01 January 2008

An Economist Questions Intellectual Monopolies

Madisonian.net pointed me to a writer I'd not come across before, Dean Baker. He has a nice line in puncturing the economic nonsense published by the press. Like this, for example:

The NYT seems very eager to side with the recording industry in its protectionist question. How else can one explain the constant use of the term "piracy" to describe unauthorized duplication of recorded music. The NYT, which harshly denounces protectionist measures designed to benefit manufacturing workers, again committed this sin today in a column on the University of Oregon's refusal to comply with a subpoena seeking records on its students.

From the article, it appears as though the students had shared music files, which they may have purchased, among themselves. It is not evident that this is violating any law (last I checked, I can lend a CD to a friend), even if the recording industry doesn't like it. Rather than asserting that an act of "piracy" has been committed, the paper could simply substitute the more neutral term "copying." In most cases, it will have room for the additional letter.

That's good stuff, but it pales in comparison to the strong meat found in this essay entitled "The Reform of Intellectual Property." Obviously I'm not wild about the "eye-pee" stuff, but Baker is under no illusions:

It is remarkable that economists, who usually view themselves as advocates of free market transactions, unquestioningly embrace various forms of intellectual property rights, especially copyrights and patents. Copyrights and patents are government granted monopolies. They have their origins in the feudal guild system, not the free market economics of Smith and Ricardo. In fact, at the end of the 19th century, Switzerland and the Netherlands actually eliminated patent and copyright protection, with the intent of promoting free market competition. In spite of their feudal legacy, and their obvious status as forms of protectionism, few economists ever question the merits of the patent and copyright systems.

The paper then procedes to that, concluding:

Clearly there are very powerful interests that stand to lose from reform of intellectual property rules, specifically the pharmaceutical industry, the medical equipment industry, the software industry, and the media and entertainment industries. These sectors include many of the biggest and most powerful corporations in the world. But the strength of the resistance to reform does not affect the intellectual argument for reform. It would be difficult to identify more harmful economic policies than the current system of patent and copyright rules. They are few cases where the application of standard neo-classical economics could have such beneficial effects.

Glad to see that the software industry got a hat-tip there.

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