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."

Comments

raises an interesting point

[Anonymous Coward]

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:

One key component, a law of contracts, governs the resolution of certain disputes between parties. Yet if adjudication were requested for more than a very small fraction of contracts, our court system would be swamped into immobility and the performance of our economy would suffer. Thus, if our market system is to function smoothly, the vast majority of trades must rest on mutual trust and only indirectly on the law.

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?

Re:All this patent crap can be resolved very simpl

[martyn s]

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.