Thoughts on Tabarrok’s Launching the Innovation Revolution

IP Law, Non-Fiction Reviews
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After reviews by Bryan Caplan and our own Stephan Kinsella got my attention, I read Alexander Tabarrok’s new “TED” e-book, Launching the Innovation Revolution.

I went in with an open mind, ready to applaud practical suggestions for incrementally increasing freedom in the area of intellectual property, even if Tabarrok didn’t endorse abolishing the entire patent system as I do. But I was still disappointed.

To Tabarrok’s credit, he does start by showing why patents aren’t necessary to have innovation (at least, he says, in most fields), and he does argue for shorter patent terms (for some things) and less patent protection (for some things). That’s all fine, as far as it goes.

Unfortunately, too much of the book is devoted to promoting new central-planning schemes that Tabarrok thinks would work better than current government programs. Kinsella discusses some of them in an update to his original review; I’ll discuss a couple more.

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Hoppe’s Phoenix and the Coming One-World Currency

(Austrian) Economics, Anti-Statism, Statism
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I noted previously, in The Prophetic Dr. Hoppe on the Rise of the Phoenix, Hans-Hermann Hoppe’s prediction years ago of the inexorable move to a single, worldwide fiat currency. It’s coming. As reported here back in 2009, “The dollar dropped after China’s central bank reiterated a call for a worldwide currency.”

In this connection, see Hoppe’s fascinating discussion of money starting about 1:05:17 of Lecture 3 of his riveting 10-part Economy, Society, and History lectures delivered in 2004, where he talks about the tendency on a free market of multiple “monies” to converge to one–by the nature of money, it’s more valuable the more widespread it is, etc. Hoppe notes that there is a similar tendency now, with fiat currencies, only this time, it’s bad, not good. He points out that the world had alreayd achieved free market unified money (gold); this was destroyed with the outgrowth of dozens of country-based paper monies, leading to a world in a state of quasi-barter; and now when the major currencies like the dollar, yen, euro, talk about monetary unification, they are moving back towards what we already had with gold, except without the relatively fixed supply and other salutary aspects of a commodity-based money.

Part of this process is cementing the position of the Euro as one of the world’s major currencies. And this is happening too. As reported in the NYTimes, Germany and France are now pushing for changes to the European treaties to extend and prop up the euro–with “automatic penalties for countries that exceed European deficit limits as well as the creation of a monetary fund for Europe. … European leaders will begin to change the fundamental structure of the union, creating a form of centralized oversight of national budgets.”

As I noted earlier, in Greece, the Euro, and Secession, in a 2004 LRC post, How Stupid are Europeans?, I observed that unless an explicit right to secede or exit from the then-proposed European Constitution were added, any countries joining would likely be prevented by force from leaving later. Happily, the EU Constitution was never finally ratified, due to the heroic stubbornness of French and Dutch citizens.

But as noted in Greece Considers Exit from Euro Zone,

It remains unclear whether it would even be legally possible for Greece to depart from the euro zone. Legal experts believe it would also be necessary for the country to split from the European Union entirely in order to abandon the common currency. At the same time, it is questionable whether other members of the currency union would actually refuse to accept a unilateral exit from the euro zone by the government in Athens.

Never join a political union. Never centralize. It could be a one-way ratchet, as the CSA was forced to realize. Decentralization—and the Catholic idea of subsidiarity—down to the individual level, is the anarcho-libertarian goal.

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Tabarrok’s Launching the Innovation Renaissance: Statism, not renaissance

IP Law
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As noted on Marginal Revolution, in Launching the Innovation Renaissance, erstwhile quasi-Austro-libertarian fellow traveler Alex Tabarrok has a new book out in the intriguing TED Books imprint, entitled Launching the Innovation Renaissance (Amzn link, B&N for Nook, also iTunes). The description of the book says:

How can we increase innovation? I look at patents, prizes, education, immigration, regulation, trade and other levers of innovation policy.

Tabarrok is presented as some radical or maverick, bravely challenging the modern horror of statism and patent. But he is not really against patents. In the book he says:

Patents, innovation prizes, patent buyouts and advance market all have their place. The key is to match problems to institutions.

So patents “have their place.” The patent system should be reformed, but it has its place! Of course patent reform is both unrealistic, and not a solution, any more than tax reform is needed.1 The only real tax reform is to lower the rates, not to shuffle things around and move from one type of tax to another. Likewise, the most meaningful IP reform, short of abolition, is to reduce the length of the term: patents, from 17, down to a shorter amount like 5 years; copyright, from over 100 years, to, say, 10 or 20. (See my post How to Improve Patent, Copyright, and Trademark Law.)

As for the “prizes,” in his new ebook he highlights private prizes like the X-Prize but downplays the fact that he thinks taxpayers should fund these prizes. But this is the idea. As I have noted previously,2 Tabarrok is in favor of a taxpayer-funded “medical innovation prize fund”–starting at “$80 billion per year, and increas[ing] with the growth in GDP“. Similar proposals include those by faux free marketeers Joseph Stiglitz and Forbes.com. (Update: I’ve read more of the book now; he doesn’t downplay the taxpayer-funded aspect of the prize system he (and socialist Bernie Sanders) advocates. He is explicit about it in the book.)

Of course, medical innovations are only a small slice of the space of technologies allegedly promoted by patent law (there are electronics, lasers, chemicals, data processing, pharmaceuticals, and so on; there are over 400 classes in the PTO’s classification system, and each class is divided into numerous subclasses). So if you extend this tax funded innovation prize idea, and replace all patents for all technology areas with tax funded prizes, you’d have to advocate $2 trillion to $20 trillion a year in taxes to stimulate the “right” amount of innovation. Or maybe more. Hurrah for “free market” “solutions” to our “problems.” What the hell, let’s be “bold” and make it $100 trillion of tax funded innovation prizes per year to create a utopia on earth by 2013! Or maybe a quadrillion dollars!

Sorry, did I say “replace”? As patents have their “place,” these prizes would not even replace the patent system, but supplement it. Injury upon injury! In this, I am reminded if calls for “replacing” the current income tax with a VAT or national sales tax. Of course, in practice this amounts to a call for adding a new sales tax on top of the current income tax, since the state will never give up the latter.3 Likewise, Tabarrok’s call for a taxpayer funded prize system would not result in this replacing the patent system, but being added on top of it, making things even worse. …


  1. See Tyler Cowen on the VAT; Say No To Tax Reform

  2. See $30 Billion Taxfunded Innovation Contracts: The “Progressive-Libertarian” Solution and Libertarian Favors $80 Billion Annual Tax-Funded “Medical Innovation Prize Fund”. 

  3. See Tyler Cowen on the VAT; Say No To Tax Reform

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A drug warrior falls on his sword

Police Statism, Victimless Crimes
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I would not expect libertarians to have much sympathy for agents of the state when they are ensnared by the same webs they help create.  And yet I do have some sympathy for former Arapahoe County, Colo. Sheriff (and one-time “Sheriff of the Year”) Pat Sullivan, who was arrested Tuesday on charges of methamphetamine distribution.  Investigators say Sullivan offered meth to men in exchange for sex, and that he had also been “taking care” of meth addicts, going so far as to claim he was on a drug task force and was working for the Colorado Department of Public Health’s meth treatment program, which doesn’t exist.

Former Arapahoe County Sheriff Pat SullivanIt’s a dramatic fall from public grace for a man whose name adorns the very detention center where he’s being held on $500,000 bail.  Sullivan served nearly 20 years as Arapahoe sheriff and ironically served on a statewide meth task force in 2000.  His department undoubtedly arrested thousands on drug charges during his tenure.  For his work he was named “Sheriff of the Year” by his colleagues in the National Sheriffs’ Association in 2001.

So it’s hard to feel sorry for someone who’s run afoul of the same unjust laws he once enforced.  But consider this: Sullivan engages in some honest, peaceful, consensual trade for once, and ends up in an orange jumpsuit and shackles on national television, shattering a decades-long legacy as a tough and ethical law enforcement officer.  It’s moments like these that makes one want to appreciate cosmic practical jokes.

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