A Real Abundance Agenda Starts by Rolling Back Patent and Copyright Monopolies

“Abundance” has become the cool word for Democratic politics. The idea is that we need to eliminate government regulations that block housing construction and other projects. While there is certainly value in rolling back excessive regulation, it likely has less benefit than advertised.

In the case of housing, we were building plenty of housing before the bubble burst in 2007-10. Most of the current shortage in housing is fallout from the crash, when the country hugely underbuilt housing for a decade.

In other areas, like constructing electricity powerlines, there clearly would be benefits from rolling back regulations, but the problem is that rolling back bad regulations, while keeping the ones necessary to protect the environment and workers is not easy. Contrary to the story the abundance gang likes to tell, the most troublesome regulations are usually not liberals getting carried away with a good cause, but business interests trying to block competition.

One area where we could hugely further abundance is by radically reducing the importance of government-granted patent and copyright monopolies. These are regulations that vastly increase the cost of a wide range of items from prescription drugs and medical devices to software and fertilizers. Without these monopolies drugs would be cheap and software would be free.

It’s hard to tell a clearer abundance story than a world without patent and copyright monopolies. Imagine a world were drugs typically sell for a few dollars per prescription and the expensive ones cost $20-$30, not hundreds or even thousands of dollars. And this is not because an insurer or the government is picking up the bulk of the tab, it is because drugs are almost invariably cheap to produce and distribute.

In a free market, drugs would sell at low prices. The reason drugs are expensive is because we give drug companies patent monopolies and related protections on an item that is essential for people’s health and/or their life. And there is a huge amount of money at stake. We will spend over $740 billion on drugs and other pharmaceutical products this year. We would likely cut this by more than $500 billion ($4,000 per household) if drugs were sold in a free market without patents and related protections.

Medical devices, everything from kidney dialysis machines to a wide range of scanning equipment, would also be far cheaper in a free market. Again, imagine that the most advanced scans cost a few hundred dollars rather than a few thousand, and not because we got an insurer or the government to pick up the tab, but because the equipment sold in a free market without patent monopolies.

Now imagine that all software could be exchanged freely over the web because it was not protected by patent or copyright monopolies. In this case, not only would the consumer software people used daily, like Windows and Word be free, but all the business software that the AI gang is developing would be available at little or no cost. (The electricity to power AI would still cost money.)

At this point, many readers are yelling in their heads that without patent and copyrights no one would develop the new drugs or invent new software. That complaint shows the narrowness of thought that dominates public debate in this country.

Patent and copyright monopolies are one way to provide incentives for research and creative work. They are not the only way. We have discovered that people will work for money.

If that point is too elliptical, we can just pay people directly as we already do to a substantial extent. For example, in the case of prescription drugs, we support over $50 billion a year in biomedical research through the National Institutes of Health and other government agencies. We also directly fund research in other areas.

The government could fund more. Displacing the patent-supported research in developing drugs would probably require another $100-$150 billion a year. We may also opt for a different mechanism than just parceling it out through a government agency, such as long-term contracts similar to what the Defense Department does with prime contracts for major projects. (See chapter 5 of Rigged for a longer discussion [it’s free.])

We can also alter the structure of patent and copyright monopolies. We can make them shorter and weaker, rather than longer and stronger, as has been the trend for the last half century.

Taking steps to lessen the price gap between the patent/copyright protected price and the free market price is classic economics textbook stuff on reducing waste and corruption. It also has the neat benefit of reducing the amount of money going to very rich people like Bill Gates and Larry Ellison.

If someone was interested in abundance they should be all in on the idea of shorter and weaker patent and copyright protection. On the other hand, if the goal is more money for the rich, maybe less so.

Copyright and patent monopolies are not the only area where a real abundance agenda might mean less money for the rich and very rich. The financial sector is both a source of great fortunes and tremendous economic waste. A modest financial transactions tax would go far towards reducing both.

The introduction of a digital currency by the Fed would eliminate tens of billions of dollars in fees collected each year by banks and credit companies and instead put the money in consumers’ pockets. And modifying bankruptcy laws to take away the incentives for private equity funds to put the companies they purchase into bankruptcy would also increase efficiency and reduce the size of PE fortunes.

And taking away the special protection that Section 230 gives hundred billionaires like Larry Ellison, Mark Zuckerberg, and Elon Musk the ability to profit from spreading lies would also reduce big fortunes and economic waste.

It seems that most of the really big items on an abundance agenda would reduce the incomes of the rich and very rich. Maybe that’s why they don’t get talked about much.

This first appeared on Dean Baker’s Beat the Press blog.

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