Chamber Of Commerce Gets Basic Stats Backwards, Calls For Stronger US Patent Protection For No Good Reason

from the oops dept

David Levine points us to an analysis by Kevin Smith (not the movie maker) at Duke University of a recent report from the World Economic Forum, placing the US as 19th in how strong our intellectual property laws are. This report caused the US Chamber of Commerce to say it’s evidence that the US needs stronger IP laws. Yet, Smith points out how silly this analysis is. First, being 19th out of 133 is already pretty damn near the top of the list. Second, the way the WEF ranked the strength of IP systems was based entirely on “executive perceptions” of IP laws in certain countries — hardly a definitive measure. But, most important, the report shows nothing of the actual impact on innovation. So, Smith did a quick back-of-the-envelope look, and noticed something interesting:

I started with this list of countries based on economic growth (the growth rate of the Gross Domestic Product) using data from the CIA World Fact Book. The US is 67th in GDP growth rate, and I made a list of ten countries from the G-20 group of nations with higher growth rates than that of the US and compared that list of ten countries to the rankings of perceived strength of IP protection. All ten of these countries, it turns out, are perceived to have weaker IP protection than the US. To choose an obvious example, China has the fastest economic growth rate of any of the G-20 economies, but is ranked far below the US — at 61st — on the list of strong IP protectors.

It is easy to lie with statistics, of course, but this simple comparison suggests that weaker IP protections might actually correlate with economic growth….

This is not surprising, and has been supported by plenty of studies in the past. Eric Schiff’s famous look at how the Netherlands and Switzerland had massive growth rates during a time without patents (or with very weak ones) is instructive here, but there are numerous other studies as well. It’s quite clear that stronger patent law does not mean greater innovation or economic growth… and yet why would the US Chamber of Commerce falsely interpret the study that way? The most basic theory? Patents have never been about innovation or economic growth. They’ve always been about protecting incumbents against competition. Guess who are members of the US Chamber of Commerce? Yup… the incumbent business owners…

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Companies: chamber of commerce

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Comments on “Chamber Of Commerce Gets Basic Stats Backwards, Calls For Stronger US Patent Protection For No Good Reason”

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Anonymous Coward says:

Bubble Charts

Somebody could gather that information(I don’t know where to look for) and put it in a google doc with a bubble chart showing all the correlations that exist.

It can even be done in group as the documents can be updated by anyone if it is configured that way.

Those bubbles charts appeared in the TED Talk and was bought or licensed to google. They are amazing on what they can show.

PrometheeFeu (profile) says:

Hum… I don’t want to rain on your parade Mike, but there is here clearly a case of multi-correlation that is not taken into account.

Countries with smaller GDP per capita often have higher rates of growth (for a variety of macroeconomic reasons which have little to do with IP) and they often have weaker IP laws. (because a lesser portion of their economy uses IP) Smith’s number crunching does not actually imply that weaker IP laws lead to greater growth.

Now, I do tend to believe that IP is often a speed bump for innovation, but it is harmful to your credibility when you copy paste that kind of math without a stronger disclaimer. And it’s not as though those of us who feel as you do about IP really need to give the industry another stick to beat us with.

Derek Kerton (profile) says:

Re: Re:

In this case, the Techdirt argument is not that there is obvious, causal, and conclusive correlation between weaker IP protection and higher innovation. The argument is the that there is NOT correlation between higher IP protections and higher innovation, thus the Chamber of Commerce is arguing against the tide of empirical data. For better reading comprehension, focus on the words:

“It’s quite clear that stronger patent law does not mean greater innovation or economic growth”

Does Mike promote the Smith argument as highly accurate statistical analysis with no chance of multi-correlation? No, once again, focus on the words:

[Smith took a] “quick back-of-the-envelope look”.

To make the nuance more clear, think of it as: The Chamber said the Earth was flat. Mike/Smith did not set out to prove the earth is round, but they did a decent job of showing that it isn’t flat. You then chastise Mike for failing to prove conclusively that it is round.

What you wrote regarding the reliability of the Smith analysis is largely correct, but you fail to appreciate what Mike wrote.

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