[776] in libertarians
Re: Intellectual property rights
daemon@ATHENA.MIT.EDU (Raymie Stata)
Mon Feb 27 16:34:38 1995
To: libertarians@MIT.EDU
In-Reply-To: Your message of Mon, 27 Feb 95 15:34:26 -0500.
<9502272034.AA23169@duke.cs.mcgill.ca>
From: Raymie Stata <raymie@larch.lcs.mit.edu>
Date: Mon, 27 Feb 95 16:10:52 EST
> Kevin writes:
>
> [Drug company D spends billions to develop a new product and takes
> not steps to protect itself from competition. Sure enough, a
> competitor swoops in and takes advantage of D, and D goes out of biz
> because it can't recoup the billions.]
>
> Fair?
Fair? Yes. Smart? No.
Protecting your biz from competition is part of doing biz. Patent
laws have just allowed the drug market to avoid structuring itself
around this fact of biz. In industries in which companies cannot use
patent laws as an absolute shield against competition the way drug
companies can (eg, computers, cars, overnight delivery, and almost
everything _but_ drug companies), companies spend billions on R&D yet
remain competitive. In fact, most agree that spending much on R&D is
_necessary_ to remaining competitive.
How would drug companies get competitive advantages from R&D
investments? I can't say. If I were such a biz-genius that I could
think of such things off the top of my head w/out even being involved
in the industry, I'd be a multi-billionaire by now. This relates to
what I said before: technology isn't the only important idea that goes
into a successful venture. Good ideas in competitive positioning and
other management-like stuff is also important. Us MIT'ers tend to
think that technology is the only intellectually hard part of doing
biz; perhaps that's why we think it's so special that it requires
special protection that other good ideas don't deserve.
Note also that I can't say how privatized roads, fire, sewer, water,
etc. will operate, and I can't say how to transfer welfare-dependents
out of the welfare system. But my inability to predict what millions
of people acting in the market place will eventually converge on
doesn't stop me from advocating these things because I know they're
right in principle. (In fact, if you but into Hayek's philosophy,
then it should be _impossible_ to predict what would happen in the
marketplace if we privatize things or get rid of patents; if a single
person could predict such things, then central planning would work.)
Just as the transportation industry would have to restructure itself
if we completely privatized and deregulated it, so the the drug
industry would restructure itself if it were deregulated (and I
include getting rid of patents as part of that deregulation). I can't
say for sure what either the transportation or drug industries would
be like after these restructurings, but I know they'd be better than
they are now.
Raymie
