Launching the Innovation Renaissance

by on December 1, 2011 at 7:36 am in Books, Economics, Law | Permalink

Launching the Innovation Renaissance (Amzn link, B&N for Nook, also iTunes) my new e-book from TED books is now available!  How can we increase innovation? I look at patents, prizes, education, immigration, regulation, trade and other levers of innovation policy. Here’s a brief description:

Unemployment, fear, and fitful growth tell us that the economy is stagnating. The recession, however, is just the tip of iceberg. We have deeper problems. Most importantly, the rate of innovation is down. Patents, which were designed to promote the progress of science and the useful arts, have instead become weapons in a war for competitive advantage with innovation as collateral damage. College, once a foundation for innovation, has been oversold. We have more students in college than ever before, for example, but fewer science majors. Regulations, passed with the best of intentions, have spread like kudzu and now impede progress to everyone’s detriment. Launching the Innovation Renaissance is a fast-paced look at the levers of innovation policy that explains why innovation has slowed and how we can accelerate innovation and build a 21st century economy.

Here is a blurb from Paul Romer (NYU):

Progress comes from improvements in both our technologies and our rules. Alex Tabarrok makes a compelling case that in the United States, our rules on patents, education, and immigration are holding us back. If you want to think clearly about policies that matter for growth, turn off the TV, stop surfing the web, and read this book!

I discuss prizes and education in Launching and so was especially pleased to get this endorsement from Tom Vander Ark, formerly the president of the X PRIZE Foundation and the Executive Director of Education for the Bill & Melinda Gates Foundation and now CEO of Open Education Solutions.

If you’re a fan of MarginalRevolution like I am, you’ll want to read Tabarrok’s latest book. If you’re interested in innovation like I am, you need to read Launching the Innovation Renaissance. Alex poses thought experiments from patents to prizes, from health to education to immigration. He skewers Soviet-style employment bargains and offers insightful alternatives to improve our educational system. Alex is occasionally snarky, often witty, always incisive. Read this on your next flight.

FYI, I began this book before I read a draft of Tyler’s book The Great Stagnation and was interested to see that although we share a few common themes that perhaps due to differences in personality Tyler focuses on describing problems while I am more excited to promote solutions!

Eat the Babies! December 1, 2011 at 7:48 am

We are going to see a lot of innovation going forward, and no doubt a good bit of it is going to come from Americans, but do you really think there’s any hope that this country is going to “win the future?” Our time is done. We’ve turned into a scared country concerned much much more with protecting what we have than accomplishing anything. Success is thought very little of in terms of what you do. It’s all about bank accounts and nothing more. It’s a doomed way of thinking, but… so be it. Some other group of people will rise up and it will probably be a very surprising nation that does it, and they will win the future. More power to them. We had a nice go of it, but lately it’s all been a hash. Let some else take command.

Andrew' December 1, 2011 at 10:01 am

Or…assume that some minor tweaks can have big impacts. For example, stop borrowing money to pay for offshoring.

msgkings December 1, 2011 at 11:31 am

Plus, ‘win the future’ is a meaningless concept. What does that mean? Just because the gap between the US and the rest of the world is closing doesn’t mean we can’t continue advancing.

Britain ‘won the past’ but I doubt most Britons wish they were living in Victorian England, with the lifespans, hygiene, and attitudes of the era.

D December 2, 2011 at 10:47 am

+1.

There is the undying meme about the USA that says we have to be #1 in everything. But in many human development categories we’re not even in the top 10. One place we do seem to be #1 is self esteem.

Dan Dostal December 1, 2011 at 7:24 pm

Hyperbole it may be, I’m not convinced anyone else can “win the future” while we recover. The ball is still in our court, even if we’re playing defensively. International prestige and power are zero-sum, and no one is moving against us very effectively. All the Americans that think China owns us haven’t heard about the impending Chinese fiscal crisis. And that of course ignores China’s structural problems and their potential for a highly disruptive social revolution. The only countries with better outlooks are too small to be in the game. America will be top dog for a while, but we have plenty of chances to lose that position.

sa December 1, 2011 at 8:26 am

Got it. Looks interesting.

ThomasRemand December 1, 2011 at 8:41 am

And keep us posted about what the Amazon e-book experience is like as an author: is it simple, confusing, stressful, fair, unfair, etc.

Corey December 1, 2011 at 8:53 am

Any chance Russ will have you on Econtalk to discuss the book and its thesis?

NAME REDACTED December 1, 2011 at 2:24 pm

That would be cool!

The Anti-Gnostic December 1, 2011 at 10:07 am

Is there anything in that book about eliminating government’s trillion-dollar footprint in the capital markets?

Also, I am genuinely puzzled about this CONSTANT immigration drumbeat: markets are global; capital goes wherever it wills; communications and travel are a breeze; and there are millions of immigrants to the West already here–who’s left over there? And is life in places like China, India and South America really so stultifyingly awful that all this untapped genius must be moved to some US or Canadian suburb or they won’t find a cure for cancer?

Dan December 1, 2011 at 11:11 am

Um, yes?

Peter Schaeffer December 1, 2011 at 3:29 pm

Dan,

China and India have vast R&D establishments at this point. India is a world leading pharmaceutical producer, supposedly the 4th largest in the world. See http://en.wikipedia.org/wiki/Pharmaceutical_industry_in_India.

A genius in China or India has plenty of opportunities to cure cancer. Letting such a person enter the U.S. might benefit America. However, let’s not pretend that people can only innovate here.

Dan Dostal December 1, 2011 at 8:00 pm

Dan’s answer was fairly on-mark. The wiki cited link actually claims thrid largest, but not in R&D, rather by volume of drugs manufactured. I would let this all stand, but I cannot let your point about a genius in China or India having opportunities stand. First off, if by genius you mean those who perform very well in school, you are correct, but have a very different notion of genius than many in the US. Second, opportunity in either India or China is mostly for the privileged few. Rags to riches stories certainly exist, but only rarely do to brains. And from what I’ve read, brains in China are even more just property of the state than your typical worker.

Cliff December 1, 2011 at 9:24 pm

Yeah, India is a huge producer of generic drugs, not exactly known for their blockbuster drug development. I’m not an expert, though.

Rahul December 1, 2011 at 11:46 am

BTW, have you ever traveled to any of those three regions you mention?

CBBB December 1, 2011 at 12:21 pm

Depends where you live in China. Hong Kong and Shanghai are pretty awesome I don’t understand why someone would move to some dump like Houston from there. Although i guess if you’re moving to the Bay Area or New York that’s an acceptable trade.

The Anti-Gnostic December 1, 2011 at 12:37 pm

No I haven’t, but I see lots of media devoted to travel and culture for all three regions. So if Americans and Europeans will pay thousands of dollars and file immigration papers to go there, how bad can those regions be?

And if they really are so awful, so devoid of opportunity, why do we want to relocate the same people who have failed to create a viable society over here?

CBBB December 1, 2011 at 12:44 pm

It’s more fun being in Asia when you’re not Asian.

But more seriously there’s a number of factors to why it might be more difficult to get ahead in some of those countries; for example a more rigid hierarchical structure ( although I think this is becoming the case in North America), the dominance of one political party that controls opportunity through political favors. It might also be that while you might be a smart person in country A with talent in some industry X the majority of the capital investment in industry X already exists in country B and so it would be simpler to move the person from A to B then re-establish an entire industry in country A.

Yes I know where you’re going, your typical Social Darwinist bullshit about how all the inhabitants of a country are to blame for the state of their country blah blah blah.

The Anti-Gnostic December 1, 2011 at 1:02 pm

Okay, so you’re telling me China, India, Chile, Brazil, et al. are really just so bad? Only the clear, ultra-capitalist (?) air of West LA or Alpharetta, Georgia can possibly nurture innovation?

If East Asia, the Indian subcontinent and South America are so irredeemably bad that the next Steve Jobs just has to be rescued from that awful squalor, why even bother doing business with them? And by what right do we cherry-pick talent that is apparently sorely needed elsewhere?

There is a fundamental dissembling and disingenuousness to the pro-open borders position.

Cliff December 1, 2011 at 1:22 pm

Anti, you’re not making any sense. You’re knocking down strawmen and then refer to some “right” to cherry-pick talent as if we need one (how about freedom of contract?). I’m not pro open borders as in “let every unskilled Hispanic person enter the country.” But we absolutely would be way better off to allow in very productive people from other countries. I don’t see how you can argue against that.

The Anti-Gnostic December 1, 2011 at 1:42 pm

Cliff: I question the need to import people of whatever level of productivity from a foreign, and in a number of respects, antithetical culture. How is smart Jewish immigration to the West Bank working out for everybody? How about smart Arab immigration to Israel? How about Morroccans and Saudis who like to attend flight school? Why can’t we just import their work product and avoid all sorts of problems? It’s a global, inter-connected planet, isn’t it?

The case has not been made that East Asia, South America and India are just so awful that nobody could possibly innovate over there (quite the contrary) and we can’t just import their work product. This is just more illogical American exceptionalism. And again, wouldn’t it be better for everybody if their talents stayed in their home countries? With an internet, shipping lanes and air travel, why must they be here?

Cliff December 1, 2011 at 2:11 pm

It’s not that they MUST be here, it’s that they are much more productive here and they help our economy tremendously being here. After, all, why can’t high IQ people in rural areas stay there? Why do they HAVE to go to Silicon Valley or New York City? Where you are really matters, you can’t just import work product from anywhere in the world and have it be just as good as having the person sitting in your office.

I don’t even know what you are talking about with Israel and flight school. Our country is based on immigration, we have incredible diversity. You think Israeli people and Chinese people are so antithetical to our culture we would be better off without them? That’s crazy.

Peter Schaeffer December 1, 2011 at 3:34 pm

CBBB,

“Yes I know where you’re going, your typical Social Darwinist bullshit about how all the inhabitants of a country are to blame for the state of their country blah blah blah”

Got a different model of reality? The correlation between how well immigrants do in the United States and how well their home countries do is rather striking. Extreme selection effects, can alter this linkage. However, for large scale immigration the regression looks rather good.

Compare say Asians in Europe with North Africans. Any guess as to which home countries are doing better?

CBBB December 1, 2011 at 4:04 pm

Peter Schaeffer,

Interesting, but it seems to me that AG here isn’t a big fan of letting Asians in either.

And AG who said that was at all anyone’s argument? You’re just making shit up.

Peter Schaeffer December 1, 2011 at 4:15 pm

CBBB,

Another comparison might be Mexicans in the U.S. versus Koreans. Some number of years ago, I check long term education statistics for Asia versus Latin America. The results were striking. Latin America lagged far behind Asia decades ago and still does.

Of course, richer countries typically have higher levels of education than poorer countries which makes the cause / effect correlation difficult. However, the data showed that even very poor Asian countries were better educated than considerably richer Latin American countries (say in 1950). Since then the once poor, but well educated Asian countries (Japan, Korea, etc.) have gone on to become quite rich. Latin America has stagnated by comparison.

I favor limited, highly selective immigration. We don’t need more poor people. We have enough already.

CBBB December 1, 2011 at 4:38 pm

This stagnation of Latin America ties in with how poisonous natural resources can be to long term economic health, going all the way back to the silver mines of the 1500s.
Most of Asia is quite the opposite in this sense, especially Korea and Japan.
I know a bit about Korean economic development though but I thought that the posters on this blog were ardently against heavy industrial policy.

D December 2, 2011 at 10:58 am

Leave out nationalities for a moment and consider intra-US migration.

I live in Boulder, Colorado. Over the last 20 years it has become a thriving place to start tech companies, and it’s accelerated even more in the last five. Almost without exception all the founders of those companies come from somewhere else, as does a huge percentage of their employees. The wealth created here has been very beneficial to the community at large.

Further, *as a DIRECT result of all the in-migration* it’s now much easier to start a company here (more capital, mentors, skilled workforce etc). And now Boulder is viewed internationally as a viable, small-scale alternative to Silicon Valley. Which attracts more talent and the cycle continues.

What if Boulder decided it didn’t want people from out of town and out of state to move here? What would be the point?

Andrew' December 2, 2011 at 5:08 am

“why do we want to relocate the same people who have failed to create a viable society over here?”

The same reason we should trade their entrepreneurs for Barney Frank.

Brock December 1, 2011 at 2:11 pm

“And is life in places like China, India and South America really so stultifyingly awful that all this untapped genius must be moved to some US or Canadian suburb or they won’t find a cure for cancer?”

Yes. You might want to read Hernando de Soto (the still-alive economist; not the dead conquistador), or just check out the competiveness rankings released by any number of economic think-tanks. It’s not that a creative person is dulled into stupidity by being in a less-developed country, but that they are unable for any number of reasons to form a corporation, attract capital investments, or retain good employees/co-founders due to the legal and market shortcomings of the country they find themslves in.

Some economies are getting better at this. China in particular. Chile is also focused on imrpoving its innovation infrastrucure. But some countries are facing seemingly intractable social shortcomings (see how India is getting worse in the corruption rankings, not better) or are swept up in anti-capitalist movements (see nationalizations in Venezuela).

Peter Schaeffer December 1, 2011 at 3:22 pm

TAG,

American style immigration is an anti-innovation policy… And a very powerful one at that. The immigrants America is actually getting are considerably less educated than the natives. See point 3 of “The amazing truth about PISA scores: USA beats Western Europe, ties with Asia” (http://super-economy.blogspot.com/2010/12/amazing-truth-about-pisa-scores-usa.html) for some simple data. Of course, you could also look at school systems swamped by immigrants and their children.

Another poster (Careless), noted that Marshalltown, Iowa now has some of the worst public schools (http://www-origin.greatschools.org/iowa/marshalltown/schools/). But not to worry, the schools do advertise food stamps, housing assistance, child abuse prevention, substance abuse treatment, etc.

Of course, I could produce the usual horrible statistics for California schools… The good news is that California doesn’t always rank 50th in the nation. Sometimes it rises as high as 49th or 48th.

More specifically, there is abundant evidence that cheap imported labor has made the U.S. a laggard in agricultural innovation. Type “grape harvesting mechanization” into Google. The rest of the world (notably Australia) is far ahead of the U.S. Worse, the machines appear to have devised abroad as well.

Cheap labor stymied both innovation and the exploitation of innovative technology in agricultural technology in the U.S. No surprise really. Many 19th century commentators noted that America’s lead in labor saving technology was a consequence of high wages. Low wages now have the reverse effect.

CBBB December 1, 2011 at 4:20 pm

Australians also drink that lovely product of mechanical grape harvesting: goon. It’s great if you don’t mind your wine flavored with birdsnest, locusts, rats, and all kinds of other great stuff.

The Anti-Gnostic December 1, 2011 at 4:46 pm

Yeah, and you can’t find good slaves to pick cotton either. That’s why nobody grows cotton these days.

It really cracks me up how the open-borders folks go all Luddite when the topic is immigration. (“We can’t possibly communicate ideas and work-product over the World Wide Web! And do you know how slow it is to ship imports via the clipper lines? And what if they run into Edward Teach’s fleet?”) And nobody ever gets around to explaining how driving down inputs per worker to Third World levels is supposed to make us all rich.

Bill December 1, 2011 at 8:18 pm

Agree regarding labor mechanization and cheap labor.

When there there strikes in California over farm labor, UC Riverside began developing machines to pick grapes.

Phil Goetz December 22, 2011 at 3:02 pm

“And is life in places like China, India and South America really so stultifyingly awful that all this untapped genius must be moved to some US or Canadian suburb or they won’t find a cure for cancer?”

The untapped genius must grow up in India or China or Europe, where the educational system, unlike the US system, identifies the best students and pays for them to go to the best schools. The untapped genius must then move to the US once they’ve been accredited by attending the best schools.

Genius born and schooled in the US, or born and schooled overseas, is mostly wasted.

The Anonymouse December 1, 2011 at 10:34 am

“due to differences in personality Tyler focuses on describing problems while I am more excited to promote solutions!”

Oh, snap. :)

anon December 1, 2011 at 11:19 am

I’m glad to see Alex posting more.

question the question December 1, 2011 at 10:50 am

Curious if there are libertarians who might struggle with the idea that patents are a form of (intellectual) property rights and thus it should be one of government’s main functions to protect them.

Andrew' December 1, 2011 at 10:51 am

Struggle? No. Disagree? Possibly.

question the question December 1, 2011 at 12:48 pm

I think struggle is the right word given that property rights are usually top of the agenda for most libertarians.

There’s a reason it’s called intellectual property.

Andrew' December 1, 2011 at 12:56 pm

“There’s a reason it’s called intellectual property.”

Partly marketing.

Urso December 1, 2011 at 1:40 pm

Yup. And branding itself is considered a type of “intellectual property,” which goes to show you how far that term falls from traditional definitions of property.

question the question December 1, 2011 at 1:46 pm

I think you’re talking about trademarking, but nice trolling nonetheless.

Urso December 1, 2011 at 4:16 pm

I’m not sure there’s a relevant distinction. A trademark is, by legal definition, a word or symbol (usually) used to signify that a good or service came from a particular source. That’s identical to my understanding of branding, although branding is something a little more informal.

Dan Dostal December 1, 2011 at 8:20 pm

No trolling. Intellectual property is a recently invented word to sell the very notion that ideas can be owned. No matter how often lawyers argue that their clients “own” their IP, intelligent judges know they mean “have been granted temporary monopolies”.

Mark December 1, 2011 at 1:00 pm

And that reason is to make it sound like a reasonable thing to defend. Intellectual property isn’t property, in that “stealing” someone’s IP doesn’t actually deprive them of anything.

Oh, sure, it might cause them to make less money, but all sorts of things do that. If my neighbor opens a hotdog stand, and then I open one right next to his, he can’t accuse me of violating his “marketplace property” rights by depriving him of revenue that he “should” get.

(fwiw, I think there should be some form of patent and copyright law, much more limited than what we have now. You just can’t justify them with libertarian thinking.)

Andrew' December 1, 2011 at 1:18 pm

You probably can justify them, and you can also criticize them. And when I do that, I come out with a much more limited system much like yourself, not least of all because ‘we’ are doing it wrong. Maybe when they stop doing goofy stuff that appears to clearly be anti-innovation (i.e. the computer industry) we can reconsider. What you can’t do is just call something property and have that magically make it equivalent to other things called property.

Urso December 1, 2011 at 1:41 pm

It’s not even that difficult — lessen the terms! This isn’t rocket science.

question the question December 1, 2011 at 1:51 pm

“What you can’t do is just call something property and have that magically make it equivalent to other things called property.”

I get it. You must be the guy in charge of defining what falls under the acceptable aegis of “property.”

Andrew' December 1, 2011 at 2:17 pm

One of them.

Dan Dostal December 1, 2011 at 8:24 pm

Now I get it. Good flamebait ‘question the question’!

Andrew' December 2, 2011 at 3:39 am

Get what?

Cliff December 1, 2011 at 11:59 am

The opposite of this. Patents are government-created monopolies- created for specific social purposes.

question the question December 1, 2011 at 12:37 pm

If I pour billions of dollars into research and development and come away with a viable marketable product, you as my competitor should be free to leech off of my hard work and financial investment?

I’m curious how this spurs innovation. In that environment, your incentive is to wait for others to do the heavy lifting.

reframe the question December 1, 2011 at 12:53 pm

If one of the roles of the government is to create legal monopolies for the purpose of spurring innovation, but the framework actually in place has the effect of diminishing innovation on net, then revisions to the framework ought to be considered.

If an environment would be sufficiently innovative absent the current IP structure (perhaps: software, genetic research, books, music), then the law permits all the downside of a monopoly without supplying the hypothesized upside.

question the question December 1, 2011 at 2:00 pm

First of all, I don’t concede that the main purpose of patents is to stimulate innovation – Alex’s contention was that patents can be obstacles to innovation. The purpose of patents, from my point of view, is to protect investment. And I would extrapolate that in some cases, yes, doing away with patents would inhibit innovation.

As to this:

“No they are actually social constructs. They would not cease if government went away. Government acknowledges them because they are fundamental to society. IP rights they just made up out of nowhere.”

This makes no sense. If there were no government/legal system in place, property rights wouldn’t be an unassailable fact of nature.

Dan Dostal December 1, 2011 at 8:26 pm

We as a society allow you to protect your investment because we see it as a public good for you to have incentive to invest. If it weren’t in the interest of the public good, then why should the rest of us give a hoot about protecting your investment?

question the question December 1, 2011 at 11:17 pm

You can say the same about protecting property rights. And any other rights granted by law for that matter.

question the question December 1, 2011 at 11:47 pm

From Wikipedia on (Ayn) Rand:

“Rand argued that limited intellectual property monopolies being granted to certain inventors and artists on a first-to-file basis as moral because she viewed all property as fundamentally intellectual. Furthermore, the value of a commercial product comes in part from the necessary work of its inventors. However, Rand viewed limits on patents and copyrights as important and held that if they were granted in perpetuity, it would necessarily lead to de facto collectivism.”

Seems about right given my (not recent) reading of Atlas. Hank Rearden was forced to give up his formula for Rearden steel for the common good if I remember correctly. A notion most distasteful to the author, no doubt.

Andrew' December 2, 2011 at 3:40 am

QtQ,

Come over to my house at midnite through the window and I’ll demonstrate the difference between intellectual and real property.

Andrew' December 2, 2011 at 4:14 am

“We as a society allow you to protect your investment…”

This is a very arrogant, statist way of putting things, in my view. Property was before government was. And while IP is a fabrication is a clue, that’s not exactly why I’m skeptical of it.

Let’s say you said with the same absolutism that qtq started the discussion that the government’s job was to protect real property. Then they couldn’t tax, then they couldn’t exist, then they couldn’t protect property. So, you can’t just call something property and say that imbues the properties of property.

reframe the question December 2, 2011 at 8:24 am

To loop in some of debate with Cliff’s position, the key difference between IP rights and personal property rights is excludability. (Cliff, I suspect you’d agree with that, and jumped the gun a little.) All rights exist in the framework of the government. Because accessing physical property has inherent excludability, the government’s role here is simply protecting property rights through its vested police powers. These personal property rights flow right out of a group pulling itself out of a Hobbesian State of Nature/War and agreeing not to independently enforce inherent excludability. Not so with IP!

IP is nonexcludable, a priori. If you made known a song, a math theorem, or pharma chemical in the State of Nature, you have no means creating or enforcing artificial excludability. That’s what Cliff means when he says the government made it up — an ‘intellectual property right’ is a paper right. Being motivated by simply “protecting your investment” begs the question: how/why to construct the enforcement of artificial excludability on songs, theorems, chemicals, etc. That gets you back to net public good and the value of innovation.

Cliff December 1, 2011 at 1:25 pm

I didn’t say anything about whether it spurs innovation. My personal opinion is that patents are net positive in some areas like pharma, net negative in others like software, and overall MUCH less effective than they could be. Changes to the patent system could be incredibly powerful in spurring innovation.

Also, I am a patent attorney.

Peter Schaeffer December 1, 2011 at 3:41 pm

Cliff,

“Also, I am a patent attorney.”

Your assessments look accurate to me. Single point patents (a new drug molecule) with high potential returns would appear to be a net positive for innovation. Patent pools where nothing can be done with licensing every patent in the pool (or the pool as a block) appear to diminish innovation.

Some number of years ago, another patent attorney told me that entry into the semiconductor industry was effectively barred by patent pool. Only a firm with a large number of patents would ever be allowed to join the pool. Since a large number of new patents would take years to accumulate, that meant never because an entrant couldn’t produce products in the interim.

These observations were made more than a decade ago so they may no longer be valid. However, the came from a semiconductor patent attorney.

Dan Dostal December 1, 2011 at 8:29 pm

PS – that’s just a symptom of the massive overall cost of entering the semi-conductor industry. Chip fabrication has insanely expensive start-up cost, completely ignoring the legal minefield.

Steven Donegal December 1, 2011 at 12:44 pm

but at some level, all property rights are government created monopolies created for specific social purposes. Why are patents different?

Andrew' December 1, 2011 at 12:54 pm

Well, let’s start with the fact that a patent is very different from a gold mine and then do some more thinking.

Andrew' December 1, 2011 at 1:19 pm

“all property rights are government created monopolies”

Property RIGHTS, maybe, probably not, but definitely not property.

question the question December 1, 2011 at 2:02 pm

Tell that to the folks at .

question the question December 1, 2011 at 2:03 pm

That’s supposed to read:

Tell that to the folks at “insert big pharma name here.”

Andrew' December 1, 2011 at 2:21 pm

Government can define the concepts of what they will or won’t protect. That doesn’t in itself change the nature of the material entity that they are describing.

I suspect “Big Pharma” is big almost entirely because of government. Look at how many small companies develop the science behind a drug and then sell out to a pharmaceutical giant. Why would that be?

Turkey Vulture December 1, 2011 at 2:48 pm

Yes, all property rights simply grant some sort of monopoly power to the person enjoying the right. Determining the proper extent of these rights requires some sort of normative perspective. For some, these rights may be an end in themselves, but I think most take a more utilitarian view of property generally, and intellectual property in particular. We grant government-protected rights over real property to stimulate investment. We do the same for investment in innovation. There is a socially optimal level of investment in both real property and innovation, and too extensive of property rights lead to over-investment.

I think property rights are a central tenet of libertarian thought because they are, broadly speaking, fairly reliable means of increasing individual liberty. But only up to a point, and I would prefer that no one see property rights as an end in themselves.

Cliff December 1, 2011 at 1:23 pm

No they are actually social constructs. They would not cease if government went away. Government acknowledges them because they are fundamental to society. IP rights they just made up out of nowhere.

Andrew' December 1, 2011 at 2:25 pm

They are even more than social constructs.

Noosa Accommodation December 2, 2011 at 12:47 am

My Noosa holiday was great fun with the rise Noosa apartment. The luxurious stay I had there, I can never forget for my life. The hospitality that Noosa accommodation gave was so good, that no one can match it. In short my holiday was just wow!!

Doug December 1, 2011 at 7:20 pm

Actually Spooner, who many would identify as a proto-libertarian, was strongly pro-ip. I believe he actually favored perpetual patents and copyrights.

Cliff December 1, 2011 at 9:25 pm

Wow, that would be a true nightmare.

Andrew' December 2, 2011 at 3:37 am

If tradeable, then what we have is the incentive to innovate on the one side and the losses to government on the other side. We know what a disaster the government and courts are, and there should be some data on the incentive to innovate by now.

Sergey Kurdakov December 1, 2011 at 11:23 am

The best advices I could think of are

1) develop really working smart drugs and use them as much as possible
2) focus current research on reproduction technologies and on ways to test babies for their IQs.

Lynn claims that it is possible to have 15 IQ points + for each family for each generation ( up to possible 200+ IQ points ) even it is just 10 points and only 20 percent of population would count on the procedure – then there would be sizable effect in innovation.

as of all other advices – I think that those who think there is a huge potential does underestimate real benefits of current internet. In fact those benefits actually show that there is really little room for any policy ( as even this huge change in information exchange actually did not change innovations outcomes to some visible degree, but internet is really makes huge difference. I could attest – that the question I posed for me – I will never hope to be answered if not internet (even if I had access for the best libraries – and I had not in my town ). Now I got those answers. ).

changing patent system might have a temporary effect of recombination of recent discoveries, then there would be ( I think ) a discovery, that patents ( and their lack ) are actually does not important for innovation now at all, that immigration in modern world ( when India and China will catch, in general, with living standards of developed countries very soon ) cannot give an edge, that due to internet, wikipedia, millions of ebooks any change in educational systems would bring just few results, because anything that can be fixed – could be fixed with with these resources on it’s own.

so there is only way to change in this field:
to make IQ of population to grow.

CBBB December 1, 2011 at 12:23 pm

Okay….but you can make the population of high IQ people grow and then they all go work for Goldman Sachs shuffling financial instruments around – I don’t see how that helps “innovation”.

Cliff December 1, 2011 at 1:27 pm

Everyone loves the “shuffling paper around” meme, but I have never, NEVER seen anyone provide any evidence that these people do not provide any value. And it is ludicrous to suggest that every high IQ person, or even a very high %, works for Goldman Sachs.

Peter Schaeffer December 1, 2011 at 3:42 pm

Cliff,

“NEVER seen anyone provide any evidence that these people do not provide any value”

That’s very true. The evidence is that they destroy value. See the 2008 to 20xx financial crisis.

Jamie_NYC December 1, 2011 at 5:12 pm

That is actually not true. Their behavior was optimal ex-ante. What “destroyed value” is drop in housing prices, not bets banks had with each other – those are a zero-sum game by definition.

This is a common trope – that derivatives lead to losses. Any numerate person should roll their eyes at such claims.

Cliff December 1, 2011 at 6:22 pm

That doesn’t count as evidence. Who are “the people” responsible for the crisis? All “paper pushers” at Goldman Sachs? I need more than that.

Dan Dostal December 1, 2011 at 8:47 pm

It’s true that the derivatives themselves did not destroy value. What they did was pretend value existed where it did not and now we are dealing with the consequences of pretending all that value was there. TGS at its finest.

D December 2, 2011 at 5:01 pm

Thinks of all the M&A deals that end up being failures. Financiers are the ones encouraging CEOs to be bold and take action.

CBBB December 1, 2011 at 4:10 pm

On balance working in Science is basically a charity-case job compared to finance. And of course those guys don’t really provide value – they’ve been hugely destructive.

Peter Schaeffer December 1, 2011 at 4:21 pm

CBBB,

We mostly agree on this point (the low social value of modern finance). However, you are overstating your case. In some years, the single college with the highest paid graduates has been Harvey Mudd. Harvey Mudd is not as well known as MIT or Caltech. However, it appears to be a better STEM school (and that’s saying a lot).

I once visited Harvey Mudd for an open house. Extremely impressive.

One sad and contrary note. Several professors pleaded with parents to send their kids to HM. The parents were clearly very apprehensive that their kids would never get a job in STEM. The professors defensively argued that “yes, your child will find productive and remunerative employment”.

The facts show that the professors were right. The parents weren’t buying it.

CBBB December 1, 2011 at 4:23 pm

I know of Harvey Mudd and sure if you go to Harvey Mudd, MIT, Stanford, or Caltech you have a shot at a STEM career. Most other schools, not so much.

CBBB December 1, 2011 at 4:25 pm

I should really say STM. I don’t necessarily argue that Engineering is as bad but Science and Math (I’m not sure what Technology is supposed to represent in this acronym since Engineering is already in there) are horrible choices. Even the people I went to school with who do have careers VERY few of them are in anything that can be construed as STEM.

Dan Dostal December 1, 2011 at 8:50 pm

T=IT
It doesn’t really fit and mont any bloke in the industry can’t draw a clear line between IT and engineering, but there is plenty of non-overlap. And of course some sectors of IT are in boom and some are in bust right now. So it’s difficult to evaluate.

D December 2, 2011 at 5:04 pm

One data point. My nephew majored in math at a second tier school. Got good grades too. He couldn’t find a job and so now is in the Army.

Nathaniel December 3, 2011 at 5:25 pm

Perhaps as another data point, I majored in CS at a hippy liberal arts school with barely any CS courses and no grades, and right out of college I landed an engineering job at one of the best companies in the world without ever telling anyone my GPA (I don’t even know it myself). It’s not hopeless. You don’t need to have all A’s from MIT to avoid scrubbing toilets on skid row. The jobs exist as long as you don’t suck, but then again that’s the way it’s always been, hasn’t it?

The Anti-Gnostic December 1, 2011 at 12:55 pm

Just remove the incentives to indiscriminate breeding, starting with welfare. We have created a system where a significant portion of the population have literally bred themselves into a lack of capacity for self-sufficient living in an advanced economy. The factories are practically all gone, so it’s “would you like fries with that” or total welfare dependency for the folks on the expanding left end tail. Does anybody think that model is sustainable?

It’s so bad, in fact, that we are having to import more quiescent and reliable breeding stock for the low-end work–and we’re starting them down the same negative-feedback loop.

Peter Schaeffer December 1, 2011 at 3:52 pm

TAG,

“It’s so bad, in fact, that we are having to import more quiescent and reliable breeding stock for the low-end work–and we’re starting them down the same negative-feedback loop.”

Not true. Check out the actual skill level of the median high school “graduate” in the U.S. America’s domestic supply of new unskilled labor is very large. No need for imports. Perhaps the best evidence is a 30+ year trend of declining wages for unskilled jobs.

Dan Dostal December 1, 2011 at 8:53 pm

I think TAG’s point is that our unskilled labor doesn’t want to do unskilled labor, so we import better candidates instead. However, those immigrants’ grandchildren jump right into the not wanting to do unskilled labor as well. There is quite a bit of research on this, though as with any potential social malaise it’s so filled with junk thinking that it’s difficult to get any real metrics to find out if it’s a thing or not.

CBBB December 1, 2011 at 4:07 pm

Now you’re just making stuff up out of thin air.

Nathaniel December 3, 2011 at 5:26 pm

I think you’ve been watching too much Maury.

CBBB December 1, 2011 at 12:29 pm

I don’t really buy this premise of innovation stagnation – if anything it’s going too fast, huge numbers of formally good paying jobs are being automated away every day. We’re probably on the verge of universal language translation meaning learning foreign languages is going to be obsolete making an entire class of what were considered pretty high-end skills irrelevant.
I think the comments on this site are telling in that respect too when this topic comes up – that it’s sort of implied that the only people who can expect to have a chance at a decent job any more are Engineers.

Any way increasing the number of science majors won’t do much for innovation most of them end up like me, permanently unemployed.

Cliff December 1, 2011 at 1:27 pm

Most of the terrible ones, I am sure.

CBBB December 1, 2011 at 4:16 pm

Same as I said by the standards of employers the vast majority of science graduates are “terrible”.

The Anonymous December 1, 2011 at 1:39 pm

Definitely this. In fact, we should have implemented this idea years ago. Think of all the hardship amongst unemployed buggy-whip makers. All of that could have been alleviated!

CBBB December 1, 2011 at 4:15 pm

What Idea? I’m just saying “stagnation of innovation” is bullshit. Clearly there’s been far too much disruptive innovation and that’s what’s causing declining wages and unemployment – whatever new jobs the next wave of innovation creates only a tiny fraction of the population will even have a chance at them.

Jamie_NYC December 1, 2011 at 3:18 pm

I agree with the first paragraph. This book seems to me like a “rooster crowing before the dawn”.

Peter Schaeffer December 1, 2011 at 3:43 pm

CBBB,

“I don’t really buy this premise of innovation stagnation – if anything it’s going too fast, huge numbers of formally good paying jobs are being automated away every day.”

But somehow all of the productivity statistics miss this trend… Maybe not.

Dan Dostal December 1, 2011 at 8:56 pm

Innovation is too broad a term. We are seeing small shifts in many places. However, jobs are only truly being destroyed in manufacturing, and only because it’s becoming cheaper to hook all the machines together without people in-between. Not exactly big innovation since it was always assumed things would move this way.

Steven Kopits December 1, 2011 at 1:10 pm

There’s plenty of innovation down here in Houston. You guys just don’t see it.

DKN December 1, 2011 at 3:25 pm

“Patents, which were designed to promote the progress of science and the useful arts, have instead become weapons in a war for competitive advantage with innovation as collateral damage.”

Great sentence pithily capturing the reality of patents today–at least in the realm of EE. (Patents may still be a net benefit in the biological/medical arts).

Peter Schaeffer December 1, 2011 at 3:44 pm

DKN,

See the comments of Cliff (the patent attorney) above.

DK December 2, 2011 at 2:24 am

“Patents may still be a net benefit in the biological/medical arts”

Alas, they are not.

ahow628 December 1, 2011 at 8:58 pm

Just picked this up. My biggest complaint about TGS was that none of these topics were covered. After emailing Tyler, he told me this was in the pipe. Super happy it has arrived.

Tim December 3, 2011 at 2:41 pm

Just bought the book, looks interesting!

Jeremie Averous December 4, 2011 at 4:53 am

Hi Alex, I can’t wait to read your book… just downloaded it on my Kindle!
I fully agree with your diagnostic, which I link to the Fourth Revolution, i.e. a massive, civilization-changing Revolution that we are now crossing, due to the emergence of unprecedented communication technology. The impact on Intellectual Property is one of my themes. Like many other of our institutions invented during the previous major Revolution (the Third Revolution=the Industrial Revolution), it will have to change. Or if it doesn’t it will get toppled. Remember that slavery was a very acceptable institutions during the Agricultural Age that suddenly became morally inappropriate in the Industrial Age, because it was not any more a valuable economic model. Likewise our current Industrial Property regime is very adapted to iterative innovation but not to disruptive innovation. Too bad, the new Age coming, the Collaborative Age, will be an Age of disruptive innovation. I can’t wait to see what you propose to overcome the limitations of the present institution!

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