Macroeconomic Effects of Patents

The essence of a Patent is a de jure monopoly: a total control on all activities related to some technique, device, or whatever is subject to the patent: use of a technique, experimentation with it, enhancement to it, technical support about it, etc. Such monopoly does not reside in a natural unability of other people to produce the same services without causing harm to someone. On the contrary it consists in a state-enforced prohibition for others to carry out activities in which they could otherwise engage most legitimately, without harming anyone, for the benefit of all concerned.

Such monopolies are not natural property: they are privileges granted by governments to a first claimer under the pretense of promoting creation of new techniques. Nobody can deny that patents are a privilege, rather than natural property. The US constitution, Article I, Section 8, Clause 8, makes it explicit: "The Congress shall have power [...] To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries; [...]". The State grants a time-limited privilege in as much as it hopes that this privilege will foster innovation. Thomas Jefferson, who co-originated this section of the US constitution, clearly explains it in some letters of his correspondance.

Even disregarding the authority of the US founding fathers, it is clear that these monopolies are not legitimate property of patent holders: indeed, even the most extended patent laws acknowledge that freedom must ultimately (after a number of years) be returned to the public to freely use the patented technology. Legitimate property would last forever, whereas patents last for a mostly arbitrary number of years that changes depending on the country, the date, and the whim of the legislator (and on the growing influence of patent lobbies on governments).

Patents are a privilege, the cost of which is borne by the public. Any economic account of patents that displays their alleged benefits without even considering their cost is a shameful lie; it is a disgrace that most people (and most legislators, too) are so easily fooled by the omnipresent protectionist propaganda of patent lobbies.

Republished article from TT Consultants