The Economics of Offensive Trademarks



WashingtonRedskinsLogoMy fellow blogger William Shughart recently gave a good critique of the Patent and Trademark Office’s decision to rescind protection of the Washington Redskins’ name. I agree with him that whether some people view a trademark as offensive should not be a criterion for determining whether it should be protected.

If a large number of people are offended by a trademark, then it will be a liability rather than an asset to whomever uses it, and economic forces will limit its use. People of a certain vintage will recall Sambo’s Restaurants, which were forced into a name change (and perhaps bankruptcy) because people were offended by the name.

The purpose of a trademark is to identify a firm’s products. If people like the firm and its products, the trademark will attract customers. If people are offended by the firm and its products, the trademark will alert customers to avoid that firm. The market system works to weed out offensive trademarks, and the U.S. government should not be in the business of determining whether trademarks are offensive.

Ironically, if Redskins really is an offensive term, then denying the team trademark protection will allow others to use the term, and the offensive term could see even more widespread use.

But while I’m discussing the subject, I will admit to being a bit sensitive to the issue myself, because my own heritage is being demeaned by being used as a team mascot by a different team.

I’ve lived in the South most of my life, and am proud to be on the faculty at Florida State University (home of the Seminoles), but (and I rarely share this bit of my background with others), I was born in the North, in Bridgeport, Connecticut. Yes, I am a Yankee. I didn’t have any say in the matter; I was born a Yankee. But I admit to being sensitive to this part of my background, and find it demeaning to have a sports team mocking my heritage.

If the Redskins lose their trademark protection, the Yankees should too.

Only 53 Percent of Previously Uninsured Obamacare Enrollees Have a Favorable Opinion of Obamacare



ObamacareScreenHartWebThe Kaiser Family Foundation has released a survey of a statistically significant sample of people who buy their own insurance. The headline reported by the media was that 57 percent of enrollees in Obamacare exchange plans were previously uninsured. To me, that seems underwhelming. But more on that later. We all know that Obamacare is unpopular. However, it is also unpopular among its beneficiaries — the previously uninsured who have bought (highly subsidized) health insurance in Obamacare exchanges. Only 53 percent of these people have a favorable opinion of Obamacare (p. 22). If that doesn’t make the law politically vulnerable, I don’t know what does.

As to the number of uninsured post-Obamacare: This estimate is getting more mysterious. When looked at from another angle, the survey suggests that Obamacare has had no real effect on the number of uninsured getting non-group (individual) private insurance. Elsewhere, the Kaiser Family Foundation informs us that the number of people with private, non-employer-based, health insurance in 2012 was 15.8 million. We also understand that the most optimistic estimate of the number of people in Obamacare exchange plans is 8.1 million.

Kaiser Family Foundation’s new survey tells us that between 48 percent and 51 percent of the people in the non-group market are in Obamacare exchanges. That is, the total market is estimated to be between 15.9 million and 16.9 million. So, maybe one million people, net, have received non-group coverage due to Obamacare.

On the other hand, the survey reports that 71 percent of the previously uninsured people who enrolled in an exchange plan had been uninsured for two years or more. 71 percent of 57 percent of 8.1 million is 3.3 million. This clearly does not reconcile with the comparison of the number of people in the non-group market in 2012 and in 2014 — unless two million or more people who used to have non-group insurance have lost it and have either received group coverage, lost coverage, or become dependent on Medicaid.

Someday this dust will settle. Wherever it settles, the political future of Obamacare looks shaky.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

Immigration and Mindless Partisanship



global_crossings_180x270About two-thirds of Americans disapprove of Obama’s immigration policies. The polling reveals extreme partisanship: 60% of Democrats and 8% of Republicans approve of the president’s approach.

And yet, there is nothing particularly remarkable about the current administration’s policies. In response to the increasing flow of children and women immigrants seeking asylum, Obama is escalating deportations and authorizing more detention facilities. This is completely consistent with the president’s tendencies over the last several years.

Many news articles have reported record deportations under Obama, while his anti-immigration critics have argued that a sensitivity to novelties in classification expose a president lax on border enforcement. Adjusting for all this, it appears that the truth is somewhere in the middle: Overall, the Obama administration has conducted deportation policies qualitatively similar to the last administration’s. Whether one concludes a slight decline or increase, the more important fact is that there has been no radical shift since he took office, and certainly not one toward liberalization. Obama’s proposal for reform last year was in fact quite reminiscent of Bush’s plan. Although conservatives tended to find Bush too liberal on immigration, a June 2007 poll showed that 45 percent of Republicans favored their president on these policies, down from 61 percent just a few months before.

How is it that two presidents can behave in a fairly similar manner and yet garner such very different reactions among voters who identify with the two parties? Surely this phenomenon is not unique to immigration. Although the figures have moderated quite a bit, in the immediate aftermath of the first NSA revelations last year, Democrats overwhelmingly supported the agency’s surveillance programs, while Republicans were about equally divided; back in 2006, Democrats opposed NSA wiretapping 61 percent to 37 percent, while Republicans approved it 75 percent to 23 percent.

It would appear that the biggest changes in American politics that arrive when one party displaces the other in power do not concern what the government actually does as much as what the populace thinks about what it does. The voters flip-flop more than the leaders, who all tend, on most issues anyway, to gravitate toward governing from the center. The implication for those with principled stances on the issues is troubling and somewhat counterintuitive. Because in the long-term the government’s activities tend to respond to and be constrained by public opinion, rule by one party rather than the other tends toward a paradoxical dynamic: A Democrat in power will be defended by partisans and condemned by opponents no matter how hawkish the policies in war and civil liberties. Similarly, a Republican in power will be defended by partisans and condemned by opponents no matter how spendthrift the economic agenda. This helps explain why Bush was able to get away with so much deficit spending and domestic government expansion, and yet be celebrated and tarred as a free marketer, while Obama can deport, bomb, and indefinitely detain while being celebrated and tarred as a bleeding heart dove.

On the other hand, of course, both parties also do have their own pet projects. The Democrats have greater ambitions of domestic entitlement aggrandizement and the Republicans do appear more ideologically committed to wars abroad. These differences, taken with the countervailing effects of political opposition, mean that we can’t make any sort of solid predictions other than a fairly confident assumption that the vast majority of government activity and its trajectory of growth will continue, with only somewhat minor differences in specific areas, regardless of the party in charge, at least so long as mainstream American political ideology continues fundamentally to embrace government in its most modern incarnation, tempered only by partisan hypocrisy as seen in these kinds of polling results.

So for the pundits wondering what all of this means for the 2014 and 2016 election cycles, to which they seem obsessed in relating every news item, all I can say is that mass deportations, the destruction of families, inhumane mass detentions, invasive border searches, and an overall horrific immigration policy will probably be safe no matter who wins or loses at the ballot box. For those who find this projection unsatisfying, I urge you to try to convince your neighbors of your political principles, and to stick to fundamentals. Nothing short of a widespread change in attitude will secure substantive reforms anyway.

The Veterans’ Administration Has Been a Disaster Since Its Inception



CoolidgeIn her modern, exceptional biography of President Calvin Coolidge, Amity Shlaes (Coolidge, HarperCollins, 2013) documents the very blemished history of today’s U.S. Department of Veterans Affairs (VA), illustrating the trite, but nevertheless very true old saw that the more things change the more they remain the same.

That department of the federal government, now embroiled in controversy for falsifying records about the excessive times the veterans of the wars in Iraq and Afghanistan are required to wait for appointments to treat their combat-related injuries, both physical and psychological, was born during the administration of President Warren G. Harding. At the time, “bonuses for veterans dominated all budget talks” (p. 230). In order to deflect pleas for spending taxpayers’ money on American soldiers returning from the trenches in mud of Belgium and France—“a new commitment to such a large group [that] would be ‘a disaster to the Nation’s finances’—President Harding negotiated a compromise with Congress to abolish the existing War Risk Bureau and replace it with a new Veterans Bureau. Headed by Harding’s friend, Charles Forbes, the bureaucratic reorganization doubled federal budget outlays from $300 million a year to $600–$700 million. Harding’s Veterans Bureau, among other things, was supposed to “build hospitals in fourteen regional offices to serve the vets all over the country” (p. 231).

Soon thereafter, “the bureau was expanding at an alarming rate”, but unsurprisingly “the veterans were finding that they “were not getting what was promised”, in part because “the prices in the contracts for the buildings Forbes was constructing seemed inflated” (p. 233). Nevertheless, “the Veterans Bureau continued to spend and [in 1923] was set to outgrow the navy in size, with a budget of $455 million” (p. 236), representing about one-seventh of the total federal budget of that long-ago time.

As is true nowadays, evidence of corruption at the Veterans Bureau was widespread: “At one hospital in Washington, Mount Alto Veterans, a dental aide was even caught stealing gold allocated for veterans’ teeth.... One man, the new director of the Veterans Bureau, General Frank Hines, had been paid $4,800 a year for two hours of work” (p. 268). More “incredible news” was that “Forbes’s bureau had paid nine times the appraised value for a site in Excelsior Springs, Missouri, and then built a hospital on such shabby plans that no veterans were being served there” (p. 269). For more recent evidence on the VA’s failings, see Ronald Hamowy’s Independent Policy Report, Failure to Provide: Healthcare at the Veterans Administration.

Many people, including me, think that caring for the veterans of America’s foreign wars, no matter how ill conceived they may be, is a national responsibility. (Truth in advertising: I am a veteran of the U.S. Navy). Quite plainly, though, that responsibility should not be delegated to a distant, inefficient and often corrupt federal bureaucracy. Such responsibilities should be devolved to state and local levels of government—or, more ideally, to the private sector (under a voucher scheme)—whereby the taxpayers who finance veterans’ benefits are better equipped than the federal government to monitor the charitable and patriotic purposes for which their hard-earned incomes are spent.

New Insights into Iraq



IraqMap_smallThe Sunni extremist group Islamic State of Iraq and Syria (ISIS), which originated as al Qaeda in Iraq in a response to the U.S. invasion and occupation of Iraq during the George W. Bush administration, now occupies much of northern Iraq and has been said to threaten Baghdad and the Shi’i government of Nouri al-Maliki. This group of Sunni jihadists feeds off al-Maliki’s autocratic oppression of Sunnis. For example, he has attempted to shut the Sunnis out of the Iraqi government and military and has trumped up charges on and arrested Sunni leaders. However, Obama’s demand that in exchange for U.S. military help in battling the group, Maliki and the majority Shi’a adopt a more “inclusive” government, containing more minority Sunnis and Kurds, will probably not work (even if Maliki is pushed out for a new Shi’i leader).

Iraq probably does not have the income levels and culture of compromise required for a multi-ethnosectarian power sharing arrangement. The mutual suspicion of the various Iraqi groups is too high. In my book, Partitioning for Peace: An Exit Strategy for Iraq, I wrote that the United States should try to help the three groups achieve a negotiated (“soft”) partition: that is a confederation of autonomous areas with a weak central government. Then the groups would have little fear that the Iraqi government would be used by one group to oppress the others, as it has been throughout Iraq’s history. Iraq is an artificial state set up by the allies after World War I to get its oil. Syria is also an artificial state. Syria has effectively been partitioned by civil war. Iraq is about ready to be so partitioned with similar bloodshed unless a negotiated settlement is reached quickly. President Obama is right that the solution in Iraq is political, not military. So instead of sending U.S. military advisors back to Iraq or conducting air strikes to help an authoritarian leader avoid a “hard” partiton by war, Obama should be pushing the ethnosectarian groups toward negotiating a loose confederation, which would be more likely to lead to long-term peace and stability.

SCOTUS Affirms That Abstract Ideas Are Not Patent-Eligible



patent_trolls_180x270It is no secret that innovation suffers because of the current state of patent law. Too many overly broad patents are issued and present patent trolls with the opportunity to sue, sue, and sue again. Today, the High Court in Alice Corp. v. CLS Bank, made abundantly clear that abstract ideas are not patentable. The patent at issue (and that was issued by the USPTO) claimed exclusive rights to the idea of an intermediated settlement, i.e., the use of a third-party to mitigate settlement risk. The Court pointed out that “The use of a third-party intermediary (or ‘clearing house’) is ... a building block of the modern economy.” It is a fundamental, abstract idea that is not patent-eligible. Alice Corp. tried to argue that the use of a computer transformed the abstract idea into a something special that was subject to patent protection. The Court shot this down. “We conclude that the method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention.”

All 9 Justices joined in this common-sense result. Hopefully, the patent examiners at the USPTO will read this decision carefully and decline to rubber stamp some of the ridiculous requests that the examiners have in the past deemed patentable.

Is “Redskins” Offensive?



WashingtonRedskinsLogoControversy over the nickname of the NFL’s Washington Redskins has been swirling for nearly a year. Today, the United States Patent and Trademark Office (USPTO) announced that it had withdrawn governmental protection for exclusive use of that name, meaning ironically that anyone (an individual or business enterprise) henceforth can call itself the “Washington Redskins”.

The purpose of the federal government’s trademark and copyright laws is to prevent copiers willy-nilly from using the same name (or symbols for it) in ways that confuse the buyers of a good or service. What would the effects on commerce or on consumers’ welfare be if, for instance, anyone were free to use Nike’s “swoosh”—or Underarmor’s distinctive “H”—to identify athletic apparel? What if a “Gucci” handbag had, in fact, been counterfeited? Consumers easily could be misled into paying more for those fakes than justified by their actual quality, as determined after purchase.

It is for the same reason that existing law grants manufacturers exclusive rights to their registered trademarks forever (in perpetuity). Patents, by contrast, run for at most 20 years.

Until today, the only reason for not enforcing a registered trademark was that the product displaying it no longer was being manufactured or sold. And so, if the company so chose, Tesla could call its vehicles “Model Ts” without fear of a trademark infringement lawsuit from Ford Motor Co.

Political correctness is now rampant. Rather than focusing on issues of real political moment, such as the clear and present danger of Islamist uprisings on the borderlands straddling Iraq and Syria or the looming disaster of healthcare “reform”, the USPTO has concluded that the nickname of our national capital’s professional football team is worthy of public attention and denial of its exclusive commercial use. Other agencies of the federal government have better things to do. (Washington’s NFL franchise can be called the “Redskins” while the USPTO’s 2–1 decision is under appeal.)

If “Redskins” no longer is acceptable, what about “Rebels”, the monikers of the universities of Mississippi and of Las Vegas, the University of Utah’s “Utes” or Florida State’s “Seminoles”? What about Alcorn State University’s “Braves”? (Alcorn State is an HBCU—an historically black institution of higher learning and so the federal government must tread lightly.) The University of Mississippi substituted a by and large inoffensive black bear for “Colonel Reb” as its on-field mascot. (But why not “brown” rather than possibly race-baiting “black”?) Stanford University succumbed to political pressure to switch from calling its sports teams “the Indians” to “the Cardinal”.

Will it never end until no one possibly is offended?

Patent Troll Hit with Legal Fees



patent_trolls_180x270The Electronic Frontier Foundation has a good post up on how the patent troll Lumen View just got hit with a fee award in federal court. This is in part because of recent Supreme Court decisions making it easier for defendants to collect attorney’s fees when they win patent suits. The troll’s patent was but a description of computer-directed matchmaking—a nonsensical patent that never should have been issued. The troll expected a quick payoff, but instead got whacked by the judge and has to pay fees as well.

Enemies of Enemies



15346152_SThe Obama administration is considering working with the Iranian government to deal with the full-blown horrors currently plaguing Iraq. As a non-interventionist, I’m committed to opposing such an approach. If I were a pragmatic realist or a utilitarian I’d be tempted to agree that such an alliance would be the lesser of evils, although as clear as that might seem today, I’d still have my reservations.

The terror in Iraq itself could be partly traced to a number of interventions where the U.S. government sought to ally with the lesser evil. The al-Qaeda-affiliated terrorists got a boost as America intervened on their side in Libya and, less conspicuously, in Syria. The instability in Iraq generally was a totally predictable consequence of the U.S. ousting Saddam Hussein.

While ousting Saddam stood as the central goal in America’s most horrifically cataclysmic foreign policy endeavor since Vietnam, he was of course every bit as brutal as the neocons claimed. Indeed, for many years the U.S. favored his rule for the precise reason that he was a brutal secular strongman who effectively suppressed Islamist factions (and before that because he was seen as a Cold War ally against radically leftist forces).

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Piketty and Emerging Markets



pikettyMuch has been said to refute Thomas Piketty’s important book, Capital in the Twenty-First Century, from the perspective of developed countries, but not from the standpoint of emerging markets. His contention that the rate of return of capital, roughly twice the rate of growth of the economy, leads to increasing inequality is not consistent with what has happened in the developing world. His notion that the economy is destined for a modest rate of growth and that the capitalists’ share of aggregate income will increase at the expense of workers runs against the evidence coming out of up-and-coming economies.

Before I get into that, I remind readers that various Austrian School economists have exposed significant flaws in Piketty’s understanding of the value of capital and its relation to the return on capital. Randall Holcombe states that the French author gets it backwards when he makes the return on capital dependent on the starting value of capital. It is by discounting the expected return generated by capital goods in the minds of entrepreneurs who combine them productively that an estimate of the value of capital can be reached. Since the discount factor depends of the rate of interest, the same capital goods can have very different values depending on the environment. And the aggregate value of capital doesn’t tell us how many ventures failed.

Spanish economist Juan Ramón Rallo, for his part, has shown that the rate of return of capital is not the same as the rate of growth of the income generated by capital. It is perfectly possible for the rate of return to be greater than the rate of growth of the economy, and for the ratio between capital and income to be fairly constant throughout the ages, as Piketty himself demonstrates while drawing the wrong conclusion from his data.

None of this disproves that inequality has grown in certain periods. In fact, Piketty shows that the years leading up to the Great Depression and the Great Recession were two such periods. But given that the rate of interest was in both cases manipulated by government, the inequality derived from the increased value of capital was a by-product not of perverse free markets, but of monetary interventionism.

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