Interactive Graphic Illustrates How U.S. Patent System Has Driven American Economy notes:
Last month, the Milwaukee Journal Sentinel published two articles documenting the current state of the U.S. patent system (see “The Milwaukee Journal Sentinel Gets It Right about Patents“). The authors of those pieces, John Schmid and Ben Poston, have now compiled an interactive graphic that shows how the U.S. patent system has shaped American history and innovation. The graphic contains a number of elements, including a timeline of key patents and significant events in American history, a comparison of domestic and foreign patents issued between 1790 and 2009, and charts showing the top countries and states in which U.S. patents originated, the number of pending applications between 1981 and 2009 and average application pendency between 1983 and 2008, fee diversion between 1992 and 2004, and rapid growth of the Chinese patent system between 1999 and 2008.
Some asked me if this proved patents do encourage innovation. But of course it does not. This proves absolutely nothing, in fact, except that there can still be growth despite state intervention such as intellectual monopoly grants. Correlation is not causation. I hope Obama doesn’t see this–I’m sure he could whip up a similar chart correlating growth over the last two centuries with, say, increasing taxes, increasing federal spending, increasing federal size/employment, increasing military size, increasing efficiency at mass murder, and so on.
Further, note the flaw in using China to prove the patents-drive-growth hypothesis: China’s economy has been growing for a good decade even though it has had and continues to have very mild and tepid IP laws. In fact, Chinese IP laws are gradually being reformed under pressure from the industrialized Western nations–no doubt to please large Western pharmaceutical, software, and other firms that stand to benefit from extending their Western-state-granted artificial monopolies to the growing Eastern economies (see my posts Russian Free Trade and Patents, IP Imperialism (Russia, Intellectual Property , and the WTO), Bush Wants More Jailed Citizens in Russia and China, and China, India like US Patent Reform). Do these intellectual monopolists really expect us to believe that China owes its recent growth to Disney and Big Pharma’s lobbying efforts?! Thank God the Western White Man saves the poor benighted Yellow Eastern man. What would they do without us? Who needs capitalism and increasing institutionalized respect for property rights–if you are a third world economy and want to grow, just let America strong-arm you to adopt their type of IP laws–along with their FDA regulations, antitrust law, and IRS. Give me a break.
Update: Interesting observation from Boldrin, M. and D. K. Levine [2011]: “What’s Intellectual Property Good for?,” Revue Economique, forthcoming:
A number of economic historians, Douglass North and his followers foremost among them, have argued that the great acceleration in innovation and productivity we associate with the Industrial Revolution was caused by the development of ways to protect the right of inventors, allowing them to profit from their innovations. Central among such ways was the attribution of patents to inventors, and their upholding either by Parliament or by the courts. Relative to the very poorly defined contractual rights of pre-seventeenth century Europe, plagued by royal and aristocratic abuses of property and contracts, there is no doubt that allowing entrepreneurs a well defined, if temporary, monopoly over the fruits of their inventive effort was a major step forward. Even monopolistic property is much better than a system that allows arbitrary seizure by the rich and powerful. This does not, however, contradict the claim according to which widespread and ever growing monopolistic rights are not as socially beneficial as well defined competitive property rights. To put it differently, about four centuries ago, as Western societies moved away from post-medieval absolutist regimes, the establishment of patents constituted a step forward for the creation of a system of property rights that favored entrepreneurship and free market interaction. By the force of the same reasoning, the abolition of patents and of the distortionary monopolistic rights they entail may well result, now, in an analogous boost to entrepreneurial effort and technological change. Once again, as a matter of available theories one cannot safely conclude one way or another.
See also Jeff Tucker’s post 2000 years in one chart.
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{ 12 comments }
SK,
For a change, I am with you
A graphic like this reminds me of what Hayek said – Statistics proves nothing. It only throws up hypothesis that need to be studied. It gives us clues as to the kind of theories that we need to further develop.
In any case, I think it is completely futile to try to draw a connection between patents and innovation. Graphics such as this only serve to perpetuate arguments revolving around “net societal benefit” of patents. What we need to do is in fact to dispense with such arguments because these are not relevant to human action.
” Correlation is not causation ”
Good point. Reminds me of the “debate” on global warming and climate change theories.
Hahaha, love the ‘The Onion’ style heading.
http://www.theonion.com/content/video/breaking_news_series_of
http://www.theonion.com/content/news/wow_factor_added_to_corporate
The other reason this does not prove squat is that I’m sure it is not corrected for changes in the law concerning what CAN be patented.
Every major country has had different rules for which kind of scientific inventions/processes can be patented. For example, back during the industrial revolution timeframe certain European countries allowed actual chemicals to be patented while in others, only the PROCESS for chemical synthesis could be patented.
What this chart really shows is the leviathan expansion of things which can now be legally patented. Remember that up until either the late 80′s to early 90′s patents for software were not legally recognized. The fact that this is commonplace now more than makes up for any increases in patents over the past decade or so. And this only applies to software, but various other things as well. I mean hell, I remember reading a piece where there was serious debate about being able to patent business models. I shit you not, there was serious thought given to actually giving government privelege to the way you structure your business.
Of course it will look like patents are increasing if you just start adding willy nilly any old thing that you want to add under its protection.
Post hoc ergo propter hoc.
I think that China is a really bad counterexample. The Chinese have profited from using western technologies. Their absence of patent laws has not induced them to become creative but to use other people’s ideas.
I did learn something useful because of these economists. Chase is giving away $100 when you open a new checking account! Their little chart is very pretty, though. Who paid for it?
I think they have it backwards.
It’s the economy which drove the patent system.
@Toby Said:
That’s the problem here, if only one country in the world had IP rights, then the way they artificially stimulate the innovation you can never tell whether other non-IP countries would have resulted in more innovation as long as the other countries can see what the IP country is doing. I am not saying that the IP-less countries would lag in innovation compared to a pro-IP country, but that there is no way to really see the progress of innovation of an IP-less country.
If Chinese really add something to say iPhone, the Apple would immediately patent it launch an iPhone 2.0, and then what we will be looking at is Apple launching iPhone 2.0 and mass Chinese producers copying it.
Since IP-less producers would copy everything from an IP country, and IP country would patent everything from IP-less country, all you will be looking at, is massive innovation in an IP country, and only copying in IP-less country.
The problem with comparing innovation in an IP-less and IP-strong society is, you cannot notice the innovation in IP-less society the way you do in IP-strong society.
Secondly, the whole point of not having IP is to have the ability to freely share the idea, so I am not sure how copying the idea from an American manufacturer is not right but copying the idea from another Chinese manufacturer is right.
I like the contradiction of the 1989 box on the timeline:
“The Berlin Wall opens, ushering in a new age of cross-border competition that includes the rise of new economic rival nations in the ares of technology, science and engineering.”
Sounds like they’re all for that new competition, except in the case of government granted monopolies, which are driving the economy.
Some people wouldn’t know irony if it laughed directly at them….
Toby,
That’s exactly the point. China’s growth is driven by the free use of ideas, which aren’t scarce. Their lack of strong IP and their growth are not a coincidence.
SImply copying ideas doesn’t give one a competitive advantage over others. But having an idea in the hands of more people than less increases the possibility that someone will improve on the idea. Building a copy of a Buick doesn’t make anything better. Improving on the process while you do it, however, (whether that means figuring out how to make a better Buick or a cheaper Buick or whatever improvement) does increase overall efficiency. Freeing up ideas to be worked over by anybody that wants to take a shot at it is better than locking it down.
What we should do is to create a competitive graphic showing all the inventions and innovations that occurred, without the benefit of patent protection, in other countries that did not have patent protection laws.
Does UNIX count? Or should we exclude state sponsored creations or inventions as well?
(IMHO we should exclude state sponsored inventions, since a lot of the time it is only successful because the government has no cost-benefit built into it and can essentially spend unlimited amounts of money).
I seem to recall seeing a list on this site a while back.
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