I know that Nicholas is a big fan of schemes like Creative Commons (mostly because he emails me about it every now and then), but I’ve often felt that property is a useful thing to have.
However it’s one thing to have private property in easily defined concrete things – like land or chattels – another thing to define private property in semi-abstract objects.
My post today is inspired by this essay by Stiglitz. In the essay Stiglitz argues that medical patenting is deleterious to the lives and health of millions. He proposes that medical research prizes be established and funded for diseases such as malaria and AIDS, and that the research generated by those prizes be free and unemcumbered by patents. Patents would still be issued for penis pills and other “lifestyle” pharmaceuticals.
I think that the scheme has some merit in ameliorating the worst side effects of the current US-led IP model, but it doesn’t go far enough. Patents on biomedical research don’t strike me as sensible or desirable. It has been argued that exclusivity is required to recoup costs on research, but another gigabuck industry puts that argument to pasture.
Modern desktop PCs are almost entirely constructed around an architecture which is decades old: the “x86″ architecture. Intel created this line as a very simple, unimpressive design. Over time the model has been extended with horrible hackery and nasty kluges, but the underlying technology has rapidly improved according to Moore’s law.
Research in the area of microprocessors is dominated by a handful of labs, all of them belonging to manufacturers. Yet despite the blizzard of patents existing in the area, manufacturers generally recoup their costs from sales, in part because a lot of technology is freely shared due to cross-licensing of patent portfolios.
I don’t see any reason why firms similar to AMD (which produces its own x86-compatibles), IBM (which produces a whole family of buid-to-order chips) and Taiwan Semiconductor Manufacturing Corp (which produces anything for anyone – a generic fabricator) could fund research in pharmaceutical drugs.
At which point, it has to be asked: why do we persist with the current model? Aside from Chapter 17 of the AUSFTA, I mean. What are the economic arguments? It seems to me that any business which requires positive legal intervention to protect its business model needs to be allowed to die.
Anyone?
I think you need to develop your post somewhat. The business you seem to think should die because it has a deficient model is called capitalism.
Do you advocate the same thing re films? Are U2 profiteers riding on the back of the positively intervening legal order? What about Myer? what are the doing selling stuff that we could just take unless there was a positively intervening state on hand to arrest us?
We actually assume positive legal intervention as part of the context within which we live, let alone run businesses. There is a sob story somewhere (the Age?) today (I think) about Thai campaigners seeking to make generically a new AIDs drug – because the disease is developing resistance to Merck’s first drug that they were already making generically. I appreciate the saving human life part, but I think people forget too easily the importance of economics.
The thing that bugs me is that as rich people in rich countries we can afford to indulge our hearts at the expense of economics, because we have so much money it doesn’t matter if we waste lots of it. But in very poor countries they don’t have that luxury – getting the economics right there is paramount because each dollar is worth so much.
So it is fine to take Merck’s ‘IP’ now; certainly we will save lives. Stiglitz comes up with an economic argument as to how we can still hope to cope when the disease starts developing resistance to this new drug, I don’t really believe it (does the expectancy of a prize pay wages?) But what I am really interested in is why is this different from taking all the fish in one pond to eat because they are yummier than those in the other; until there are no more fish in that pond; or of cutting down all the trees for paper because it is easier and cheaper?
Jacques;
I think i get some of where you are coming from. Private property is a platform for some, but i have none (relatively).
Your points about patents are a sign of our times. Interestingly, though I offer comment only, the Yanks caught on to this process a long time ago:- The patent of ‘ideas’ and ‘processes’ and so on.
So lets assume that ‘ameliorating the worst side effects of the current US-led IP model’ is a good approach. We are then left with a problem at this juncture- which road to take now. Should we cross off the US road, reject it from further traverse, use it as a benchmark, or consider it just one of many in the matrix of paths less travelled.
The juncture between circuit-board architecture and the cross roads is patented long and wide. And as you rightly point out, it is mostly populated by old boards and old ideas.
However, we find many an idea is in fact held in the US patent office. Now I would ask, which is a good idea? and which is not; which one do we select? though they are all patented, or pending patent, do all these ideas represent the best of what we need as a society, and as a race. Or do all the sign -posts lead to freindly Rome.
We could liken the architecture of the PCCB, to one of a city, all sign-posted and replete with services and power installations. But is it a useable architecture? Should we patent it. Should we patent the Iraqi model? and, before or after rewiring?
Here, we have major philosophical questions to be asked of the US patent office. Does what the US patent office offer, really stack up as useable product for the entire world? and if not, where can global interests source new and enterprising architecture for IP protocol, and how can it be made free laws safe to protect it from random bits of code?
Codes such as Econofascism.
Ends
Jacques
i haven’t had time to read Stigliz (just back from a week away and about to launch into another round of relatives, friends, offspring and arguments and drinking), but you are on the right(eous) path. theres a good case to be made that much of the pharma development is funded buy public monies anyway at present with universities, researchers, public trials, access to patients etc.
much of current BIG pharma development nowdays is not focussed on lifesaving or breakthrough drugs but on minute changes, or alternative athways, to existing effective products. Enough change to claim a patent and also claim a “vast” improvement over the old product. This vast improvement is mostly a minor difference, an improvement for some and a “sideffect” for others. Thsi “vast” improvement is generally from about 85% effectiveness with 100% of patients to 87% effectiveness with 80% of patients and 90% effectiveness with 40% and so on.
oh yeah;
I forgot to mention viruses, contagions and genetic engineering.
Jacques,
I guess the essential case for IP is two-fold.
1. We need ‘artificial’ incentives to encourage innovation. This is a pretty reasonable argument, but as open source things are showing us, it’s amazing what people do even without protection.
2. That other systems like prizes don’t work very well. I think the latter point is a fairly reasonable one. Curing cancer, or even some type of cancer may happen as a result of a series of inventions without any one of them being the obvious breakthrough. Patents because they use the analogy of property create a kind of organic world of effort towards the goal which may not be able to be as well replicated by other mechanisms.
There are a whole lot of other considerations as well however. With discount rates of 15% or so, there’s very little case for patents lasting longer than about 15 years. And as we’re discovering more and more, patents are not a one way street – more protection may not mean more innovation. In software patents are completely unnecessary but they’re much worse than useless. They create a legal minefield for people trying to make software – including effectively public domain software (open source software). So it’s a bad situation.
Where the balance lies is hard to know, but certainly there are a range of areas where easy gains could be made – to start with patents should be reduced to (say) 15 years. Copyright likewise unless we want to be sentimental about individual authors. But there’s no case for doing this for large corporations.
If you want to see the radical case against all IP protection (except trade marks) made by a top line economist who is generally a fan of free markets and strong property rights, have a look at the e-book Against Intellectual Monopoly.
Eric Von Hippel looked at userspace innovation and found that the most innovation occurred with users and where the knowledge was freely shared, which he called diffusion. The example used was steam power in 19thC England. Richard Tevithick developed a high pressure steam engine and didn’t bother patenting it. That engine was innovated upon quickly. IIRC the manufacturers who wanted commoditised power got the engineers together to trade knowledge with the purpose of knowledge diffusion.
Hippel’s book, “Democratizing Innovation”, is readable online. It is well worth going through.
The example of steam engines is very instructive and taken up by the Michele Boldrin and David K. Levine in Against Intellectual Monopoly as linked above. James Watt was a nasty piece of work, like so many Intellectual Property Robber Barons. He persuaded the Parliament to grant him a retrospective extension of patent life, like the US IP community managed to do in the Uruguay GATT Round of negotiations.
Maybe so Jacques;
But when we apply a Marxologists perspective to notions of property and propertied, we get the real story.
Whilst one owns the IP, the other is in a position to exploit both the owner and the owned. If you can add up, exponential equations of a negative influence go bad real quick.
And then there is God.
Who is to judge that one man may exploit another, or his wisdom?
The architects of such have been judged since time immemorial by one who is greater than all.
Lest we not forget.
Coupla things here.
First, Stiglitz’ argument boils down to the classic “market failure” red herring. This goes a little something like this: the market is failing to provide drugs to poor people and _something_ must be done about it. What, exactly? *slaps forehead* Government
fundingprizes, of course!Why this problem is something to do with patents and not the fact that poor people can’t afford to fund drug research is a little surprising. Would we suddenly have more and cheaper drugs if pharma IP lacked legal protection? Nope – while EXISTING, patented, drugs would be made more cheaply than now, the economic incentive to produce – and thus the actual production of – new drugs would be substantially reduced. What’s slowing the development of a malaria vaccine is not patent protection, but the fact that the sufferers of the disease are generally poor and don’t have the market power (i.e. money) to attract the research dollars. Fat Americans do, however, which is why we now have diet pills.
If rich people want poor people to have drugs, there’s no reason why they can’t fund the research, production and distribution themselves, rather than appropriating someone else’s property. I believe that nasty capitalist Bill Gates (a bloke who REALLY knows the value of IP) is doing something along those lines already for diseases like HIV/AIDS.
Second, the analogy with PC microprocessors is particularly unhelpful to the anti-patent cause, as Intel has been a vociferous defender of its IP, and does not license its technology “freely”. It gets paid for the use of its property, just like any commercial enterprise would demand. Patents are not intended to prevent cooperation – their purpose is simply to protect the investment of the patentee.
Actually, my above comment was meant to respond to N Gruen; and not Jacques.
Government granted monopolies are simply an alternate business model and without them another business model will develop that still provides reasonable returns.
A monopoly might increase returns by 0% to 200% – that is all – first to market, reasonable marketing etc etc with no monopoly protection will still provide good returns. The monopoly only gives a premium.
A new movie comes out – will you see it in the authorized theatre or the the dump next door that is unauthorised but charges a dollar less? Will you pay good money for an unauthorized DVD that is more likely to be dodgey quality or will you pay a premium for an authorized DVD?
“Watt.. persuaded the Parliament to grant him a retrospective extension of patent life, like the US IP community managed to do in the Uruguay GATT Round of negotiations.” Or like Disney getting Mickey Mouse’s copyright extended to 75 years? A big public interest there.