Protection of Property Rights Guarantees Innovator Returns 97.0

On intellectual and other property rights, I have copied a relevant post from another Forum that I joined, VoiceOver 2015.

A similar scheme for HIV/AIDS drugs for the developing world has been applied elsewhere (See Post #75) after a real threat from US$1 per dose substitute from India, a countervailing force needed for robust democratic debate.

On August 21, Gerdjan Hoekendijk of the Netherlands posted this topic at the Third Chamber 2015 Forum. (The Forum is free to join. Interested friends can click the first link above.)

Open source can boost development Some time ago I heard about Extremadura, the poorest region of Spain, that boosted the application of ICT in education, healthcare and government by solely applying open source software.

For more information check: http://news.techworld.com/operating-systems/6558/spanish-region-goes-entirely-open-source/ I became convinced, that consequently applying open source software (and sharing all applications) can boost development in developing countries.

One of the advantages is, that computers that became superfluous because they are to slow for the latest version of Windows can still be used when using Linux. I also believe that choosing for ‘open source’ is about more than just software applications. Its about a mentality of freely sharing endlessly reproducible knowledge.

Two out of the three prior first responses tended to highlight that open source is, “It’s a marketing tactic, and a sham.” and “Or Africa … even though your struggling with poverty and your children cannot afford expensive I.T. education, buy patented software from me … Put that in your pipe and smoke it .”

Please visit the site here to get the authors’ context of the quotes above. I wrote in my response, the fourth for the topic, on August 22.

Open source can boost development. There is a way out of this dilemma without reducing it into a dichotomy, in fact, a false either/or emotional issue.

(Note: even open-source software needs customization, user-friendliness and maintenance to be truly useful on the ground.) There is a way out even with branded knowledge products like software or medicines.

The insights of Paul Romer of Stanford U in his journal Endogenous Technological Change (1990) can frame the issues here quite clearly and may provide a good approach – like the deal on HIV/AIDS drugs for the developing world. (See Post #46 for more detailed discussion and link to the journal.)

In Romer’s words, knowledge products can be managed as both “non-rival and partially-excludable” goods.

Non-rivalry means that a product, like knowledge, can be shared to a second party without the first losing any bit of it. Conversely, a bottle of beer is a rival good because when given away, the giver is left thirsty.

Exclusion pertains more to ownership and control. One can keep an excludable good like the same bottle of beer in my bodega and exclude you from partaking in it. In some sense, a You Tube video is partially-excludable because the channel owner will have a means to control the video – and recover value – even as the video is given out free.

On one hand, the innovators of new things like software or HIV/AIDs drugs need to have be paid back for out-of-pocket costs to develop new product and an incentive to develop and improve more in the pipeline for the future.

On the other hand, consumers of these products need to have an affordable way to acquire them.

The problem is often that the first part is done in the developed world where non-tradable costs are expensive but also consumed in developing world where incomes (and non-tradables) are low priced. Here, we insert private property.

I believe that it is to the advantage of even the poor to support the laws on protection of private property if he ever hopes to extricate himself from poverty. It is only with private property that they can improve themselves permanently. The taking of what is not owned and a disavowal of private property comes mainly from those who feel no hope of improving themselves, like the un-empowered who are also at the very bottom of pyramid – or those who feel like they can take and keep it by force permanently.

Therefore, the solution, in the language of Romer, is for the inventors, i.e. First World companies, to share their product at a low price to cover local costs in a way that has the useful efficacy but in a mode that cannot be resold to the First World. Being non-rival, there is no real loss to the inventor. And being partially excludable, there is no marginal loss as all local costs are covered and there is no chance of a being resold in the home market.

A concrete example of this is to diffuse an older version of software into the developing world as appropriate technology. Indeed, software, whether open source or branded products, like HIV/AIDS medicine can be of great help for development.

Enforcement of property rights, I reiterate, is the guarantee for the lowliest among us who are able to save up to permanently extricate themselves to a better life. Let us always look for creative ways to share the bounty of innovation fairly, including the creation of countervailing forces in robust democratic debate, to achieve a balance between incentive for the innovator and opportunity to release from unfreedoms for those that are behind that will ultimately benefit all.