Hi I have a question for you guys and galls. Where do patents fit in in a free market ? Patents are legal property, they are similar to investments in that you take your money or labor time and put it into developing a new product, process or in the case of an investment a corporation, then you are entitled to a retern on your investment. The purpos of a patent is to recope losses incerd during R&D as well as a way for inovaters to profit from what is durring the duraration of the patent there intelectual property. In an unregulated or state absent market it would be difficult for many patent holders to secure there rights ( the exclusion of others from using there patent ) , have a remidy to seek restitution from infringment, or to have the market even acnowlge the patent as bieng ligitamite. This would discorage the inovater as there would be no reward for encorring the cost of thiere inovation since the new or more efficent product or process is open to all the market to exploit. Awnsers from differnet points of view are welcomed and encouraged. Espesialy if you wold void or alter the consept of the patent.
Thanks Bye
OK, at this point, I'll stop arguing from the liberty angle and just concede defeat there. While compromise on liberty itself is something out of question, I stil must consider something on this issue based on the ultimate ends, irrespective of the means.
Pharmaceutical companies can end up spending 10 years on researching and developing drugs, many of which will be discarded, and among all, only a few will enter the later stages of development. Once they come up with these few drugs, they can even have to spend 10 more years on giving trials to these drugs. If they have to recover the costs of developing all other failed and discarded drugs from the few drugs that were successful, they'll have to ensure to charge high prices to recover all their sunk costs.
Of course, many companies these days have extremely acute financial analysis teams calculating the net present values of their projects before even thinking of undertaking them. (Just for those few who might not know, net present value is the value of a venture based on all future cash inflows and outflows) Since years of consuming cash for development bring down the net present value greatly, the financial calculators of the company will not allow the venture to be undertaken if it has negative net present value. And if they know that imitators will bring down the prices they can charge, they will clearly be able to see that the project has negative net present value, and they will simply not undertake it in the first place. Drug companies will refuse to develop drugs to address common ailments, period.
I know some smart person is leaping at the chance to say it, but no, I know that what is good for a competitor is not the same as what is good for competition. I do, however, know that if all pharmaceutical development projects have a negative net present value, none of them will ever be undertaken, and none of them will ever be there to address people's ailments. There will be no drug companies. And if there are no drug companies, who will undertake the massive expenditure to develop them? The state?
Prateek Sanjay:I stil must consider something on this issue based on the ultimate ends, irrespective of the means.
Prateek Sanjay:Pharmaceutical companies can end up spending 10 years on researching and developing drugs, many of which will be discarded, and among all, only a few will enter the later stages of development. Once they come up with these few drugs, they can even have to spend 10 more years on giving trials to these drugs. If they have to recover the costs of developing all other failed and discarded drugs from the few drugs that were successful, they'll have to ensure to charge high prices to recover all their sunk costs.
Prateek Sanjay:Drug companies will refuse to develop drugs to address common ailments, period.
Prateek Sanjay:I do, however, know that if all pharmaceutical development projects have a negative net present value, none of them will ever be undertaken, and none of them will ever be there to address people's ailments. There will be no drug companies.
Prateek Sanjay:And if there are no drug companies, who will undertake the massive expenditure to develop them?
So you're going to pretend liberty doesn't exist, so you can argue around it?
So now you're arguing against the market by arguing for monopoly?
You're asserting market failure. Do you actually believe free markets fail?
Prateek Sanjay:I know some smart person is leaping at the chance to say it, but no, I know that what is good for a competitor is not the same as what is good for competition. I do, however, know that if all pharmaceutical development projects have a negative net present value, none of them will ever be undertaken, and none of them will ever be there to address people's ailments. There will be no drug companies. And if there are no drug companies, who will undertake the massive expenditure to develop them? The state?
This latter argument basically amounts to the "too big to fail" bank argument. If we don't allow the drug companies monopoly profits, then we will have to turn it over to the monopoly state. In other words, we are hostages to drug developers.
Please, try to present something resembling a free market, Austrian argument.
If Bastiat was reading this, he would be rolling in his grave.
If you find something evil that wobbles, push it. - Gary North
It's getting late in the evening and I am getting a little exhausted, but all the same, I am just curious - based on all available empirical evidence, what has been the level of investment in drug development in countries where patents exist and in countries where patents don't exist, and whose consumers have benefitted from availability of more drugs and at better prices?
I don't believe in any such thing as market failure. Markets merely allocate resources to their best available uses under any given circumstances, nothing more, nothing less. I am not arguing against market; how can anybody argue against human exchange?
Prateek Sanjay:If there were no law enforcement, there could still be a mafia-like organized crime for people's protection and rooting out independent criminals, but then the costs of extortion for protection would still be present and would just as well replace taxes.
There ARE gangs and mafia-like organizations WITH state run law-enforcement so whats your point again? Also state run law enforcement tend to get caught up in scandals due to their position of power.
Daniel:The major difference between the state and the insurance company is that paying the insurance company is voluntary, while the state initiates coercion to get you to pay it.
There is one other major difference between the state's production of security and private production of security aside from the fact that private insurance companies are morally sound. Private firms have price calculation. The state does not. the state has no way of measuring whether it's security efforts are effective.
Statism is a religion.
Prateek Sanjay:Pharmaceutical companies can end up spending 10 years on researching and developing drugs, many of which will be discarded, and among all, only a few will enter the later stages of development.
This is not true.
In 2001 Sony, Toshiba, and IBM pooled millions of dollars to fabricate a technology known as the Cell processor. After years of R&D their pooled resources probably extended over a billion. Since the tech industry is largely a bit more economically free than others these company's can spare to invest this type of money into it. The cell on it's own if it were sold to consumers would be comparable to a $100-200 Intel chip. SImilarly AMD and Intel poor millions into R&D and sell thheir products anywhere from $40 to 1000. Intel, unlike the pharmacutical company has fronted all the original investment into fabricating smaller die sizes, up to the now 45nm die. They have beared this cost alone simply to enter the market first. Their products still remain at an appropriate cost and they still derive a profit.
Pharmaceutical companies on the other hand generally spend less time fabricating new products and their manufacturing costs are extremely low. The reason their costs are so high is due to a distortion of the natural market, it has nothing to do with the time or money that went into making it which when compared to the tech industry is assumed less.
Also, does it make sense for society to front the cost in R&D in products they may not necessarily be interested in purchasing? If a company is spending an exhorbant amount of cash on R&D into products that don't sell than the company needs to go out of business as they are wasting resources. Modern medecine on the other hand has the state's hand all into it perverting the natural order of a market economy. The states involvement has distorted the price mechanism.
Prateek Sanjay: I am just curious - based on all available empirical evidence, what has been the level of investment in drug development in countries where patents exist and in countries where patents don't exist, and whose consumers have benefitted from availability of more drugs and at better prices?
Sadly all the major drug companies exist in country's with heavy state involvement. It's impossible to compare apples to apples here, so you will have to find another industry that operates on a similar level in the production of consumer goods and R&D Practices. I compare the tech industry to the pharmaceutical industry all the time because technically they are both technologies and business models tend to be similar.
Prateek Sanjay:I am just curious - based on all available empirical evidence, what has been the level of investment in drug development in countries where patents exist and in countries where patents don't exist, and whose consumers have benefitted from availability of more drugs and at better prices?
You know that doesn't prove anything about patents. Certainly not an Austrian analysis.
Prateek Sanjay:I don't believe in any such thing as market failure.
Then why do you insist on state intervention in the market? You claimed that without patents, no one would make drugs. You claimed the market would fail to fill demand.
Prateek Sanjay: I am not arguing against market; how can anybody argue against human exchange?
That is precisely what patents are. Artificial monopoly privilege, which restrict free exchange. A patent is no different than a tariff.
filc:Pharmaceutical companies on the other hand generally spend less time fabricating new products and their manufacturing costs are extremely low. The reason their costs are so high is due to a distortion of the natural market, it has nothing to do with the time or money that went into making it which when compared to the tech industry is assumed less.
Many of the costs are meeting regulatory demands, which also functions as another layer of monopoly privilege. The state allows the pharma companies to charge more for their goods, as long as the FDA and associated bureaus get their cut of the action. This again, limits competition.
Prateek Sanjay:based on all available empirical evidence, what has been the level of investment in drug development in countries where patents exist and in countries where patents don't exist, and whose consumers have benefitted from availability of more drugs and at better prices?
You are asking the impossible. This is comparing apples to oranges. There are untold of number of variables that could affect production and innovation.
At most, 5% of the population would need to stop complying to bring down the government.
A couple quick points:
Imagine two cavemen are moving large stones around. One decides to roll his large stone on logs, essentially making use of the very first wheel. The other caveman sees this and thinks it's a good idea. Does the first caveman have a right to destroy the second's attempts at using wheels? For how long? What if caveman 3 a few miles away also thought of using logs to roll heavy things? Which one invented it first?
Patent law covers "non-obvious" innovations. Who is to say what is obvious? How many times have you had an idea for the solution to a problem that, when you looked it up, someone else has already thought of?
Ubiquitous is the idea that inventors set out to invent things in order to get a patent. They enjoy solving problems (we all do) and would continue solving problems regardless. I'm not sure what to do about drugs, but heres a clue: http://www.lewrockwell.com/tucker/tucker132.html
I am certain that patenting the "online transaction" or the "scaleable multiplayer online world" is an absurd abuse of the system. Heck, there's even a patent for turn based combat card games: you can't make one of those and sell it without recieving 10s of thousands of pages of intent to sue paperwork from hasbro.
liberty student:Many of the costs are meeting regulatory demands, which also functions as another layer of monopoly privilege. The state allows the pharma companies to charge more for their goods, as long as the FDA and associated bureaus get their cut of the action. This again, limits competition.
Yes I whole heartedly agree.
Innovation is caused by competition. Patents reduce competition. Thus patents must reduce innovation.
Patents create an economic incentive to innovate. Why would I spend my money on R&D to develop something if somebody else can use the fruits of my labor without having incurred the costs that I was willing to spend? Many technologies would never be discovered in the first place if there were no IP laws. Intellectual property is property.
jct181:Patents create an economic incentive to innovate.
So why not make them last forever then? What about 50 years? Or only one year?
jct181:Why would I spend my money on R&D to develop something if somebody else can use the fruits of my labor without having incurred the costs that I was willing to spend?
Because you would be able to be first to market and you would be the market leader.
jct181:Many technologies would never be discovered in the first place if there were no IP laws.
You don't think we would discover truth without patents? So why have competition then?
jct181:Intellectual property is property.
Could you please define "intellectual property"? Are you not just saying "ideas" are property?
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