Nobel Prize Winning Economist Explains How IP Rights Are Part Of The Globalization Problem

from the not-the-solution dept

Kevin Donovan writes in to point us to the transcript of a fascinating speech by Nobel Prize-winning economist Joseph Stiglitz on Making Globalization Work. We've written about Stiglitz in the past, for his explanation of how patents often do more harm than good economically. In this speech, which is covering a much broader topic (globalization), he makes a few really good points about why what politicians put in place as "globalization" isn't matching what economists say should happen in a globalized economy -- and intellectual property comes into play. The main point is just that most "free trade" agreements have absolutely nothing to do with free trade. While they're labeled as such, they're usually filled with restrictions on trade that benefit the bigger countries. A true free trade agreement would, as he notes, be short and sweet and easy to write: basically, there are no restrictions on trade. Instead, what we get are supposedly "free trade" agreements that are really pushed by industry representatives for certain industries to benefit themselves.

In particular, he points out how this is done with intellectual property. This is something we noted last year when we couldn't understand why a "free trade agreement" would guarantee monopolies on intellectual property. That seemed like the opposite of free trade. As Stiglitz notes:
"The Uruguay Round TRIPs Agreement, which is Trade-Related Intellectual Property, has nothing to do with trade. They just put "trade-related" because they had to put that in there to have it in a trade agreement. That was the real ingenuity.

There was already an intellectual property organization, called WIPO, the World Intellectual Property Organization. But they wanted the trade ministers to do it because the trade ministers didn't know anything about intellectual property, and that meant they were much more vulnerable to the influences of the special interests."

They put in provisions that were explicitly designed to reduce access to generic medicines. Just to highlight why that's important, a generic AIDS medicine, for instance, costs under $300 for a year's treatment. The brand name is $10,000. If your income is $500 a year or $300 a year, or even $5,000 a year, you can't afford $10,000 a year for the brand name. So when they were signing that agreement in Marrakesh, they were signing the death warrants for thousands of people in sub-Saharan Africa. That was the consequence.
The entire piece is a good read, but as Kevin pointed out, it's interesting to see how Stiglitz fits some of these pieces together to show why globalization hasn't lived up to its promise.


Reader Comments (rss)

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    Ron (profile), Apr 24th, 2008 @ 1:34pm

    Ya Know

    I enjoy reading these column; oft times they are an interesting insight to workings of someone's or some governments mode of "thought". But, it's getting really depressing. IP right designed to line someone's pockets, patent fights that would embarass most children, censorship and spying in a supposedly free country, making criminals out of people who really aren't, RIAA, etc. working off the assumption of "guilty until proven innocent", and now, if what Stiglitz says is true, organized, wholesale, murder agreed to at the international level. Is there any good news on this planet?

     

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      angry dude, Apr 24th, 2008 @ 1:48pm

      Re: Ya Know

      "patent fights that would embarass most children"???

      WTF dude ???

      Children (mine included) know nothing about patent rights

      It's a game for adults

       

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        Anonymous Coward, Apr 25th, 2008 @ 7:59am

        Re: Re: Ya Know

        He means that patent holders are being childish, to the point that even children would find it absurd. I think it was a hyperbole.

         

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      Ant, Apr 24th, 2008 @ 3:34pm

      Re: Ya Know

      I know. Reading these columns gets to be really depressing at times because it expresses what little power we have under the control of governments, businesses, politicians, etc. But is it really any more depressing than turning your TV and watching the NEWS?

       

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    Joe Smith, Apr 24th, 2008 @ 1:37pm

    hypocrits

    The biggest problem with globalization is that the big Western countries (the U.S., Japan, Europe) are refusing to liberalize agriculture and in fact are massively subsidizing their domestic agricultural sectors. This has the effect of preventing the poorest countries, who's best hope for moving to a successful market economy would be agriculture, from getting off the ground.

    Shame on cotton subsidies, shame on sugar subsidies and restrictions, shame on producer subsidies for rice, shame on corn subsidies.

    Western governments should stop all agricultural subsidies and liberalize international trade in agricultural products immediately.

     

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      angry dude, Apr 24th, 2008 @ 1:51pm

      Re: hypocrits

      and kick farmer's asses

      how bout your little arse lemonade joe ?

       

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        Joe Smith, Apr 24th, 2008 @ 2:31pm

        Re: Re: hypocrits

        "and kick farmer's asses"

        No, just drag them squealing from the public trough.

        We subsidize millionaire Western farmers out of some romantic attachment to our great-grandfathers having been farmers ignoring that most of our ancestors fled the farms as soon as they could.

         

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      James (profile), Apr 24th, 2008 @ 4:04pm

      Re: hypocrits

      Japan and Europe are big western countries? they are not even western.

       

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    Philipp Mueller, Apr 24th, 2008 @ 1:47pm

    Trips is not about globalization - it was a landgrab, pre-globalization (in the 1980s) by the US pharmaceuticals. They lobbied and persuaded the USTR and the rest of the world gave in because they could not imagine a world where these things would matter. Check out Robert Lawrence's TRIPS case at: http://www.ksgcase.harvard.edu/casetitle.asp?caseNo=1661.0
    There is a follow up, which outlines some of the tactics of contestation at: http://www.ksgcase.harvard.edu/casetitle.asp?caseNo=1736.3 - you will enjoy the part, where the U.S. government argues against generic AIDS medicine to save millions of lives in South Africa, but for mandatory licensing of CIPRO during the anthrax scare.

     

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    N1ck0, Apr 24th, 2008 @ 2:50pm

    Free trade

    I remember trying to explain this to a young college school student a week ago, that "Free trade" is not free trade, "The Flat Tax" is not a flat tax, "Intelligent Design" is not about an intelligent design, All "Liberals" are not liberal and "Conservatives" are not conservative (not to mention that they are not "Right" or "Left"), the US "Capitalism" is not true capitalism.

    In the end he was confused that the world is based on redefining everyday terms to have nothing to do what they actually mean, while still pretending that they hold the actual meaning. And I feared for his future and the need for better " keys on keyboards.

     

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    Joe Smith, Apr 24th, 2008 @ 4:12pm

    "west" is relative

    "Japan and Europe are big western countries? they are not even western."

    I suppose, although the US certainly considers itself a Western country, Japan lies to the "West" of the U.S and Europe is to the "West" of Japan. :-)

    Substitute "large economically advanced" for "big Western" if that makes my point clearer.

     

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    Jimmy Z, Apr 24th, 2008 @ 5:59pm

    Globalized corruption.

     

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    Anonymous Coward, Apr 24th, 2008 @ 6:06pm

    from the not-the-solution dept:
    So when they were signing that agreement in Marrakesh, they were signing the death warrants for thousands of people in sub-Saharan Africa.

    Since when did the corp thugs care about anyone but themselves ?

     

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    MLS, Apr 25th, 2008 @ 8:57am

    Economists

    While undoubtedly wishful thinking, how nice it would be if an economist someday actually took the time to learn just what a patent really represents.

     

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      Anonymous Coward, Apr 25th, 2008 @ 9:32am

      Re: Economists

      A government-sanctioned monopoly?

       

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      Mike (profile), Apr 25th, 2008 @ 10:24am

      Re: Economists

      While undoubtedly wishful thinking, how nice it would be if an economist someday actually took the time to learn just what a patent really represents.

      Hmm. I've read an awful lot of the economic research, and I haven't seen too many that don't understand what the patent system represents. A few do, certainly, but not many.

      I'm curious which economists you think misunderstand the purpose of the patent system.

       

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    MLS, Apr 25th, 2008 @ 12:54pm

    "I'm curious which economists you think misunderstand the purpose of the patent system."

    This is really not what I said or even meant to suggest. What I did say is my wish that they would take the time to learn what a patent acutually is. They come in various flavors (plants, designs, utility) and each have specific features about what you can do and not do with them that in large measure ameliorate much of the criticism leveled against them. So many critics seem to believe that they are a direct descendant of the Statute of Monopolies Act of 1623. In truth, what was adopted in the US starting with the Patent Act of 1793 is significantly different.

     

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      Mike (profile), Apr 25th, 2008 @ 1:46pm

      Re:

      So many critics seem to believe that they are a direct descendant of the Statute of Monopolies Act of 1623.

      Really?!? I've yet to see an economic study of patents that looked at patents in such a manner. Most of them look at the specifics of the patent system we're dealing with today, and even take into account more recent changes such as the 1952 act and Bayh-Dole.

      Which research are you aware of that uses the definition of patents as established in 1623?

       

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    MLS, Apr 25th, 2008 @ 2:11pm

    If nothing else, this presents a top level summary of some of the issues associated with the interplay between economics and the conduct of business. It is not a comprehensive treatment of the subject, but it does at least provide some food for thought that can help frame the discussion.

    http://www.patenthawk.com/blog/2005/04/patent_economics_part_1_market.html

     

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      Mike (profile), Apr 25th, 2008 @ 3:24pm

      Re:

      I'm confused. I asked you for the economic research that treated patents as they were in 1623 and you point me to Patenthawk's essay?

      What's that got to do with anything?

       

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    MLS, Apr 25th, 2008 @ 5:14pm

    You really should read comments more carefully. Note that I used the term "critics", and not "economists", in my reference to the 1623 Act.

    I could more easily respond to questions you pose if you would conform your comments to what was actually stated.

    P.S.- The 1952 Act did not amend the law. It was a statutory compilation of both prior legislation and judicial decisions interpreting same. As for Bayh-Dole, I am curious why you even mention it.

     

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    mjr1007, Apr 27th, 2008 @ 2:50pm

    Patent pools and Prizes

    Really interesting article from an obviously knowledgeable person.

    The most interesting part of the article was his solutions to some of the issues discussed previously here at techdirt.

    It was especially nice to see innovation described as something that is not free. For those who didn't rtfa

    "In the book I describe an alternative system for financing innovation. Innovation doesn't come costlessly, so you can't just say, "Let's just have people innovate." It requires incentives; it requires finance."

    It's nice to see that historically patent pools have worked.

    Also the prize idea is really novel. The only problem is who decides how big the prize should be and how does this distort the market.

    "But a far better system is a prize system, where you ascertain what are the diseases that we care about, malaria and diseases that affect hundreds of millions of people, and you say, "If you discover that, you'll get a big prize. If you discover something less important, you get a small prize."

    If you take compulsory licensing and cap the amount of money then it starts to look an awful lot like a prize. The only difference is that instead of having someone in advance decide what is or is not worthy of a prize, you let the market decide. If a patent is useful people will use it, if not they won't. It's often hard to tell a priori what will end up being the most useful basic research. Just the nature of things. As Henry Ford said, "If I asked my customers what they wanted they would have told me they needed a faster horse".

    The prize idea is pretty interesting thought. Maybe several companies will pool resources and offer a prize for certain types of basic research which they will then put into a patent pool.

    Lots of interesting ideas out there other then just get rid of patents.

    Just my USD 0.02 worth.

     

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