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How Time and Uncertainty Can Make Us “Antifragile” – Article by David Howden

How Time and Uncertainty Can Make Us “Antifragile” – Article by David Howden

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The New Renaissance Hat
David Howden
January 26, 2014
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Antifragile: Things that Gain from Disorder, Nassim Nicholas Taleb (New York: Random House, 2012).

No two buzzwords define the present crisis more than “contagion” and “robustness” in the world of economists and policy wonks. The current interrelated nature of the financial system has bred a fragile situation where the success of the greater economy supposedly hinges on its individual components, such as banks that are too big to fail. To combat this fragility, economists have increasingly sought to build robust institutions. Such institutions will remain strong in the face of adverse effects if an individual component of the economy fails — be it subprime mortgages, sovereign debt, deposit-taking institutions or investment banks. This approach to the crisis stresses that if we cannot battle contagion, we had better construct strong institutions to weather future storms.

Nassim Taleb takes great issue with this approach in his new book Antifragile. His view is that constructing such so-called robust institutions is not sufficient as they continually fight yesterday’s battles. Instead the focus should be in building “antifragile” insti­tutions. Although often confused with robustness or resilience, an antifragile institution is not only unharmed by adverse events, but is actually strengthened by them. Building antifragile institutions will not only strengthen the global economic arena, but also have wide-ranging social applications.

Taleb’s latest work builds on two of his previous books, Fooled by Randomness (2001) and The Black Swan (2007). The common theme underlying all three is that there are events which are fundamentally unknowable — true uncertainties — in distinction to merely risky outcomes. Since we cannot know in advance what these events are, or what their effects will be, we should not exert too much effort in constructing contingency plans.

It is at this point that my first quibble with the book arises, and one I had with its predecessor The Black Swan. Taleb bifurcates between two definitions of uncertain events. On the one hand he invokes random or fundamentally unknowable events. Readers of this journal will be sympathetic to this definition of uncertainty, bearing close resemblance to Mises’s own use of “case probabilities”[1] (1949, pp. 110–113), or Shackle’s (1949) use of “non-seriable, non-divisible” events.[2] On the other hand, it is also clear that Taleb also thinks of uncertain events as merely rare events. These are events located on the fat or long tails on a probability distribution. Even though he thinks that these represent true uncertainty, there is no doubt that he is referring to funda­mentally probabilistic events.

This quibble aside, one can apply much of the remaining work cognizant that Taleb’s terminology differs from that of the Austrian economists, and also that the domain of his theory is slightly different than he thinks.

Something is “antifragile” if it gets stronger from a negative event. What are some examples? Taleb applies the prefix of his book liberally to outline what choices we should be pursuing. Indeed, the body of the book gives a long list of antifragile actions that, at least on one level, boil down to doing the exact opposite of what you think you should be doing.

Authors should be shocked to learn that there is almost no news that can harm a writer’s credibility, and that any publicity is good publicity (pp. 51–52). Corporations and governments that try to “reinstill confidence” should not be trusted because they would do so only if they were ultimately doomed (p. 53). Children shouldn’t be on antidepressants as this removes a source of learning from the life experience and thus make individuals less capable of dealing with unwanted events later in life (p. 61). The sinking of the Titanic was a positive disaster as it put shipbuilders on their toes, and possibly avoided an even larger accident later (p. 72). The general theme is that those who make errors are stronger than those who don’t — reliability, or antifragility — only comes when something is regularly tested by an unwanted event.

The theory has merit. Consider this lesson applied to central bank policies. In the wake of the dot-com bust a concerted effort by the world’s central banks flooded the global financial system with liquidity. The liquidation of assets that should have happened never did, and as a result lenders and borrowers didn’t learn their lesson on prudential money management. The seeds were sown for the larger crisis starting in 2007–2008 because a simple lesson was not learned when the financial system’s problems were still in relative infancy.

There is much to learn from this book and much to be wary of. At the end of the day, Taleb reckons the best test of an anti-fragile institution is Mother Nature mixed with a healthy dose of time. In chapter 21 he criticizes the prevailing orthodoxy of “neomania,” the mistaken belief that newer is better. Those institutions that have existed the longest are, in all likelihood, those that will continue to exist into the future. As an example, imagine that the year is 1988 and answer the following: which structure will last the longest, the Berlin Wall or the Great Pyramid of Giza.

In this test, as in much of the book, Taleb asks too much and too little. He asks too much because those institutions with the most longevity were once upon a time also the ones with the least. There must be a better test than longevity, as it only pushes the problem back in time to identify the source of antifragility. It cannot be turtles all the way down.

An applied example relevant to the present financial crisis would involve looking for those institutions that have been strengthened by current affairs. The crisis has taken its toll on many aspects of the financial services industry, but some general types of products have proven surprising resilient, or antifragile. Governments with prudent fiscal policies — e.g., Germany, Switzerland and Singapore — have fared well and indeed been strengthened as finances deteriorate in more profligate countries. Investment funds capitalizing on what were once unorthodox strategies, such as gold and other precious metal holdings, have out-performed more traditional investments as the financial crisis worsens. Readers of this journal will also notice that their stock in Austrian economics has increased in value over the past decade. Question begging and failed policies developed through more mainstream theories have led many former outsiders to the ranks of Austrian economists. An unwanted event caused an offsetting positive outcome in all these scenarios. That is what being antifragile is about.

Taleb asks too little by not exploring the true sources of antifragility. He comes close, alluding in many places that market-based institutions better combat the false security that planned institutions create. Explaining and elaborating on this link would do much to take the fundamental merits of antifragility to the next level. It would be, however, fodder for another book.

References

[1] Mises, Ludwig von. 1949. Human Action: A Treatise on Economics. Auburn, Ala.: Mises Institute, 1998.

[2] Shackle, G. L. S. 1949. Expectations in Economics. Westport, Conn.: Gibson.

David Howden is Chair of the Department of Business and Economics and professor of economics at St. Louis University’s Madrid Campus, Academic Vice President of the Ludwig von Mises Institute of Canada, and winner of the Mises Institute’s Douglas E. French Prize. Send him mail. See David Howden’s article archives.

This article first appeared in the Fall 2013 edition of The Quarterly Journal of Austrian Economics.

The Paradox of Public Assistance – Article by David J. Hebert

The Paradox of Public Assistance – Article by David J. Hebert

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The New Renaissance Hat
David J. Hebert
January 26, 2014
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Let’s put ideology aside for a moment. One might not think it’s morally or politically justifiable to take from one person in order to help another. But for now, let’s ask another question: Does it help?

A lot of people see the existence of “poverty amid plenty,” wherein a few people have acquired a lot of wealth while the overwhelming majority struggles to make ends meet. The standard call is to provide some means of transferring those resources from the haves to the have-nots, either through a progressive tax policy or via some direct transfer program.

The problem with these policies is obviously not in their stated goals. Who could argue against the desire to help people? Nor is it, entirely, the coercive nature of redistribution. The real problem comes in the ability of welfare advocates to actually reduce poverty in an effective and long-lasting manner.

World Coyne

In his latest book, Doing Bad by Doing Good, Chris Coyne discusses problems with delivering effective humanitarian aid to other countries. Coyne identifies two potential problems: the planner’s problem and the incentive problem.

Briefly, the planner’s problem refers to the impossibility of people outside of a society actually to possess the information required to assist in fostering continued economic development. The incentive problem refers to the idea that the planners may face perverse incentives to go ahead and do something that the planner’s problem suggests is impossible to start with.

These points are all well and good, and should be well received at least by readers of this publication. But I think we can go further to urge that the problems Coyne identifies apply equally to issues related to domestic intervention.

Disconnect

The people who advocate most strongly for poverty relief programs are not, in fact, people who are poor. Rather, they are people who are typically either politicians seeking reelection or wealthy people who have some overwhelming desire to do something (usually they want to get other people to give them money to do something). They are not poor, but rather they simply do not like seeing poor people suffer and feel some desire to help. However, because they are not poor themselves, they have absolutely no idea what it is that poor people actually want.

Do they want shelter, clothing, and food? Yes. Do they want education, hygiene, and employment? Of course. But in what order, how much, and of what type? In a world of scarcity, the answers to these questions are of crucial importance if we are to find ways to help the most people as quickly and effectively as possible. And yet, the answers to these questions are wholly unknowable to outside observers.

Similarly, and perhaps more importantly, the incentive problem that the planners face also applies to domestic intervention. Politicians are people who, just like us, are primarily concerned with helping themselves. Given their position, what is in their interest might sometimes in be the interest of the “general public” (providing genuine public goods, the rule of law, etc.) but as James Buchanan and Gordon Tullock rightfully point out in their groundbreaking book, The Calculus of Consent, this is not guaranteed to be true at all times and in all cases. In fact, it may be the case that as a direct result of political involvement, incentives may direct their behavior in ways that enrich concentrated interests and impoverish poor people even more.

The War on Poverty

One answer is that the disparity might be much, much worse without government intervention—that is, the rich would be even richer and the poor would be even poorer. But another possibility is that the war on poverty directly contributes to a burgeoning underclass. How can we adjudicate between these positions?

On the surface, giving people aid seems like a straightforward proposition. We observe people suffering and then send resources to them to alleviate that suffering. On the other hand, as Buchanan pointed out in 1975, we run into problems in which the aid designed to alleviate poverty actually perpetuates it, creating dependency. This dependency, in turn, means that an increasing number of people derive the majority of their income from aid.

Paid to Be Poor

That some of the poor get most of their income from the government is not to argue that welfare recipients are lazy or don’t wish to work. Rather it suggests that the incentives they face may make them reluctant to accept employment opportunities at offered wages. We can think through this proposition logically: Suppose I offer you $240 per week in financial aid while you are between jobs. You would be receiving that money for zero hours of work per week. Being an honest person, you go out and look for work, eventually finding a job that pays you $8 per hour, or $320 per week working full time. Should you take that job?

On the one hand, you would receive more money by taking that job than you would by accepting the aid. However, economics teaches us the value in thinking at the margin. Doing so reveals that you would only receive an additional $120 per week in exchange for your 40 hours of work. In other words, taking into account your opportunity cost, you would really only be earning $3 per hour! While I certainly cannot speak for everyone, I feel reasonably confident in saying that few people in this country value their time at only $3 per hour. Realizing this, it is no puzzle why people receiving aid tend to stay unemployed for so long. The Cato Institute recently published a study offering evidence of the work versus welfare trade-off, which can be found here.

Politics and Perquisites

Now that we understand why domestic aid programs may lead to the perpetuation of poverty among the poor, we’re ready to discuss how they may lead to the enrichment of the already wealthy. When politicians decide to try to do something about an issue, one of the first things that they do is convene special hearings about the issue. Here, they call upon the testimonies of experts to try to figure out (1) what can be done and then (2) how best to do it.

The problem here is that the very people who are best equipped to detail how to solve the problem will typically explain that they themselves (or the people that they represent) are in fact the best to solve the problem and should be awarded the contract to solve the problem. We see this in government all the time. Take, for example, the company that was placed in charge of rebuilding Iraq after the US invasion in 2006: Halliburton, which was formerly run by then-Vice President Dick Cheney. Is it any wonder why this company was awarded these contracts? Kwame Kilpatrick, when he was mayor of Detroit, would routinely award offices and several perks to his friends and family members. Don’t forget about the legendary William Tweed, better known as “Boss Tweed.” The point here is not that all politicians are corrupt, but that knowing a politician who is in a position to award perks puts you in good stead to be the recipient of largesse. And, of course, if that’s true, you have very good reasons to create incentives for the politician to steer favors in your direction. It is the nature of politics.

What to Do

Evidencing the failure of domestic aid to help combat poverty, Abigail Hall has an excellent article, forthcoming in the Journal of Private Enterprise, detailing the failure of the Appalachian Regional Commission. This line of research might lead one to the sobering conclusion that there is little that can be done to alleviate the suffering of the poor. Nothing could be further from the truth, however.

We can take away a couple of things from this type of work:

1) The limits of what can be directly achieved through political means of alleviating poverty; and

2) The idea that the expansion of opportunity ultimately drives economic growth and helps the poor.

Rather than focusing on giving poor people the resources to live well, we should instead focus on removing the barriers that prevent people from discovering ways to be productive. Doing so would not only provide them with the tools to lift themselves out of poverty, but would also provide the basis of dignity.

David Hebert is a Ph.D. student in economics at George Mason University. His research interests include public finance and property rights.

This article was originally published by The Foundation for Economic Education.
The Rational Argumentator Now Accepts Dogecoin Donations

The Rational Argumentator Now Accepts Dogecoin Donations

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The New Renaissance Hat
G. Stolyarov II
January 20, 2014
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I am pleased to announce that, in addition to accepting Bitcoin donations, The Rational Argumentator now also accepts donations in Dogecoin, the world’s first meme-based cryptocurrency. This broadening of donation options is motivated by the desire to encourage the further evolution of decentralized media of exchange, and also by the fact that Dogecoin is presently easier to mine than Bitcoin, thereby facilitating easier entry into the cryptocurrency arena for those who wish to mine rather than purchase cryptocurrencies. Besides, as I pointed out in my recent and fast-spreading article, “Cryptocurrencies as a Single Pool of Wealth”, the purchasing power of Bitcoin and all other similar cryptocurrencies is closely connected, as long as there is free exchange among the cryptocurrencies.

You can donate using the code on the sidebar widget. Here are the donation codes for both Bitcoin and Dogecoin, for your convenience.

Bitcoin: 1J2W6fK4oSgd6s1jYr2qv5WL8rtXpGRXfP

Dogecoin: DCgcDZnTAhoPPkTtNGNrWwwxZ9t5etZqUs

Much cryptocurrency of either kind will be appreciated.

Dogecoin_logo

Cryptocurrencies as a Single Pool of Wealth: Thoughts on the Purchasing Power of Decentralized Electronic Money – Article by G. Stolyarov II

Cryptocurrencies as a Single Pool of Wealth: Thoughts on the Purchasing Power of Decentralized Electronic Money – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
January 12, 2014
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The recent meteoric rise in the dollar price of Bitcoin – from around $12 at the beginning of 2013 to several peaks above $1000 at the end – has brought widespread attention to the prospects for and future of cryptocurrencies. I have no material stake in Bitcoin (although I do accept donations), and this article will not attempt to predict whether the current price of Bitcoin signifies mostly lasting value or a bubble akin to the Dutch tulip mania of the 1630s. Instead of speculation about any particular price level, I hope here to establish a principle pertaining to the purchasing power of cryptocurrencies in general, since Bitcoin is no longer the only one.

Although Bitcoin, developed in 2009 by the pseudonymous Satoshi Namakoto, has the distinction and advantage of having been the first cryptocurrency to gain widespread adoption, others, such as Litecoin (2011), Namecoin (2011), Peercoin (2012), and even Dogecoin (2013) – the first cryptocurrency based on an Internet meme – have followed suit. Many of these cryptocurrencies’ fundamental elements are similar. Litecoin’s algorithm is nearly identical to Bitcoin (with the major difference being the fourfold increase in the rate of block processing and transaction confirmation), and the Dogecoin algorithm is the same as that of Litecoin. The premise behind each cryptocurrency is a built-in deflation; the rate of production slows with time, and only 21 million Bitcoins could ever be “mined” electronically. The limit for the total pool of Litecoins is 84 million, whereas the total Dogecoins in circulation will approach an asymptote of 100 billion.

Bitcoin-coins Namecoin_Coin Dogecoin_logoLitecoin_Logo

The deflationary mechanism of each cryptocurrency is admirable; it is an attempt to preserve real purchasing power. With fiat paper money printed by an out-of-control central bank, an increase in the number and denomination of papers (or their electronic equivalents) circulating in the economy will not increase material prosperity or the abundance of real goods; it will only raise the prices of goods in terms of fiat-money quantities. Ludwig von Mises, in his 1912 Theory of Money and Credit, outlined the redistributive effects  of inflation; those who get the new money first (typically politically connected cronies and the institutions they control) will gain in real purchasing power, while those to whom the new money spreads last will lose. Cryptocurrencies are independent of any central issuer (although different organizations administer the technical protocols of each cryptocurrency) and so are not vulnerable to such redistributive inflationary pressures induced by political considerations. This is the principal advantage of cryptocurrencies over any fiat currency issued by a governmental or quasi-governmental central bank. Moreover, the real expenditure of resources (computer hardware and electricity) for mining cryptocurrencies provides a built-in scarcity that further restricts the possibility of inflation.

Yet there is another element to consider. Virtually any major cryptocurrency can be exchanged freely for any other (with some inevitable but minor transaction costs and spreads) as well as for national fiat currencies (with higher transaction costs in both time and money). For instance, on January 12, 2014, one Bitcoin could trade for approximately $850, while one Litecoin could trade for approximately $25, implying an exchange rate of 34 Litecoins per Bitcoin. Due to the similarity in the technical specifications of each cryptocurrency (similar algorithms, similar built-in scarcity, ability to be mined by the same computer hardware, and similar decentralized, distributed generation), any cryptocurrency could theoretically serve an identical function to any other. (The one caveat to this principle is that any future cryptocurrency algorithm that offers increased security from theft could crowd out the others if enough market participants come to recognize it as offering more reliable protection against hackers and fraudsters than the current Bitcoin algorithm and Bitcoin-oriented services do.)  Moreover, any individual or organization with sufficient resources and determination could initiate a new cryptocurrency, much as Billy Markus initiated Dogecoin in part with the intent to provide an amusing reaction to the Bitcoin price crash in early December 2013.

This free entry into the cryptocurrency-creation market, combined with the essential similarity of all cryptocurrencies to date and the ability to readily exchange any one for any other, suggests that we should not be considering the purchasing power of Bitcoin in isolation. Rather, we should view all cryptocurrencies combined as a single pool of wealth. The total purchasing power of this pool of cryptocurrencies in general would depend on a multitude of real factors, including the demand among the general public for an alternative to governmental fiat currencies and the ease with which cryptocurrencies facilitate otherwise cumbersome or infeasible financial transactions. In other words, the properties of cryptocurrencies as stores of value and media of exchange would ultimately determine how much they could purchase, and the activities of arbitrageurs among the cryptocurrencies would tend to produce exchange rates that mirror the relative volumes of each cryptocurrency in existence. For instance, if we make the simplifying assumption that the functional properties of Bitcoin and Litecoin are identical for the practical purposes of users, then the exchange rate between Bitcoins and Litecoins should asymptotically approach 1 Bitcoin to 4 Litecoins, since this will be the ultimate ratio of the number of units of these cryptocurrencies. Of course, at any given time, the true ratio will vary, because each cryptocurrency was initiated at a different time, each has a different amount of computer hardware devoted to mining it, and none has come close to approaching its asymptotic volume.

 What implication does this insight have for the purchasing power of Bitcoin? In a world of many cryptocurrencies and the possibility of the creation of new cryptocurrencies, a single Bitcoin will purchase less than it could have purchased in a world where Bitcoin was the only possible cryptocurrency.  The degree of this effect depends on how many cryptocurrencies are in existence. This, in turn, depends on how many new cryptocurrency models or creative tweaks to existing cryptocurrency models are originated – since it is reasonable to posit that users will have little motive to switch from a more established cryptocurrency to a completely identical but less established cryptocurrency, all other things being equal. If new cryptocurrencies are originated with greater rapidity than the increase in the real purchasing power of cryptocurrencies in total, inflation may become a problem in the cryptocurrency world. The real bulwark against cryptocurrency inflation, then, is not the theoretical upper limit on any particular cryptocurrency’s volume, but rather the practical limitations on the amount of hardware that can be devoted to mining all cryptocurrencies combined. Will the scarcity of mining effort, in spite of future exponential advances in computer processing power in accordance with Moore’s Law, sufficiently restrain the inflationary pressures arising from human creativity in the cryptocurrency arena? Only time will tell.

Liberally Classical – Article by Jeffrey A. Tucker

Liberally Classical – Article by Jeffrey A. Tucker

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The New Renaissance Hat
Jeffrey A. Tucker
January 12, 2014
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I was recently in an ornate orchestral hall built in the late Gilded Age, a setting designed to present an opera or symphonic music to a generation before World War I that craved such performance art. The concert I attended was sold out, with tickets running between $40 and $75.
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The place was vibrating with anticipation as the full orchestra with winds, strings, brass, and percussion came on stage, and a 25-voice choir—live acoustic music without conspicuous electronics—filed in behind. The cheers, even before it all began, were glorious.
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As I looked around the vast room full of wide smiles, I noted that that average age of the concert goers was late twenty-something. It was a slightly startling sight after having been to so many symphony concerts filled with septuagenarians. Not that there’s anything wrong with old people, but it always seemed to symbolize a dying art to me. Not this time though. This art and this room were alive and youthful and looking to the future.
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What followed was two hours of dramatic, emotionally gripping symphonic music. The audience couldn’t wait to cheer and stand at every opportunity. At the intermission not a soul failed to return to his or her assigned seat.
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I’ve been around the art-music sector of the music industry for many years, and, for me, this experience was all dreamy, even surreal. My whole life, I’ve heard the same old complaints from classical musicians. We are underfunded. Governments are stingy. The people are not coming to our concerts. The young are only interested in junk music. High art is being crowded out by pop: it’s Schubert vs. Spears, Beethoven vs. Bieber, Mahler vs. Madonna. Our concert halls and symphonies are being massacred by market forces. We need subsidies in order to uphold real music against the pathetic tastes of the middle class.
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And so on it goes.
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The conventional tactics for dealing with this obvious and old problem are well known. There are labor strikes—you know, those oppressed oboists and violists who are clamoring for their surplus value to be given back by the unnamed exploiter. Donors are being squeezed to make up for what can’t be gained in ticket sales. There are hectoring public campaigns to “support the arts” or feel really guilty. There are marketing gimmicks. There are foundations that provide temporary relief. All the while, musicians grow ever more bitter, resentful, and despairing.
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So what made this event different? Many things. The bar was open with wine, beer, and spirits, and people were welcome to bring them to their seats, just like in a movie theater when people watch with soda and popcorn. Yes! Why doesn’t the Kennedy Center allow this? I don’t know. It should.
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Also, the fantastic and rightly showy conductor was a young woman—defying the eternal stereotype and addressing another complaint about sexism in the history of orchestral conductors. Another thing: Many members of the audience were dressed in character, sporting funny ears, wigs, and costumes. Character? More on that follows.
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Finally, the main event was something completely unexpected. The music was a performance of the soundtrack to the video game Legend of Zelda. The full name: “The Legend of Zelda: Symphony of the Goddesses.” Yes, a video game, a cult classic, one that began in 1989 and now has a beloved heritage and rich tradition.
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The game itself is accompanied by a full suite of serious music composed over the course of 25 years by a dozen or so specialists (all well-trained musicians) from Japan. That means there is not a single god-like composer—we like to pretend they were all sui generis—but rather a crowdsourced, thematically arranged series of pieces, each of which is connected to some iteration of this long-running game.
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The musicians seemed to love it, and the audience surely did. The exchange relationship between the musical producers and consumers was unlike anything I had experienced. This was not an audience obediently frozen in a stuffy pose waiting for the next assigned time to clap (never, never between movements, dammit!). They were serious, engaged people who were happy to gasp, laugh, cheer, ooh and ahh, and even cry. They did it all, and not on cue.
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Above the orchestra floated a large screen that played scenes that matched the music, from its earliest and crudest computer animations to the latest and most dazzling visual art. We even saw the characters grow up in the course of their adventures, which are wonderful, faux-medieval tales of danger, courage, chivalry, and devotion.
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My goodness, the whole scene just moved me so much. Here were the gamers all gathered, those “nerds” everyone made fun of during high school and college, and their love of their computer world was being validated and affirmed. But I suspect that even they didn’t understand the implications of all of this. I wanted to stand up and explain: Do you see what you have done here? Your consumers’ interests have brought back large-scale, live performance art—full choir and orchestra—through the most circuitous route one can possibly imagine.
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And how different, really, is this from a Rossini opera about a love affair involving barbers, secret letters, singing lessons, stodgy aristocrats made to look silly, and narrow escapes down second-story ladders? Or a Mozart opera involving magic bells and flutes, evil queens, floating boys in an air balloon, and scary dwarfs and dragons? It’s all the same stuff. It’s that beautiful combination of audio and visual art—the sense that something is happening right there in front of you. They didn’t have video games but we do, and good for us!
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All of this music could have easily been played on a loudspeaker, but that would have taken away the whole sense that something was being created on the spot. You want to see the violinists moving their bows, the percussionists crashing cymbals together, the bassoonist playing that most implausible of instruments. Adding to the irony is that the music on the Zelda game itself is mostly electronic, especially the choirs and their ethereal voices. Not here. It was human. It was life. We all experienced it in real time—fantasy became reality before our eyes and ears.
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I thought back to my days hanging around the school of music, all those students and professors with long faces and grim demeanors, people down on markets, down on society, down on consumers. No one would have believed that he or she had a future in live performance music, filling up the old orchestral halls, by way of fun and wonderful video games. No, it took entrepreneurs and commerce to blaze this trail. It took markets to make this surprise happen.
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The world of classical music, in fact, has been pathetically lacking in creative vision for many decades, if not an entire century. In large part, it keeps trying to recreate the past while cursing the present and despairing of the future. Why? Perhaps it is because this sector of life has been ever more removed from the commercial world through centrally planned education, subsidies, union control, copyrighted and monopolized musical scores, a culture of the entitled guild. None of it has worked and, needing to pay the rent, there has been a steady stream of young musicians leaving years of conservatory training to enter some other profession like making lattes.
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But get outside those establishment circles and you see entirely different things happening. It was in Turkey when I first saw a performance of an all-woman string quartet. During the first part of the evening, they presented a solid program of Schubert, Mozart, and Haydn. Then came the change to leather and boots and an all-electronic/pop program followed by the same players. One can sneer at it as tacky (actually, I don’t think so) but people love it and pay the big bucks for it. Since I saw this performance two years ago, the approach has reemerged at several venues in the United States as well.
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My point is not to isolate these two types of art-music presentations and say: This is the future for classically trained musicians. Maybe this is just the beginning. Maybe there are dozens of other approaches yet to be explored. What is needed is some serious entrepreneurship to find the new approaches and test them in the marketplace.
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The main feature in success here is an intimate connection between the players and the audience—the same as you see in the pop music world. It’s not about the style. It’s about the economic and artistic relationship between the producers and consumers. It must be a value enhancing proposition for both sides for a true profit to emerge.
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Meanwhile, I will never be able to read the quarterly harangue in The New York Times about the death of symphonies without thinking of this wonderful evening. Classical music is not dead. It is just now coming back to life.
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Jeffrey Tucker is a distinguished fellow at the Foundation for Economic Education (FEE), CEO of the startup Liberty.me, and publisher at Laissez Faire Books. He will be speaking at the FEE summer seminar “Making Innovation Possible: The Role of Economics in Scientific Progress“.
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This article originally appeared in The Freeman, the magazine of the Foundation for Economic Education.
The Minimum Wage Forces Low-Skill Workers to Compete with Higher-Skill Workers – Article by George Reisman

The Minimum Wage Forces Low-Skill Workers to Compete with Higher-Skill Workers – Article by George Reisman

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The New Renaissance Hat
George Reisman
January 4, 2014
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The efforts underway by the Service Employees International Union, and its political and media allies, to raise the minimum wage from $7.25 to $15 per hour would, if successful, cause major unemployment among low-skilled workers, who are the supposed beneficiaries of those efforts.

The reason is not only the fact that higher wages serve to raise costs of production and thus prices, which in turn serves to reduce physical sales volume and thus the number of workers needed. There is also another equally, if not more important reason in this case, and it is a reason which is only very inadequately described by reference to the substitution of machinery or automation for the direct labor of workers when wages are increased.

This is the fact that a low wage constitutes a competitive advantage for less-skilled workers that serves to protect them from competition from more-skilled workers. In other words, a wage of $7.25 per hour for fast-food workers serves to protect those workers from competition from workers able to earn $8 to $15 per hour in other lines of work. The workers able to earn these higher wage rates are not interested in seeking employment at the lower wage rates of the fast-food workers.

But if the wage of the fast-food workers, and all other workers presently earning less than $15 per hour, is raised to $15 per hour, then these more capable workers can now earn as much as fast-food workers as they can in any of the occupations in which they had been working up to now.

Moreover, the widespread rise in wage rates to $15 per hour will cause unemployment in all of the occupations affected. The unemployed clerks, telemarketers, factory workers, and whoever, who otherwise would have earned between $8 and $15 per hour, will have no reason not to apply for work in fast food, which will now pay as much as any other occupation that is open to them. And since those workers are more capable, it is overwhelmingly likely that to the extent that they do seek employment as fast-food workers, they will be preferred over the low-skilled workers who presently work in fast-food establishments. Thus, the rise in the wage of the fast-food workers will serve as an invitation to the competition of large numbers of workers who do not presently think of working as fast-food workers and who, being better qualified, will almost certainly take away their jobs.

Between less employment overall in the least-skilled lines of work such as fast food, and the incentive created for vastly increased competition for employment in those lines coming from more qualified workers, the effect could well be to close those lines altogether to the employment of workers at the low end of skill and ability. That, of course, would deprive these people of the opportunity to acquire skills and abilities from work experience that otherwise would have enabled them to become capable of performing more demanding jobs later on.

What the demand for a $15 an hour minimum wage represents is a case of low-skilled workers being led to reach for a high-wage “bird in the bush,” so to speak. Unfortunately, at the high wage, there are both fewer birds in the bush than are presently in hand and most or all of them will fly away into the hands of others, who possess greater skills and abilities, if the attempt is made to reach for them.

This must ultimately be the result even if somehow the present fast-food workers and the like could be enabled to keep their jobs for a time. Even so, practically every time that it became a question of hiring someone new, the new employees would almost certainly be drawn from the ranks of workers of greater skill and ability than those who had customarily been employed in these jobs. Thus, even if not immediately, in time there would simply be no more room in the economic system for workers at or near the bottom of the skills ladder.

No one can question the desirability of being able to earn $15 an hour rather than $7.25 an hour. Still more desirable would be the ability to earn $50 an hour instead of $15 an hour. However, it is necessary to know considerably more than this about economics before attempting to enact sweeping changes in economic policy, changes to be achieved by attempting to organize a mass movement that is based on nothing but a desire for economic improvement and no real knowledge whatever of how actually to achieve it.

George Reisman, Ph.D., is Pepperdine University Professor Emeritus of Economics and the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996; Kindle Edition, 2012). See his Amazon.com author’s central page for additional titles by him. His website is www.capitalism.net and his blog is www.georgereismansblog.blogspot.com. Follow him on Twitter.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Advancing Pharmaceutical and Medical Technology Does Not Depend on Patents – Article by Nathan Nicolaisen

Advancing Pharmaceutical and Medical Technology Does Not Depend on Patents – Article by Nathan Nicolaisen

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Nathan Nicolaisen
January 1, 2014
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Pharmaceutical drug manufacturers are often regarded as the successes of the intellectual property regime. It is assumed that their willingness to take risks by investing heavily in R&D is justified by the awarding of patents over their lifesaving discoveries. Proponents of intellectual property claim that without patents many lifesaving drugs would not exist. They assert that generic drug manufacturers would diminish profit margins and dissipate the original manufacturer’s market share and innovation would come to a virtual standstill. Further, manufacturers once willing to create new drugs will no longer do so without sufficient returns on investment. Research into the matter suggests, however, that patent protection may not be required for medical advances.

Unpatented Medical Technologies

The notion that unpatented medical technologies are not feasible is historically false. Surveys of important medical breakthroughs provide insight into whether patents are absolutely necessary and conducive to innovation in medicine. In 2006, the British Medical Journal challenged its readership to submit a list of the most noteworthy medical and pharmaceutical inventions throughout history. The original list contained over 70 different discoveries before being narrowed down to 15. The list goes as follows in no particular order: penicillin, x-rays, tissue culture, ether anesthetic, chlorpromazine, public sanitation, germ theory, evidence-based medicine, vaccines, the pill, computers, oral rehydration therapy, DNA structure, monoclonal antibody technology, and smoking health risk. Of these discoveries, only two of them have remotely anything to do with patents, chlorpromazine and the pill.[1] In another survey conducted by the United States Centers for Disease Control the results are strikingly similar. Of the ten most important medical discoveries of the twentieth century, none of them had anything to do with patents.[2]

Natural Market Advantages and Trade Secrecy

Contrary to popular belief, large pharmaceutical companies may maintain significant market share advantages after the introduction of generics through the help of natural barriers to entry. Large pharmaceutical companies have a first-mover advantage and an established internal and external structure that competitors, large and small, do not. Regardless of how fast competitors can manufacture a generic drug (never mind the fact that they must hire new labor, train new employees, buy raw materials, establish suppliers, organize logistics, create a marketing and advertising plan, and set up competitive shelf space), it can be extremely difficult to make a dent in the market dominance of an already-established drug. Competition data from India suggests that it takes approximately four years for generic drugs to enter the market.[3] In addition, the Congressional Budget Office calculated that an original drug manufacturer could still maintain a market share of more than 20 percent after the introduction of generics. Expanding the scope of research beyond pharmaceutical drugs, a survey of R&D labs and company managers revealed that between 23 percent and 35 percent believe a patent is an effective way of getting a return on investment. At the same time 51 percent believe trade secrets to be an effective way of ensuring returns.[4]

The Truth about R&D Costs and Generic Drugs

Pharmaceutical drug manufacturers enjoy large margins in spite of large R&D. The claim that R&D for pharmaceuticals is high is not unfounded. The cost to bring a new drug to market varies between estimates of $402 million on the lower end and $800 million on the upper end.[5],[6] Regardless of high R&D costs, drug companies still command high margins. For the past two decades pharmaceutical drugs have been one of the most profitable industries in the United States, never dropping below third place.[7] The profitability of pharmaceuticals can be explained away under the assumption that people are living longer and consuming more pharmaceutical drugs. It may also be suggested that the human population is less healthy than in the past and the demand for pharmaceutical drugs is inelastic. But, analysis of the profit margin on pharmaceutical drugs and lack of any serious innovation suggests that this is not always the case.

The pharmaceutical industry globally maintains about a 25 percent operating margin as opposed to 15 percent for consumer goods. In the United States, this number achieved its zenith at almost 35 percent. The high margin on the drugs may not be due directly to high R&D costs, either. As of 2006, the ratio of R&D to sales revenue was about 0.19.[8] Further, the top 30 pharmaceutical firms in the world incur costs for promotions and advertising that are nearly double the costs of R&D. This is not to imply that there is a perfect amount of R&D spending each firm must do, rather it is to show that the inability to recoup R&D costs is greatly exaggerated.

Generic drugs are not just manufactured by small companies that seek to ride on the coattails of the giants. It is believed that generics add nothing innovative to the realm of lifesaving drugs, they merely manufacture competing drugs that are already in the public domain; the real innovation comes from the companies willing to invest in research and development. The National Institute of Health Care Management conducted a survey of drugs that received approval from the FDA from 1989 to 2000 with revealing results. Just over half the drugs in the survey, 54 percent, were using active ingredients that were already in use in the market. Of the drugs that were approved by the FDA, 23 percent were given a priority rating on the basis that they were a sufficient clinical improvement compared to existing alternatives. As a corollary, 77 percent of the approved drugs did not exhibit any kind of significant clinical improvement.[9] In other words, these drugs are functionally generic drugs, offering no kind of advantage over existing treatments. Large drug companies are ironically engaging in the kind of behavior they abhor by developing functionally generic drugs while wasting valuable R&D resources.

Conclusion

In a truly free market, whoever has the resources to manufacture an invention is permitted to do so, and the firms that enter the market first with a new drug enjoy a significant advantage. Moreover, the fact remains that the best way to protect an idea is to keep it a secret, which is why the trade-secret method remains effective. The federal government, however, has made it profitable to conclude that the best way to protect an idea is twisting the wrists and shoulders of one’s competitors with government force. Yet in spite of overwhelming federal-government intervention, innovation and ingenuity prevail, even if to a lesser degree.

Nathan Nicolaisen is a senior at Luther College in Decorah, Iowa studying business management and mathematics. 

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Notes

[1] This means that the inventions were not patented, due to some previous patent, or discovered out of desire to obtain a patent. Michele Boldrin and David K. Levine, Against Intellectual Monopoly, (Cambridge University Press, January 2010), 258, 259.

[2] ibid, 259.

[3] ibid, 266

[4] ibid, 186

[5] $402 million is in 2000 dollars. James Bessen and Michael J. Meurer, Of Patents and Property, Boston University Shool of Law, 2008), http://object.cato.org/sites/cato.org/files/serials/files/regulation/2008/11/v31n4-4.pdf

[6] $800 million is in 2000 dollars. Michele Boldrin and David K. Levine, Against Intellectual Monopoly, (Cambridge University Press, January 2010), 241.

[7] ibid, 256

[8] ibid, 255

[9] ibid, 261

Why Are Jurors Expected to Work for Below-Market Wages? – Article by Gary Galles

Why Are Jurors Expected to Work for Below-Market Wages? – Article by Gary Galles

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Gary M. Galles
January 1, 2014
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Jury duty garners complaints from those who have been drafted into service, but it seldom gets media attention. Other than when there is a celebrity involved (e.g., when Oprah Winfrey was chosen for a murder trial), juries seem to enter public discourse only when there is a sensational case, such as the upcoming trial for Aurora theater shooting suspect James Holmes.

Even when juries get noticed, it is not the inefficiencies and the waste of juror time that get the attention, yet the large number of jurors to be called for sensational cases (6,000 for the Holmes trial) often makes those problems more obvious than usual.

Serious inquiry highlights the single most effective reform available: ensuring a sufficient number of qualified jurors by paying them what their time is really worth. Because jury system problems primarily arise from treating jurors as if their time has little or no value, paying jurors instead of drafting them would produce real advantages over our current system, not just in lower costs to society, but in better dispensing dependable justice.

The greatest inefficiency of current jury service is its huge waste of juror time (e.g., 165,000 of 6 million Californians who performed jury duty actually served on a case last year). But with juror services essentially costless to judges and lawyers, they have little reason to reduce the waste. If jurors were paid something that reflected the true value of their time, they would be utilized far more effectively.

Another problem is uncomfortable and unpleasant jury facilities. With drafted jurors, there is little incentive to accommodate their preferences. If they had to be recruited voluntarily, like other employees, they would be willing to work for less under more pleasant conditions, and courts would provide for more juror comfort and convenience to cut the cost of wages.

No-shows are another major problem which increases both costs and administrative difficulties. Courts have to guess how many draftees will actually appear, wasting many jurors’ time on many days, and wasting court resources when there are too few jurors. Jurors paid a market rate for their time would show up like other employees whose jobs depend on it, reducing such waste.

Underpriced jurors cause other problems. Facing below-market costs for juror time, some courts limit jurors’ ability to take written notes, leading to delays, mistakes and avoidable jury room disputes over what was actually said. Similarly, jurors are often restricted in submitting questions to clarify their understanding, or to discuss the trial during breaks, causing confusion and wasted juror and court time. If jurors had to be paid a competitive wage, such time-wasting practices would be trimmed.

If jurors were paid, attorneys would be pushed to use plain language rather than legalese to facilitate more efficient communication. Tighter time constraints would be imposed to force attorneys to make their points more quickly and clearly, and to avoid repetitive questions (a pet peeve of jurors). Paid jurors would also spur other efficiencies, such as speeding up jury selection (e.g., by limiting peremptory challenges).

Paying jurors would also induce jurors to become more educated on the law, evidence, and procedure, reducing the chance of mistrials and the resources now devoted to ensuring jurors understand and follow the rules.

Offering sufficient inducement to attract “professional” jurors would also make justice more reliable as professional jurors would seek to cultivate a reputation as reliable and unbiased.

Currently, the primary incentive of many drafted jurors is to finish their involuntary servitude faster. That offers little assurance of attentive jurors or evenhanded rulings (not to mention creating big payoffs to jury consultants for finding “leaners” who can change the outcome in their direction). In contrast, paid jurors’ incentives would be more like those of current mediators, which litigants increasingly find preferable to court trials.

Mediators must be thorough and evenhanded if they want to continue in that role, because they must remain acceptable to both sides involved. Obvious bias or sloppiness would end their careers. Those wanting to continue to serve as paid jurors would similarly want to be fair and balanced, to preserve that possibility. Since, as according to California’s courts assert, “the duties of a juror are as important as the duties of a judge,” these incentives are crucial.

Jurors are the only resource our justice system treats as essentially costless, though, as with a military draft, the very real costs are really “paid” by the draftees. Our current system is made slower, more wasteful and more inequitable because the costs imposed on jurors, which all too often are a serious financial and personal hardship for many, are essentially ignored.

Americans’ right to a jury trial does not imply that drafting jurors is the best way to provide that right. A paid volunteer juror system would be an important positive reform, bringing us closer to providing the “liberty and justice for all” that is the goal.

Gary M. Galles is a professor of economics at Pepperdine University. He is the author of The Apostle of Peace: The Radical Mind of Leonard Read. Send him mail. See Gary Galles’s article archives.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

After 100 Years of Failure, It’s Time to End the Fed! – Article by Ron Paul

After 100 Years of Failure, It’s Time to End the Fed! – Article by Ron Paul

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Ron Paul
December 15, 2013
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A week from now, the Federal Reserve System will celebrate the 100th anniversary of its founding. Resulting from secret negotiations between bankers and politicians at Jekyll Island, the Fed’s creation established a banking cartel and a board of federal-government overseers that has grown ever stronger through the years. One would think this anniversary would elicit some sort of public recognition of the Fed’s growth from a quasi-agent of the Treasury Department intended to provide an elastic currency, to a de facto independent institution that has taken complete control of the economy through its central monetary planning. But just like the Fed’s creation, its 100th anniversary may come and go with only a few passing mentions.

Like many other horrible and unconstitutional pieces of legislation, the bill which created the Fed, the Federal Reserve Act, was passed under great pressure on December 23, 1913, in the waning moments before Congress recessed for Christmas with many Members already absent from those final votes. This underhanded method of pressuring Congress with such a deadline to pass the Federal Reserve Act would provide a foreshadowing of the Fed’s insidious effects on the US economy—with actions performed without transparency.

Ostensibly formed with the goal of preventing financial crises such as the Panic of 1907, the Fed has become increasingly powerful over the years. Rather than preventing financial crises, however, the Fed has constantly caused new ones. Barely a few years after its inception, the Fed’s inflationary monetary policy to help fund World War I led to the Depression of 1920. After the economy bounced back from that episode, a further injection of easy money and credit by the Fed led to the Roaring Twenties and to the Great Depression, the worst economic crisis in American history.

But even though the Fed continued to make the same mistakes over and over again, no one in Washington ever questioned the wisdom of having a central bank. Instead, after each episode the Fed was given more and more power over the economy. Even though the Fed had brought about the stagflation of the 1970s, Congress decided to formally task the Federal Reserve in 1978 with maintaining full employment and stable prices, combined with constantly adding horrendously harmful regulations. Talk about putting the inmates in charge of the asylum!

Now we are reaping the noxious effects of a century of loose monetary policy, as our economy remains mired in mediocrity and utterly dependent on a stream of easy money from the central bank. A century ago, politicians failed to understand that the financial panics of the 19th century were caused by collusion between government and the banking sector. The federal government’s growing monopoly on money creation, high barriers to entry into banking to protect politically favored incumbents, and favored treatment for government debt combined to create a rickety, panic-prone banking system. Had legislators known then what we know now, we could hope that they never would have established the Federal Reserve System.

Today, however, we do know better. We know that the Federal Reserve continues to strengthen the collusion between banks and politicians. We know that the Fed’s inflationary monetary policy continues to reap profits for Wall Street while impoverishing Main Street. And we know that the current monetary regime is teetering on a precipice. One hundred years is long enough. End the Fed.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

Revolutionary France’s Road to Hyperinflation – Article by Frank Hollenbeck

Revolutionary France’s Road to Hyperinflation – Article by Frank Hollenbeck

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Frank Hollenbeck
December 15, 2013
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Today, anyone who talks about hyperinflation is treated like the shepherd boy who cried wolf. When the wolf actually does show up, though, belated warnings will do little to keep the flock safe.

The current Federal Reserve strategy is apparently to wait for significant price inflation to show up in the consumer price index before tapering. Yet history tells us that you treat inflation like a sunburn. You don’t wait for your skin to turn red to take action. You protect yourself before leaving home. Once inflation really picks up steam, it becomes almost impossible to control as the politics and economics of the situation combine to make the urge to print irresistible.

The hyperinflation of 1790s France illustrates one way in which inflationary monetary policy becomes unmanageable in an environment of economic stagnation and debt, and in the face of special interests who benefit from, and demand, easy money.

In 1789, France found itself in a situation of heavy debt and serious deficits. At the time, France had the strongest and shrewdest financial minds of the time. They were keenly aware of the risks of printing fiat currency since they had experienced just decades earlier the disastrous Mississippi Bubble under the guidance of John Law.

France had learned how easy it is to issue paper money and nearly impossible to keep it in check. Thus, the debate over the first issuance of the paper money, known as assignats, in April 1790 was heated, and only passed because the new currency (paying 3 percent interest to the holder) was collateralized by the land stolen from the church and fugitive aristocracy. This land constituted almost a third of France and was located in the best places.

Once the assignats were issued, business activity picked up, but within five months the French government was again in financial trouble. The first issuance was considered a rousing success, just like the first issuance of paper money under John Law. However, the debate over the second issuance during the month of September 1790 was even more chaotic since many remembered the slippery slope to hyperinflation. Additional constraints were added to satisfy the naysayers. For example, once land was purchased by French citizens, the payment in currency was to be destroyed to take the new paper currency out of circulation.

The second issuance caused an even greater depreciation of the currency but new complaints arose that not enough money was circulating to conduct transactions. Also, the overflowing government coffers resulting from all this new paper money led to demands for a slew of new government programs, wise or foolish, for the “good of the people.” The promise to take paper money out of circulation was quickly abandoned, and different districts in France independently started to issue their own assignats.

Prices started to rise and cries for more circulating medium became deafening. Although the first two issuances almost failed, additional issuances became easier and easier.

Many Frenchmen soon became eternal optimists claiming that inflation was prosperity, like the drunk forgetting the inevitable hangover. Although every new issuance initially boosted economic activity, the improved business conditions became shorter and shorter after each new issuance. Commercial activity soon became spasmodic: one manufacturer after another closed shop. Money was losing its store-of-value function, making business decisions extremely difficult in an environment of uncertainty. Foreigners were blamed and heavy taxes were levied against foreign goods. The great manufacturing centers of Normandy closed down and the rest of France speedily followed, throwing vast numbers of workers into bread lines. The collapse of manufacturing and commerce was quick, and occurred only a few months after the second issuance of assignats and followed the same path as Austria, Russia, America, and all other countries that had previously tried to gain prosperity on a mountain of paper.

Social norms also changed dramatically with the French turning to speculation and gambling. Vast fortunes were built speculating and gambling on borrowed money. A vast debtor class emerged located mostly in the largest cities.

To purchase government land, only a small down payment was necessary with the rest to be paid in fixed installments. These debtors quickly saw the benefit of a depreciating currency. Inflation erodes the real value of any fixed payment. Why work for a living and take the risk of building a business when speculating on stocks or land can bring wealth instantaneously and with almost no effort? This growing segment of nouveau riche quickly used its newfound wealth to gain political power to ensure that the printing presses never stopped. They soon took control and corruption became rampant.

Of course, blame for the ensuing inflation was assigned to everything but the real cause. Shopkeepers and merchants were blamed for higher prices. In 1793, 200 stores in Paris were looted and one French politician proclaimed “shopkeepers were only giving back to the people what they had hitherto robbed them of.” Price controls (the “law of the maximum”) were ultimately imposed, and shortages soon abounded everywhere. Ration tickets were issued on necessities such as bread, sugar, soap, wood, or coal. Shopkeepers risked their heads if they hinted at a price higher than the official price. The daily ledger of those executed with the guillotine included many small business owners who violated the law of the maximum. To detect goods concealed by farmers and shopkeepers, a spy system was established with the informant receiving 1/3 of the goods recovered. A farmer could see his crop seized if he did not bring it to market, and was lucky to escape with his life.

Everything was enormously inflated in price except the wages for labor. As manufacturers closed, wages collapsed. Those who did not have the means, foresight, or skill to transfer their worthless paper into real assets were driven into poverty. By 1797, most of the currency was in the hands of the working class and the poor. The entire episode was a massive transfer of real wealth from the poor to the rich, similar to what we are experiencing in Western societies today.

The French government tried to issue a new currency called the mandat, but by May 1797 both currencies were virtually worthless. Once the dike was broken, the money poured through and the currency was swollen beyond control. As Voltaire once said, “Paper money eventually returns to its intrinsic value — zero.” In France, it took nearly 40 years to bring capital, industry, commerce, and credit back up to the level attained in 1789.

Frank Hollenbeck, PhD, teaches at the International University of Geneva. See Frank Hollenbeck’s article archives.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.