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Another Call For Abolishing Patents, This One From the St. Louis Fed
New submitter WOOFYGOOFY writes "The most recent call for curtailing patents comes not just from an unexpected source, the St. Louis Fed, but also in its most basic form: total abolition of all patents. Via the Atlantic Monthly: a new working paper (PDF) from two members of the St. Louis Federal Reserve, Michele Boldrin and David Levine, in which they argue that while a weak patent system may mildly increase innovation with limited side-effects, such a system can never be contained and will inevitably lead to a stifling patent system such as that presently found in the U.S. They argue: '...strong patent systems retard innovation with many negative side-effects. ... the political demand for stronger patent protection comes from old and stagnant industries and firms, not from new and innovative ones. Hence the best solution is to abolish patents entirely through strong constitutional measures and to find other legislative instruments, less open to lobbying and rent-seeking.' They acknowledge that some industries could suffer under a such a system. They single out pharma, and suggest other legislative measures be found to foster innovation whenever there is clear evidence that laissez-faire under-supplies it."
The ideal system of government is a benevolent dictator. One person acting with consistent policy and absolute power putting the interests of the majority above special interests and himself. While it is possible to find such a person once every few centuries, it is impossible to maintain this system of government because a bad dictator will inevitably rise and send everything to hell. Every society in the world has gone through the motions of trying to "fix" their monarchy, and suffered revolution after revolution "fixing" their system trying to find a better single ruler. But now, we have realized it was always a losing battle and abandoned the monarchy altogether. Representative governments may be inefficient and suboptimal, but they are stable for the long term and do not require violent "fixes" periodically.
The argument presented by this article is that patent systems behave in the same way. While a "fixed" patent system would be ideal, its corruption inevitably recurs no matter how many times we actually manage to "fix" it because of how it inherently distributes money and influence among the concerned parties. The only solution, therefore, is to abolish the system entirely and use a completely different paradigm to produce suboptimal but stable results. In many industries that may in fact be laissez-faire, while in others we may need different, more targeted approaches.
Boldrine and Levine have show rather conclusively that drug development tends to go where the patents are not in their book, Against Intellectual Monopoly (http://levine.sscnet.ucla.edu/general/intellectual/against.htm). They also effectively demonstrate that the introduction of new drugs actually slowed with the introduction of patent protection in any country where patent protection is introduced.
For some reason, the assumption that patents foster innovation is taken as a fact without looking at the evidence amassed so far. I think it's grand that Boldrine and Levine lend a voice to skepticism of the "patents foster innovation" mantra, but I wonder, just how did they get on the board in a district of the Federal Reserve?
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