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Greenspan Examines the Economics of IP
lilgerry writes "Alan Greenspan is asking some tough questions about the correct balance between rewarding innovators and inhibiting follow-on innovators. There's not many answers here, but there's a hint that there could be some clear economic thinking coming to be added to the discussion. Several good questions raised, and in very precise terms that should get papers published on these topics for years to come."
You shouldn't be able to patent anything that has no mass. Think about it.
It's Christmas everyday with BitTorrent.
Wait, so when you patent an algorithm, it's just a mathematical thing, therefore it has no mass, so it shouldn't patentable. What about drugs? Are you patenting the physical drug, or the method of making the drug, or what? The method of making the drug has no mass. All patents can be reduced to massless things. What exactly are you measuring for mass? It's not as simple as you make it, I don't think.
Greenspan is saying everything that has been said on Slashdot and other venues: the laws are unbalanced towards hyper-regulation, and there's an "untamed" frontier trampling IP rights totally unaffected by the hyper-regulation.
Although said in the usual Econo-speak, one of his themes is that trying to use the court system to tame this frontier is a waste of time, and ultimately useless. Other markets don't need constant lawsuits and court intervention because everyone understands and respects the rules and have no desire to cross them. The rules seem fair and the market prices things at an appropriate level so there's little desire to break the rules by most participants.
That's Greenspans way of saying the DMCA and the Lawyer Heavy tactics are going to stunt growth. He's really suggesting that IP rules be re-written so everyone can respect them and live by them, and implicitly, the IP vendors should try learning to live in a true free market where their prices come down due to competition.
That's one of his themes.
The bitter lessons of a veteran coder: http://bitterprogrammer.blogspot.com
From the Article Header:
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At the 2003 Financial Markets Conference of the Federal Reserve Bank of Atlanta, Sea Island, Georgia
I think Greenspan is plainning on having the rest of the Fed look at this stuff real critically, thus he leaves the questions open. This is, hopefully a very good thing, as it might raise some questions about congress's continued protection of Mickey. As it is, I would have to place Greenspan as one of the more influential people in the US economy today. I swear, this man farts and the DOW drops three points. I think that, if Greenspan was to state that he dislikes the current Copyright "balance", we might see some changes to it come down the pipe.
As for trying to get some good answers, you do realize that this is
Necessity is the mother of invention.
Laziness is the father.
The whole idea behind patents is that you patent the PROCESS, not the material product. You can't patent a cheese burger or glass or steel, but you can patent the process of making the cheese burger, manufacturing and refinement of glass or steel.
You don't patent a car, you patent the DESIGN. Think about it, you can't patent matter. That's absurd. "You've got 10 molecules of naturally occruing versions of a material I've patented. You owe me XXX!"
Thinking like yours is why people people oppose anything with the word patent in it. You don't understand it at all.
Glad to see someone in a position of such great power and influence (arguably he is the most influential single person in American) considering these issues with deliberation.
Reform of IP laws for the better have long suffered from the impediment of entrenched special interests benefitting from the current laws.
To gain the trust of the extremely important business community, Greenspan has had to cultivate an aura of being above the fray of petty politics where insistent congressman want him to push the gas pedal to the floor just in time to make the economy "look good" right around re-election time, even if such policies are not in the long term best interest of the economy as a whole. Since Volker, the Chairman of the Fed has been the Wizard of Oz and business people like the predictability of low inflation.
Being in that position gives special credence to his words.
"Provided by the management for your protection."
Sigh. He lost me right there. I thought our objective was to maximize joy and minimize suffering. (I guess I'm either a utilitarian or a Buddhist.) Almost everyone seems to believe that the society with the fastest-growing economy is the best society for its members, but I've never seen a coherent argument to that effect. In fact, until I see something of the sort, I'm inclined not to believe it.
OK, if you're done being apoplectic about me challenging this particular sacred cow, how about explaining this belief to me slowly and calmly, in a manner suitable for a weak-mided fool like myself who somehow misses the point.
mt
To put it another way: free markets are beneficial, we all agree on that. We also most note that free markets are self-organizing. Which means that most people act in a way that supports the existence of a free market.
....old man voice....
:-) Well, we knew that was wrong, too.
Except that it's a chicken-or-the-egg problem. I disagree that free markets are self-organizing; trade existed, and markets emerged, mereged, and organized. Organization of this kind of thing is nearly always an afterthought, or a reaction. To take the state of nature argument, people act in a way that support the existence of free markets, only in situations where actors are of near equal standing, have something the other wants. This prevents the force or fraud angle. It would be nearly impossible for a consumer to deal with Wal-Mart in good faith without government protecting him from force or fraud.
What objectivism relies upon is that force and fraud never enter the equation between free individuals because it is antithetical to life. Hence the constant struggle between the protagonists in Rand's novels and the "looters."
When 20 million people trade files on P2P networks, they may be commiting an act which is morally wrong according to our present views, but they are merely exploiting a property of information that has always been bubbling under the surface: it can easily be copied.
This hasn't always been the case, and only technology has made it easy to copy. We've moved -- progressed to technologies that are copy-friendly for quality reasons, rather than for purposes of copying and "sharing." The fact of the matter is, Napster wouldn't have been popular if the mp3 kiddies had needed to dub everything from 45's.
In my day, sonny, we made mix tapes. Darn right it was a pain in the ass. And we knew it was wrong, but we didn't have the money to buy the real tape ourselves. We were too busy buying beer and cigarettes......
Technology today is simply exposing the false assumption, made long ago, that information is difficult to copy.
Again, I don't think you can make that argument. We've created duplicating devices for convienience, and some people have chosen to abuse those. It's just the degree of abuse. Some of it, also, is a backlash against overwhelmingly high prices of music. I *could* make a photocopy of a thirty dollar, 350 page book, for about three dollars and fifty cents (assuming about $0.01 per page, which is what most high-end copiers do). It's just a pain in the ass, and not worth my time. If I'm real eager to read a book, and don't want to shell out the money for it, I'll go put it on reserve at the library. Barring that, I can wait the six to eight months it takes to come out in paperback. Yes, that costs more than the photocopies, but it's more portable, and easier to read. And legal.
The bottom line on filesharing is......If MP3's were a quarter or less to download from a publisher's website (and there was an easy way to be able to burn it to cd in cda format), p2p would dry up for music. It'd still be there for warez and pr0n.
A "free market" in information is therefore not self-regulating, and should not be called a free market at all. It's more like a kind of "non-laissez-faire capitalism"
I addressed that a bit above. Again, assuming adequate protections from force or fraud, laissez-faire capitalism can flourish. It just hasn't been tried very much.
We should ask ourselves, is the massive regulation required to prop up this system worth it? Or should we just fix this assumption and start anew?
The regulations that have been phased in since about 1900 have totally destroyed any opportunity for a nice, free capitalist system. And you have to be honest about the root of those regulations: Communist and Socialist influence. Alas, many people still subscribe to those morally bankrupt philosophies, so we're kind of stuck. Short of a bloody revolution, there is no way to start anew. I'm prepared to deal with the lousy situation we've got now. It's better than the alternative.
I admire the simplicity of the capitalist ideal, but using it as a justification for making everything behave like property by enforcing scarcity where there is none, is an ugly perversion of capitalism, in fact, I would argue that it is the opposite of capitalism.
Capitalism is a means to manage scarcity, and it is very good at it, but artifically creating scarcity just so that capitalism may be applied is like shooting people to create a demand for hospitals:
"stop shooting people!"
"what, you don't like hospitals?"
That's funny because by definition Objectivists are pragmatic.
That's funny, since I haven't yet met an Objectivist who wasn't more concerned with the purity of the way things ought to be than about dealing with the way things are to achieve the desired result.
I'll stipulate that in theory, Objectivists should be pragmatic. However, in practice I find that Objectivists are about as pragmatic as 2nd year philosophy majors.
Oh, go on, check out my job.
Greenspan is a former "Randroid" and even though he has been holding a job that involves government micromanagement of a certain aspect of the economy, his exposure to the other side apparently still has him meeting Planned Economists with hesitancy.
"If our objective is to maximize economic growth.." If indeed.
And as for economic growth.. my cat got sick after many years of wellness. I took the cat to the vet and wrote a check for the bill she presented me. The vet's service and my payment -- that was economic growth. And thank Allah for the coming economic growth in the construction industry in Manhattan. More illness and disaster is just what this economy needs.
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
If drug research were publically funded, who would determine which drugs are researched? How would we know which are the best drugs to research, and which not? The free market is a wonderful mechanism to determine this
Umm, this is ridiculously false. First off, the free market is only good for determining how much money something is worth, not for determining how much society will benefit from something. And to answer the firts point, the same way everything else in public policy is done, the people* decide what drugs are to be researched.
History bears me out on this. Any student of economics knows that free markets invariably produce better outcomes overall than do centralised economies
Not when it comes to things of public welfare. Why do you think the US has what is generally regarded to be one of the worst health care systems in the first world, and the most expensive drugs? Why do you think senior citizens have to smuggle drugs across the border because they cannot afford them themselves? Answer: because health care in most all EU nations and Canada and Australia are publicly funded, and have massive publically funded drug research programs, because they try to look after the people, whereas the US is just interested in making a quick buck.
Sure, but not because of the tens of millions afflicted in Africa. Some African nations had started to distribute "illegal" generics, because their dying population cannot afford the patented drugs.
I'll repeat it for you. The free market, by definition, optimizes for profit. If AIDS research costs $5B and earns $6B, while a special drug for an ailment only Bill Gates has costs $5B and he's willing to pay $10B, free market will invest in Bill Gates' drug.
The fact that AIDS is hotly researched is because many relatively rich people are affected. Many diseases (TB, for example) that primarily affect poor third world countries are neglected by the free market, because there's no money there.
The free Market is the only way. If it was supported by public research, that would mean MORE taxes as well as Political influence.
No, many health issues are not best handled (nevermind only handled) by private industry. It will lead to abuses like:
- "Poor people diseases" getting too little
funding
- "Rich people diseases" getting too much
funding
- Unnecessary medication. Remember their
objective is to sell you as many pills as
possible without killing you or otherwise
making you stop buying.
A better approach is a hybrid. Let private industry work on "rich people diseases", because there the demand aligns with profit, where private industries work best. However, somebody has to take care of the neglected diseases.