I've been thinking of patents as nukes during the Cold War lately.
Superpowers (US/USSR, Apple/Google) acquire very large nuclear/patent arsenals under the guise of protection/defense. These arsenals are relatively cheap for superpowers to build, but they are expensive for small states (small countries/small businesses) to acquire.
The US and USSR were roughly equivalent in their arsenals so it made little sense for either party to act offensively. However, the implied power behind the arsenals gave them a lot of power when dealing with smaller actors. The superpowers benefit greatly from acquiring these arsenals. Even without using them publicly, the threat can always be used behind closed doors (as Jobs has been shown to do).
But there's a third actor; the most universally feared actor: terrorists/patent trolls. These actors behave only offensively because they have nothing to defend. These actors are best poised to benefit from nukes and patents and can send an otherwise orderly system into chaos.
Anyway, just a fun but flawed analogy to play with in your noodle. :)
Interestingly, this analogy works very much at the company level, but reverses at the country level.
For companies, patents represent weapons in an arsenal, in which MAD prevents offensive action, as you've said.
For countries, the reverse holds: a country that jettisons its patent architecture, or never evolved a restrictive one to begin with, will be a bastion for innovators. The stable equilibrium is no bad patents - a lack of shallow protectionism - and the only reason patent law in the US has remained constant for so long is because of the other advantages that have given it technological and scientific primacy.
As those advantages erode, patent law will loosen to stimulate competition. Perhaps there is an upside to the perception of decline?
Personally, I see nukes as more ethical than patents. You can make the argument that MAD-based nuclear deterrence has saved us (at least so far) from a third world war. Not everyone will agree, of course, but a strong case can be made.
On the other hand, to defend patents, you have to show that there are things on the market that we can buy that would not have been made available to us if not for patent rights. Nobody can claim that patents have saved us from a catastrophic world war by forcing our leaders to find less destructive ways to disagree. About the most you can say is that without patents, some lifesaving medications for some relatively uncommon conditions wouldn't have been economically feasible to develop.
Musk's comparison of patents to land mines is much more apt than comparing them to nukes. Only a psychopath (or a land mine manufacturer) would argue that humanity is better off because land mines exist. Nuclear weapons are a genuine gray area in comparison.
That and even if the states that developed them in the first place never intended to use them, they remain in the environment for many years after, poisoning entire regions of the landscape. Sometimes to the point of making those regions uninhabitable.
Good analogy. But you got the countries around the wrong way with "(US/USSR, Apple/Google)". The resemblence to the cold war is even more striking when you realise that this also parallels planned economy vs free market.
It will be interesting to see if we get the same result at the company level as we did at the country level.
1) Nuclear weapons are not even relatively cheap. (Certainly not for the Soviet Union.) ~$640B over the next 10y, and this is during a draw-down in weapons.
2) It's pretty ridiculous to suggest that nuclear powers covertly threatened smaller countries with the threat of their nuclear arsenals, let alone actually attacked smaller powers (unless you count the US bombing of Japan).
Using patents doesn't lead to Mutually Assured Destruction, and there are many cases of large organizations using patents to damage or defeat other smaller (or even large) organizations.
3) Many of the patent trolls are surrogates of big players who simply give them plausible deniability. Again, there's no analogy of a big power giving nuclear weapons to terrorists to conduct attacks on its rivals because the downsides are so immense. With surrogate patent trolls it's merely a matter of some bad P.R.
I think nukes are a bad analogy: patents are far more likely to be used because their use is not nearly as destructive. When Apple won a $1 billion judgement against Samsung, it wasn't even remotely damaging to Samsung ($178 billion in revenue in 2013).
Really, it's just the inequalities of large markets. In general, it's a bad idea to start up a company in a field that a $100 billion company is expending a lot of effort in. Because they are established, they have the ability to create barriers to entry for you in a lot of different ways (marketing, supply chain, and yes, patents). If patents are no longer a problem, there are still plenty of ways that Google or Apple can keep you from playing in their backyard.
If you're talking big companies vs big companies, they're just trying everything they can to make their competition spend more money on lawyers, etc. to reduce their margins even further. Apple has huge margins, Samsung does not, so it hurts Apple less to spend $100 million on patent lawyers than it does Samsung.
The patent trolls are a new problem, and one that probably needs a regulatory solution. Technology patents in general are a problem, but solving the patent problem won't instantly change the landscape for smaller companies. They'll still be at a distinct disadvantage in a number of ways to larger companies, and need to pick their battles carefully.
I enjoyed your post. I have a couple of thoughts / suggestions for you.
I got the impression that the underlying motivation for writing the post, and tactic you used for justifying your positions was largely in response to what I would consider the overly myopic hacker news user base. That is, disproportionately white, male, curmudgeoney programmers. I sympathize with your frustration, but urge you not to let their world-view cloud yours, or cause you to search for complicated answers to simple questions.
An example of what I mean:
> I believe the current skepticism around Silicon Valley's "Make The World a Better Place" mentality is deeply rooted in historical anxiety about institutional capitalism.
On this point, I urge you to consider a much simpler explanation: that people are skeptical because there is much to be skeptical of. People like Musk are a rare breed in Silicon Valley. Today's tech "entrepreneur" rarely looks like Elon Musk, someone who genuinely seems to want to do good things for the world. The skeptisism exists because there are a lot of startups doing plain silly things, masked in global do-goodery marketing narrative.
Startups are the new gold rush, today's investment banking. But the west coast has much different cultural norms towards opulent wealth than does the east coast. Put simply, we like to hide it out here, they like to flaunt it out there. Thus, "we're making the world a better place" instead of something like The Wolf of Wall Street.
Still, I enjoyed your post and your choice of using macro-economic theory as a lens through which to view this. Thanks for writing.
Actually, I agree with you more than you'd think. After living in San Francisco for a year or two, I'm absolutely skeptical toward 99% of the stuff that's passed off as "Silicon Valley revolutionary" crap. I'm pretty much only interested in pure technology: SpaceX/Tesla, new hardware manufacturing / internet of things, drones, immersive computing, bitcoin (to some extent), etc.
Which is why, I think, I can enjoy the HBO show thoroughly while still lamenting about "where did all the hackers go"
> Today's tech "entrepreneur" rarely looks like Elon Musk, someone who genuinely seems to want to do good things for the world. The skeptisism exists because there are a lot of startups doing plain silly things, masked in global do-goodery marketing narrative.
I would say that it's more of today's entrepreneur genuinely believe that they're doing good, but are just terribly misguided.
I don't want to start a east coast vs. west coast feud over how rich boys spend their money, but there's a difference.
I can spot an east coast transplant, even after they lose
the accent--and they think, and spend their money differently too. There are always exceptions, but in my world East coast men are more competitive, less empathetic, and have taken more money out of my pocket than west coast men. Yes--I'm stereotyping, but in my world I try to avoid doing business with people who grew up in highly populated areas of the east coast. It's harder to make money on the east coast. I couldn't imagine trying to compete in New York.
I'll get beat up over this post, "down voted", whatever--I've just noticed real differences in people between the
two coasts. I'm tired of being so polite--oops I did it again.
Trust is not a binary decision, it is a continuum. And within that continuum, the US is way further to being a trusting society than not. When we sign a contract, we have an expectation that it will be fulfilled, and that if it isn't, the courts will work, albeit slowly. You get a job, and you tend to get paid. Go in a cab, not expect to get robbed, or murdered. If you hire an employee, you expect him to at least attempt to do his job. Is someone does a good job, there's a chance there's some reward behind it.
There's a reason Southern Europe has worse economic outcomes, and that's trust. You get even worse results as you move towards the development world. And many parts of South America make Southern Europe seem downright trustworthy.
It's important to have a high trust society, but it's really more of a systemic trust than anything: About having negative consequences to breaking trust, not about taking leaps of faith to trust companies.
> There's a reason Southern Europe has worse economic outcomes, and that's trust.
I have no idea where you got this impression from. It is wrong, though. I did business in several southern Europe countries, and you can seal a deal with a handshake and be confident it'll go through.
Playing devils advocate, I'd say sure, it sucks that some (or most) people are selfish dickheads leading to mutually degrading situations. But it would suck almost as much to always be at mercy of your competitors good will (that he won't arbitrarily screw you, leave unpunished and with a better outcome), even if it happens sparsely. The obvious solution to this fabricated game theory dilemma is regulation, which is nothing more than eliminating those scenarios which are undesirable for society altogether. Not only it avoids the risk of being screwed, or the costs associated with being screwed, or the loss of optimality of outcomes -- but most importantly it simplifies greatly the game. Markets are quite complex already and the added constraint of having to think hard about your oponents and consider all the scenarios to make sure you're not screwing them is enormous. I think this behavior is distinct from bad faith, it's just a matter of responsibility and scope.
This, to me, is ideal capitalistic behavior: oblivious, but with good faith (not trying to 'unfairly' or 'destructively' bring down your opponent) -- and it should come with swift regulations and laws flexible enough to punish edge cases.
We have a truly unrecognized gift as a species: morality. Not because it's cute or honorable (that would be a circular assessment), but because it allows us to reach those Pareto optimal spots. We just have to use it in proper settings, with proper rules.
In this story, it's regulation that has put some companies at the merci of competitors. Small Startup Y has to hope that Big Corp X wants to license a patent for a fair $ amount. Startup Y has no way to negotiate a large fee down to an acceptable level, pay the expensive licenses or fight in court if they ignore the patent.
Considering two companies with patents, you get the Nash equilibrium where both companies go to court for patent infringement (assuming the plaintiff always wins). The payoff matrix could look like this, where the numbers are the changes in profits in %.
- If no company goes to court, both profits grow slightly with 1% to 15%.
- If one company goes to court, and the other doesn't, the plaintiff's profit increases with 10% to 24% and the defendant's drops with 15% to -1% (placing it a loss).
- If both companies go to court, the profits of both companies drop with 5% to 9%.
If you want a real-life example of this situation, just look at the lawsuits between Samsung & Apple. Probably the only case where they'll evolve to the pareto optimal solution, is when patents no longer exist at all.
A world without patents would allow companies to win customers based on pure attractiveness and features, not by getting competition banned. Note that this isn't the same as giving your key designs away for free. It means I could reverse engineer an iphone touchscreen and create a compatible version, without being sued by anyone. Apple would still have the early mover advantage with existing customers; the consumer would have more/better/cheaper choices and i would have a more attractive product. (Note that this might not be the case for other sectors, like pharma, where it costs a lot to develop a new drug from scratch, rather than the cheaper additive innovations in the tech sector).
The author is seriously mistaken about game theory. The Nash Equilibrium requires every player to be maximizing their payoffs given what the other players are doing. But game theory itself does not say what the nature of the payoffs are: there is no problem in modelling altruistic players who attach a high payoff to outcomes which are good for everyone and low payoffs to outcomes which benefit only themselves.
The Pareto Optimal is not an outcome which is best for both, since the whole point of this concept is to avoid giving a definition of "best for both". Rather it is an outcome from which no player can be made better off without making some other player worse off. So, for example, for two greedy people sharing a cake, any division of the cake, including one which gives the entire cake to one person, is Pareto optimal.
Anyone seriously interested in understanding what game theory really says and avoiding superficial mistakes in its interpretation should read at least the first chapter of Binmore's 'Playing for Real'.
Author is very unfair to the "capitalist environment like America's". Our market-driven society requires, and rewards/trains, a level of trust that's less-common elsewhere. Just two data points:
(1) Americans are "The Weirdest People in the World", per one review of psychological studies, in economic games. They're more willing to punish 'unfair' offers in the 'Ultimatum Game', and offer higher shares against naked self-interest in the similar 'Dictator Game'. See for more details:
(2) We've had a number of explicitly "anti-capitalist" nation-states in the last 150 years. They haven't been paragons of collective action for the greater good, or protection of the common environment. In particular, the ex-Communist societies and emigrants-from-same sometimes take a while to adjust to new economies where every stranger, government and non-government alike, isn't constantly trying to screw them under false pretense of shared-sacrifice.
The actual games in "capitalist America" are only very occasionally dog-eat-dog zero-sum affairs. More often, they're iterated games rewarding not just consciously chosen cooperation but an optimistic, cooperate-by-default mindset. Politics, with its zero-sum elections and redistributions, is an exception. Its partisanship shouldn't be attributed to market processes, but to electoral/governmental ones.
This explains, at the very least, why rampant partisanship is an inevitability in a large Democracy, despite it being worse off for everybody (including politicians themselves).
Instead of saying "in a large Democracy" it should say "in a large Democracy which uses plurality voting." Some voting systems (for instance Condorcet compatible ones) do not encourage partisanship in the same way as plurality does. In fact other systems actually encourage cooperation and favor candidates that are more in the center.
And I think that points to a flaw in the conclusion of the article: attempting to directly change human nature (or culture, as the OP suggests) is a fool's errand.
Instead, changing the rules of a system, such that the Pareto optimal result and the Nash Equilibrium align more closely, is a much more realistic approach. And I believe that when you do set up good systems where people are rewarded for cooperating, the culture changes with it.
(Regardless I think it is an excellent article and the more people who understand the Game Theory stuff he explains, the better. And I absolutely agree with his sentiment than Musk should be lauded for what he is doing rather than being met with cynicism.)
Patent discussion aside, I just want to point out that battery powered cars are NOT the solution to global warming, at least not at the current state of technology. Aside from all the environmental damage involved in producing the lithium cells them selves, you have to also consider that to charge those cells we are still burning cola and then transmitting that power over an incredibly inefficient, almost 100 year old power grid (in US).
In fact, given the environmental damage from production of a new car combined with environmental damage from production of lithium batteries, combined with CO2 emissions from the cola burning power plants and nuclear waste from the nuclear power plants, I would argue that the earth is better off if you were to drive an older F150 pickup truck for another 300k miles, rather than buy a new Tesla. If you have an option though, you should choose something more efficient.
But overall, I just wanted to point out to anyone who is honestly concerned about global warming. Driving your current car for longer (assuming it's reasonably economical), and investing the money into fixing it up and getting more miles out of it is way better environmentally than buying a new car. Remamber, repair > reuse > recycle > replace.
> A "Pareto optimal" solution is one which, given all the possibilities of action, produces the best outcome for both parties (with some negotiable surplus).
This isn't quite right. In a Pareto optimal solution, there's no way to improve things for one party without making them worse for another party, but there's no guarantee that the outcome is good for everyone. "I get everything, you get nothing" is a Pareto-optimal way of diving things up.
The idea that the Pareto-optimal situation is the one where everyone freely copies from each other may be appropriate for the market Tesla finds itself in, but is in general directly contradicted by the actual experience of the technology industry.
The experience of the technology industry is that innovation happens in periods of monopoly. That monopoly might arise from first-mover effects, network effects, lock-in effects, or IP protections (patents, copyrights, and trademarks). This has been true from Bell Labs to Xerox to Google to Facebook. Bell Labs had its heyday when AT&T was a government-sanctioned monopoly. The Xerox Alto, which pioneered the GUI, the mouse, and networking, was invented at a Xerox that had 100% of the U.S. copier industry, a few years before an antitrust consent decree forced it to license its patents to Japanese competitors, quickly destroying its marketshare.[1] If another search engine could easily copy Google's data and algorithms, they wouldn't have the money to be working on self-driving cars and AI. Facebook is a textbook example of network effects precluding perfect competition.
In comparison, look at the PC industry, which is based on open standards and an OS licensed on non-discriminatory terms. What has happened to the PC? They have become commodities and innovation is essentially dead. Companies like Lenovo eke out single-digit profit margins, and nobody can afford to spend money on R&D.
AT&T developed the transistor, but it was government pressure that prompted AT&T to release control of its patents on the invention, and it was licensees like Motorola, Texas Instruments, and Fairchild (which gave birth to Intel) that did the bulk of the work in the transistor market. AT&T wasn't even sure what to do with it; they were just looking for something better than the vacuum tube.
The Alto was first built in 1973, but was used only internally at Xerox and was never made into a commercial product. Meanwhile, a loose-knit Homebrew Computer Club had among its members two guys named Steve. It was a visit to Xerox by one of them, in 1979 -- a full six years after the initial release of the Alto -- that led to the beginning of the modern graphical interface.
Microsoft began developing multi-touch technology in 2001, but it was the iPhone, in 2007, that won the market. Rumors of Microsoft's wall-mounted multitouch displays predate Apple's products, but it was Apple that figured out how to get the products into customers' hands.
What has happened to the PC is that it has become mature. This happens to all technologies. Modern automobiles are not very different from their 1950s counterparts -- just more refined. Refinements in PC technology however has led to things like the Raspberry Pi and a second-generation community of electronics tinkerers.
Not to belabor the point, but the automobile was also patent-encumbered, and it was the development of better production techniques (the moving assembly line, by Ford), that made the automobile accessible to large numbers of people.
The fundamental problem of product development is that those most suited to inventing things are usually not also those most suited to bring a product to market.
I think you've cleverly bundled together a couple of meaningless correlations. Yes, there's a grab bag (but, in my opinion, not much more than that) of important technological innovations which have come from large companies, but so what? You still have corporations with large amounts of disposable cash for R&D in a world without monopolies and intellectual property. The handful of innovations you can mention don't really have anything to do with monopoly or intellectual property, they just happen to have come from big companies - and there's really no evidence that those companies would simply collapse by being slightly more cooperative.
The majority of important software innovations have come from the open bazaar, not the cathedral. The Internet; The Web; Firefox, WebKit; GNU/Linux, Unix; HTTP; SSH, SSL, AES; Python, Ruby, C, C++. Thousands of humble open source projects which have been distributed to and changed by millions of users.
And even when large corporations do spawn projects, those that succeed are those that encouraged at least some degree of openness. Android from Google, Java from Sun. Open standards for computer hardware architectures and software have lasted and stood the test of time.
Open code, projects, and standards have more than stood the test of time. We are actually living in a time of unprecedented open source success. The majority of computing systems run on significantly open source code. Millions of Android phones running Linux. Every serious server on the planet running on Apache or NGINX on Linux or BSD. A landslide percentage of users accessing them using Webkit, Blink, and Firefox. That's just the tip of the iceberg! Millions of lines of code are being updated publicly, in real time, by thousands of people across the world in collaboration. More so than ever before!
Sure, maybe some people are a bunch of VC-backed business-savy Steve Jobs-worshipping iPhone mobile app developers now, but it's still sad to see someone say that tech innovation "happens in periods of monopoly" on HackerNews.
The innovation only seems to come from the fact that the monopoly has a large enough war chest but it's the competition that distributes the fruits of that innovation to the public.
Which really seems more like an argument for high funding for centralized research that can be distributed to multiple competing companies.
The author makes some big statements about what Elon is doing and then wonders why everyone isn't guzzling the kool-aid like the author. It has nothing to do with the prisoners dilemma.
First, there is a large portion of the population that doesn't believe global warming is an issue.
Second, there is another large population that doesn't believe global warming can be stopped by a slow transition to electric cars.
Third, there is a large majority of the population that can't afford a 90k luxury car so they fail to see how Tesla will revolutionize the world. This is compacted by the fact that the batteries will need to be replaced in 6-10 years and it will likely cost 20k+. These cars are out of reach for the majority of Americans it's not really going to reduce CO2 output by anything significant enough in time to matter.
Fourth, Elon made a fat stack of cash selling PayPal to Ebay. With that being his primary historical success story, it doesn't make it sound like he is doing just what is optimal for humanity. SpaceX is great for space exploration, but that's not really optimal for humanity considering our current problems.
The article had a nice write up on pareto optimal solutions and the prisoner's dilemma but they are completely irrelevant to the skepticism observed here.
I really don't think that Elon selling his paypal stake to Ebay is his primary success story.
SpaceX and Tesla are much bigger stories, and they are an ongoing affair. The only reason you can make the statement you made is because you added 'historical', but what use is that if it is only used to eliminate the present which is by far the more interesting portion.
"These cars are out of reach for the majority of Americans" - I don't think these are the last, cheapest, most efficient and advanced cars that Tesla plan to build...
I believe the current skepticism around Silicon Valley's
"Make The World a Better Place" mentality is deeply rooted
in historical anxiety about institutional capitalism.
OT rant here: I don't think this is related to Tesla opening up at all. "We make the World a Better Place" is self-important bullshit in 99.9% of cases. The most likely outcome is that what you are doing has no measurable impact on the "goodness" of the world. In most cases, what you are doing matters only to a tiny fraction of the world's population. "Making the World a Better Place" is simply self-important hyperbole to the extreme.
Addendum: The fact that your fancy new app is only for a tiny fraction of the world's population is totally fine. Most products are like that. Just don't pretend it's anything more than it is.
The only hope is cultural trust, and the only way to achieve that is to allow like-minded individuals to separate themselves into autonomous political units.
This is dangerous thinking Chris, if you start following these thoughts through to the end, rather than spinning off into happy-clappy "change the world's heart" wishing...
Did you not see the link at the end of the article to Balaji's talk on exit?
(Genuine question. If you haven't checked out that talk, its about opting out as an option for pursuing change and it sounds like what you're alluding to!)
> The only hope is cultural trust, and the only way to achieve that is to allow like-minded individuals to separate themselves into autonomous political units
...and the reason why you're separating is because you don't trust anyone else.
Or you could just learn to live with people who aren't exactly like you. You know, like everyone on the planet except for wealthy and reactionary enclaves of the United States.
You are being melodramatic. There is no anti-Tesla sentiment, at least here on HN. People were simply asking why didn't Tesla release the patents under an irrevocable, royalty-free defensive patent license instead of just blogging about it, which is a perfectly legitimate concern.
Also optimism has never been as high as it is now with all this talk about full automation of the economy and people living happily ever after with their guaranteed basic income.
If Tesla did this in the early game, would they still be in the position they are today? I think this open source movement works but only if you have the next thing in hand or after you've taken your fill and are ready to move on. In Tesla's case, I think both are true.
If a hunter goes out, learns out how to kill an animal, and then teaches everyone else in the tribe how to do the same, he is shooting himself in the foot because he is no longer useful. The tribe can get their own food and his specialization is no longer special. So he dies off. Unless, he's ready to retire the hunting business and/or holds the monopoly for creating the weapons.
In Musk's case, he seems more interested in what SpaceX is doing and just built the largest electric car battery factory.
It's amazingly philanthropic and evil genius at the same fucking time!
> If a hunter goes out, learns out how to kill an animal, and then teaches everyone else in the tribe how to do the same, he is shooting himself in the foot because he is no longer useful. The tribe can get their own food and his specialization is no longer special. So he dies off. Unless, he's ready to retire the hunting business and/or holds the monopoly for creating the weapons.
This ignores competitive and first-mover advantages. Maybe he's the best hunter (because of experience or talent), or maybe no one else wants or is able to be a hunter (especially if it's dangerous or physically-demanding).
Essentially, you're arguing that the sole hunter should keep a strong grip on the hunting monopoly by keeping everyone ignorant. In practice, this never works out well.
Your argument only makes sense if you ignore the fact that Tesla is a company made up of a large number of employees, not literally Elon Musk personally designing, building, and selling electric cars.
"Of course, this applies way beyond Tesla. I believe the current skepticism around Silicon Valley's "Make The World a Better Place" mentality is deeply rooted in historical anxiety about institutional capitalism."
silicon valley really needs to get over itself. the only thing different about silicon valley and other companies is that silicon valley is to naive to realize they are just like every other company, no matter how much they doth protest.
companies dont set out to make the world a worse place for the most part, even hated companies like BP have good intentions. but if you want to be a publically traded company, and if you want to make money, you have to make profit.
i mentioned on HN before that its funny how Amazon is loved and Walmart is loathed. all the reasons why walmart is loathed Amazon has in spades.
i also feel your view on how capitalism works in the western world. in fact, it has always been a prisoners dilemma / golden rule do onto others as you would have them do onto you economy. thats actually a reason why capitalism has worked so well for the west, and one of the reasons why it took longer in places like China.
The thing about capitalism, and our dismal history with capitalism-at-large, the "assume the other party is a shitbag" idea is so fundamentally ingrained in our cultural
What's that got to do with Capitalism? Correct me if I'm making a straw man, but the alternative to capitalism is to remove negotiation from individual interactions by implementing more State-heavy mechanisms like Communism. Isn't creating a crap-ton of government bureaucracy, rules and regulations to tell people exactly how to live and interact with each other institutionalizing the idea that people are shitbags and shouldn't be allowed the freedom to behave freely?
I liked your original HN post and tend to be similarly disappointed in the lack of giving some people like Musk his due for trying to do the right thing... not to mention the nit-picking posts that assume that Musk and his people are too mentally deficient to properly allow use of their patents.
One of the inherent assumptions of neo-classical economics is that we're all selfish, rational, utility maximizing, humans. That's built into our understanding of markets and how they function.
Now I understand where the author is coming from, and I agree there is a terrible lack of trust in modern America. I just don't agree that the cynical view, that all humans are untrustworthy shit-bags, is all that terrible. Cyncism causes parties to make explicit their assumptions about future behavior. We can then codify this assumed behavior in contracts.
If I was a battery manufacturer and I wanted to use Tesla's patents, I would approach Tesla and ask for a contractual agreement whereby Tesla agreed not to use those patents against me. If Tesla were unwilling to enter into this sort of contractual agreement with me, I would assume they were reserving the right to later use these patents against me.
Just having the right culture is not a solution. You can have a culture that routinely goes for Pareto optimality. If that's not an evolutionary stable strategy, the moment you introduce agents that choose the Nash equilibrium instead, they would start winning and gaining ground.
I wonder about a different solution though: can you design a mechanism that transforms the Nash equilibrium of a Prisoner's dilemma game into the Pareto optimal outcome? Something similar to escrow?
[+] [-] nostromo|11 years ago|reply
Superpowers (US/USSR, Apple/Google) acquire very large nuclear/patent arsenals under the guise of protection/defense. These arsenals are relatively cheap for superpowers to build, but they are expensive for small states (small countries/small businesses) to acquire.
The US and USSR were roughly equivalent in their arsenals so it made little sense for either party to act offensively. However, the implied power behind the arsenals gave them a lot of power when dealing with smaller actors. The superpowers benefit greatly from acquiring these arsenals. Even without using them publicly, the threat can always be used behind closed doors (as Jobs has been shown to do).
But there's a third actor; the most universally feared actor: terrorists/patent trolls. These actors behave only offensively because they have nothing to defend. These actors are best poised to benefit from nukes and patents and can send an otherwise orderly system into chaos.
Anyway, just a fun but flawed analogy to play with in your noodle. :)
[+] [-] xianshou|11 years ago|reply
For companies, patents represent weapons in an arsenal, in which MAD prevents offensive action, as you've said.
For countries, the reverse holds: a country that jettisons its patent architecture, or never evolved a restrictive one to begin with, will be a bastion for innovators. The stable equilibrium is no bad patents - a lack of shallow protectionism - and the only reason patent law in the US has remained constant for so long is because of the other advantages that have given it technological and scientific primacy.
As those advantages erode, patent law will loosen to stimulate competition. Perhaps there is an upside to the perception of decline?
[+] [-] CamperBob2|11 years ago|reply
On the other hand, to defend patents, you have to show that there are things on the market that we can buy that would not have been made available to us if not for patent rights. Nobody can claim that patents have saved us from a catastrophic world war by forcing our leaders to find less destructive ways to disagree. About the most you can say is that without patents, some lifesaving medications for some relatively uncommon conditions wouldn't have been economically feasible to develop.
Musk's comparison of patents to land mines is much more apt than comparing them to nukes. Only a psychopath (or a land mine manufacturer) would argue that humanity is better off because land mines exist. Nuclear weapons are a genuine gray area in comparison.
[+] [-] noonespecial|11 years ago|reply
[+] [-] rednukleus|11 years ago|reply
It will be interesting to see if we get the same result at the company level as we did at the country level.
[+] [-] Tloewald|11 years ago|reply
1) Nuclear weapons are not even relatively cheap. (Certainly not for the Soviet Union.) ~$640B over the next 10y, and this is during a draw-down in weapons.
http://www.ploughshares.org/what-nuclear-weapons-cost-us
2) It's pretty ridiculous to suggest that nuclear powers covertly threatened smaller countries with the threat of their nuclear arsenals, let alone actually attacked smaller powers (unless you count the US bombing of Japan).
Using patents doesn't lead to Mutually Assured Destruction, and there are many cases of large organizations using patents to damage or defeat other smaller (or even large) organizations.
3) Many of the patent trolls are surrogates of big players who simply give them plausible deniability. Again, there's no analogy of a big power giving nuclear weapons to terrorists to conduct attacks on its rivals because the downsides are so immense. With surrogate patent trolls it's merely a matter of some bad P.R.
[+] [-] houseofshards|11 years ago|reply
[+] [-] exelius|11 years ago|reply
Really, it's just the inequalities of large markets. In general, it's a bad idea to start up a company in a field that a $100 billion company is expending a lot of effort in. Because they are established, they have the ability to create barriers to entry for you in a lot of different ways (marketing, supply chain, and yes, patents). If patents are no longer a problem, there are still plenty of ways that Google or Apple can keep you from playing in their backyard.
If you're talking big companies vs big companies, they're just trying everything they can to make their competition spend more money on lawyers, etc. to reduce their margins even further. Apple has huge margins, Samsung does not, so it hurts Apple less to spend $100 million on patent lawyers than it does Samsung.
The patent trolls are a new problem, and one that probably needs a regulatory solution. Technology patents in general are a problem, but solving the patent problem won't instantly change the landscape for smaller companies. They'll still be at a distinct disadvantage in a number of ways to larger companies, and need to pick their battles carefully.
[+] [-] ajsharp|11 years ago|reply
I got the impression that the underlying motivation for writing the post, and tactic you used for justifying your positions was largely in response to what I would consider the overly myopic hacker news user base. That is, disproportionately white, male, curmudgeoney programmers. I sympathize with your frustration, but urge you not to let their world-view cloud yours, or cause you to search for complicated answers to simple questions.
An example of what I mean:
> I believe the current skepticism around Silicon Valley's "Make The World a Better Place" mentality is deeply rooted in historical anxiety about institutional capitalism.
On this point, I urge you to consider a much simpler explanation: that people are skeptical because there is much to be skeptical of. People like Musk are a rare breed in Silicon Valley. Today's tech "entrepreneur" rarely looks like Elon Musk, someone who genuinely seems to want to do good things for the world. The skeptisism exists because there are a lot of startups doing plain silly things, masked in global do-goodery marketing narrative.
Startups are the new gold rush, today's investment banking. But the west coast has much different cultural norms towards opulent wealth than does the east coast. Put simply, we like to hide it out here, they like to flaunt it out there. Thus, "we're making the world a better place" instead of something like The Wolf of Wall Street.
Still, I enjoyed your post and your choice of using macro-economic theory as a lens through which to view this. Thanks for writing.
[+] [-] natural219|11 years ago|reply
Which is why, I think, I can enjoy the HBO show thoroughly while still lamenting about "where did all the hackers go"
[+] [-] couchand|11 years ago|reply
And from what I understand, use it to hide the beach from poor folks, too.
[+] [-] jon2512chua|11 years ago|reply
I would say that it's more of today's entrepreneur genuinely believe that they're doing good, but are just terribly misguided.
Of course, that's just how it feels to me.
[+] [-] hindsightbias|11 years ago|reply
As for his mention of the WWW, I don't credit the valley for all that and wonder if Vint Cerf has emoted about his mentality when coding TCP/IP.
> cultural norms
Not sure about that, unless you consider it a very recent 'value.' There was quite a bit of flaunting during the dot-com era.
[+] [-] joeq|11 years ago|reply
[+] [-] marincounty|11 years ago|reply
[+] [-] hibikir|11 years ago|reply
There's a reason Southern Europe has worse economic outcomes, and that's trust. You get even worse results as you move towards the development world. And many parts of South America make Southern Europe seem downright trustworthy.
It's important to have a high trust society, but it's really more of a systemic trust than anything: About having negative consequences to breaking trust, not about taking leaps of faith to trust companies.
[+] [-] sergiosgc|11 years ago|reply
I have no idea where you got this impression from. It is wrong, though. I did business in several southern Europe countries, and you can seal a deal with a handshake and be confident it'll go through.
[+] [-] Symmetry|11 years ago|reply
[+] [-] darkmighty|11 years ago|reply
This, to me, is ideal capitalistic behavior: oblivious, but with good faith (not trying to 'unfairly' or 'destructively' bring down your opponent) -- and it should come with swift regulations and laws flexible enough to punish edge cases.
We have a truly unrecognized gift as a species: morality. Not because it's cute or honorable (that would be a circular assessment), but because it allows us to reach those Pareto optimal spots. We just have to use it in proper settings, with proper rules.
[+] [-] blackskad|11 years ago|reply
Considering two companies with patents, you get the Nash equilibrium where both companies go to court for patent infringement (assuming the plaintiff always wins). The payoff matrix could look like this, where the numbers are the changes in profits in %.
Assume the profit of the previous year is 14%. If you want a real-life example of this situation, just look at the lawsuits between Samsung & Apple. Probably the only case where they'll evolve to the pareto optimal solution, is when patents no longer exist at all.A world without patents would allow companies to win customers based on pure attractiveness and features, not by getting competition banned. Note that this isn't the same as giving your key designs away for free. It means I could reverse engineer an iphone touchscreen and create a compatible version, without being sued by anyone. Apple would still have the early mover advantage with existing customers; the consumer would have more/better/cheaper choices and i would have a more attractive product. (Note that this might not be the case for other sectors, like pharma, where it costs a lot to develop a new drug from scratch, rather than the cheaper additive innovations in the tech sector).
[+] [-] yomritoyj|11 years ago|reply
The Pareto Optimal is not an outcome which is best for both, since the whole point of this concept is to avoid giving a definition of "best for both". Rather it is an outcome from which no player can be made better off without making some other player worse off. So, for example, for two greedy people sharing a cake, any division of the cake, including one which gives the entire cake to one person, is Pareto optimal.
Anyone seriously interested in understanding what game theory really says and avoiding superficial mistakes in its interpretation should read at least the first chapter of Binmore's 'Playing for Real'.
[+] [-] gojomo|11 years ago|reply
(1) Americans are "The Weirdest People in the World", per one review of psychological studies, in economic games. They're more willing to punish 'unfair' offers in the 'Ultimatum Game', and offer higher shares against naked self-interest in the similar 'Dictator Game'. See for more details:
http://www.psmag.com/magazines/magazine-feature-story-magazi...
(2) We've had a number of explicitly "anti-capitalist" nation-states in the last 150 years. They haven't been paragons of collective action for the greater good, or protection of the common environment. In particular, the ex-Communist societies and emigrants-from-same sometimes take a while to adjust to new economies where every stranger, government and non-government alike, isn't constantly trying to screw them under false pretense of shared-sacrifice.
The actual games in "capitalist America" are only very occasionally dog-eat-dog zero-sum affairs. More often, they're iterated games rewarding not just consciously chosen cooperation but an optimistic, cooperate-by-default mindset. Politics, with its zero-sum elections and redistributions, is an exception. Its partisanship shouldn't be attributed to market processes, but to electoral/governmental ones.
[+] [-] robbrown451|11 years ago|reply
Instead of saying "in a large Democracy" it should say "in a large Democracy which uses plurality voting." Some voting systems (for instance Condorcet compatible ones) do not encourage partisanship in the same way as plurality does. In fact other systems actually encourage cooperation and favor candidates that are more in the center.
And I think that points to a flaw in the conclusion of the article: attempting to directly change human nature (or culture, as the OP suggests) is a fool's errand.
Instead, changing the rules of a system, such that the Pareto optimal result and the Nash Equilibrium align more closely, is a much more realistic approach. And I believe that when you do set up good systems where people are rewarded for cooperating, the culture changes with it.
(Regardless I think it is an excellent article and the more people who understand the Game Theory stuff he explains, the better. And I absolutely agree with his sentiment than Musk should be lauded for what he is doing rather than being met with cynicism.)
[+] [-] x0054|11 years ago|reply
In fact, given the environmental damage from production of a new car combined with environmental damage from production of lithium batteries, combined with CO2 emissions from the cola burning power plants and nuclear waste from the nuclear power plants, I would argue that the earth is better off if you were to drive an older F150 pickup truck for another 300k miles, rather than buy a new Tesla. If you have an option though, you should choose something more efficient.
But overall, I just wanted to point out to anyone who is honestly concerned about global warming. Driving your current car for longer (assuming it's reasonably economical), and investing the money into fixing it up and getting more miles out of it is way better environmentally than buying a new car. Remamber, repair > reuse > recycle > replace.
[+] [-] greatzebu|11 years ago|reply
This isn't quite right. In a Pareto optimal solution, there's no way to improve things for one party without making them worse for another party, but there's no guarantee that the outcome is good for everyone. "I get everything, you get nothing" is a Pareto-optimal way of diving things up.
[+] [-] rayiner|11 years ago|reply
The experience of the technology industry is that innovation happens in periods of monopoly. That monopoly might arise from first-mover effects, network effects, lock-in effects, or IP protections (patents, copyrights, and trademarks). This has been true from Bell Labs to Xerox to Google to Facebook. Bell Labs had its heyday when AT&T was a government-sanctioned monopoly. The Xerox Alto, which pioneered the GUI, the mouse, and networking, was invented at a Xerox that had 100% of the U.S. copier industry, a few years before an antitrust consent decree forced it to license its patents to Japanese competitors, quickly destroying its marketshare.[1] If another search engine could easily copy Google's data and algorithms, they wouldn't have the money to be working on self-driving cars and AI. Facebook is a textbook example of network effects precluding perfect competition.
In comparison, look at the PC industry, which is based on open standards and an OS licensed on non-discriminatory terms. What has happened to the PC? They have become commodities and innovation is essentially dead. Companies like Lenovo eke out single-digit profit margins, and nobody can afford to spend money on R&D.
[1] http://en.wikipedia.org/wiki/Xerox#1970s
[+] [-] thaumaturgy|11 years ago|reply
The Alto was first built in 1973, but was used only internally at Xerox and was never made into a commercial product. Meanwhile, a loose-knit Homebrew Computer Club had among its members two guys named Steve. It was a visit to Xerox by one of them, in 1979 -- a full six years after the initial release of the Alto -- that led to the beginning of the modern graphical interface.
Microsoft began developing multi-touch technology in 2001, but it was the iPhone, in 2007, that won the market. Rumors of Microsoft's wall-mounted multitouch displays predate Apple's products, but it was Apple that figured out how to get the products into customers' hands.
What has happened to the PC is that it has become mature. This happens to all technologies. Modern automobiles are not very different from their 1950s counterparts -- just more refined. Refinements in PC technology however has led to things like the Raspberry Pi and a second-generation community of electronics tinkerers.
Not to belabor the point, but the automobile was also patent-encumbered, and it was the development of better production techniques (the moving assembly line, by Ford), that made the automobile accessible to large numbers of people.
The fundamental problem of product development is that those most suited to inventing things are usually not also those most suited to bring a product to market.
[+] [-] tstactplsignore|11 years ago|reply
The majority of important software innovations have come from the open bazaar, not the cathedral. The Internet; The Web; Firefox, WebKit; GNU/Linux, Unix; HTTP; SSH, SSL, AES; Python, Ruby, C, C++. Thousands of humble open source projects which have been distributed to and changed by millions of users.
And even when large corporations do spawn projects, those that succeed are those that encouraged at least some degree of openness. Android from Google, Java from Sun. Open standards for computer hardware architectures and software have lasted and stood the test of time.
Open code, projects, and standards have more than stood the test of time. We are actually living in a time of unprecedented open source success. The majority of computing systems run on significantly open source code. Millions of Android phones running Linux. Every serious server on the planet running on Apache or NGINX on Linux or BSD. A landslide percentage of users accessing them using Webkit, Blink, and Firefox. That's just the tip of the iceberg! Millions of lines of code are being updated publicly, in real time, by thousands of people across the world in collaboration. More so than ever before!
Sure, maybe some people are a bunch of VC-backed business-savy Steve Jobs-worshipping iPhone mobile app developers now, but it's still sad to see someone say that tech innovation "happens in periods of monopoly" on HackerNews.
[+] [-] arg01|11 years ago|reply
Which really seems more like an argument for high funding for centralized research that can be distributed to multiple competing companies.
[+] [-] hueving|11 years ago|reply
First, there is a large portion of the population that doesn't believe global warming is an issue.
Second, there is another large population that doesn't believe global warming can be stopped by a slow transition to electric cars.
Third, there is a large majority of the population that can't afford a 90k luxury car so they fail to see how Tesla will revolutionize the world. This is compacted by the fact that the batteries will need to be replaced in 6-10 years and it will likely cost 20k+. These cars are out of reach for the majority of Americans it's not really going to reduce CO2 output by anything significant enough in time to matter.
Fourth, Elon made a fat stack of cash selling PayPal to Ebay. With that being his primary historical success story, it doesn't make it sound like he is doing just what is optimal for humanity. SpaceX is great for space exploration, but that's not really optimal for humanity considering our current problems.
The article had a nice write up on pareto optimal solutions and the prisoner's dilemma but they are completely irrelevant to the skepticism observed here.
[+] [-] avz|11 years ago|reply
What do you think is optimal for humanity?
Which current problems are more significant than planetary-level challenges like global warming and confinement of our specifies to a single planet?
These put the existence of our civilization at risk. I would really love to hear which other problems are more significant than those.
[+] [-] jacquesm|11 years ago|reply
SpaceX and Tesla are much bigger stories, and they are an ongoing affair. The only reason you can make the statement you made is because you added 'historical', but what use is that if it is only used to eliminate the present which is by far the more interesting portion.
[+] [-] prawn|11 years ago|reply
[+] [-] Shivetya|11 years ago|reply
[+] [-] rowyourboat|11 years ago|reply
[+] [-] rowyourboat|11 years ago|reply
[+] [-] carsongross|11 years ago|reply
The only hope is cultural trust, and the only way to achieve that is to allow like-minded individuals to separate themselves into autonomous political units.
This is dangerous thinking Chris, if you start following these thoughts through to the end, rather than spinning off into happy-clappy "change the world's heart" wishing...
[+] [-] istorical|11 years ago|reply
(Genuine question. If you haven't checked out that talk, its about opting out as an option for pursuing change and it sounds like what you're alluding to!)
[+] [-] Florin_Andrei|11 years ago|reply
...and the reason why you're separating is because you don't trust anyone else.
Nice.
[+] [-] eli_gottlieb|11 years ago|reply
[+] [-] MarcusVorenus|11 years ago|reply
Also optimism has never been as high as it is now with all this talk about full automation of the economy and people living happily ever after with their guaranteed basic income.
[+] [-] E_Carefree|11 years ago|reply
If a hunter goes out, learns out how to kill an animal, and then teaches everyone else in the tribe how to do the same, he is shooting himself in the foot because he is no longer useful. The tribe can get their own food and his specialization is no longer special. So he dies off. Unless, he's ready to retire the hunting business and/or holds the monopoly for creating the weapons.
In Musk's case, he seems more interested in what SpaceX is doing and just built the largest electric car battery factory.
It's amazingly philanthropic and evil genius at the same fucking time!
[+] [-] ahomescu1|11 years ago|reply
This ignores competitive and first-mover advantages. Maybe he's the best hunter (because of experience or talent), or maybe no one else wants or is able to be a hunter (especially if it's dangerous or physically-demanding).
Essentially, you're arguing that the sole hunter should keep a strong grip on the hunting monopoly by keeping everyone ignorant. In practice, this never works out well.
[+] [-] gfodor|11 years ago|reply
[+] [-] autokad|11 years ago|reply
silicon valley really needs to get over itself. the only thing different about silicon valley and other companies is that silicon valley is to naive to realize they are just like every other company, no matter how much they doth protest.
companies dont set out to make the world a worse place for the most part, even hated companies like BP have good intentions. but if you want to be a publically traded company, and if you want to make money, you have to make profit.
i mentioned on HN before that its funny how Amazon is loved and Walmart is loathed. all the reasons why walmart is loathed Amazon has in spades.
i also feel your view on how capitalism works in the western world. in fact, it has always been a prisoners dilemma / golden rule do onto others as you would have them do onto you economy. thats actually a reason why capitalism has worked so well for the west, and one of the reasons why it took longer in places like China.
[+] [-] crusso|11 years ago|reply
What's that got to do with Capitalism? Correct me if I'm making a straw man, but the alternative to capitalism is to remove negotiation from individual interactions by implementing more State-heavy mechanisms like Communism. Isn't creating a crap-ton of government bureaucracy, rules and regulations to tell people exactly how to live and interact with each other institutionalizing the idea that people are shitbags and shouldn't be allowed the freedom to behave freely?
I liked your original HN post and tend to be similarly disappointed in the lack of giving some people like Musk his due for trying to do the right thing... not to mention the nit-picking posts that assume that Musk and his people are too mentally deficient to properly allow use of their patents.
[+] [-] smutticus|11 years ago|reply
Now I understand where the author is coming from, and I agree there is a terrible lack of trust in modern America. I just don't agree that the cynical view, that all humans are untrustworthy shit-bags, is all that terrible. Cyncism causes parties to make explicit their assumptions about future behavior. We can then codify this assumed behavior in contracts.
If I was a battery manufacturer and I wanted to use Tesla's patents, I would approach Tesla and ask for a contractual agreement whereby Tesla agreed not to use those patents against me. If Tesla were unwilling to enter into this sort of contractual agreement with me, I would assume they were reserving the right to later use these patents against me.
[+] [-] ntoshev|11 years ago|reply
I wonder about a different solution though: can you design a mechanism that transforms the Nash equilibrium of a Prisoner's dilemma game into the Pareto optimal outcome? Something similar to escrow?
[1] http://en.wikipedia.org/wiki/Evolutionarily_stable_strategy
[+] [-] mythz|11 years ago|reply
"Apparently, lots of confused media inquiries about blog title. Look, we just to make sure they don't set us up the bomb."
[+] [-] Lagged2Death|11 years ago|reply