Hoisted from Comments: James Galbraith on "Dean Baker on Judges Behaving Badly"

James Galbraith weighs in:

Brad DeLong's Semi-Daily Journal: Dean Baker on Judges Behaving Badly: I keep harping on a theme, but I can't help it.

The one thing missing from this discussion, at every level from Brad DeLong and Paul Krugman through the comments, is actual data.

D-A-T-A. Numbers. Measurement.

Everyone is talking about inequality, attributing 2/5ths to this cause and the rest to some other.

But what are you talking about, actually?

Income inequality? Earnings inequality? Wage inequality? They are not the same, and in the U.S. they sometimes don't even move in the same direction.

Income inequality soared in the late 1990s. Why? A decomposition by region and sector can tell you pretty much exactly: it was the tech bubble and the stock boom. Capital gains and stock options realizations. Much of it in just five places in the whole country: Manhattan, King County WA, and Santa Clara, San Francisco and San Mateo Counties, CA. Take out those five, as Travis Hale and I showed in a paper, and the between-counties component of income inequality (which isn't all of it, but it isn't chopped liver, either) doesn't go up at all.

Meanwhile, earnings inequality went down in the same time. Why? Full employment. This component of inequality is closely tied to utilization rates and unemployment. It varies with hours worked, and overtime earned, more than anything else. It is, in short, a macroeconomic phenomenon.

Most of the discussion here and elsewhere, sadly, is about a third concept -- inequality in hourly wage rates. That is the subject of Dean Baker's anecdote about Northwest airlines: the flight attendants do not wish to work for the wage rate the company is offering.

In a decade of working on this topic, I have yet to see any measure of inequality that is based exclusively on movements in relative hourly wage rates. Not one. No doubt, changes in the structure of hourly rates can affect inequality, in principle -- changes in the minimum wage do have a measurable effect in past data.

It is quite certain, however, that the effect of changes in relative hourly wage rates on income inequality is very, very small, compared to that of changes in non-wage income (such as capital gains), and changes in the macro and demand factors that cause variations in relative earnings.

Understanding the hierarchy of components of income is the first, small step toward a realistic grip on the inequality issue. Any takers?

James Galbraith

I would say there are five things going on: (a) income and wealth at the top end, driven by changes in finance; (b) the effects of unemployment on the wage share; (c) skill-biased technological change; (d) declining union power; and (e) shifts in policy that erode equality-supporting measures like the minimum wage. I can't untangle them.

Comments

[Slocum]

"Income inequality soared in the late 1990s. Why? A decomposition by region and sector can tell you pretty much exactly: it was the tech bubble and the stock boom. Capital gains and stock options realizations. Much of it in just five places in the whole country: Manhattan, King County WA, and Santa Clara, San Francisco and San Mateo Counties, CA. Take out those five, as Travis Hale and I showed in a paper, and the between-counties component of income inequality (which isn't all of it, but it isn't chopped liver, either) doesn't go up at all."

Which is to say tech entrepreneurs, tech VCs and their investment bankers. A mixture of genuine wealth creation, tulip-bulb mania, and rent-seeking. But none of it having anything to do with delining union power.

[anne]

http://delong.typepad.com/sdj/2006/08/government_poli_1.html#comment-21384309

August 22, 2006

Government Policy and Income Inequality Yet Again Again

To give myself a bit of credit, in *1998* I published an entire book -- Created Unequal -- which thoroughly debunked the claim that technological change drives *wage* inequality. In that immortal text, I showed among other things that (a) the timing was wrong; and (b) pattern of sectoral effects were wrong. Most of the rise in wage inequality in the 1980s occurred before the great wave of technical change associated with computerization, and most of it was in manufacturing, which computerized less than services did.

[I realize that some writers on this deny that in speaking of technological change they mean "computerization," but so far as I know, no one has specifically pointed to anything else of comparable importance.]

The actual effect of technology on wages is usually the opposite of that claimed by this hypothesis. Technology does not raise the wages of the skilled, it is introduced to devalue the wages of the skilled by allowing their jobs to be done by people with less skill, and at lower relative pay.

Further, direct measurement of inequality in the wage structure is not only possible, it is relatively easy. And having done it, one finds that there isn't that much of a residual to explain. Most of the change in pay inequalities is traceable to fluctuations in aggregate demand and employment. It's really very simple: when times are tough, low-wage people work fewer hours, earn less overtime, and inequality rises; this is less true of high-wage workers whose income streams are generally more stable.

Clear implication: The rise of inequality we observe has *very* little to do with changes in hypothetical hourly wage rates, which are hard to observe but so far as one can observe them, in fact change very little in relative terms.

Further, the technology sector *did* have an important influence on *income* inequality in the late 1990s, due to the bubble in technology stocks. This had everything to do with the madness of the capital markets, nothing whatever to do with "skill-bias" in technical change, which by that time was already being discarded as a conceptual category by observant mainstream economists, including Robert Lawrence and David Card.

I wish I could say that Robert and David were influenced by a prior reading of my book but there is no evidence of that.

Finally, Tom Ferguson and I published an article in Research in Economic History back in 1999 which completely deconstructs the change in wage structures during the period 1920 to 1946. We find this was mainly due to the flux of demand (55%, by the eigenvalue), next to labor agitation and minimum wages (20%), and third to exchange rate changes (15%). Taking these three forces together, there is simply nothing left for the Goldin-Margo hypothesis to explain. There is also very little to be explain by the fudge-word "norms": what happened was entirely related to demand, politics and relative prices (exchange rates).

If esteemed colleagues would stop quoting each other for a few minutes and actually examine the evidence I have been trying to lay before you for many years, you might possibly learn something.

Much of this information is freely accessible at

Yours in hope and irritation,

James Galbraith

[anne]

http://delong.typepad.com/sdj/2006/08/the_primacy_of_.html

August 26, 2006

A Few Data-Based Comments on Krugman's Chronology
By James Galbraith

The Great Compression, 1929-1947: The birth of middle-class America....

Comment: Balls. Ferguson and I measured the movement of wage inequality comprehensively and on an annual basis from 1920 to 1947, in an article published in Research in Economic History and referred to in my earlier comment. There was a huge *increase* in pay inequality and a collapse of the then-existing middle class in 1929-33. The birth of the modern American middle class occurred from 1941-1945, strictly as a result of the war-time mobilization, which transformed the wage structure and vested American households with large holdings of series E bonds -- financial wealth they had never before possessed.

The Postwar Boom, 1947-1973: An era of widely shared growth....

Comment: The fifties were, on the contrary, a period of multiple recessions, with sharply rising pay inequality in the early years. The real boom years were 1962 to 1969. They ended with the recession of 1970. 1971-72 was a very unstable period, marked by price controls and a strong but unsustainable Keynesianism in Nixon's reelection campaign.

Stagflation, 1973-1980: Everyone lost ground....

Comment: Stagflation started in 1970, and was the provocation for Nixon's bout of price-wage control. Inequality rose during this period. But not everyone lost ground. With the oil boom, the oil producers and the places they come from gained ground, both in the U.S. and abroad. The late 1970s were a boom period for Texas, Oklahoma, Louisiana..

The New Gilded Age, 1980-?: Big gains at the very top, stagnation below. Between 1980 and 2004, real wages in manufacturing fell 1 percent, while the real income of the richest 1 percent -- people with incomes of more than $277,000 in 2004 % -- rose 135 percent.

Comment: This too is very misleading. There was a huge recession in 1981-2, with vast increases in pay inequality. The late 1980s saw a reasonable recovery; further increases in income inequality occurred but they were largely due to changes in household composition rather than in pay structure. But remembering the huge stock market crash of October 1987, it's hardly reasonable to call this period a "gilded age." There followed yet another recession in 1990-92.

If by a "new gilded age" one means a stock-market-driven bubble as in the 1920s, with gigantic increases in *income* inequality driven by financial valuations, then the gilded age really got going in the late Clinton years. Like the 1920s, this was a period of broad prosperity and falling *wage* inequality, driven by the expenditures of tech firms riding the bubble up. It wasn't a bad period for most people: just unsustainable, as we learned.

Final comment: Comparing real incomes with average real manufacturing wages is statistically not kosher, since the latter are strongly affected by changes in the composition of what is described as a manufacturing job.

Final, final comment: there is no substitute, in this business, for careful work with actual data.

[Maynard Handley]

"(a) income and wealth at the top end, driven by changes in *finance* "

Finance?

To put it bluntly, this is money generated by monopoly rents. Calling these monopolies patents and copyrights does not change the fact that they are monopolies.
It seems a bit strange for people to claim that these changes in income have not been affected by the govt when their have been substantial changes (all to the benefit of monopoly rentiers) in the law of patents and copyrights over precisely this time period.

[Lee A. Arnold]

Backgrounder: For an amateur picture of the distribution of income and wealth, have a look at the Ecolanguage animation "Tax Cuts," now at:

http://youtube.com/watch?v=SA1f2MefsMM

where it's bigger, badder, and throatier. The li'l' domestic macromorph is a lot more legible.

Chapter 2 "Distribution" shows the size distributions in 2004, from the IRS, Census, and Fed consumer survey. Things haven't changed much.

[Slocum]

"It seems a bit strange for people to claim that these changes in income have not been affected by the govt when their have been substantial changes (all to the benefit of monopoly rentiers) in the law of patents and copyrights over precisely this time period."

It seems strange to suggest the dot-com boom (and the VC and investment banking profits that went with it) were, in any significant way, a function of changes in intellectual property protection.

Google hasn't gone from zero to $100 billion in market cap because of rents on IP. In fact, Google is, to some extent, being restrained by IP (e.g. the publisher's lawsuit over the Google book-scanning project).

[Denis Drew]

First: the great compression was not only about income but about concentration of (bargaining) power or loss of same. The post war economy was a new technology economy producing new goods or able to make some goods widely available.

Second: as long as the economy is generally growing fast (I am old enough to remember the recessions of the fifties) everybody is allowed to make money -- remember the difference the way companies (at least used to) behave depending on boom or bust. Simple human nature (at least used to) intervene in the numbers.

By the time productivity slowed, the winners and losers had sorted themselves out and the pressure was on wages. Comes the dot com boom, the pressure goes off and most folks mostly keep up with growth again -- until.
************************
European top earners don't earn anything like American top earners. American bottom earners make out much worse than Europeans -- especially considering beneifits (aka entitlements) despite many admittedly anti-growth policies in Europe. Europeans being left wing are thouroughly labor organized -- Americans not being labor militant at all are unorganized. An accident of polemical history seems to me the fundamental cause for the unnecessary inequality in this country.

[TheJew]

I thought the whole thing this discussion was based on was the Saez dataset compiled from income tax returns. Availible here:

http://elsa.berkeley.edu/~saez/piketty-saezOUP04US.pdf

The important pattern that caused the label "second guilded age" comes from U-shaped graph of the wealth share of the top percentile from the thirties (end of the previous "gilded age") to the nineties (pg. 49).

In addition, it is important to note that the bulk of the skew in wealth distribution comes in that top one percent, which increased its share of wealth by 9%, as opposed to 1% increase in the share of the 90-95th percentiles and an increase of 2% in the 95-99th percentile's share (these are percent of total personal income, not percent growth; the top percentile went from controling 8% of income to 17% at the height of the tech bubble). I could see how decreasing power of unions may impact disparity between the top ten percent and the bottom ninety, but that is not what is happening.

There is a marked discontinuity in income distribution for the top percentile in 1986-1988. This is highly suggestive of the 1986 tax cuts being implicated as the casue of this increase in inequality. I also observe a spike in entrepreneurial income in the top 1/2 percentile during 1986-1988 (page 79 of the paper, table A7), a spike which becomes more pronunced the higher in the distribution one looks (the top 0.1% experience a jump from 14% entrepreneurial income to 26%). This is unusual because of the decline of entrepreneurial income share in all parts of the top decile, but which reversed itself in the early eighties only amongst the top half of the top one percent and experienced a quasi-discontinuity in 86-88.

This is suggestive to me that this increase in high end entrepreneurial activity is to blame for the widening inequality. To the extent that government was involved in creating these entreprenuers (through deregulation, de-unionization, or through incentive by lower marginal tax rates) government was involved in creating the income disparity. I'd like some anecdotal evidence as to who or what these new eighties entrepreneurs were.

[andres]

I'd like to second anne's endorsement of Galbraith's work at UTIP, but one clarifying point is in order: Galbraith's analysis does not use any sort of household survey data nor does it use the Piketty/Saez data. The main source is the BEA Regional Economics Accounts. For a full explanation, see:

http://utip.gov.utexas.edu/papers/utip_27.pdf

This also allows UTIP to neatly break down incomes by county. The powerpoint presentation

http://utip.gov.utexas.edu/us_theil.ppt#2

is pretty nifty. My only complaint is that this data is not available in the UTIP website: it would spare researchers quite a bit of work to have an .xls file listing average incomes by county-year.

[anne]

Andres:

"Galbraith's analysis does not use any sort of household survey data nor does it use the Piketty/Saez data. The main source is the BEA Regional Economics Accounts. For a full explanation, see:

http://utip.gov.utexas.edu/papers/utip_27.pdf

"This also allows UTIP to neatly break down incomes by county. The powerpoint presentation

http://utip.gov.utexas.edu/us_theil.ppt#2

is pretty nifty. My only complaint is that this data is not available in the UTIP website: it would spare researchers quite a bit of work to have an .xls file listing average incomes by county-year."

Precisely, and agreed :)

[Maynard Handley]

"It seems strange to suggest the dot-com boom (and the VC and investment banking profits that went with it) were, in any significant way, a function of changes in intellectual property protection."

Copyright protection of software is novel; patent protection very novel. Patents for genes are novel. Patents for "business processes" are novel.

You think Disney would be worth what it is if copyright for movies hadn't been repeatedly extended? You think Sony Music and friends would be worth what they are if copyright were still at 14 yrs + one possible additional renewal of 14 years?

Microsoft is where it is for the specific reason that no-one can copy Windows. Not just in the simple sense that they can't make CD of Windows and sell them on the street, but also in the larger sense that a web of laws around Windows severely limits the extent to which other people can make their own OSs that will be acceptable replacements to Windows (ie will do everything people need Windows to do, plus whatever value added by these competitors). And so on and so on.
You think Google's valuation is based purely on a belief that no-one else is smart enough to put together an internet ad business, that patents have no role in it? Don't be ridiculous.

[James Galbraith]

Thanks to Brad for "hoisting" this. Readers should note that the final paragraph of summary is his, rather than mine.

I agree with (a) if by "changes in finance" one means "stock market bubble."

(b) The effects of unemployment are not necessarily on the wage share (e.g. wages vs. profits; in fact that effect may cut the other way, as profits fluctuate more sharply with unemployment than wages do); the effect is, rather, on the distribution of wage earnings. The earnings of low-wage workers are more responsive to labor market conditions than are the earnings of high-wage workers, and so when unemployment is high, the distribution of wage earnings becomes more unequal.

(c) I disagree with completely: there is no good empirical case for skill-biased technological change. Brad needn't take it from me; he should go talk to David Card about this!

(d) Declining union power is tricky. Unions exist to raise wages for their members, relative to other workers. It is therefore not obvious that the direct effect of declining union power is to increase wage inequality. However, where unions are strong, they also usually exercise political pressure on the entire wage structure, for instance by favoring high minimum wages, with the result that social democratic countries with strong union movements do tend to be egalitarian.

(e) Of course shifts in policy have a role. My paper with Tom Ferguson on The American Wage Structure, 1920-1946, in Research in Economic History (1999), presents a method for untangling these effects. (Note for techies: The method uses a combination of cluster and discriminant analysis, and the eigenvalues associated with each "force" measure quite precisely the relative importance of each. Can't do it with regression, though.)

I could write a lot more on this but my plane is boarding.

[Randolph Fritz]

One thing about the tech bubble and the banking collapse; they sucked capital out of other industries, so that growth was reduced elsewhere. How much? Good question.

[Slocum]

"Copyright protection of software is novel"

No, it is not novel -- software copyrights have been around since the 1960s:

http://digital-law-online.info/lpdi1.0/treatise17.html

"Microsoft is where it is for the specific reason that no-one can copy Windows."

Yes, and J.K. Rowling is rich because no one can print and sell copies of 'Harry Potter' without paying her.

"Not just in the simple sense that they can't make CD of Windows and sell them on the street, but also in the larger sense that a web of laws around Windows severely limits the extent to which other people can make their own OSs that will be acceptable replacements to Windows (ie will do everything people need Windows to do, plus whatever value added by these competitors)."

Which is why you can't browse the web, develop software, edit photos and write documents, etc with Mac OS or Linux. Oh, wait... But I assume you meant that law prevents you from emulating Windows so that windows programs will run. That's also false. Technically, it's very hard to do, but it IS legal, as is made clear by the 'WINE' project which can run many Windows programs without Windows:

http://www.winehq.com/

"You think Google's valuation is based purely on a belief that no-one else is smart enough to put together an internet ad business, that patents have no role in it? Don't be ridiculous."

Huh? Google has many competitors with search engines and ad-businesses. Some are very large and well-financed -- Yahoo and Microsoft in particular. Do you think Yahoo and Microsoft's internet businesses are fundamentally hobbled by Google patents? If so, how?

[theCoach]

Software copyright protections are however, policy, no?

It is certainly theoretically feasible that policy could be changed so that any software released had to be released with full and freely usable source code, with failure to do so being punished by death.

It could theoretically be policy for the govt to buy Microsoft for current shareholder value, and then release all of the source code, while setting up a 100 billion dollar a year system of basic software research, grants and prize money for particular problems.

I guess what I am getting at here is it seems extemely wrongheaded to make a statement baselined on policy staying the same.

If we postulate that the inequality is caused by technological change, it seems ludicrous then to assume that policy should not react to that. There seems to be a very bizarre assumption here that policy ought to be one of those constants included in the all other things being equal.

It reminds me of the weird obsesson with whether or not global warming is caused by human factors. Excluding what that implies about our ability to correct the problem, what does that really matter at all? Given the following assumptions:
1. The world is warming.
2. The rate the world is warming will cause significant damage.
3. We have the ability to do something about it.

How does it matter at all to what we should do that the warming is caused by humans or by some 10,000 year natural solar cycles?

Similarly, we have growing inequality which most agree is something we would prefer to avoid. It is also obvious that there are policy solutions to the problem (whether or not the growing inequality would occur under some bizarrely academic static policy seems entirely irrelevant).
The relevant question is whether or not the policy solutions cause more damage than they fix. To me, the answer is rather obvious, at least with regard to some specific policies.

[Slocum]

"Software copyright protections are however, policy, no?"

Ah, OK, fair enough -- it's not *new* policy, but it is policy.

"It is certainly theoretically feasible that policy could be changed so that any software released had to be released with full and freely usable source code, with failure to do so being punished by death."

"It could theoretically be policy for the govt to buy Microsoft for current shareholder value, and then release all of the source code, while setting up a 100 billion dollar a year system of basic software research, grants and prize money for particular problems."

Right, in theory we could nationalize all software development and abolish all forms of intellectual property protection, but, it would be hard to enumerate all the reasons those would be terrible ideas (and why, fortunately, have no chance of happening).

But consider Google. Google provides a set of highly valuable services that cost us absolutely nothing to use, the company employes a growing population of high-paid, high-skill workers. And because of all this, Brin and Page are billionaires which, yes, contributes to inequality.

Taken as a whole, is Google a 'problem' you really want to 'solve'? Because it isn't a problem *I* want to solve. The more people who can follow Google's lead and figure out how to get rich by making great stuff and giving it to me for free -- well, let's have more of that please.

[Movie Guy]

Brad DeLong - "I would say there are five things going on: (a) income and wealth at the top end, driven by changes in finance; (b) the effects of unemployment on the wage share; (c) skill-biased technological change; (d) declining union power; and (e) shifts in policy that erode equality-supporting measures like the minimum wage. I can't untangle them."

Brad, with all due respect, I question whether you're covering all of the bases on this issue.

As previously posted:

Government Policy and Income Inequality Yet Again Again
August 22, 2006
http://delong.typepad.com/sdj/2006/08/government_poli_1.html#comment-21384309

Where is the consideration and discussion regarding the factor influence of advanced global trade initiatives on growing income inequality in the USA?

Posted by: Movie Guy | August 22, 2006 at 08:56 AM

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Income Inequality and Information Filters
March 14, 2006
http://delong.typepad.com/sdj/2006/03/income_inequali.html

ADVANCED GLOBAL TRADE IMPACTS ON U.S. EMPLOYMENT AND EMPLOYEE COMPENSATION

Paul Krugman is only addressing a limited consideration of the growing wage and income problem in the United States.

Paul's income inequality piece does NOT address the full role that advanced global trade plays in shaping the U.S. wage and total compensation picture.

Advanced global trade is having a much larger effect on the U.S. economy and American workers beyond those workers directly displaced from jobs outsourced or relocated offshore. Such considerations also extend beyond the remaining direct employment by competing companies and corporations.

The advanced global trade impact zone extends to the shrinking support services base of employment and associated wage levels for those company operations that lose support contracts for corporations and companies that either reduce or eliminate domestic plant and facility operations in the United States. Meanwhile, the remaining American-based employees are facing new pressures directly related to advanced global trade.

Internal corporate pressures to remain cost competitive in the global economy have resulted in multiple initiatives to suppress wage increases and benefit package increases.

The evidence of such initiatives is widespread and growing among corporations and companies with operations in the United States. If all else fails, some corporations file for federal bankruptcy to divest themselves of pension plan obligations.

Similarly, other corporations and companies are capping their health care share responsibilities by using a given year (2006, as an example) as the last corporate supported cost increase supplement for existing worker health plans. Some corporations and companies are simply reducing their health care plan coverage in terms of corporate/company share funding of such plans.

While not all corporations and companies are fully integrated into the global economy, there is evidence that many of the remaining corporations and companies are using the 'global corporate lean model' as a blueprint for also reining in such employee compensation costs.

Corporations engaged in advanced global trade are pressuring domestic suppliers to rein in costs and trim profit margins to avoid additional offshore sourcing. Some corporations are directly advising their suppliers to move component and parts production offshore.

Advanced global trade is having a much larger effect on U.S. employee wage levels and total compensation than some are acknowledging or suggesting. Real wages are declining, and now...real total compensation is also in the early stages of a declining trend. Many of the changes can be attributed directly and indirectly to advanced global trade.

It's my judgment that the more important issues are the economic effects of real wage and real compensation declines that are impacting a growing proportion of American employees in a wide spectrum of industries.

The decreasing purchasing power less credit extension for many income groups is not sustainable as measured against existing standards of living. The economic implications of declining real wages and real total compensation for American workers are significant.

Advanced global trade is most certainly having a major impact on a growing number of American industries and related employment wages and total compensation.

If economists and analysts intend to have any credibility on the subject of advanced global trade and the impacts on U.S. employment, real wages, and real total compensation, then they need to piece together the entire puzzle. Few appear to be up to the task.

Posted by: Movie Guy | March 14, 2006 at 10:35 AM

-----

That's my take.

All the best.

MG

[robert e]

"(d) Declining union power is tricky. Unions exist to raise wages for their members, relative to other workers." - James Galbraith

I humbly, but strongly, disagree. Unions exist to raise wages for all workers. It is not in unions' interest to have significant numbers of workers who are willing to work for much less than union workers. Unions would in fact prefer that all workers be union members. The more workers, the more power. "Other workers" diminish that power.

Unions may compete with nonunion workers in a sense, but their primary purpose is to allow workers to compete with owners and management for the wealth workers create. Unions enable solidarity; solidarity gives workers the economic and political clout to achieve *and maintain* an egalitarian wage structure despite strong and continuous pressure to make that structure more exploitive. It should, therefore, be not tricky to see that a likely effect of declining union power is to increase wage inequality.

Where unions are strong, they will naturally try to use that clout to equalize wages because universal worker welfare is both their mission and in their interest. (This in effect brings "other workers" into the fold, extending solidarity, and therefore enhancing power.) Thus, "social democratic countries with strong union movements do tend to be egalitarian."

Of course there are complexities: whether workers themselves recognize the relationship between union power and their own long term political and economic well being; simplistic union vs. management dynamics; whether unions or management behave wisely, or overreach to their future detriment; corruption; etc. But in broad terms, it seems to me that the relationship between union power and wage equality seems quite straightforward.

[theCoach]

Slocum,
I responded previously, but it appears to have been eaten.

"And because of all this, Brin and Page are billionaires which, yes, contributes to inequality.

Taken as a whole, is Google a 'problem' you really want to 'solve'?"

The problem I want to solve is inequality, so yes, this is aproblem I want to solve. But you set up a false dichotomy here. If Page and Brin were only holding out hope that they might evenetually have $ 500 Million, do you think that would have changed their incentives, or otherwise interfered with the creation of Google? I sure do not.

And looking at this class of super rich, my guess is that they measure their wealth in relative terms, not absolute. In fact, I would wager a bunch of money that if given the choice Larry Ellison would rather be a Billion dollars poorer, if every one in front of him on the richest person in the world, became a billion dollars poorer than that.

Obviously, I am not at favor of putting to death everyone that does not release all source code, but I think you are vastly overestimating the value that monopoly IP protection, in this day and age, deliver to society as a whole. Different sectors are different, but I think with music, certainly the returns are negative, and I think Dean Baker has convincingly shown that Drug research protections are an extremely inefficient way to fund innovation.