For the Stars

The suits are not the only ones who get paid far more than the average worker. Superstar athletes, rock singers, and Hollywood celebrities get paid outlandish amounts of money. Then again, those who object are free to not buy the products of such “overpaid” celebrities, so there should be no right for anyone to complain. Right?

Not quite. Many of these multi-million dollar earners are receiving rather large amounts of government largesse. Consider superstar athletes: they get paid to play in taxpayer funded stadiums. If the teams had to pay for their own stadiums, salaries would be significantly lower (but still high for the stars).

Consider singers and movie stars. Their high salaries are possible due to copyright law. And the government keeps extending the duration of copyrights for the benefit of Disney, AOL Time Warner and other media corporations. Copyright enforcement is a valuable service provided by the government, and it is a bit expensive to provide. Even foreign policy is affected by the quest to enforce copyright law.

Then again, such stars do pay a huge amount of tax dollars, so it is reasonable that they get services in return. And property rights enforcement is a proper function of government.

The problem is that I as a Libertarian want to get rid of the personal income tax. It is intrusive on privacy and expensive to enforce. I would prefer that special government service be paid using something akin to user fees, much as roads are paid for mainly by gasoline taxes.

Update (2018): The above was written back in 2003 when I was still active in the Libertarian Party. I left in 2007. Whether I should still be classified as a libertarian in even the broad sense is debatable.

One possibility is to go away from implicit copyrights and back to the requirement of active registration. To claim copyright protection on any work over a certain age, one should have to register the work and obtain a number to verify the registration, which must get placed on the copyright notice for the copyright to be valid. Part of the registration should include the price which the owner of the copyright thinks the copyright is worth. The government would then charge an annual property tax based on this declared value.

To make the value meaningful, this value should be the value that the author is willing to sell, vs. an estimated market price (which would be hard to determine). To ensure honesty, the assessed values would be public information, and anyone who found the value to be low could buy the copyright at the declared price from the current owner. If the owner was honest in her assessment, then both parties should be happy.

Some people may think that this is a bit too harsh in that an author could lose control over a work due to an unwise valuation, or that an author may not be able to defend a high valuation until after sales have been made. Here is one variation on this idea that might be more palatable: base the tax not on the value of ownership, but on the value of an annual (or possibly longer term) license (exclusive or non-exclusive) license to produce the work in unlimited quantity. An author could then lose control only temporarily. And keep in mind that this loss of control would be compensated in accordance to the stated value of the author.

This idea could also be applied to patents. There, the license term at issue should be longer than a year due to the time it takes to set up production.

If the government does a poor job of enforcing copyrights and patents, the declared values go down and the government gets less tax money, as ought be.

Finally, one reason for the huge earnings of the top entertainers is the limited number of broadcast channels. This leads to a winner take all situation. The arrival of cable television and the Internet has helped the situation significantly. There is one other area where it seems to me that improvement is possible: broadcast radio. Wherever I have lived, nearly all the UHF television frequencies were empty. Why wasn’t some of this bandwidth devoted to a new audio band? One television station uses considerably more bandwidth than an audio channel. And while we are at it, the new band could use something better than the flawed FM stereo encoding which the FCC mandated be compatible with the old FM mono.

Having said this, I have not done any in depth research into the matter. There may be legitimate reasons for the current situation. But keep in mind that it is in the interest of station owners, networks and top acts to keep the number of channels restricted…

Update (2018): Some of this bandwidth has been reclaimed since this article was written. And the Internet has effectively created a huge increase in bandwidth. I have since heard at least one pundit say that star musicians will soon be making most of their money on live performances and actually paying to be promoted on audio channels. I leave it up to the reader to determine whether this is happening; I don't follow pop music.