Patents Aren’t Signs of Economic Health

The President in the State of the Union speech pridefully observed that America issues more patents than any other country.  So what.  That’s not a sign of economic vitality.  It’s a sign of government giving privileged monopolies to some and allowing them to stop the march of learning, innovation, and research.  Matthew Yglesias understands.  John Bennett at Against Monopoly observes:

Matt Yglesias does a neat skewering of Obama’s State of the Union self-congratulatory allusion to our patents: “No country has more successful companies, or grants more patents to inventors and entrepreneurs.”link hereHe then does a riff on what would have happened if Newton had got a software patent on calculus. He would have sat on the patent “until Leibniz published his superior method and then sued the pants off anyone who tried to take a derivative without coughing up a hefty license fee.”

Yglesias manages to get in other digs over what is currently patentable and the likely lower quality of today’s patents. He concludes by noting patents do not create “property’ but rather are a regulation which creates a monopoly.

Read it.

The same site earlier this week reported how patents are actually slowing and blocking progress in one of the most promising arenas of medical research, stem cell research:

One of the most promising areas for medical research are stem cells, and now that the Obama Administration has lifted many restrictions on their use, you would think this line of research would be booming. Not so according to Medindia which reports that there has been such a rush to patent in this area that research is in fact very difficult now

Interesting and Good Stuff from This Week

  • From the Wall Street Journal: Bring Back the Robber Barons I think I’ll pass. I mean why stop with the robber barons? Why not go all the way back to feudalism where most workers are the personal property of some monied rich baron who’s buddy-buddy with the king?
  • From Maxine Udall (girl Economist): Bring Back the Robber Barons? I don’t Think So. You go girl.
  • “The $800 billion federal stimulus bill has boosted employment by 1 million to 2.1 million and helped the economy grow about 1.5% to 3.5% larger than it would have without the stimulus, the nonpartisan Congressional Budget Office said Tuesday.”  Read more as the CBO smacks down the arguments of critics of the stimulus.
  • Rajiv Sethi on Intellectual Property and Guard LaborGreat article including good further links about how wasteful and unproductive copyrights, patents, and other forms of government-granted private monopolies on ideas.  Really such efforts as copyright and patent schemes are really another form of attempted thought-control by a minority at great expense to the rest of us.  [disclaimer: I own a patent myself, but have never attempted to restrict it’s use]
  • Gavin Kennedy at Adam Smith’s Lost Legacy with What Adam Smith Actually Identified as the Appropriate Roles for 18-century Governments responds to one of the latest attempts to claim Adam Smith was an advocate of tiny-government, libertarian policies.  Gavin has a very detailed list of the many functions that Smith specifically said governments should provide (and not outsource to a private profit-making firm). It’s not at all what the Republicans, Libertarians, or Chicago Boys claim.  I really wish people would read the books before they claim some dead author supports them.
  • For the student interested in economic history, particularly macro, the history of Say’s Law is essential.  It defines the difference between Classical theory vs. Keynesianism/Progressive. Brad Delong has an excellent post on this.

More evidence against patents

Yes, patents, copyrights, etc., the intellectual so-called property protections are really profits-protection for existing large corporations.  The stronger patents and copyrights are, the weaker is innovation and growth.

…weaker IP protections might actually correlate with economic growth,…

via Scholarly Communications @ Duke » The joy of statistics.

Save the Whales! Abolish Patents!

Well, actually it likely wouldn’t save the whales. But, abolishing patents would likely re-invigorate the economy, revive competition, lower costs (particularly healthcare costs), and speed up innovation.

Levine and Boldrin help lay out the case against patents in this piece.  An excerpt ( I recommend following the link):

Abolishing so-called intellectual “property” (IP) won’t solve all social ills — and it certainly won’t save the whales. But it would be a big step in the right direction for solving a range of problems from the high cost of health care, to innovating our way out of the current recession. In a series of posts with my co-author Michele Boldrin, we’ll tackle these issues one at a time.

….

With the exception of Japan, the rest of the world spends only about 60-70% of what we spend for prescription drugs. The European countries’ average is 60%, with some countries at around 55%.That means that simply paying what the rest of the world pays would reduce our health care bill by at least 4% – that is about 0.7% of national GDP, or roughly $100 billion.

via David K. Levine: Save the Whales! Abolish Patents!.

Also, it’s worthwhile to go to their blog at