Tag: Economics

Link to an article by Dean Baker:

“Inequality As Policy: Selective Trade Protectionism Favors Higher Earners”

This article is Baker grandstanding as usual, making the same arguments he has made ad nauseam for many years.  There are numerous flaws in his arguments, which is extremely unfortunate because he’s trying to make some important points, however crudely, about the promotion of inequality.

The major flaw in his argument about intellectual property (IP) law is that he conflates the specific case with the general case (a type of association fallacy).  This is a flawed form of argument that many economists use regularly to deceive readers.  Baker concludes that all IP is bad, but his argument relies almost exclusively on examples from copyright and pharma patents.  It almost goes without saying that copyright laws are indeed maximalist and skewed toward special interests.  His criticisms there are spot on and need no further explanation.  His critiques of patents focus on pharmaceuticals.  The problem is that pharma is not like other technologies.  Pharma is a regulated industry, and companies are able to rent-seek even with unpatented drugs.  Recent examples in the headlines include the Martin Shkreli saga and the EpiPen debacle.  While excessive patent strength/value may be problematic, it is not the sole cause of rent-seeking problems.  And there are so many unique aspects of the pharma industry (right down to doctors’ monopolization of writing prescriptions) that criticisms of pharma patents says almost nothing about patents in other technology areas.  Baker writes, “The laws have been changed to extend patents to new areas such as life forms, business methods, and software.”  The problem with this statement is that it is completely false.  While the U.S. patent laws have indeed been updated with the America Invents Act, and other miscellaneous legislative changes, it is worth noting that these changes to the patent statutes did not alter patent-eligible subject matter (35 U.S.C. 101 – unchanged since 1952).  While courts did expand patent subject matter eligibility from the early 1980s through the turn of the millennium, Baker ignores how the major development in patent law in judicial decisions over the last decade has been to curtail patent subject matter eligibility (Bilski v. Kappos, Mayo v. Prometheus Labs., Alice v. CLS Bank, Association for Molecular Pathology v. Myriad Genetics, etc.).  Baker suggests a trend in a direction directly opposite to the bulk of the recent judicial record.  While numerous other countries prohibit patenting of medical diagnosis or treatment inventions, and countries like Germany historically (though no longer) prohibited patenting chemical compositions, there was never such a ban in the United States.  Furthermore, what about trademarks or trade secrets?  These constitute whole areas of IP law, yet Baker makes no mention of them.  This further underscores how Baker has cherry-picked specific cases, divorced from their specific factual contexts, and (misleadingly) presented them as the general case.

The comments to Baker’s article make some useful points.  As Vic Volpe notes, software and financial patenting is arguably a bigger problem than pharma patents.  (see also, e.g., http://open.mitchellhamline.edu/cybaris/vol5/iss2/1/).  Also, BobbyG notes the misleading citation of average physician salaries in the article, which further evidences how Baker’s primary mode of argument is to distort the facts to serve his ideological agenda — in case it is in doubt what that is, Baker supports centrist “New Deal” Keynesian economic policies.  So, while it is fine that Baker critiques neoliberal policy in its promotion of “winner take all” inequality, readers can rightfully question how and why he inserts New Deal liberalism in its place.  Of course, many other critiques of patents and such are equally ideologically-driven, which is unfortunate because meaningful criticism is needed.

Addendum:  Baker has continued to promote the same line in a further interview (no surprise).  But what is hilariously ironic is that he makes the following snide comment: “There also is a reluctance to think differently. We often joke that intellectuals have a hard time accepting new ideas. Unfortunately it is close to accurate. Even well-established academics are much more likely to accept an idea from an academic with high standing than a person with less standing, no matter how compelling it might be.”  Reading the whole interview makes clear that Baker fails to see how this criticism forcefully applies to him too!