I find it interesting that Andras can even attempt to make this claim. Consider the following:

Business A is a drug research company.
Business B is an individual who has set up a laboratory in his back shed.
A and B are both independently researching the same problem.
The undiscovered drug X solves this problem.
A discovers drug X first and patents it.
One week later, B discovers drug X.
Due to the patent on drug X, B is forbidden from using it without paying the monopoly price stipulated by A.
B’s investment is therefore lost.

Even if the loss of investment is relatively small, it is still a loss of investment. Hence my arguments in the above posts are still unrefuted.

Andras also wrote:
**********
You can buy these patents or their licenses. And you can wait till the patent expires. Furthermore, not only your competitor’s but your research is also backed by patents. They will need your licenses as well (if you were so close).
**********

With patents, researchers have to work out how much to invest by factoring in the price of existing licenses.
Without patents, working out how much to invest is far easier because their are no existing licenses and hence no additional costs of using their own resources.
Hence calculation is hampered by patents.
I would have thought it was obvious that the less factors of production, the easier calulation becomes.

Andras also wrote:
**********
Moreover, under no-IP schemes lots of resources has to be allocated to ensure secrecy.
**********

The premise that patent legislation decreases the need for secrecy is completely unfounded. Throughout the research phase, the promise of monopoly to the first discoverer would increase the need for secrecy, not decrease it. Is Andras really trying to argue that cutting edge drug research is not currently shrouded in a cloud of secrecy?
It would only be during the testing phase that one could possibly argue that secrecy needs to increase. It is impossible to make a general determination of the overall costs/savings (it will be different from case to case). Therefore, one cannot use the argument of ‘decreased secrecy costs’ to justify patent laws.

Andras may have a lot of specific knowledge about the current drug patent system. However this seems to be limiting his ability to view the ‘unseen’ effects of that system. I liken it to someone who has great knowledge of the current minimum wage laws but is unable to see their true effects because they can only recognise the ‘seen’ effects and are unable to recognise the ‘unseen’ effects.

the military industry is parasitic. anything that shrinks the power of the state is a direct threat to its health. so i don’t think we can be dogmatic about what industry would predominate, free of ip monopoly.

i raised the existence of ip legislation in the ussr, because those against ip legislation are often accused of being some sort of marxists.

It is no surprise that the drug industry has set up an efficient system around the existing patent legislation to minimise the loss of investment. But there still is loss of investment. Time, wages, capital, etc are still consumed and irretrievably lost when business A discovers the very technology that business B was close to discovering.

In the absence of patent laws, there is no loss of investment because business B is not excluded from utilising the fruits of their research.

but also imagine that the enforcement and regulatory burden imposed by ip legislation is now lifted. the savings are going to go to alternative uses. maybe charities will deal with non-commercial research like rare diseases or those peculiar to the third world, as i think happens today but to a lesser extent.

science gulags are best left to communists. incidentally, ip protection was a feature of the ussr
http://www.marxists.org/history/ussr/government/1928/sufds/ch15.htm

as far as calculation goes, every tiny commercial innovation faces uncertainty, on the cost side, and to an far greater degree on the revenue side. that’s the art of the entrepreneur. science entrepreneurs aren’t a special case.

2) You saw the calculations only as a macroeconomic problem. You did not address the organizational problem. And that is the real one. How do you do the actual research, heavily theoretical without the ability to rank the information and the people who handle them and if you trust them without the risk of them going rouge and starting their own business. Any of them, any time?
You may know, please tell me.
I saw only one solution, the Russian’s “science cities”, intellectual labor camps, similar to the “Manhattan Project”. However, I see some shortcomings with this approach, as well. I would prefer IP any time to those.

The ability to calculate is really the ability to minimise the ‘unknown’. The more unknowns there are, the greater the risk you are taking with each decision and therefore the more difficult calculation is.

What has this got to do with IP? Well, you can’t possibly “calculate” how much capital is required for a new technology. Therefore you are taking a risk whenever you invest in research. It is very easy to show that IP increases business risk rather than decrease it.

Consider the following:
1. Businesses A and B invest capital into developing a new technology.
2. Business A develops the new technology first.
3. Business B is now excluded from using that technology.
4. The capital invested by business B is now wasted even if business B would have developed that technology independently.
5. In the absence of IP laws, the capital would not have been wasted since business B would still have been able to utilise the fruits of their research.
6. The risk of wasting capital on technological research has therefore been increased by the existence of IP laws.
7. Hence IP laws make economic calculation more difficult.

This should be no surprise to anyone.
IP is contradictory to property rights.
The better the property rights of the individuals in a society are enforced, the more accurate economic calculation in that society is.
Therefore, the implementation of IP laws must decrease the accuracy of economic calculation.

Anybody can address these?

I was actually also born in a communist country and also consider Ayn Rand’s writings a powerful message. At the same time, I disagree with a lot of her arguments and philosophy.

In my country, the planning beaureau decided that heavy industry is the way to go and concentrated their efforts in that direction for decades. The positive results were that it created a lot of employment and an improvement of the living standards for large parts of the population. The negative results where the lack of consumer goods and devastated environment. Once communism fell apart, it turned out the products were not competitive on the market and large parts of the heavy industry went bankrupt. That created mass unemployment and associated drop of living standards for those affected. These people have trouble finding alternative jobs (due to non-marketable skills) and long for the communism to come back.

So, according to your logic, we should conclude that the favouring of the heavy industry wasn’t so bad after all, because there were some benefits and the industry would have never existed without it.

This assumes that the costs are lower than the benefits. But how do you calculate that?

I think you have dismissed my idea of testing the patent system by seeing the effects of decreasing the monopoly time because you felt that by doing so you acknowledge their right to regulate and ultimately their existence. We like it or not, they are the souvereign. Even if the law of the land says differently.

Anyway, I say decrease the state as much as possible. You say unless its zero I’ll never satisfied. My system unites yours divides. You fit into mine even if I will never fit into yours. It seems a huge difference but the funny thing is we are closer to each other than to 99% of the population. At least we understand each others value system. At least I understand yours and even respect it. I wish you luck to reach your objectives. I truly hope you win.
Andras

“I follow the IP discussion to find a way to reconcile my discomfort about the state monopoly and rights. I think I have found the solution and that is not Kinsella’s.”

Oh? Do tell!

But the solution that is “not-Kinsella’s” simply means “some state solution” since I oppose the state grant of privilege. You are wording it in a way that tries to avoid making clear that you are positively favoring state grant of monopoly privileges. It doesn’t matter what your “solution” is so long as it is some variation of this; it is not justified, for the reason that aggression and crime cannot be argumentatively justified.

” Sorry, I am not an anarchist, I saw that in practice as well. But that would be a subject of another discussion.”

yes; again, here you want to say you are “not an anarchist” as if it’s just one of many views for which the proponent needs to carry a burden of proof. It’s not. It’s simply the anti-aggression point of view. We don’t need to justify being against aggression any more than we need to justify being nice to people (no offense, Objectivists who need to prove that it’s okay to be benevolent).

It seems your final argument is based on faith, somehow, we do not know how it will work out. I am sure it will. Just it takes time. What is the cost of, not just reach that stage but also disassemble what we have now.

Let me give you one example: at my previous project I was working on how to cure C. difficile infections. http://en.wikipedia.org/wiki/Clostridium_difficile
The current treatment is not too effective. 10-20% of patients just keep showing symptoms (fulminating bowels). So the final solution is to remove their colon (a non-IP solution from the alternative, the surgery field). Desperation is so prevalent that even fecal transplantation is used. Literally you it shit, shit of your healthy relative. Just read the website I gave you.
We had a compound that has a great potential to cure the disease just by taking it for a month or so, according to test results. It is a result of a great collaboration between biochemistry, structural biology, medicinal chemistry, microbiology, pharmacology, toxicology and the clinicians. The first three heavily rely on IP. Without IP we would not even have a chance to understand the underlying principles. Beyond others it also allows allocation of resources, human resources as well to their right positions (under the current system). And there is the non-IP solution to eat shit. Right now, that is the “somehow”. I am sure that can develop to something better when resources allocated differently. It is just time. But explain that to the patients.
Maybe IP is not so bad after all. Especially, when its life span is limited.

I understand the property right argument as well. It always argues with full rights, forgetting rents, limited ownership etc. What if chemicals are sold with the limitation that you can only use them for what is allowed by IP. Would that be a conspiracy theory as it must involve the whole industry? Or a trade association which removes the black sheep. The result is the same as now but shifted the issue to the physical world.
Best, Andras

> Without this system, I believe, this invention would
> not even be possible though.
Allow me please to provide an alternative view. You come to this conclusion because it corresponds to the way you (or the industry you work in) is presently conducting business. It reminds me of a lecture that is somewhere on this website (I believe by Yuri Maltsev). He used to work as an economist in the Soviet Union. He recalled explaining the free market for workers to the communist beaueu. And they said: that can’t possibly work, we can’t imagine people moving to a different city in order to get job.

This is both a psychological issue and a simple result of the complexity of the world. The ability to come up with an unexpected way to reach your goal is a trait frequently found in engineers and businessmen. I would even say businessmen are better at it.

As I said in other comment, IP encourages approaches that are more capital-intensive. Does that mean that the goods thusly produced would be impossible to produce otherwise? Of course not. It could also mean that a substitute product may have been produced by a competitor that was driven out of business due to IP. It could also mean that the product would be produced later, and other goods (e.g. less effective product) sooner. It could also mean that the product might have been developed at a lower cost. We can’t know that in advance. But to jump to the conclusion that it would be impossible is the economists’ equivalent of a conspiracy theory (connecting the facts into a conclusion that is unrefutable but unlikely).

Projecting results as a linear progression of the current trend makes only sense in limited amount of areas and/or short time periods. The more complex the issue is, the less likely a linear progression is to match the development. Solving problems is not a binary function. It is not even onedimensional. Same goes for satisfying customers’ needs.

“This is a small compromise for a social engineer to satisfy both sides.”

“I have repeatedly stated that the grace period, you can even call it monopoly, offered by the patent laws is an acceptable compromise which satisfy the interest of the inventor and the copiers. In an ideal case this time frame coincides perfectly with the internalization of the idea from the unique to the infinite to satisfy the scarcity argument.
In my opinion the only room for change left is setting the time frame, the reason I used the “18 years or much much less argument”. This is a job for social engineers not for philosophers.”

“Abolishing the patent system due to a blanket grudge over the IP laws would do a tremendous damage to the pharmaceutical industry. This is alone for many a valid reason to go against IP.”

“they still need time from the non-existent to the unique and then to the infinite.”

And then later tries to say:

“I have never used the utilitarian “net benefit argument”…”

I wish Andras would show a little intellectual honesty here. “Acceptable compromise” and “satisfy both parties” are clearly “net benefit” arguments.

The rest of his last post is clearly an attempt to bait me into further argument. Standard Troll procedure. I do appreciate the skill that trolls have of inciting emotional reactions. The following lines are classic:
- “Flooded me with contradictions”
- “I see now that the main tactic is chasing away opposing views”
- “clearly you are not interested”
I may not like trolls, but I can’t help but admire their skills.

.

@Newson, what you have written was my interpretation of Andras’ position. Actually it took me a while to work out what he was going on about because his posts are vague in general. Once I figured out that his position was simply a “net benefit” argument, I knew the refutation would come from considering the “unseen”.

is that right?

–I have never used the utilitarian “net benefit argument” though I have argued that what anti-IP simply is just social engineering and as such should go for the best compromise.

–”Please go ahead and make that list for non-IP, I’m sure it makes sense. This response leads me to suspect that you simply didn’t understand my post. (The fact that you called it a “list” suggests a general lack of comprehension)”

–I agree with your argumentation. I did even before your list as I went through the same. But I see huge holes in it, e.g., it should not be linear as there are alternative solutions and life is too short to wait for solutions for life threatening diseases. However, ducktailing slogens won’t cut it. Read Marx and you will find similar arguments for bringing heaven to the proletariat ending with the same conclusion you made for non-IP.
When you eliminate all opposing arguments, facts and experience, by definition you end up with your original thesis. But that does not make it true.

–”oh we can’t put the poor inventors out in the cold”

–I don’t think inventors will need help. I certainly do not. I can do the lobotomy work and on the side I can satisfy my curiosity and invent even in if on a much smaller scale. I surely will survive but will you? I was rather concerned about you.

–”And, surprise surprise, you’ve suddenly tried to change the argument to one of economic calculation.”

–Strange, it always ends here. On both sides. If you read my discussion with Peter that I was focusing on the scarcity argument. As you have changed subject and flooded me with contradictions I was forced to go to the next one as the original was evaded.

Jay, it seems we talk a different language and not just because English is my third. I am sure you observed that, too. I was surprised that Mises.org has little opposing voices left inspite of the fact that even Kinsella is complaining about the world not understanding his genius. I see now that the main tactic is chasing away opposing views. I wanted to educate you on my field and its IP implications but clearly you are not interested. You rather prefer conforming Kinsella/Boldrin/Tucker, even when Mises was definitely against their argumentation.

On the other hand, you seem to be well versed in the anti-IP dogma. If you live around LA we might meet and go beyond slogens and soundbites. I am truly interested in argueing someone who knows what he is against to find answers to my questions.
Let me know.

You have completely evaded the point I’ve made. Clearly you’ve realised that the “net benefit to society” argument simply doesn’t hold up.

What is ‘standard troll procedure’ in these circumstances? I’m guessing it’s something like: Make a sarcastic and pointless comment, bring up an irrelevent point and then try to change the argument. Let’s see how well you did…

**********
You persuaded me, I’ll go herd sheep!
But wait! You can make a very similar list and conclusion for non-IP. People got fooled into it and see what they got.
**********

Please go ahead and make that list for non-IP, I’m sure it makes sense.
This response leads me to suspect that you simply didn’t understand my post. (The fact that you called it a “list” suggests a general lack of comprehension)

**********
Have you asked what the inventors, the generators of ideas think about your proposal?
Or just ignore them as their opinion does not fit yours.
**********

Oh it’s suddenly a matter of opinion now? Before it was, “Patents give a net benefit to society”. Now it’s “oh we can’t put the poor inventors out in the cold”.
Is it just me or are your arguments getting weaker and weaker as the discussion continues?
Should I consult the central bankers and ask them what they think about my idea of abolishing central banking?

**********
Actually, I see huge negative effects already. Like all socialist scheme it lacks the ability to calculate thus to cooperate (as Mises pointed out). There will not be professional inventors, but lone wolves, outside of economies, called externalities. I see this as a negative as cooperation should beat parasitism but I was wrong before.
**********

And, surprise surprise, you’ve suddenly tried to change the argument to one of economic calculation.

You got 3/3 in the “How to be a forum troll” handbook. Congratulations. You have won a place on my “List of known Mises trolls”, which I keep on the desk next to me.

Goodbye Andras.