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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."
I think Greenspan is a smart guy. He has the moral understanding of Capitalism that he got from Ayn Rand and that lot, but unlike your average ideological Objectivist, he's also pragmatic. He understands that, say, the inefficiency of the federal reserve affecting interest rates is balanced against the short-term chaos and unpredictability of an unregulated money supply.
So what he's saying here is interesting and balances the ideology of "intellectual property" with pragmatic reality. The main point I notice is this:
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. This idea is echoed by Greenspan's statement above.
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. Technology today is simply exposing the false assumption, made long ago, that information is difficult to copy.
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"
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?
Alan Greenspan is the one asking the questions--
In finacial markets, this is likely akin to The Voice Of God coming down and asking you questions.
I think a intellectual output calls for two protections which are to be VERY differently managed. All too often the two are wrongly lumped into one or at least muddled.
One is attribution: Your idea is yours, and anybody quoting or using it should attribute it to you whenever possible. I think this is an inalienable right and cannot be argued away. The GPL, for example, is very clear on this.
Second is compensation: Your idea MAY be yours to profit from it. Society MAY decide to let you use the idea for profit and help defend yourself from imposters. This is NOT an inalienable right, but merely a social bargain and will change over time to reflect market and societal environment.
I think Alan Greenspan in his speech correctly goes back to the underpinnings of the second protection and asks whether our current system of IP protections benefits or hurts the economy.
As I read, an interesting thought struck me.
Part of the problem is that unlike real property secured by a deed, intellectual property claims are terribly vague. In fact, the entire field of patent attourneys pride themselves on being able to be just specific enough to get the patent granted and no more.
No property deed is allowed to claim this house and the land out yonder as a valid description, but that's exactly what patents are like. The resulting uncertainty is increasing the risks at an alarming rate. A good first step would be to tighten up patent claims to be as concrete as possible.
Even a strong supporter of IP should agree to that.