Abolish Patents.

A bit of knowledge, like a mathematical formula, is often described as the platonic ideal of a public good*. This suggests that innovation might be under-provided by the market, and so the United States employs what has evolved into a highly complex patent system (trivia fact: the first patent ever issued in the US was granted by none other than the father of our great university).

This system has come under significant scrutiny recently after some high profile cases, most notably Apple v. Samsung. In response, many have advocated significantly altering the laws governing software patents. The Atlantic summarizes a paper from the research division of the Federal Reserve Bank of St. Louis that goes even further – it suggests that perhaps we should simply abolish patents altogether. The paper suggests that

[...] Strong patent systems retard innovation with many negative side-effects,

and that the best solution is to abolish patents and

to find other legislative instruments, less open to lobbying and rent-seeking, to foster innovation whenever there is clear evidence that laissez-faire under-supplies it.

This lines up with discussions we've had in class which reflect the idea that even when something appears to be a perfect public good that would be substantially under-provided by the market, it seems that these goods frequently are provided publicly and sometimes with fewer serious side-effects. They provide some interesting empirical evidence that compares findings across different countries and systems and conclude that not having a patent system is actually more conducive to innovation on net, even if it still may under-supply this public good.

Overall, I find the conclusions of the STL Fed paper a bit suspect and the notion of a patent system appeals to me, but it certainly reveals the difficulty of this particular public good provision problem.