Free Trade & IP

James Suroweicki is one of my favorites to read. In this article, he brings out how bullying is endangering moral legitimacy for developed countries when it comes to advancing global causes. Intellectual-property rules are clearly necessary to spur innovation: if every invention could be stolen, or every new drug immediately copied, few people would invest in innovation. But too much protection can strangle competition and can limit what economists call “incremental innovation”— innovations that build, in some way, on others. It also encourages companies to use patents as tools to keep competitors from entering new markets. Finally, it limits consumers’ access to valuable new products: without patents, we wouldn’t have many new drugs, but patents also drive prices of new drugs too high for many people in developing countries. The trick is to find the right balance, insuring that entrepreneurs and inventors get sufficient rewards while also maximizing the well-being of consumers. He is bang on when he points out that history suggests that after a certain point tougher I.P. rules yield diminishing returns. Recent incidents involving Thailand & the drug lndustry point to pent up feelings and defiance, however wrong , they may appear to be on paper.. Suroweicki is again at his best when points out the anamoly between positions taken by rich nations when it suits their interest. The U.S. when it comes to labor standards, argues that we shouldn’t impose developed-country standards on developing countries, but in the case of intellectual property its position is exactly the opposite. Global powers can definitely do better on many fronts when it comes to dealing with free trade.