April 14, 2024

Posner and Becker, Law and Economics

Richard Posner and Gary Becker turn their bloggic attention to the Grokster decision this week. Posner returns to the argument of his Aimster opinion. Becker is more cautious.

After reiterating the economic arguments for and against indirect liability, Posner concludes:

There is a possible middle way that should be considered, and that is to provide a safe harbor to potential contributory infringers who take all reasonable (cost-justified) measures to prevent the use of their product or service by infringers. The measures might be joint with the copyright owners. For example, copyright owners who wanted to be able to sue for contributory infringement might be required, as a condition of being permitted to sue, to place a nonremovable electronic tag on their CDs that a computer would read, identifying the CD or a file downloaded from it as containing copyrighted material. Software producers would be excused from liability for contributory infringement if they designed their software to prevent the copying of a tagged file. This seems a preferable approach to using the judicial system to make a case by case assessment of whether to impose liability for contributory infringement on Grokster-like enterprises.

It’s fascinating that Judge Posner, with his vast knowledge about the law and about economics, avoids a case-by-case law and economics approach and looks instead for a technical deus ex machina. Unfortunately, his knowledge of technology is shakier, and he endorses a technical approach that is already discredited. Nobody knows how to create the indelible marks he asks for, and in any case the system he suggests is easily defeated by encrypting or compressing the content – not to mention the problems with malicious placement of marks. In short, this approach is a non-starter.

Becker is right on the mark here:

But several things concern me about the issues raised by this and related court decisions. I basically do not trust the ability of judges, even those with the best of intentions and competence, to decide the economic future of an industry. Do we really want the courts determining when the fraction of the total value due to legal sales is high enough to exonerate manufacturers from contributory infringement? Neither the wisest courts nor wisest economists have enough knowledge to make that decision in a way that is likely to produce more benefits than harm. Does the fraction of legitimate value have to be higher than 50 per cent, 75 per cent, 10 per cent, or some other number? Courts should consider past trends in these percentages because new uses for say a software-legal or illegal- inevitably emerge over time as users become more familiar with its potential. Must courts have to speculate about future uses of software or other products, speculation likely to be dominated by dreams and hopes rather than firm knowledge?

One of the tenets of the law and economics movement is that decisions about legal regulation of economic behavior should be grounded in a deep understanding of economics. Sound economics can predict the effect of proposed legal rules; but bad economics leads to bad law. As luminaries of the law and economics movement, Posner and Becker understand this as well as anyone.

What is true of economics is equally true of computer science. Only by understanding computer science can we predict the impact of proposed regulations of technology. As we have seen so many times, bad computer science leads to bad law. Posner seems to miss this, but Becker’s stance shows appropriate caution.

One criticism of law and economics is that it works well in a seminar room but may lead to dangerous overconfidence if applied to a hard case by an overworked, generalist judge. One solution is to teach judges more economics, and economic seminars for judges have proliferated. Perhaps the time has come to run seminars in computer science for judges.


  1. Copyright Prophet says

    Posner is correct in his ‘Problematics of Legal and Moral Theory’, that judges need education about basic math and economics. He states that law schools in his time, the 1950s, abused the Socratic method of teaching, whch aimed to uphold the “mysticism” of the law profession, at the expense of teaching lawmakers (judges etc.) to think about the economic consequences of their decisions.

    The question is not whether CD-tagging is realistic because it will be “inevitably defeated”. Rather, it is that DETERRENCE WORKS. Most people are non-technical, and will not want to waste time trying to tinker about how to defeat this or that technology. Posner is absolutely correct that by issuing a REQUIREMENT for software/hardware vendors to implement standardized watermarking-reader-blockers, it will lower the risks and social costs of uncertainty in lawsuits.

    That is a minor trade-off compared to the MAJOR losses when our society murders the better indie artists of the world, such as composers, who don’t gig, who cannot record in big studios, and who cannot waste time “building a mailing fan list”. These composers once had hope of earnings on mp3.com circa 1999, before Michael Robertson unleashed his self-sabotaging mycd thing (in reaction to unfair competition from Napster / Grokster as well as in reaction to pesky artists, whom he is known to have detested).

    Basic math will teach judges, that if copyright laws are everywhere disrespected, then everyone will internalize criminal behavior as “norms” (as Lessig clearly wants), and society itself will implode by a) removing the last vestiges of income available to indie composers and b) creating a society which is less creative and less inventive because it ends up listening to more stupid music promoted by stupid file sharers who have no more conscience about their acts c) broadcasting to the world that americans are culturally lawless: they don’t respect their own laws, therefore why should other nations respect america’s laws?

    No one talks about these inverse-adverse economic effects of promoting a lawless Lessig-society. But perhaps judges, and law students alike, should learn economics: because justice requires logic-> requires ability to trace causality of events ALL THE WAY TO ITS CONCLUSION -> requires tracking of MANY variables at once in a Matrix -> requires Linear Algebra & Statistics -> to understand Economic consequences to a greater level of depth than currently displayed, even in Supreme Court opinions.

    Posner is right to say that his own profession, the American Law Association, etc., is mostly unscientific. They have a fetish with worshipping past decisions, at the expense of common sense. Well, common sense says, “Pay for great artists, means advancement for Mankind”, when you all finally recognize that the Bach’s and Mozarts of this world inspired not only spiritual norms, but also inspired science itself. So why kill all the Bach’s living today? That would be stupid, short-sighted american culture. It’s about time you got smart.

    Lessig should have read Posner. Lessig is no economist. For he seems to intentionally ignore the costs of artist-composer development. Nowhere does Lessig ever mention how these composer-artists, once were paid on mp3.com, but now are not.
    Lessig focuses on the abuses of big business, but forgets that the economy is linked intimately with the achievements of relatively few, but great composers. Destroy those composers, and you destroy / limit the Economy. Thus Lessig and his adherents, desplay a remarkable trait of Dark Ages, primitive, caveman, unscientific thinking. They are not advanced, because they cannot “see” genuine music. They only go by their voodoo stats. Harvard take note!

  2. Randy Picker says

    Excellent. As I note at the end of my post on this (http://picker.typepad.com/picker_mobblog/2005/07/teaching_law_un.html), I look forward to the reading list.

  3. I must wearily report, from the perspective having tried such activism stretching past nigh upon a decade now, that it’s not so simple. I suspect I can write you the reply:

    “Of course, when writing my blog post, I over-simplified a bit in order to make the idea clear. No tag is ever “unremovable” in an absolute sense, just like a “secure lock” can be picked, or a “technological protection measure” which “effectively controls access” can be removed. But the legal framework takes this into account.” [yadda yadda yadda …]

    That’s the nice version. I still have the scars from the nasty version applied to censorware, the wonders of the computer.

    Why not write to Posner and try to educate him in specific? Let us know how it goes.

  4. Randy,

    That’s an excellent question. I’m planning to devote a blog post to it soon.

  5. Seth,

    I don’t think Judge Posner thinks he invented the label-and-filter strategy he advocates. The problem is that he believes salesmen who are making unjustified technical claims. Also, he probably doesn’t realize that the overwhelming consensus of independent experts is that such claims are probably false.

    What I would like to see is just some basic intuition about which kinds of claims are plausible and which are not. Consider these three claims about motor oil.
    (1) This motor oil will keep your car engine from burning up, for at least 3,000 miles.
    (2) This motor oil will keep your car engine from burning up, for at least 50,000 miles.
    (3) This motor oil will allow your car to fly.
    Most judges would know immediately that (1) is very plausible, (2) is possible but shouldn’t be believed without independent verification, and (3) is almost certainly bogus. You don’t have to know a lot about the physical chemistry of motor oil to make these judgments, but you do need a basic understanding of what motor oil is and what role it plays in a car.

  6. I agree entirely with what Seth said, and would apply it to this statement: “Nobody knows how to create the indelible marks he asks for, and in any case the system he suggests is easily defeated by encrypting or compressing the content — not to mention the problems with malicious placement of marks. In short, this approach is a non-starter.”

  7. I’d say this isn’t an issue of computer science _per se_. More like getting people to grasp the principle of roughly: “If you think there’s some obvious simple solution to a complicated problem, a simple solution that nobody but you has ever thought of, and the implementation is just getting the world of idiots to adopt your brilliant idea – then it’s highly likely you don’t really understand the problem, and your so-called brilliant idea has been discarded long ago.”.

    Unfortunately, the reputation-points are too often based on proposing appealing simple solutions, not debunking them.

  8. Ned Ulbricht says

    I’d want judges to understand the Peano postulates.

    Unfortunately, what I really mean by that statement is that they should have some understanding of modern algebra. And that, roughly, means that they first need an intro via a course in linear algebra, which in turn requires them to pass freshman calculus, necessarily meaning that they have sufficient basic algebra skills.

  9. Randy Picker says

    Perhaps you could post a reading list: top five (ten?) articles that lawyers, judges and law professors need to read to understand the technical limits that you describe?

  10. The idea of trying to make judges into experts in computer science terrifies me. Trying to make them into experts in economics has resulted in some good work, but also in half-baked opinions based on terribly narrow interpretation of economic theories that might or might not model actual human behavior, with unexamined premises littering the landscape. Even expert economists get large-scale decisions terribly wrong on a regular basis — just ask Jeffrey Sachs or Joe Stiglitz.

    The same goes for computer scientists — the past 40 years will give you a good idea of how accurate, en masse, CS folks have been at predicting the impact or even the broad evolution of their field. (Some predictions spot on, others not even close)

    If there were some kind of seminar in computer science for judges, so that
    they could avoid looking completely at sea, what principles would you want to teach them?