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Volume 12, Issue 49: December 7, 2010

  1. Fashion Design and Copyright
  2. Toward a Realistic U.S. Policy on the Korean Peninsula
  3. Ireland’s Economic Recovery Requires Keeping Taxes Low
  4. Healthcare and the Commerce Clause
  5. New Blog Posts

1) Fashion Design and Copyright

Should fashion designs be protected by copyright? Legislation introduced in Congress last August—the Innovative Design Protection and Piracy Prevention Act—would give designers three years of copyright protection against imitators, provided their designs meet defined standards of originality and novelty. Supporters may see the bill as a step toward fairness for designers, but they often overlook the contributions of design copyists in making fashion available to consumers, according to Independent Institute Research Fellow Edward J. López, editor of the Institute’s path-breaking new book The Pursuit of Justice.

Designers who operate at the highest levels—those who create the haute couture modeled on the runways of New York, London, Milan, and Paris during Fashion Week—cater to elite connoisseurs who appreciate fashion at its most abstract. Beneath this echelon are the derivative designers and manufacturers who imitate the higher-level ideas and adapt them for clothing that people can relate to and wear. These design copyists also create something that the top-level designers do not create—short cuts in manufacturing and distribution that help reduce unit costs and thereby make fashion affordable to greater numbers of people, Lopez explains in the December 2010 issue of The Freeman.

The characterization of design copyists as parasites therefore ignores their productive contributions as adaptive-imitative entrepreneurs who make fashion relevant to all segments of society. Granting copyright protections to designers, López concludes, would undercut the useful institutions and practices the design industry has developed over many decades and thereby would harm the lower-level innovators and their customers in ways that most people do not fully appreciate.

“Fashion Design and Copyright,” by Edward J. López (The Freeman, 12/10)

Upcoming Event: “Is U.S. Justice Broken? Overcoming Government Legal Failure,” featuring Edward J. Lopez, David Friedman, Judge Alex Kozinski (Oakland, Calif., 12/9/10)

The Pursuit of Justice: Law and Economics of Legal Institutions, edited by Edward López


2) Toward a Realistic U.S. Policy on the Korean Peninsula

Is China’s support for irrational North Korea itself irrational? A recent editorial in the New York Times suggested as much. China, the editorial argued, has an interest not merely in stabilizing its border with its neighbor, but also in ensuring that the erratic North Korean regime does not acquire greater stockpiles of nuclear weapons—an interest that China seems reluctant to act upon, notwithstanding Beijing’s call for one more round of six-party talks. An article buried in the Times, however, provides better insight about China’s stance toward North Korea.

As that article noted—and as Independent Institute Senior Fellow Ivan Eland concurs—China supports Kim Jong-Il’s regime because it fears that a sudden collapse of its neighbor could put a U.S. military ally on its border. One solution is for Washington to adapt to this reality by discontinuing its military commitment to South Korea after a period long enough for that country to begin to provide for its own defense—say, five years after putting Seoul on notice. This strategy would dovetail with the U.S. interest in avoiding war on a peninsula of questionable strategic value.

With South Korea unallied with the United States, China would have weaker incentives to prop up an erratic and bellicose North Korea. Incentives to establish good relations with a united, wealthy Korea would strengthen. “Thus, the Chinese might very well have an incentive to end assistance to the North—the only thing that keeps the regime from collapsing.” Such a development would benefit the United States, China, South Korea, and the people of North Korea—but not the North Korean regime.

“U.S. Policy Toward the Koreas Is Unrealistic,” by Ivan Eland (12/1/10)

The Empire Has No Clothes: U.S. Foreign Policy Exposed, by Ivan Eland

Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland

Partitioning for Peace: An Exit Strategy for Iraq, by Ivan Eland


3) Ireland’s Economic Recovery Requires Keeping Taxes Low

The Irish bailout has given Germany, France and others a pretext for castigating the Emerald Island for its low corporate tax rates. Currently set at 12.5 percent, Ireland’s rates enabled it to attract foreign investment and thereby surpass German and British per capita income by the end of the 1990s. It also provoked the wrath of European governments, who decry “unfair tax competition” and call for the “harmonization” of differentiated tax regimes by making Ireland’s corporate tax rates as uninviting to investors as their own rates.

Blaming Ireland’s tax policy for its debt crisis is particularly misguided, according to Independent Institute Senior Fellow Alvaro Vargas Llosa. Ireland’s troubles owe their origin to the worldwide financial implosion—and to the government lending and borrowing spree that followed—not to low tax revenue. Indeed, Greece, Portugal, and Spain have corporate tax rates much higher than Ireland’s, but this has not saved them from fiscal trouble. Ireland’s main mistake was its costly bailout of insolvent banks.

Ireland should resist international pressures to raise its corporate tax rates if it hopes for economic recovery to come sooner rather than later. “Some central European nations that adopted relatively low flat taxes against much domestic and international uproar are now among those that by and large have recovered reasonably quickly from the meltdown,” writes Vargas Llosa in his latest op-ed. Whatever its mistakes, Ireland does not deserve to be “bullied into adopting the wrong tax regime simply because the current one makes the rest of Europe look bad,” concludes Vargas Llosa.

“Bullying Ireland,” by Alvaro Vargas Llosa (12/1/10) Spanish Translation

Lessons from the Poor: The Triumph of the Entrepreneurial Spirit, edited by Alvaro Vargas Llosa

Liberty for Latin America: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa

The Che Guevara Myth and the Future of Liberty, by Alvaro Vargas Llosa


4) Healthcare and the Commerce Clause

Are there any limits to the federal government’s power to regulate commerce? U.S. District Judge Henry Hudson said he would decide this matter by the end of the year. His decision could determine the fate of the healthcare reform legislation signed into law earlier this year.

The nation’s founders added the Commerce Clause to the Constitution so that state governments could not erect trade barriers—a problem that weakened the original Articles of Confederation. Congress claims that the authority to require individuals to purchase health insurance derives from the Commerce Clause. This is but the latest in a series of legislative stretches that goes back 70 years, according to William J. Watkins, Jr., a research fellow at the Independent Institute.

In his latest op-ed, Watkins raises some of the sticky questions that will arise if the courts interpret the Commerce Clause in a manner consistent with a federal mandate for individuals to purchase health insurance: “If Congress and the president can force Americans to buy health insurance, is any activity beyond the scope of the Commerce Clause?” asks Watkins. “If the auto industry needs assistance, what is to stop Congress from requiring that all multi-car families own at least one Chrysler or General Motors product? Rather than bail out the banks, Congress could simply require citizens to increase their bank deposits or face a penalty. The possibilities are endless.”

“Government by Commerce Clause,” by William J. Watkins Jr. (The Daily Caller, 11/30/10)

Reclaiming the American Revolution, by William J. Watkins Jr.


5) New Blog Posts

From The Beacon:

From MyGovCost Blog:


  • Catalyst
  • Beyond Homeless