Rah Efficient IP
On this blog I’ve long favored economic efficiency.
Economic efficiency is our best wide general analysis tool for finding win-win deals that get people what they want. That isn’t everything, but it is a lot. (more)
On this efficiency basis, I’ve defended many controversial policies, such as blackmail or polygamy. But oddly, I seem to elicit the most opposition by defending the mere possibility of efficient intellectual property! A widely held position and one embodied in law today. If you recall, I argued:
Before barbed wire, it make less sense to farm, or to enforce property rights in land against roaming animals. But after barbed wire, farming and land property rights made a lot more sense. … I’m happy to admit that today intellectual property (IP) is not obviously a good idea. Such property can create large “anti-commons” transaction and enforcement costs … Today, it is often better to rely on other social incentives to innovate. … [But] just as farmers developed barbed-wire, someday I expect IP advocates will develop better forms of intellectual property, and better technologies for marking, sharing, and enforcing such property. Using such innovations, I expect we will allow more and stronger intellectual property. … Which, like barbed-wire, will mostly be a good thing. (more)
Brad Delong responded:
Robin Hanson appears to think that people have the right to send killer robots off to hunt down people who use their ideas without paying. Me? I think this is an example of how thinking too much about property rights can madden the mind. (more)
(Scott Sumner says this “mischaracterizes” me; I agree.)
Matt Yglesias responded:
Robin Hanson is apparently the kind of libertarian who believes in government-created monopolies over the use of ideas: … Are we sad that Isaac Newton was unable to patent a method for calculating instantaneous rates of change? Does Hanson think he should be paying royalties to Michael Spence every time he writes about signaling? … The idea that a person, having shared his ideas with the world, now has the right to call the cops and have people arrested for taking inspiration from the idea without paying for a license in advance seems odd. Which is exactly why historically government regulation of idea-copying has been the exception rather than the rule. (more)
Yes IP’s high costs now make us use it sparingly. But as such costs fall, my guess is that efficient economic institutions will eventually include more ways for users to pay creators of innovations. I make no claims, however, about the exact forms such property and payments will take.
To reduce transaction costs, property rights may expire after a time, and both “usage” and “authorship” may be evaluated at large crude granularities, rather than “every time he writes about [Spence-style] signaling.” There may be random auditing of innovation usage, and folks may buy access to large bundles owned together by those who worked on related innovations. I don’t know if paying for access will be done before or after usage. I also don’t know if such property will be enforced by government monopoly or private law – perhaps people will voluntarily opt into property rights regimes.
What I do know is that enormous value is at stake in getting good innovation incentives and access, value that can probably be increased by better property rights. Economies show a weak a long-term tendency to adopt more efficient institutions, and that tendency is mostly a very good thing.
Actually, India now has domestically developed drugs. Saying the West's (especially America's) draconian IP-system is necessary to develop new drugs is like saying that paying protection money to gangsters is necessary to prevent people getting their legs broken by men with baseball bats. Most scientists and inventors don't care about IP and royalties, all they seek is the thrill of being the first, the joy of figuring out how something works, the immortality of being in the history books and to just live comfortably while working on their next project, what they don't seek is billions in profit (they won't get those anyway in our current system, upper management and the shareholders will). However, we live in a world where clever shareholders and executives have made sure they control all the resources (both physical and intellectual) that scientists and inventors require for research. Then they turn around and say: "see, scientists and inventors need us, and we need money and IP-rights, so money and IP-rights are necessary for research".
One more thing, and I've said this before: what exactly is fair about making money off of population size? Why should a creator keep charging money for downloads of his ideas, beyond the cost of his research? Why should an American creator get four times as much money as a German creator?
I think about IP in the following terms. Consider imagination as a resource. At a certain moment in time there is a given amount of imagination available. What IP does is to influence the direction in which it is used. With no IP, it is generally used to make quasi-identical copies of already existing successful items (these are low-risk, so more of them are made). What IP does is to force innovators to come up with things that are sufficiently different from already existing things (such that they are not covered by the existing patents). From this point of view, IP may be a good thing to have, if we want fast enough innovation in certain areas (e.g. medicine). (I'm not sure how this could be framed in terms of "efficiency", it's more about having certain desirable social goals.)
Consider some examples that illustrate this theory:
(1) India does not recognize IP when it comes to drugs. As such, it is a great producer of generic drugs, but, as far as I know, no novel drugs have come from India. This is understandable, as the search for new drugs is a costly and uncertain process.
(2) Open source pieces of software are largely copies of existing successful software (typical example: LibreOffice is a slightly improved clone of Microsoft Office 2003, the same thing is true about open source picture, video & music editors etc.). The notable exceptions seem to be the open source technological platforms (like Linux, Apache, MySQL, Java etc.). There may be a reason for this, as being free gives them a strong competitive edge over proprietary platforms (even if the latter are, perhaps, better quality). Moreover, it may be a desirable thing for platforms to change slower.
(3) Music since piracy became widespread has not been very innovative. From 1950s till the 1990s something radically new music appeared every decade. No longer so in the past two decades. (There may be an alternative explanation: the increased availability of old music provided strong competition to new acts.)