Economists Argue Patent System Should Be Abolished 376
nukem996 writes "Two economists at the St. Louis Federal Reserve have published a paper arguing that the American patent system should be abolished. The paper recognizes the harm the current patent system has caused not only to the technology sector but the health sector as well."
Re:Been saying that... (Score:5, Informative)
Because it's never existed, never will exist and even Adam Smith saw that the government was going to have to be involved to keep the actors honest. And it should be obvious to anybody who's actually dealt with corporate enterprises that they're more interested in the immediate profits than what they can profit from a few years down the road. Assuming that they're not planning to dismantle the outfit and sell it off chunk by chunk.
Re:Been saying that... (Score:4, Informative)
IBM, K-Mart, Hechts and Kodak didn't operate in free markets. They operated in regulated markets that enforced the lack of monopolies, along with other things that are detrimental to economic growth that the free market allows.
Re:Been saying that... (Score:5, Informative)
That's the case when you're the little guy, sure.
Once you start to get monopoly power, things get more interesting. In the absence of contrary regulation, you can prevent resellers or middlemen from handling competing products, preventing them from reaching market. You can get exclusive contracts on materials or infrastructure your competitors would need, driving up their costs and thus their prices; you can drive standards and make the creation of interchangeable or interoperable widgets unnecessarily expensive or complex... etc.
"The beauty of capitalism" works fine when the startup and infrastructure costs are small, the inputs widely available, the output truly fungible, and customers and suppliers unhindered in their ability to select the product they wish to carry or purchase. Here in the real world, we need regulation to ensure that the free market keeps working outside those ideal conditions.
Re:Been saying that...Wrong, Simply Wrong. (Score:5, Informative)
Please at least read page 13 of the paper, and throw out your well preserved assumptions of how the world works.
- I'll give you a taste of page 13:
"There are four things that should be born in mind in thinking about the role
of patents in the pharmaceutical industry. First, patents are just one piece of a
set of complicated regulations that include requirements for clinical testing and
disclosure, along with grants of market exclusivity that function alongside patents.
Second, it is widely believed that in the absence of legal protections, generics would
hit the market side by side with the originals. This assumption is presumably based
on the observation that when patents expire, generics enter immediately. However,
this overlooks the fact that the generic manufacturers have had more than a decade
to reverse-engineer the product, study the market, and set up production lines.
Lanjouw’s (1998) study of India prior to the recent introduction of pharmaceutical
patents there indicates that it takes closer to four years to bring a product to market
after the original is introduced—in other words, the fifi rst-mover advantage in pharmaceuticals
is larger than is ordinarily imagined. Third, much development of
pharmaceutical products is done outside the private sector; in Boldrin and Levine
(2008b), we provide some details. Finally, the current system is not working well:
as Grootendorst, Hollis, Levine, Pogge, and Edwards (2011) point out, the most
notable current feature of pharmaceutical innovation is the huge “drought” in the
development of new products."
More Evidence (Score:4, Informative)
The most recent issue of the Journal of Economic Perspectives is focused on the patent issue.
http://www.aeaweb.org/articles.php?doi=10.1257/jep.27.1 [aeaweb.org]
All articles reach similar conclusions to the first (Boldrin and Levine). They have been saying the same thing about patents for over 10 years, so don't expect their careers to be destroyed or whatever other apocalyptic scenarios were discussed above. They are academic economists who have worked for a several strong research departments and feds over the years. They (and others) provide very strong evidence that the current patent system does not help consumers/citizens. That is the purpose of laws governing commerce, correct?
It is highly likely that a perfectly designed and operated patent system would be better than no patent system. Given the reality of humans running things, this is unattainable and no patents are probably better than the current system for consumers. When examining the evidence, this claim appears obviously true (to me at least, but I read the Boldrin/Levine book a decade ago). The NIH and NSF could pick up the slack in funding pharma research, and in other fields, first-mover advantage seems to provide plenty of monopoly profits for innovators.
Re:Been saying that... (Score:3, Informative)
As long as there was no artificial legal barrier to entry, I think enterprising small companies could outmaneuver a monopoly.
You mean like patents?