IPI Incomes Parity Initiative

A shareholders’ resolution...

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WHEREAS:

Data: US Census

1. As shareholders, we want the business of [The company] (“company”, herein) conducted in a manner not merely consistent with our own interests, but fairly in the interests of our employees, users and buyers of our products and services, suppliers and the general society.
2. Extreme disparity of incomes in the general society
1. creates a negative economic externality
2. results in social stratification manifesting
   1. distortion of democratic processes and
   2. emergence of a social class resembling aristocracy.
3. In our era, our society produces and distributes goods, services and incomes via corporations such as the company.
4. The company provides an admired, influential, leading example for other companies worldwide.

RESOLVED:

We request that the board of directors implement an Incomes Parity Policy (“Policy”, herein) such that

1. The annualized rate of compensation of the least well compensated employee of the company will be more than 1/70th (one seventieth) of the annual rate of compensation of the most highly compensated employee. This is the core principle of the Incomes Parity Policy.
2. “Employee”, as used here,
   1. during the first year of effectiveness of this Policy, and thereafter, refers to any employee, director, executive officer, whether “exempt” or “non-exempt” or “temporary” or “permanent” or “full time” or “part time” or “casual” or otherwise, without regard to geographic location.
   2. during the second year of effectiveness of this Policy, and thereafter, refers additionally to any person providing labor or services comprised significantly of labor, by formal or informal contract with an agency or union or directly, including all consultants and other workers.
3. “Compensation”, “compensated”, etc., as used here, refer to all salaries, wages, bonuses, equity awards, contractual payments, fees, stock options, payments in kind and deferred income, and similar transactions, including, but not limited to, all forms of compensation mentioned in the Executive Compensation section of the annual proxy statement and other forms of compensation of employees. “Compensation” does include dividends and change in value of shares of stocks and financial instruments awarded to an employee as compensation. “Compensation” doesn’t include dividends and change in value of ordinary common stock purchased by the employee with their own funds.
4. The board will interpret the Policy broadly, to defeat attempts to circumvent the meanings of “Employee” and of “Compensation”.
5. The board will oversee the amounts and timing of adjustments of employees’ compensation.
6. If existing contracts bind the company, the company will honor them, but new, extended and renewed contracts will comply with the Policy. The board, at its discretion, may incur significant and material costs to cancel or modify contracts to achieve compliance with the Policy.

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The text of the above resolution, excluding graphics, is less than 450 words. I am grateful for the advice of friends who reviewed early drafts.

Sources consulted:

Alphabet Inc.,  2016 Proxy Statement 
Craig McGuire, “How to write a shareholder proposal”  (2012) 
Daniel Brockman, "The 1% and the 99%" (Nov 13, 2011)
U.S. Census, current population survey household income data tables (http://www.census.gov/hhes/www/cpstables/032012/hhinc/toc.htm downloaded Nov 2011, no longer available. See www.census.gov.)

This entire article is a free cultural work (CC0  2016). Anyone may use it for any purpose without seeking permission.

To the extent possible under law, Daniel Brockman has waived all copyright and related or neighboring rights to Incomes Parity Initiative. This work is published from: United States.

On Resolving Trump’s Conflicts of Interest

President-elect Donald J. Trump owns many properties and companies worldwide. A conflict of interest exists if a presidential decision shaping national policy could benefit him personally. A blind trust is a customary way of hiding assets from an owner to prevent a conflict or the appearance of a conflict of interest. 

An article by Dean Baker on the Center For Economic and Policy Research site, and commentary from Russ Abbott and several others, inspired my thinking on a route to divestiture.

There are complications with divesting Mr.Trump’s assets to establish a blind trust. Accurate estimates of the values of major commercial properties can escape even highly experienced appraisers, even as auctions sometimes yield prices of great works of art that surprise professionals. The properties have unique characteristics, including conditions affecting the seller, and the potential buyers have varied perceptions, opportunities and constraints.

Photo: trumphotels.com/las-vegas

With the Trump properties, the brand name influences the value of the asset. And tax effects may reduce the value the seller can realize in an early sale, versus several years or indefinitely in the future.

A strategy something like the following could fairly accommodate these considerations:

1. Appoint 3 Trustees agreeable to Mr. Trump and certified professionally capable by the General Accounting Office, with the Senate Ethics Committee having general oversight.  The 3 Trustees manage the divestiture and conveyance of the proceeds to the blind trust. They (and their staff) organize the Trump assets, properties and companies into suitable accounting entities to “package” the assets for sale. They prepare financial statements and projections for each asset. They hold sealed-bid auctions for each of the entities. These will be net assets, reduced by the debt they bear. Let the market set the value. Each asset not receiving bids in two years and each asset clearly having negative value would go to its own separate bankruptcy.

2. For each asset, escrow all related income occurring after Dec 31, 2016. The buyers of the properties will receive the accumulated income. At the time of the sale, the Trustees will estimate the income tax effect, based on the difference in income taxes for Mr. Trump between (hypothetically) holding the asset and selling it, and the tax effect will be escrowed and sold as part of the property. The escrow will accomplish separation of Mr. Trump from the assets. Mr. Trump will receive no income from the asset after Dec 31, 2016. Bidders at the auctions will need several months to inspect the assets, estimate incomes, and kick the tires before they bid. Prudent management of the distribution from escrow could require a few months after the sale. Disposition of all assets could possibly take three or four years.

3. With great publicity, the Trustees will change the brand of each property from "TRUMP" to "T1" on Dec 31, 2016, with new signage going up promptly. Buyers may continue operating under the "T1" brand. The "Trump" brand will divest for $1 to Trump's children, which they may not use before 2037. Thus everyone will know the "T1" brand labels the divested Trump asset.

4. For those currently using the "TRUMP" brand under license, their right to use the brand will cease at the next scheduled fee payment date, and they will not pay license fees after Dec 31, 2016.

5. For each asset, the Trustees will govern business operations after Dec 31, 2016.

6. The Trump family may not buy any of the assets before 2037.

What do you think?

Sources:

Dean Baker, “Ending Trump’s Conflict of Interest Problem in three Easy Steps”, Center for Economic and Policy Research (Nov 22, 2016) http://cepr.net/blogs/beat-the-press/ending-trump-s-conflict-of-interest-problem-in-three-easy-steps

Update: The 35-Hour Work Week: Remedy for Unemployment

Reduce the standard working hours per week from 40 to 35.

Each week, the 325 million people of the United States produce, by their labor, a quantity of goods and services that more or less satisfies their wants and needs. They apportion the labor (strictly speaking, the employment) unequally to half of the people, about 160 million (excluding children, prisoners, the armed forces, and people who can’t work or don’t want to work), including 124 million employed “full time”, and 28 million employed “part time”. 

The average number of hours of employed work per day, for a person who works on a weekday, is about 8. They work 40 hours per week.  

Different people work different numbers of hours per week. In 2015, 25% worked less than 35 hours per week, 68% worked 40 hours per week or more, including 16% (1 out of 6 workers) who worked 49 hours per week or more.  

The people who want to work, but haven’t found a job, are about 5% or 8 million, plus about 1 million “marginally attached” to the labor force. 

As a first-order calculation, if the people worked 7 hours per day, instead of 8, then they would produce 7/8 as much stuff as they now do. If they also hire an additional person for each 7 persons now working, that would make up the difference in production. That would create a labor demand for 20 million workers. That would employ most of the 8 million now seeking work. 

The question immediately arises whether to adjust the pay rate of the employee working 7 hours per day, instead of 8. In the California state employee furloughs, the additional time away from the job had net value for many workers. Further, Talent Thread in Sep 2016 reported 

“...when a company comes up short on the salary side of the equation, workers said they’d consider options like a flexible schedule or more paid time off to balance things out.” 

This question of pay adjustment need not have a generally applicable answer. Workers and employers can forge relevant agreements in each organization.

If you have a car with a leaking engine, you might keep it going a few more miles by adding oil. However, this won’t fix the problem. To fix it, you must make structural changes. Similarly, President-elect Trump’s $1 trillion infrastructure program, if implemented, won't fix the continuing unemployment in the United States, though it will save some people from destitution. In our opinion, the society, led by the government in partnership with businesses, must seek structural changes to reduce income disparities and distribute income more broadly, and thereby remedy the extensive unemployment in the economy. Reducing work to 35 or fewer hours per week per worker is one structural change that tends to distribute income more broadly. (Nobel economist Joseph Stiglitz has documented a number of other possible beneficial structural changes in his book “Rewriting the Rules”. )

One policy to incentivize the 35-hour work week might look something like this:
1. The spirit of this policy. The national interest warrants that, while large numbers of willing workers are unemployed, excess hours of work facilitate a negative economic externality, and employees should work 35 hours per week or less, with few exceptions.
2. Reduce employer’s incentive for excess hours. Employers will pay the employee 135% of the employee’s regular pay rate for hours worked in excess of 35 in any week and on days worked in excess of 5 in any week.
3. Reduce employer’s incentive further. Employers will pay a payroll tax surtax of 35% for employee’s pay for hours in excess of 42 hours in any week, for each employee working excess hours.
4. Reduce employee’s incentive to work excess hours. Each employee working excess hours will pay a payroll tax surtax of an 35% for their pay for hours in excess of 49 in any week. 
5. Reduced hours won’t imperil benefits. Employers will provide full employee benefits to any employee who usually works more than 10 hours per week.
6. No excuses - the rules apply to just about everyone. Employers will make a fair and reasonable estimate of hours worked for each employee not paid by the hour and for every employee paid at a lower rate than 1/10 of the rate of the most highly compensated employee.
7. No excuses - if they look like a worker, and act like a worker, then they are a worker. Employers using contract employees, or time and materials workers, or workers via an agency or similar arrangement, will consider these rules to apply to these workers. 


Related earlier articles:

This 2016 article makes updates a 2010 analysis: The 35-Hour Work Week http://daniel-brockman.blogspot.com/2010/07/the-35-hour-work-week-remedy-for.html.

The California Experience http://daniel-brockman.blogspot.com/2010/12/california-experience.html 

The French Experience http://daniel-brockman.blogspot.com/2010/11/french-experience.html 


Additional information on Sources:

24 Seven, “Talent Thread” (Sep 1, 2016, downloaded Dec 1, 2016) https://talentthread.com/2016/09/01/66-of-employees-are-planning-a-job-change-job-market-report-2016/

BLS Bureau of Labor Statistics, “Technical Notes, Household Data” (Feb 2016) http://www.bls.gov/cps/eetech_methods.pdf 

BLS, “The Employment Situation - October 2016” (Nov 4, 2016) http://www.bls.gov/news.release/archives/empsit_11042016.htm

BLS, “Labor Force Statistics from the Current Population Survey; Household data annual averages; 19. 2015, Persons at work” (Feb 10, 2016, downloaded Dec 1, 2016) http://www.bls.gov/cps/cpsaat19.htm

United States Census Bureau real time population clock http://www.census.gov/

Donald J. Trump, “Infrastructure: Donald J. Trump’s Vision” (Downloaded Dec 1, 2016) https://www.donaldjtrump.com/policies/an-americas-infrastructure-first-plan 

The Fairy Tale of Capitalism: The 90 Percent

FTC Ring: Previous  | Next 

Photo: http://mobilitylab.org/

A deep motif of FTC, the Fairy Tale of Capitalism, is that a wealthy Aristocrat getting richer benefits Workers and Society.

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The 90 Percent consists of the 90 percent of the Society who have the least Wealth or Income. The 90 Percent includes nearly all of the Workers and the small business owners, and all of the poor people.

According to Thomas Piketty (“Capital”, Figure 9.8, p. 324), the aggregate income of the 90 Percent declined from a share of about 63% of the aggregate income of Society in 1970 to about 53% in 2010, in the United States. Per Emmanuel Saez and Gabriel Zucman, the aggregate wealth of the 90 Percent, as a percentage of aggregate wealth of Society, declined from about 30% in 1970 to about 23% in 2012. While many of the Wealth 90 Percent are also in the Income 90 Percent, there are some differences. Saez and Zucman find the Income share of the 90 Percent has fallen from 72% of the aggregate income of Society in 1970 to 60% in 2010.  Saez reports the 90 Percent share of Income was 49.5% in 2015.

David Ricardo, in writing “On Profit”, “On Value” and “Of Wages” (“Principles”, 1817, 1821), clearly supposes that increases in Capital (the Wealth of the Aristocracy) create a demand for Labor, and so Labor must have a value. Ricardo’s LTV Labor Theory of Value is famous and extensively discussed, though Stigler tells us Ricardo’s LTV was, like FTC, more a meditation than a theory. Ricardo writes

“in estimating the exchangeable value of stockings, for example, we shall find that their value, comparatively with other things, depends on the total quantity of labour necessary to manufacture them, and bring them to market.”

But we shouldn't misunderstand him to say the value of a product is the value of all the labor that went into producing it. Ricardo well understood variations in value due to perceptions of usefulness, exchange and the honorific value of useless consumption that Veblen described. However if we take that crude dumbed-down LTV that the value of a product is the value of the labor that went into producing it, then we must ask what is the value of the Labor of the Workers?

Graph: http://eml.berkeley.edu/~saez/SaezZucman2016QJEAppendix.pdf

Labor is the productive activity of the Workers. Nearly the entire Income of the 90 Percent arises from compensation for the Labor of the Workers. Then half the Income of Society is the current value of Labor. Rarely will any two people ever have the same income. Some will have more and some less. A tenth part of the people will enjoy an income exceeding the highest income of the 90 Percent. Still, we contemplate, why would not the value of Labor be 75% or 80% of the Income of Society?

FTC Ring: Previous  | Next 

Sources:

Thomas Piketty, “Capital in the Twenty-First Century” (2014, English translation) http://amzn.to/2fJg7Oi

Emmanuel Saez and Gabriel Zucman, “Wealth Inequality in the United States since 1913” (The Quarterly Journal of Economics, May 2016)  http://eml.berkeley.edu/~saez/SaezZucman2016QJE.pdf http://eml.berkeley.edu/~saez/SaezZucman2016QJEAppendix.pdf

Emmanuel Saez, “Striking it Richer” (June 30, 2016) http://eml.berkeley.edu/~saez/saez-UStopincomes-2015.pdf

George J. Stigler, “Ricardo and the 93% Labor Theory of Value” (American Economic Review, Vol. 48, No. 3, June 1958) http://www.econ.nyu.edu/user/bisina/stigler-labor.pdf

Thorstein Veblen, “The Theory of the Leisure Class” (1899) http://amzn.to/2fJAzyz

David Ricardo, “On the Principles of Political Economy and Taxation” (1817, 1821) http://www.econlib.org/library/Ricardo/ricP.html

Trigger Finger Discipline

Trinity Site, New Mexico, July 16, 1945

The United States Congress can require a unanimous committee decision before use of nuclear weapons.


The system of government in the United States has elaborate checks and balances to prevent excessive concentration of power in any one person or group. Yet, we allow a single person, in a few minutes of misjudgment, the option to launch nuclear weapons. Use of just a few of these weapons in conflict would make the earth literally uninhabitable within a few months, permanently, with no human surviving, anywhere, forever.


The Congress may now have the last opportunity to restrain an itchy trigger finger on the red button. Imminently, in two months, we will inaugurate a famously unpredictable and impulsive president. His 30-second attention span and volatile temper are well documented. Most members of both parties, including majority and minority leaders in the Congress, and the sitting President, doubt the new President’s judgment.


Congress can pass bipartisan legislation to forbid the President and any agency of the government from launching nuclear explosive devices without the unanimous decision of a committee. While specific composition of the committee could be subject to negotiation, I propose a committee of seven, to include the President, the Secretary of State, and the House and Senate party leaders, chaired by the Chief Justice of the Supreme Court. The legislation would specify backup members should any of the primary members be unable or unavailable to perform.


The Congress can, in 2016, pass the legislation and get the President’s signature within weeks, constraining the President in making the nuclear decision.

Photo: Trinity Test Fireball at 16 ms, Trinity Site, New Mexico, July 16, 1945 (Wikipedia, https://en.wikipedia.org/wiki/File:Trinity_Test_Fireball_16ms.jpg retr 20161109)

Intellectual Property and The King of Denmark’s Rule

CONTENTS

PART 1 - CENTRAL ISSUES
PART 2 -  IPR INTELLECTUAL PROPERTY RIGHTS CONTROVERSY
PART 3 - PROPOSED TAX ON IPRS
APPENDIX 1 - THE ORESUND SOUND DUES
APPENDIX 2 - WHY ETHERNET BEAT TOKEN RING
SOURCES


PART 1 - CENTRAL ISSUES

The King of Denmark’s Rule

Image: Oresund map,
Public Domain,
https://commons.wikimedia.org/w/index.php?curid=25944

The tax on the cargo is 1% of value, as assessed by the master of the vessel. The King’s agent may choose either to accept the tax payment or to buy the cargo at the assessed value.

If we disregard the possible collusions between the master and the agent to cheat the King, the master has incentive to assess the value fairly. If the master assesses a low value, then the agent may refuse the tax and buy the cargo. If the master assesses a high value, then he pays more tax than the law requires. (See Appendix)

Incomes Disparity, or Income Inequality

To the extent that politically knowledgeable people vote their pocketbooks, one can imagine without difficulty that a wealthy person in the United States would have different opinion from a poor person on nearly every significant political issue.

Senator Bernie Sanders was one of the two most significant contenders for the 2016 nomination for President of the United States by the Democratic Party. He focused on income and wealth inequality as the most important political problem in the United States. Seeking to persuade some of Bernie’s enthusiastic following, other candidates echoed Bernie in advocating for their own policies.

IPRs Intellectual Property Rights

Economist Joseph Stiglitz wrote in “Rewriting the Rules” that some persons seek IPR monopolies to secure market power. (Some have criticized use of the word “monopoly” as pejorative in discussing the privilege granted by an IPR. But we note that IPR does grant the owner the exclusive right to sell or license or use the products embedding the IP patent or copyright. The condition in which only one seller can sell a product in a market is a monopoly, by definition. We regard IPRs as grants of monopoly by governments.) Stiglitz calls for revising IP laws for better balance of the rewards of innovation with the societal usefulness of innovation.

Economists Michele Boldrin and David Levine wrote of IPRs that “this cancer is attacking the most vital centers of our economy: metastasis is near and so it is time to face the intellectual monopoly threat squarely, and to take action.”

The first laws governing IPRs in the United States were copyright and patent acts of Congress that became law in 1790. Each act granted 14 years of IPR protection to writers and authors. In our age, IP consists of four categories: patent, copyright, trademark, and trade secrets.

PART 2 -  IPR INTELLECTUAL PROPERTY RIGHTS CONTROVERSY

With large amounts of money at stake in some IPRs, the governing laws have spirited advocates and opponents.

WIPO World IP Organization, part of the United Nations organization, generally advocates for the positive value of IPRs. Advocates often claim that increasing counts of numbers of patents granted and growth of GDP show that IPRs stimulate imagination and GDP growth, much as does Kamil Idris in his “Intellectual Property: A Power Tool”, and that IPRs attract investment.

Alan Greenspan, former chairman of the Federal Reserve Board advocated for IPRs. In 2003, he attributed only a small part of US GDP growth in the last decades of the twentieth century to physical materials, with the accelerating large part of the growth coming from IP.

James Madison argued for IPRs. Discussing the powers accorded to Congress by the US Constitution, and the right to grant IPRs, specifically, he wrote “The utility of this power will scarcely be questioned.“

Idris also argues that IPRs attract capital investment. Clearly, they do so in a world in which IPRs exist. Idris doesn’t show that capital investment in ideas wouldn’t occur in a world without IPRs. Nor does he answer whether IPRs distort capital allocation from superior ideas and projects.

International payments for the use of IPRs were $350b worldwide in 2015, per the World Bank, using data from the International Monetary Fund.

International payments for use of IPRs. Source: World Bank.

Source: Emmanuel Saez (2014)

While coincident graphs don’t imply causation, we can’t but notice a resemblance in the growth of IPR payments with the growth of the highest 1% of US incomes, per Emmanuel Saez.

I’ve not found criticisms of IPRs in his writings, but Stiglitz does identify IPRs as a rule that contributes to deep US disparities of incomes.

Opponents of IPRs often claim that IPRs stifle invention, discovery and manifestation of creativity. For example, Michael W. Carroll, in his “Intellectual Property and Related Rights in Climate Data”, describes how IPRs can interfere with climate change research, which requires fairly open access to diverse data sources.

Thomas Jefferson, often quoted by IPR opponents, wrote “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.” Jefferson did note the rush of inventors and writers to apply for copyrights and patents. And ultimately, he was persuaded (allegedly by Madison) that IPRs strictly limited in duration would have some value.

In the development of computer networks, two comparable and competitive ideas, token ring and ethernet, competed in the 1970s and 1980s. Ethernet was not protected, but Olof Soderblom required a royalty of 2 percent for each node of his patented token ring. Ethernet flourished with rapid innovations increasing speeds and reducing costs. People also invented enhancements for token ring, but the patent impaired development and distribution. Eventually, ethernet deployments dominated. It became the ubiquitous protocol underlying the Internet. Token ring survives in isolated specialized applications. (See Appendix)

Aristotle.
After Lysippos, Public Domain,
https://commons.wikimedia.org/w/index.php?curid=1359807

James Watt spent the latter part of his life actively defending his steam engine patents and suppressing even some superior designs offered by potential competitors. Boldrin and Levine describe James Watt’s career as an exemplary case, along with numerous others. They conclude IPRs aren’t needed for innovation, and more likely hurt, more than help, innovation and growth. IPRs promote socially costly rent seeking.

Benjamin Franklin, Jonas Salk, Aristotle, Luther Burbank, Rene Descartes, Charles Dickens and Alexander Fleming, among many others, either had no access to IPRs, or they declined to use them.  Further, each of us has creative thoughts and ideas, for which we never have IPRs. Arguably, people have good ideas because it’s fun to discover and create things. Clearly, IPRs aren’t required for people to have good ideas.

PART 3 - PROPOSED TAX ON IPRS

IPRs, by their existence, attract capital to finance development of ideas and production of useful products and works of art. At the same time, they create monopolies that encourage rent seeking and diminish innovation and the availability of useful ideas. Further, the existing legal structure of IPRs facilitates intense concentration of immense wealth and disparities of incomes. We propose a new US tax on IPRs, modeled after the King of Denmark’s Rule, and some minor modifications of existing law. Further, we propose uses of the tax revenue to encourage inventions, authorship, fine and useful arts and science.

The IPR tax

First, the IPR tax law will overlay, not replace, existing law, except in cases of direct conflict. No existing or new IPR will continue in effect beyond 100 years under any circumstances. New IPRs, coming into existence after enactment of the enabling IPR tax, will have a maximum term of 14 years.

The tax will apply to both new and existing IPRs. Upon enactment, the tax will apply to existing IPRs 3 years after enactment of the law. The tax will apply to each new IPR 3 years after the IPR comes into existence. The tax will apply to any IPR having a value of more than $500,000, adjusted for future inflation. The tax will not apply to any IPR of lesser value.

Annually, within 60 days of the anniversary date, the holder of each IPR will file a statement of value with the IPR Tax Office. If the holder doesn’t file the statement on the 3rd anniversary of the IPR and thereafter, then the IPR passes permanently into the public domain. The statement will explicitly state the value in dollars of the IPR, with appropriate documentation, and a payment of the tax due. The Tax Officer may ask for clarification of the statement, and the holder will answer within 30 days. The Tax Officer may accept the payment rendered, allowing the holder continued ownership of the IPR. If the Tax Officer acts within 60 days of receiving the statement, then the Tax Officer may return the payment rendered, and pay the holder’s stated value (but not less than $400,000) to the holder as compensation, and take possession of the IPR, and the IPR will pass permanently and immediately into the public domain. If the Tax Officer doesn’t act within 60 days, then the holder continues to own the IPR.

The tax won’t be due before the end of the 3rd year of the term of the IPR. The following table provides the tax rates applying.

Anniversary of creation of the IPR	Tax as a percent of holder’s stated value
0	0
1	0
2	0
3	1
4	2
5	4
6	8
7	16
8	32
9	64
Thereafter	64

We suggest the revenues from the tax will be distributed by the Department of Commerce as grants to qualifying scientists, inventors, artists, writers and similar persons who apply for project funding and to arts and research organizations such as the National Institutes of Health, the National Gallery, the Smithsonian Institution, the National Aeronautics and Space Agency, and others.

APPENDIX 1 - THE ORESUND SOUND DUES

Coat of Arms of Erik de Pomeranie. Image by
A.T. [CC BY-SA 3.0
(http://creativecommons.org/licenses/by-sa/3.0)],
via Wikimedia Commons

In 1857, the US treated with Denmark to pay a small sum to the King of Denmark to relinquish all rights to the “Sound Dues”, a source of revenue for the Crown for centuries. The major governments of Europe had similarly concluded the tax on passage through the Oresund, the strait between Denmark and Sweden, in 1855 and earlier in some cases.

The tax and its predecessors had existed for centuries, with some evidentiary documents dating from the 14th century. The Sound Dues were regularized and made permanent by Eric of Pomerania, King of Denmark, Norway and Sweden, in 1429.

The Sound Dues had applied to merchant cargoes (and sometimes to hulls) passing through the straits. Masters of the vessels were required to stop at Helsingor (a.k.a. Elsinore) or suffer cannon fire from shore. The master would provide a manifest and valuation, and pay a tax of about one percent of the value, varying somewhat from year to year, and depending somewhat on the type of cargo, ownership, the flag of the ship, origin, destination, and the particular royal agent collecting. Or the agent would pay the master’s valuation to the master, and take possession for the crown.

APPENDIX 2 - WHY ETHERNET BEAT TOKEN RING

According to Iljitsch van Beijnum http://arstechnica.com/gadgets/2011/07/ethernet-how-does-it-work/, ethernet was conceived and standardized as a body of standards with a clever, minimalist design that required only cheap, relatively simple components. Token ring remains in use in a very few special cases. Ethernet users sought ever faster networks, which led to the ubiquity of ethernet.

Reasons for ethernet's dominance:

1, Ethernet had a messiah, Bob Metcalf. -  Geoff Thompson
2. ArcNet (early network resembling token ring) didn’t make it into specification IEEE 802 -  Geoff Thompson
3. Ethernet tolerated failure. - Dan Pitt
4. Token ring patent, owned by Olof Soderblom, required the user to pay a royalty of 2 percent of the cost of the machine which was the node connected to the network. Competition was managed and never allowed to flourish. - Joe Skorupa

Oral history video discussions by networking pioneers of ethernet and token ring:
https://www.youtube.com/watch?v=3J-pK7oiRP0
https://www.youtube.com/watch?v=g2RlRRXZprY


SOURCES

BBC, “When Charles Dickens fell out with America” (Feb 14 2012 http://www.bbc.com/news/magazine-17017791 )

Luther Burbank Home & Gardens, Santa Rosa, California (http://www.lutherburbank.org/, retrieved Oct 7 2016)

Michele Boldrin & David Levine, “2003 Lawrence R Klein Lecture: The Case Against Intellectual Monopoly”, International Economic Review, Vol 45, No 2 (May 2004) https://www.researchgate.net/profile/Michele_Boldrin/publication/5110522_2003_Lawrence_R_Klein_Lecture_The_Case_Against_Intellectual_Monopoly/links/0fcfd50db5dff388c4000000.pdf

Michele Boldrin & David Levine, “Against Intellectual Property” (2007) http://levine.sscnet.ucla.edu/papers/ip.ch.10.m1004.pdf
Detailed review of “Against Intellectual Property”, Syracuse Science & Technology Law Reporter (Fall 2009), p.130 http://jost.syr.edu/wp-content/uploads/6_Azzarelli-SSTLR-Vol.-21-Fall-2009-FINAL.pdf

Michael W. Carroll, “Intellectual Property and Related Rights in Climate Data”, American University Washington College of Law Research Paper No. 2016-17 (2016 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2763709) .

We are grateful for additional ideas and information provided openly in some prepublication research by Dr. Carroll.

Cisco DocWiki, “Token Ring/IEEE 802.5”, http://docwiki.cisco.com/wiki/Token_Ring/IEEE_802.5 (Cisco, retrieved Oct 6 2016)

Cornell University Law School, “Intellectual property” (https://www.law.cornell.edu/wex/intellectual_property, retrieved Oct 6 2016)

Jonathan Follows, “Token Ring Solutions” (IBM http://www.redbooks.ibm.com/redpapers/pdfs/redp0031.pdf 2000 )

Benjamin Franklin, “Autobiography of Benjamin Franklin”, Project Gutenberg edition (2006, https://www.gutenberg.org/files/20203/20203-h/20203-h.htm)

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