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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.
Damn, I had my heart set on patenting neutrinos...
"Stop failing the Turing test!" -- Dilbert
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?
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.
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.
Alan Greenspan is asking some tough questions about the correct balance between rewarding innovators and inhibiting follow-on innovators
What balance? Doesn't rewarding innovators with a patent naturally inhibit follow-on innovators?
From the speech: How appropriate is our current system--developed for a world in which physical assets predominated--for an economy in which value increasingly is embodied in ideas rather than tangible capital?
Can't wait to see what they come up with at the conference. We've been saying the patent system needs an overhaul, wonder if they'll reach the same conclusions we've reached here.
-- If god wanted me to have a sig, he'd have given me a sense of humor.
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:
/. right?
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.
Indeed, the nature of intellectual property is importantly different from physical property. In particular, one individual's use of an idea does not make that idea unavailable to others for their own, simultaneous use. Furthermore, new ideas almost invariably build on old ideas in ways that are difficult or impossible to delineate. From an economic perspective, this provides a rationale for making the calculus, developed initially by Leibnitz and Newton, freely available, despite the fact that those insights have immeasurably increased wealth over the generations. Should we have protected their claim in the same way that we do for owners of land? Or should the law make their insights more freely available to those who would build on them, with the aim of maximizing the wealth of the society as a whole? Are all property rights inalienable, or must they conform to a reality that conditions them?
Hmm.... This is the exact same line of reasoning that I've seen in hundreds of /. posts. I think it's more than likely that Mr. Greenspan has pirated one of these postings. If he wants to make a living discussing economic issues, he needs to go back and innovate his own arguments, then exercise the due dilligence to make sure that they are in fact totally novel. This previously used argument is the rightful property of those whoever first posted it here.
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.
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.
This article is very relevant to this discussion: http://www.eff.org/IP//against_ip.article
Test 1 2 3 4
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
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?"
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.
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.
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.An interesting point was made about intellectual property rights in the health care industry (patents on medicine). Some here have argued that IP in the hands of corporations cause those in dire needs, such as AIDS patients, to go helpless. Others here argue that without intellectual property rights in the health care industry, nothing will ever get done.
It is important for everyone to realize in health care markets, governments should fund most if not all research; in the health care market, intellectual property suffers from market failure and inefficient allocation of goods.
In markets dealing with physical goods, such as a potato, goods are allocated efficiently because people who need those particular goods recieve them at the right price; that is, the demand for such good will be met by the supply for such good. Following this logic, if there is a market for, say bottled beef, those demanding the good will be supplied. Markets that allocate physical goods TEST such products to determine if they are useful and needed by society. Bottled beef would clearly fail the market test because people demanding bottled beef would be little to none, and the cost to supply such good would be greater than the benefit users or society derives. Markets that allocate physical goods act as a testing mechanism, determining whether society needs a particular good.
Intellectual property in the health care industry, particularly patents on drugs, does not need such testing mechanism because EVERYONE deems physical health necessary. A patent on AIDS drugs unnecessarily excludes those that can't pay for such drugs. Hence, intellectual property in the health care industry suffers one of the greatest market failures because everyone that needs drugs cannot recieve them. In this sense, health care, like national security, is a public good. Governments should find ways to provide health care to everyone universally, NOT exclude them ineffciently.