It's distressing when an ardent capitalist like Doug Bandow of the Cato Institute plumps for government grants of privilege. The columnist's pule for patents does, however, contain a welcome admission that a patent is a government grant of monopoly.
In practice, a patent allows the inventor to use the force of the law to prohibit someone else from practicing the invention. Government grants the patent holder the right to forcibly restrict entry into the market. Restricted entry causes restricted supply. The patent holder thus creates a scarcity of the product, allowing him to inflate prices. This is not how market-based profits are generated, but it is quintessential central planning.
Mr. Bandow justifies this monopoly on the grounds that companies must be allowed to “enjoy the fruit of their labor,” a misleading way of couching the fact that with patent privileges, government guarantees to the pharmaceutical kingpins a return on their investment. Surely Mr. Bandow doesn't believe companies have a right to a secured investment.
What many patent advocates share with leftist, non-libertarian, patent abolitionists is that both defend or repudiate patents on utilitarian—not principled—grounds. Many proponents of patents sanction them on the basis that patents contribute somehow to the “greatest wealth or happiness for the greatest number of people.” Leftist abolitionists, for their part, grouse about the need for a “Creative Commons,” for the good of “society.”
Any attempt to pronounce conclusively on the benefits to society of patents is something of an economic impossibility. “Society” is a collection of individuals with disparate needs, which is why there can be no objective value to a commodity. The removal of Bristol-Myers' patent over the diabetes-fighting drug Glucophage will permit competition from generics, which will, in turn, save diabetics money. Bandow or other central planners would likely counter by claiming that, because the loss to pharmaceutical-company shareholders is likely to be many times the savings to diabetics, the economy on the whole is poorer.
Nonsense on stilts!
The value of a commodity is subjective. No “expert” can decree the loss to one party more important than the gain to another. What is amply clear is that profits from the patent monopoly are illegitimate and come at the expense of all but the special interests they are designed to favor.
More compellingly, no wealth-creation calculus can justify the overturning of property rights, which is what patents achieve. To clarify what is properly the object of property rights, let's hark back to some imagined, primordial time we'll call BG (Before Government):
The homesteading of previously unoccupied, tangible property is the way property is justly acquired. Duly, Tribe A moves into an unoccupied cave and makes it its own. The cave, in a word, is now spoken for.
Next, Cavewoman A invents a bat-catching widget. The tribe not only has a home, but it now has a steady supply of bat stew. Shortly thereafter, an irate Batlady discovers that the neighboring Tribe B is using the same device. For “stealing” her idea, Batlady demands that the elders unleash the tribal warriors to punish the neighbors.
The elders are wise and peaceful. They huddle to debate the alleged theft by Tribe B of Batlady's idea. The timeline supports her claim: The neighbors began using the device well after it was invented and produced by Tribe A. No evidence, however, of trespass could be found on Tribe A's property. None of its widgets were missing. Tribe B clearly fashioned the copycat batcatchers using their legitimately owned wherewithal.
The elders, who astutely entertained the obvious possibility of concurrent invention, concluded that, Batlady's pride notwithstanding, Tribe B stole nothing from them. The state of affairs was as Thomas Jefferson would one day describe it: “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.”
Since all this happened BBG (Blissfully Before Government), Tribe A directly approached Copycat Tribe with a contract, inked in ochre and blood. Accordingly, Batlady would divulge her next muse to Copycat Tribe in exchange for a couple of lavish mink coats for Tribe A's womenfolk.
Having applied the natural law, never did it occur to the elders to demand that The Copycats pay royalties in lieu of each and every one of their widgets, for decades to come. It seemed clear to our elders that they had no legitimate stake in the Copycat Tribe's widget property. They did, however, initiate a voluntary contract to protect their prized advantage. Absent coercive Big Brother, batty patents would not exist.
© By ILANA MERCER