Every person who conceives of new ideas with value to others has the right to compensation. And yet, freedom itself is compromised, and enterprise hobbled, when the use of content, processes, formulas and other ideas are in any way restricted.  While it is a common misconception that these two statements are mutually exclusive, AFFEERCE identifies a synthesis of the objective right to compensation and the subjective right to build on ideas.

In fact, intellectual property is so fundamental to the theory that we start with the definition of ground rent: VOLUNTARY PAYMENT TO THE COMMONS for EXCLUSIVE USE of THE LAND. We invert the capitalized words yielding: MANDATORY PAYMENT FROM THE COMMONS for SHARED USE of IDEAS. I’ll leave it to better logicians than myself to say whether this is an inverse, reverse or contrapositive. But more metaphorically, just as ground rent is the soul of collection theory, paying intellectual property is the soul of distribution theory.

Historically, intellectual property has been paid from sales. Not only has this become increasingly impossible in the modern digital age, but it has also given every creator the veto right over progress, as well as requiring a tyrannical state to enforce. Any nation violating IP treaties automatically has the upper hand in creating new technology. Like the monopolization of land, intellectual property laws drive up the price of everything, most noticeably lifesaving medication that can cost thousands of dollars a pill, but more subtly, everything! Knowledge itself has been hidden from the public eye under the guise of copyright protection.

When IP is paid from the ground rents, it is based not on sales, but product distribution. Product distribution is the quantity of discrete sales, but independent of price, including a zero or negative price. Product distribution must be consumer initiated. In some cases, the same person will not be counted as a consumer more than once. Suppose your best friend writes and records a song. Should you download the song a thousand times, it will only count as one distribution. Your friend needs a thousand different people to download the song to receive royalties for 1000 distributions. Every category and sub-category of IP receives a tranche of the general IP distribution. Distribution rules for each tranche are determined by the Voluntary Standards Group (VSG) for that tranche, the workings of which are beyond the scope of this essay and will be covered in an installment on regulation, if time permits.

The consequences of basing IP on distribution are enormous. Firstly, all content is free. Every song, movie, eBook, article, photograph and app is free to download.  Releasing content on a disk costs the same as a blank disk or even less if released by the creator themselves. Patent drugs cost less than generics! Redundant software becomes a thing of the past as huge public libraries of code evolve from the competition of tens of thousands of developers who will be compensated whenever their code is used. The holder of the patent makes money regardless of who distributes their product. Businesses will be quick to patent their secret processes and share them with the world! The cost of everything will come down dramatically, some things by 99% or more. Small artists and inventors will be far better compensated than they are today. A single product can contain hundreds or thousands of patentable ideas without being subject to hundreds or thousands of vetoes. Technology explodes forward.

Why would a producer, builder, assembler or editor spend the time to identify all of the intellectual property in their products? 5% of any distribution for IP goes to these assemblers. Every product must be patented to be eligible for the 5%, even if there is no new intellectual property. For instance suppose you create a CD with the greatest hits of the 60s. You patent the CD, identifying all of the artists and their percentage of space on the CD. You work with the Federation equivalent of the Library of Congress to develop the patent. Every time a CD is purchased, the artists get 95% of the distribution for a music CD and you get 5% of the distribution.

Every transaction is a transaction with the virtual biometric currency called the VIP. Even free downloaded content must be purchased (for $0.00) with the VIP, so assessing distribution becomes trivial. Clearly, this revolutionary way to handle IP requires modern technology. We ought not to get too upset with our forebears for foisting the present tyranny upon us. It served its purpose.

Having said, paying intellectual property is the soul of distribution theory, I’m now going to reveal that most of the IP distribution will not come directly from the ground rents. After all, the ground rents are likely to be depleted paying for public and personal goods and services. They might even fall short.  So how does IP get paid?

In the next installment on Viral Community Theory, I’ll show how currency in AFFEERCE Georgism must be backed by land value. Land value is ground rent divided by the capitalization rate, historically 5% and I believe more closely related to the average depreciation rate of goods than the interest rate. But that is beyond the scope of this essay. The important point is that total currency = total ground rent x 20. So if ground rent increases by $100 million, then currency must increase by $2 billion. Released into the economy, this is a recipe for hyperinflation. The money would be used to bid up ground rents, which would increase land value, which would increase currency, which would be used to bid up ground rents…

Therefore, most created currency is banked by the Federation treasury for a bad year, or series of years. So how do we release the proper amount of currency into an economy so there is neither inflation nor deflation? There are at least two methods which are theoretically sound. The key to both methods: released currency is tied to productivity.

We saw above how the intellectual property distribution lowers prices. Quite literally, the wealth of the Federation is increased by the minds of its citizens. Currency is a claim on wealth, so new claims on wealth (currency) should equal the wealth created by the IP. The total distribution should be such that prices do not fall.

The second method for release of currency into the economy is tied to an actual increase in land value. Under ordinary circumstances, when a town builds new infrastructure with non-distribution funds, they end up paying for it twice. First they pay for the infrastructure. However, the new infrastructure, if successful, raises land value, and thus ground rent. So the town citizens pay a second time through increased rents.

Since the trebling system gives us an exact accounting of ground rent at any time, the increase in land value attributable to any given piece of infrastructure is possible to compute, even with multiple nearby land value sources and sinks. Up to 150% on land value created can be returned to the town investors or taxpayers from new currency over the several years required for an accurate calculation.

More on intellectual property and distribution theory can be found in AFFEERCE Volume I – The Vision, Chapter 3 – Distribution of the Ground Rents. More on AFFEERCE monetary theory (although slightly outdated) can be found in Chapter 6 – The Balance of the RCs and the Treasury. In the next installment, we leave distribution theory and discover how to get from where we are today to AFFEERCE Georgism: Viral Community Theory.

This article is a part of an ongoing series explaining the AFFEERCE Georgism implementation based on the ideas of economist Henry George. The fruits of our labor belong to us alone while the land belongs to each of us and to all of us. AFFEERCE is an acronym for Alternative Families + Free Enterprise + Universal Entitlement + Balance of the RCs + Enlightenment. To further understand, check out AFFEERCE Volume I – The Vision at AFFEERCE.org. For more info on AFFEERCE natural rights, See AFFEERCE – Volume I – Chapter 8 – The Natural Rights of Mankind. For an introduction to AFFEERCE, See AFFEERCE Volume I – Introduction and AFFEERCE Volume I – Chapter 1 – What is AFFEERCE? See also the stand alone PDF “What is AFFEERCE”a 12 page introduction. All of these are available free on the AFFEERCE website http://AFFEERCE.org.