know that they can't rely upon promises. They can only expect transfers of title to property if it exists. So the expectations idea or the reliance idea is not the right way to ground contract theory, at least according to Evers and Rothbard and what I agree with. I think instead it should be looked at as title transfers only. It really has nothing to do with promises or reliance or expectations. Now you had a second question in Libertarian Society. Will there be bankruptcy if it's not written into a contract? I don't know. That's one of these conundrums I'm not sure about. I tend to think that that might be a customary part of contracts or people might write into contracts, but you have to be careful about it. But I think in the case I gave, Walter is aware that there's a possibility that on the due date, one year from now, January 1st, 2012, whatever, well October 24th, 2012, let's say, I may not have the money. And he's also going to be aware that according to Libertarian Theory, I'm not a thief on that day, so he can't do anything about it. But he's not going to want to let me walk away scot-free, so we're going to build into the contract a bunch of subsidiary or ancillary title transfers, namely the ones that say, and if I can't repay you on the due date, then I still owe you the amount due with interest accruing in the future until, you know, so three years later, I somehow get back on my feet and get a job and make money, and then I finally acquire $1,100 or maybe $1,200 then with accrued interest, then Walter owns that money. And if I have a job and I'm only making $100 a month, he can go to my employer and say, the moment you pay Cancella that $100 for that week's work, that becomes mine by title transfer because of the contract Cancella set up. So you need to give it to me instead of to him. So that would be a way to garnish wages. Now, if he garnishes 100% of my wages, I'm going to starve to death and not be able to – I would have no incentive to work. So as a practical matter, he would only be able to garnish maybe 25% of my wages until he just repaid, which is actually what the law does now. The law allows garnishment of wages but only a certain maximum percentage of it, which makes sense. And that's what no lender is going to agree – force the debtor to agree to pay 100% of his wages after he recovers from pennilessness or bankruptcy because he knows that that's not acceptable. The guy would die. Who would agree to that? So I do think a type of bankruptcy provision in the sense of a limited ability to garnish wages would arrive contractually, but it doesn't necessarily have to, I believe. Tony Cape asks a follow-up question. Should declaration of bankruptcy allow a racing of the existing debt, or should you have to pay Walter the 1100 when you're able? Well, I think most lenders or creditors would insist that you repay them the whole amount plus interest accruing. So if it takes me two years to pay off a debt that should have been paid off in one year, it's going to be more than 1100. It's going to be like 1200 then. But as a possible matter, probably you would go to your debtor and say, listen, I've been on hard times. I need a fresh start. If I pay you $600 now or promise to pay you half my salary for the next two years and pay you $800 that way, would you accept that? It would probably take it because they're getting something back instead of nothing. Jesse Porch, this is where collateral comes into play, right? I give you some of my property to hold as a hedge against future uncertainty. Well, in some contracts, yes, which is why I think that you would have other agreements, you would say, and if I can't pay you the 1100, if I own any other property that I can sell that's worth something like that, then you can see that and sell it instead, which is what they do now. I think that would be part of it too. But I'm assuming in the extreme case that you own nothing. You're really penniless. And in not every case will the borrower have collateral. Some contracts have security or collateral and some do not. I'm sorry, some loans. Sometimes the borrower has no collateral. He just has a good business plan. I mean, sometimes you don't have any collateral and there's going to be a market for that too. The interest rate might be lower if you have collateral. The interest rate might be higher if you have no collateral. But there's no reason to think there's always a possibility of collateral or a security bond, et cetera. Jackson says he doesn't find this persuasive. Be happy to answer follow-up questions. Feel free to email me or post them on the board too. We can talk about it further if you like. Okay. It's six past the hour. I know we took a five-minute break earlier, but let's pause here for about five minutes. Let's come back at 11 minutes past the hour and we will resume shortly. It says you can't see the questions people are asking. I'm not sure why it's in the chat window. If everyone is sending to all participants, they should be able to see it. Okay. Let's resume. I'm going to go ahead and go on. I'll take a look at the questions here. Let's see. Tony has a survey he wants people to take. Fundpoliticalsurvey.com. Brian Mooney says, is there a confluence of morality and natural rights in this issue? It may be that one's natural rights are not violated if another one defaults on a contract, but there still be a moral obligation to do the right thing. And if the person who defaults lives up to the moral not rights-based standard, they salvage or improve their reputation for future exchanges. Absolutely. I think in a private society we would have a return to the kind of mentality there was maybe 30, 40, 50, 80 years ago where people wanted to pay their debts off, even if they were bankrupt. Even people that went bankrupt and were released from their legal obligation, they worked to pay their debts off. We've seen a loss of this mentality now where people file bankruptcy and they just, you know, they can get away with it, they get away with it, they walk away from their mortgages, et cetera, like Doug French argues, et cetera. But not only that, I don't think that you would ever be off the hook. You still owe the money unless you had an agreement that lets you off the hook, at least as I didn't either. I don't know what you're replying to. Anyway, so by the way, what you mentioned is interesting to me because in the civil law, right, there's two major legal systems in the world, the common law and the civil law. The civil law, which is the continental legal system based upon Roman law and like the Napoleonic code and France and other codes like that, Greece and Louisiana, my home state, Italy, et cetera, Germany, Switzerland, Scotland, Quebec, in any case. They do view contracts as obligations and there are two types of obligations. One of the obligations to do something, which I think would actually not be a type of legal right in the rock partying system and an obligation to give or to transfer title, which is I think what all contracts really should be viewed as. But in the common law, there's a doctrine called consideration, which I think is not a libertarian required idea. The idea is that if you have a contract with someone, you have to get something in exchange for your transfer to be enforceable or bind up an enforceable obligation. You have to get consideration. So if I just say I give you $1,000, I promise to pay you $1,000, but you don't promise to do anything in exchange and it's not really a binding contract. You have to at least promise to do something small. It doesn't have to be equal in value. It has to be at least a peppercorn, they call it, you know, a little tiny thing. That's why you'll see a lot of common law jurisdiction contracts that you agree to pay a dollar or $10, some minimal payment in exchange for getting something. Do lawyers put that in there? It's a formality now. They do that to make sure there's consideration so the contract is binding. The civil law doesn't have a doctrine of consideration. All they say is you have to have cause, which makes more sense. But what they do say is that if you make a promise that is not enforceable for some reason like, let's say I make a contract with you to pay you $1,000 but I'm 17 years old. So I don't have legal majority yet. I don't have the legal capacity to enter into contracts. Well, actually, then if the debtor tries to enforce that against me, I can say the contract is null and void. However, the civil law says if you made that kind of promise and when you turn 18, then you want to reaffirm it, then you can actually make it binding because they call it a moral obligation, actually. So if there's a moral obligation, then the contract can be enforced if the party agrees that they should enforce it. It's sort of like a whole – it's sort of like a blending of the moral aspect with the legal aspect. This is kind of compatible with what I think you're saying, Brian. I think it's fascinating. Anyway, let's go on here. We may attest to this a little bit, but I have a whole slide on here I wanted to go into. This may be something that not everyone here agrees with me on. By the way, I don't mean to dictate what official libertarian doctrine is here. I'm trying to give you different perspectives on different disputes and give you my perspective on some of them because that's what I'm thinking about them. But you're free to debate it, disagree with it, take what you want from it. But just like my view on the inalienability issue and the bankruptcy issue and the contract issue, I want to talk about self-ownership now. Self-ownership is used a lot as a term. And every now and then you'll run into a libertarian who says that that's a mystical or a nonsense term. Now, I can understand a non-libertarian disagreeing with it because basically self-ownership is incompatible with almost every positive law that these leftists and socialists and conservatives are in favor of because they all basically have the state or the collective assuming a partial ownership of your body. So for example, when drugs are illegal or when you're penalized for not paying income tax or when you are conscripted to fight in the government's wars or when you're put in jail for being the wrong religion or reading pornography or smoking marijuana, every one of those cases the government is assuming ownership of your body. Now, as I said before, ownership of someone else's body is not necessarily unlibertarian, but it just has to be as a response to aggression. In other words, it's okay to use force against the body of a criminal in response to his force to defend against it or to punish him after. But the government is not doing that in these cases. They're just using – they're initiating force against you because the actions they're punishing you for were not themselves aggressive. So basically almost every illegitimate law that would use force against the body of a person – punish him, that is, or put him in jail – is actually assuming that the government owns your body to some extent. In other words, that you're the government's slave. So body ownership is the fundamental libertarian view and it's 100% incompatible with anti-libertarian, unlibertarian state laws. So it's surprising to me – so I can understand why a status or a mainstream Democrat or conservative would oppose unfettered, unlimited self-ownership because that would make it impossible for them to have their socialist policies in different types. So it's always a shock to me when I come across libertarians who say that they don't believe in self-ownership. Now what I think they're afraid of is they're afraid of – they're afraid by saying that if you believe in self-ownership, you're admitting there's a distinction between the self and the body and you're admitting some type of mystical religious view like a soul and also some kind of belief in natural law based upon natural rights, based upon natural law theory, which is anchored in Catholic or religious views. So it's like they're afraid to admit that there's self-ownership because they're afraid to admit some kind of religious or conservative view. But of course they're confused because self-ownership doesn't imply any of those things. It doesn't even imply religion or anything. It doesn't imply a type of dualism, but dualism that is having a perspective of two different aspects of the realm or the subject you're describing is part of Austrian economics itself, right? Mises was a dualist in that he believed there was a different realm of understanding and reasoning and laws for human action, which includes economics and also ethics and human purpose and norms and shoulds, things like this, right and wrong, good and evil, and the other realm of the physical world that's governed by causal laws. So being a dualist doesn't imply anything mystical or anything religious, and it doesn't even imply a belief in natural law in the religious sense. So I think that the people that – they'll say things like, well, you are your body. And I think that's a little too materialistic in the sense – I mean, look, when you die, your body is still there, but you're no longer alive. In fact, your identity, you as a person, don't exist anymore. So clearly there being a human body is not sufficient for there being a person. Similarly, if you have a brain and a mind, they're not the same thing. To admit that they're conceptually different things doesn't mean that you believe there could be a mind without a brain. To say that the person is not the same as your body doesn't mean you believe you could be a person without your body. It just means you're describing different things. I mean, it would be a mistake to say that your memories are your brain. Clearly memories are not your brain. You couldn't have memories without a brain, but the memories are some phenomena that is generated by the brain or that subsists on the brain. But they're clearly different conceptual things that you're identifying as part of reality. And this is common sense until modern times when people got a little too fancy. Back in 1646, Richard Overson wrote, to every individual in nature is given an individual property by nature not to be invaded or usurped by any. For everyone as he is himself, so he has a self propriety, else he not be himself. So he's saying you're a self owner. You have a property in yourself or in your body. And John Locke said in 1690, though the earth and all inferior creatures be common to man, every man has a property in his own person. This nobody has any right to but himself. So it's a common sense recognition that you are the one that has the right to control your body. That's all self ownership means. It means that your body is a scarce resource. And it means that you believe that that person who is associated with or identified with that body or who is that body, if you want to say, doesn't matter. The point is that person is the one who gets to say so over who gets to use that body. That's what self ownership means. And it seems to me that that is the fundamental libertarian principle and no one can deny it without straying from libertarianism. So I think libertarians that object to self ownership are getting hung up on some extraneous things that they confusedly think flows from admitting this. There's no harm to admitting that we oppose slavery. Okay. Lee Cate says, with rock parties that believe in proportional punishment, how would they justify or not shooting and killing someone who entered their home without the owner's consent? Well, I think that – so I think you would have to distinguish between self defense and punishment. Punishment would be looked at something you do after the fact, after the crime has happened, when you're trying to – when you catch the criminal and you're trying to meet out proportional punishment. Then you can do something to him somewhat proportional to what he did because that's the idea. But if you kill someone during a break in, you're not punishing them. You are using force to prevent them from committing the crime. Now, the theory of proportionality for self-defense is, to my knowledge, not very well developed. There is some recognition that proportionality principles still apply to self-defense. But almost everyone believes that – let's say you have a robber breaking into your house at night or committing rape or even committing an act of serious violent assault. Almost every libertarian would say that if you have to use lethal force to kill the guy to stop him, you're entitled to do that. Even if he got away with it and you caught him later, and it would be disproportionate to execute him for those crimes because executing him would be too disproportionate to kill someone for just committing an act of assault and battery. So I think clearly the standards are not the same. Clearly what would be disproportionate to do in punishment is not always disproportionate to do in self-defense. Now, the question is, is there any limits to what you can do in self-defense? So let's say you have a 12-year-old kid stealing a pack of gum from your small drugstore or something. Could you hold the gun up and say, put that down or I'm going to kill you? And the kid just looks at you and says, no, I'm taking this pack of bubble gum and I'm leaving, and he walks out. Would you be justified in shooting him to kill him? I would think most libertarians would think not. They would think that that would be disproportionate. But I think that the standards for proportionality are different when it comes to self-defense and when it comes to punishment after the fact. It's a higher standard for punishment. It's a lower standard for defense. What that lower standard is, I haven't seen much detailed exploration of that. Lee says, would libertarians believe the castle doctrine is unproportional punishment? I don't think so. I mean, I think the example I just gave is not really the same as the castle doctrine. That's like a minor property theft against a minor, and people would think it's disproportionate to murder him or to execute him for that. But the castle doctrine, the idea of someone breaking in your house, I think that's almost always such a serious potential violent threat that legal force used against that person would be justified in libertarian theory. Brian says, what happened? This is a good question. I actually have a slide on this later on, but I don't have a lot of words on it, so we'll just talk about it now. Brian Mooney says, what happens to ownership rights of property at the moment of death is a last bullet testament valid if the owner no longer exists. Actually, David Gordon and I have debated this in private conversations. I think there's no problem with this, and he thinks there's a potential theoretical problem. And it's a problem you're pointing at, Brian, that once you no longer exist, then you don't own the property anymore, so does it just become abandoned and subject to re-homesteading? Now let's say that was the rule, which I don't think it would be in any society. I think basically any society that's libertarian and respects property rights would respect the last bullet testament and give effect to that upon death. I think basically it's like a contract. You basically are saying, I hereby give my property to X upon the occurrence of this condition, and the condition is my death. And now you have an infinitesimal moment where you no longer exist, and you can think of, you know, that's zero times, zero plus and zero minus in calculus terms, right, an infinitesimal moment right before you were still alive, zero plus after you weren't. If the state or if the legal system didn't recognize that will and testament because you no longer exist, then you know you have a lot of property and you want it to go to your heirs, so you would come up with a mechanism to get around that. One mechanism would be, you know, as you get a little older, you put all your property into a trust, which is some third party agency that owns it, owns the base paddle to it, but they have a contract with you that lets you use it as long as you're alive. So the moment you die, your use right expires and this trust has full ownership of it now. But in your trust arranged with them, you set up that they had to make a contract with your heirs that upon your death they would transfer it to them. So that's one way you get around it. There's lots of ways to get around it, but I think the will and testament could also just say that I'm setting up a standing order as to my consent, as to what should happen to my property, and my order is that the very barest second before my death, I want that to trigger a transfer of title to these heirs. So I think that that would happen. Now, Brian asks a good question. Can a trust, which is a non-person, own anything? Is a corporation or a trust a person? The contract theory makes more sense. Actually, I'm using contract theory. I'm assuming in a free society there would be no state chartered corporations or legal entities like trusts or corporations. You would have companies or businesses or firms, which are just collections of individuals that have contractual relationships among each other, and they would have various reputations. If you want to make it simple, let's just think there's one person that you know really well. Let's say you're a best friend or a person that has the business of doing this trust business. He's got a reputation that he doesn't rip people off, et cetera. He's in this business. So it could be a person, though. It could be one person or it could be a thousand people having a contract among themselves that we call a corporation contract, but it's just a contract that defines among these people who owns what and what their obligations are to other people contractually with respect to property that they own. So that could include this. So if you have a friend, let's say, and you could extend this to the trust ideal, you have a friend. You say, I hear my transfer to you, all of my property, on the following terms. Number one, you immediately transfer it all back to me. The use of it, the user front we say in civil law, the right to use it. You transfer the use of it back to me. Number two, you sign an agreement with my son that upon my death you will transfer it all to him. I mean, you can do it this way. And remember, lawyers would have it in the sense that to come up with complicated and complex and subtle legal instruments to arrange these things in the absence of the state institutions that they rely on now. Right now, we don't have to worry about it because the government has monopolized this field. But yeah, sure, in its absence, I think people would be very creative about contract, use of contracts to arrange these things. Here's one I talked about in my previous class on IP. I hinted at it earlier when we talked about this mistaken metaphor about labor and how you own your body and therefore you own your labor. And if that's true, therefore you own things you create with your labor. Right? So this has led, as I mentioned, to the entire confused field of intellectual property where objectivists and unrand followers, randians, and other libertarians, typically utilitarian types and randians, have this idea that we own property, normal property in the world, scarce resources, but we also own intellectual property because we create it. But what they do there in this argument, by the way, it's 8.34 p.m. New York time, so we're a little bit past the end. So I don't mind going a little bit farther. It's the last class. It's the land gap class, the bonus class. So I'll go a little bit farther. But if it gets too late for people, let me know. I don't want to go too far here for people to catch up with us later. So I don't want to go much farther than the end of this hour, but I'll be happy to go a little bit farther. What people have commonly said is that there are three ways that you can come to own property. Number one, you can homestead it or find it, find unowned property. Number two, you can acquire it by gift or contract from a previous owner. And number three, you can produce it or create it. So they sort of think loosely that these are the basic ways you can acquire property. But if those are the three ways of acquiring property, then one of those ways, the final one, the creation way, well, why don't you own other things? If you own anything you create, including scarce resources, why don't you own other valuable, economically valuable things you create, like a novel or a painting or a pattern or a method or a process or an invention, the design of a new mousetrap, etc. After all, those take effort, you mix your labor with it, and you did create it. Without you, it wouldn't have existed. So that's their basic argument. Now, that argument only makes sense if you sneak in the presumption that creation is, in fact, one of the three sources of property rights ownership. But in fact, it is not. That is another case of people not being really clear and people overusing metaphors and vague, non-rigorous language to describe the basis of property rights. Just like Locke himself relied upon this labor ownership idea, which means is confusing in a metaphor and is not even necessary to his argument, and led to mischief. It led to the labor theory of value of Marx and Marxism, and it led to – so it corrupted economics for a long time. And it also led to this confusion about the nature of rights when it comes to reputation rights and defamation, law, and intellectual property. The confusion here is that basically it's sort of like the issue we talked about earlier where if you say you have free speech rights and your body, you're double-counting, or if you say you own your body and your labor, you're double-counting because owning your body is sufficient to let you control what actions or labor you perform. Likewise, owning property is sufficient to allow you – in other words, having property rights arise only from homesteading or from contract. It's sufficient to cover property rights that come from production or creation. So in other words, to create something really means to – or to produce something. We don't really create new matter from nothing. What we do is we take existing resources or existing matter and then we rearrange it into a more useful shape. If I take metal, iron ore, and I rearrange it into a sword shape, it's more useful to me or maybe to my customers who I might sell it to. Now, do I own the sword because I created it? No. In fact, I couldn't have created the sword if I didn't own the raw materials already. If I own this iron in a lump of iron ore, then when I stretch it out into a sword, I still own it even though the shape has changed. I own the sword because I already owned it when it was a pre-sword. In other words, production presupposes that you already have an ownership right in the factors that you transform. So creation is not necessary at all to explain the ownership of the things that you produce. Production is really transforming owned things into a more valuable arrangement. Now, that does create wealth, but wealth is a subjective thing. Wealth is how much you value something. If I rearrange the metal into a sword, now it's more valuable to me. I have more wealth or I can exchange it for something else that I want that I couldn't exchange the unproduced iron ore for. But it was my appropriating the iron ore out of the earth that gave me ownership over it, not transforming it into a sword. So creation is actually not a source of rights. And by contrast, let's say I take my neighbor's iron ore and I transform that into a sword. Now, who owns the sword then? Well, my neighbor does because it was his iron ore. In fact, I might owe him damages if he didn't give me permission. If he did give me permission, then I was his employee and I was just doing something to his property in exchange for being paid to do that. Right? That's why employees of Toyota or Ford don't own the cars that they help the owners of those companies produce. Okay. And once you realize this, then you realize there's no argument left for intellectual property. Creation is not a source of rights. It's a source of wealth. But that just means when you own things that you already own and you produce, you use your intellect and your effort and your labor to rearrange them or transform them into a more valuable configuration, then your property is now more valuable to you. That's all that it means, but there are no new rights. We have a question here from Lee Cape. He's reading The Power Makers. It mentions how early poor American inventors had a hard time making any money from their inventions because they were often mass produced by others with capital. And that spurred the development of later American patent law. Could you give me the short answer to how inventors would be incentivized to invent new things if others with more money could take the idea and mass produce it and sell it at a profit as opposed to the poor inventor that doesn't have any money? Well, I'm not aware that the view about that phenomenon is what gave rise to patent law. My understanding is the founders put the patent clause in the Constitution in 1789 just because they thought it would be a good idea to stimulate innovation. And then a year or two later, Congress passed the first patent law. I don't think they did in response to this so-called problem. So I don't know if you're talking about before the patent law or after the patent law. You're talking about before the Constitution or after the Constitution. After the Constitution, there was already a patent law there, so these inventors could have filed for a patent for it. Oh, the new component in the early 1700s. So my short answer to this would be it is not the job of the law to make sure that people can make money off of their efforts. It is up to people in an environment where property rights are secured to figure out a way to do that. And everyone who comes up with something they can do on the market that gets them paid money, some valuable service or product, they all face competition, right? If you become a laborer working for a company, you're in competition with other laborers. If you have a really good wage, that's going to draw competition from others who are going to enter this field and then over time bid down the price that you are paid for this job because there's more supply of workers for this field. If you start selling a new product or have a new idea for a new type of store like a department store or a Sears mail catalog or a grocery store chain or a fast food chain, you know, or iPods, smartphones, whatever, anything you sell that is popular and lets you make a big profit will draw competition. And that's always a possibility on the market. And this is actually good. This keeps producers and entrepreneurs always working to improve their product and to increase efficiency, to lower cost, to retain customers, and to outdo the competition. So there's nothing wrong with this general phenomena. And there's no difference in the thing you gave. You said that they had inventions and it was immediately mass produced. Well, I don't believe it was immediately mass produced. There's no immediate mass production. It takes a while. But anyway, there's nothing wrong with that. There's nothing wrong with people. That's just competition. If I see someone with a smart, some company make a lot of money off selling a computer or a smart phone. Now, I realize that there's a lot of profit to be made there and I might start manufacturing my own computers. It might be similar to theirs. It might be a little different. It doesn't matter. Now there's another interest in the market competing with the first guy and his profit starts getting eroded. So they both are competing. Sometimes the value of the product that you're making is easier to copy by competitors because a large amount of it is in the design. Like in the case of novels or music or some innovated inventions like you're talking about here. In those cases, all this means is that it's easier for a competitor to compete with you. But it's not fundamentally different. It's just easier for a competitor to compete. All that means is the guy selling the original product has to come up with a way to make a profit off of it. And the first thing that comes to mind is to make it and sell it and then be ready for competition. So I think the answer is the law cannot guarantee that you're not going to face competition. Competition is always a threat anyone is going to face. And competition might be fiercer and easier to come in products that are more easily replicable. So in those cases, in some cases, it may not be worth it to go into that field. Or you have to find another way to make a profit. Come to market faster, use trade secrets, leverage it, use it to enhance your reputation to get a job employed somewhere else. No one can predict how people will find ways to profit on the free market. But they have to do it by using their entrepreneurial creativity, not by turning to the law, to ask the law to legally prohibit people from competing with them. If you release a product onto the market, if you release knowledge onto society, then you can't complain when people observe what you're doing and emulate you or compete with you. That's the short answer. And I actually think these stories are probably greatly exaggerated. Lisa, but if a competitor could buy your product and simply copy it without having to invest any money in R&D, wouldn't companies be hesitant to sink money into R&D? Well, I mean, the short answer is it's not just an all or nothing thing, right? I mean, there are some things that companies don't invest R&D in now because they don't think they can recoup the investment because they're going to face competition and not making a profit. I mean, there's always an unlimited amount of R&D and innovation we could shoot for, but at a certain point it becomes uneconomic, right? And absent patent law and copyright law, companies would invest some R&D into coming up with products because they would think they could make some profit off of it. So the only argument that the patent advocates have is that we don't have enough R&D now, that we have this much innovation and R&D in a free society. But if you add patent law, we would have this much more. Well, but we don't have this much then. So what are we going to do about all this missing innovation? In other words, there's no optimal level, and they can't tell us what the optimal level is. So some companies would sink money into R&D, and I think, of course they would. There's always been research and development and technological progress, scientific progress and research, even before patent law. So the only argument is that there's an optimal amount that we're not achieving now and that the introduction of patent law that is enforced monopolies would somehow increase that amount and get us closer to the optimal level. But of course, no one has ever demonstrated what that optimal level is. So I think companies would, of course, put money into R&D to come up with better products to serve the customers. They would have a reputation for having the best stuff. I mean, look, people pay a premium for Apple products right now. You can go get a competing smartphone or computer or iPhone or MP3 media player. But people pay a premium because they like Apple's design. Apple's put a lot of money, and I know that they have patents and copyrights, but I think they would still be premium hardware manufacturers. I mean, Mercedes and BMW have a reputation for having superb R&D into the way machines work, their cars work, their engines are designed. People pay a premium for that, and they have a reputation for being the best. So there's various reasons why you would invest in R&D. You might do it to hire the best employees. If there's a bright graduate out of MIT, you might rather go work for a company that has a reputation for supporting the best R&D. So they might do it just to get the best employees. You never know. But the answer is freedom and property rights. Let the market operate. Let people figure this out. Ryan says, people can download music off BitTorrent for free, yet iTunes makes a lot of money still. Yeah, of course. They're providing a service, packaging, a searching function, and other stuff people want and purpose is simply free. They're competing differently. It's not all or nothing. Why do you buy a book when you go to the library? Yeah, I think that's exactly right. Or a simple example, why is Tylenol still in business? I mean, you can buy acetaminophen for $3 a bottle at the drugstore, and it's sitting on the shelf right next to the exact identical product, except for the name brand, which sells for $6 a bottle. And yet people still buy that. Some do. Some buy the cheaper one. Some sell. Some sell has leveraged their reputation for high quality, for continual innovation in packaging, the way the bottles open, the way the pills are shaped always, and also just the consistency of knowing that there's quality control there. So there's lots of reasons people would invest in R&D. I mean, there's no doubt whatsoever there will still be R&D and innovation and creativity, like music. No one can say that if we abolished copyright and patent, there would be no invention, no innovation, no creativity, no music, no art, no movies. No one can seriously argue that. All they can argue is there would be less and there wouldn't be enough. But that's like the argument that we should have a minimum wage, or we should have price controls. That's based upon the fatal conceit, right, that we can know what the optimal prices for these things are. Of course, you can't. By the way, on this creation issue, on R&D even, your Brian observes that in copyright, there's no copyright in clothing, yet there's lots – well, yeah, high fashion – actually, there's an argument that the fashion industry, the big designers, profit make a lot of profit in part because there is no copyright, because knockoff companies knockoff their designs pretty quickly. And that makes – that opens up a market for the designers to come up with new designs that are going to be in demand by the rich people who can afford these expensive designs. Because once the old design gets copied and is being sold in Walmart, then the rich don't want that anymore, so it gets stale really quickly. So there's always an incentive to innovate, and there's always demand for the new products out there in fashion design. And by the way, of course, there is lobbying for a fashion type copyright law right now, which I think is totally unnecessary and would hurt the fashion industry. On this creation issue, on R&D, who's a strong advocate of IP, she has a great quote here which is completely compatible with Rothbard and Papa and Mises, where she expressly, explicitly recognizes that when we create things, we don't bring something new into existence. What it really means is arranging natural elements into an arrangement that hadn't existed before. In other words, R&D's creation is rearranging things. But if you rearrange something, that means you already had to own the thing that you're rearranging. So it doesn't give rights to new property rights. So if R&D had realized, well, basically she didn't realize that this insight, which is correct, was incompatible with her other argument about the source of rights being creation. It's actually not. I've got a quote from Rothbard and Mises here saying almost the same thing on page 21 and 20. Now, let me just go into a couple of related – I think I'm going to wrap it up by the end of the hour. So if anyone has any questions, feel free to hit me with them now before we run out of time. So a related confusion to this creation idea. I've already talked about labor, how we don't own actions and we don't own labor. We own our bodies. It's redundant, our consequence of our body ownership. There's a really good insight that Hoppe has brought out, which can also be powerful in helping you see some problems in reasoning, especially pro-IP people. And that's this idea. When libertarians say that when they try to express our fundamental libertarian idea that you shouldn't harm people, they're using a vague term. Actually, we're not opposed to harming people. Harm is not a rigorous term. If I steal your girlfriend, I've harmed you. If I compete with you and steal your customers and lower your profits, I've harmed you. But there's actually nothing that should be illegal about that and there's nothing even immoral about it. So harm is not well-defined enough to be the standard for what libertarian principles are about. Likewise, people sometimes say, they say, well, you lower the value to me in some way, so you've harmed me. Well, again, harm is not the standard of what libertarian principles are about. As Hoppe explained, we do not have property rights in the value of your property, but you only have a property right in the physical integrity of – and this goes back to the idea of property rights being rights to control scarce resources that have boundaries or borders that the owner establishes – publicly observable borders that others can respect if they want to respect them and use their own property but not yours without your consent. By the way, this is one reason I think the term private property is a little bit odd because property by its very nature has publicly visible borders. That's the entire function of property is to set up publicly visible and respectable and respected borders that others can see and avoid so they can avoid conflict. So in a sense, property is public, not private, but that's an anomaly of language. But in any case, so imagine that you have a house across the street from a neighbor who has a beautiful rose garden and that enhances the value of your property, either subjectively to you because you like to look at it every morning when you're drinking your coffee, or it makes your house more valuable on the market. You could sell it for a higher dollar value because of this beautiful surrounding of your neighbors. Now, if your neighbor cuts down his rose garden, he has lowered the value of your property, but he has not violated the physical integrity of your property. He hasn't crossed your borders. He hasn't invaded your property. In other words, you don't have a right to the value of your property. And this is what Rothbard says when he argues against reputation rights, which are what is behind a defamation or libel law. By the way, defamation is the general legal concept for the law that prohibits making public statements that injure someone's reputation, right? And libel is the written form of defamation, and slander is the oral form, so the general concept is defamation. But it rests on the idea that you've created a reputation that has value to you. You have a property right in that value. This is what the objective is saying. You can see that they're mistaken because they're relying on this mistaken notion that creation is a source of rights, right? You created your reputation, so you own it, and they're relying upon this false notion that you have a property right in value. But of course, to have a right in a reputation is to have a right in what other people think about you, because reputation is just what other people think about you. But how can you own other people's brains or minds or opinions or heads? You can't. And how can you have a property right in value for your reputation when value is a subjective phenomenon, right? It's how other people choose to value you, how they demonstrate by their actions that and how much they value you. The reputation is what other people believe about you. You cannot own other people's beliefs. You cannot have a property right in value of things. You don't even have a property right in value of things that you own. You only have a property right in those things, physical integrity. So once you realize all these interconnected fallacies and interconnected insights into the true nature of rights and property, then you can realize all the flaws that are associated with the idea that libertarianism is about not doing harm. It's not. Or that libertarianism is about rights that arise from things you create. It's not. Creation is not a source of rights. All these related ideas, or that you have a property right in value, you don't. That violates Austrian plus libertarian principles. We've reached the end of the hour now. I think I would like to start to close here because otherwise we're going to have a much too long final session for people to listen to and recording. So if anyone has any final comments or questions, I'd be happy to talk about them now. Thanks, Jackson. I appreciate that comment. I've enjoyed it too. You guys have been a really good class. I hope you enjoyed the test. Feel free to take the test. Don't feel compelled to take anything you don't want to. It'll be a short multiple choice quiz just for fun, just to kind of refresh on some of these issues. And I'll try to have it up by the end of the week. It's not up yet. I've got to finish writing it and putting it up later. Lee, thank you very much. I enjoyed the class. By the way, some of these issues will be discussed in the upcoming David Gordon and Danny Sanchez course starting, I think, this week, which looks fascinating. I actually might take it myself. So I encourage you guys to look into it if you're curious for more of this stuff. Lee, thank you very much. I enjoyed it. I hope everyone has a good night and a good weekend. And feel free to email me later or post on the forum. We can continue discussions otherwise. And my next course has not yet decided yet, but just stay tuned and I'm sure another course will be coming up in the upcoming weeks and months. Thanks, Cam. I enjoyed it, too. Thanks, Brian. Good night, everybody. And for all the people listening on the recording, thanks for being patient and doing it that way. And again, everyone feel free to communicate with each other and with me on the forum or by email.