|Rumpus on the
campus at GMU
The Mercatus Center, which bills itself as "the
world’s premier university source for
market-oriented ideas" (AKA, a free market think tank), last
a report titled "How Many Jobs Does Intellectual Property
Create?" In it, the authors, Eli Dourado and Ian Robinson, pour
scorn on estimates of IP’s effect on economic
"In the past two years, a spate of misleading reports on
intellectual property has sought to convince policymakers and
the public that implausibly high proportion of US output and
employment depend on expansive intellectual property (IP)
rights," it says. "These reports provide no theoretical or
empirical evidence to support such a claim, but instead simply
assume that the existence of intellectual property in an
industry creates the jobs in that industry. We dispute the
assumption that jobs in IP-intensive industries are necessarily
For instance, the authors call out a USPTO report from March
2012 that identified 75 "IP-intensive" industry groups that
directly accounted for more than 27 million jobs and added more
than $5 trillion in value to domestic product. The Mercatus
authors argue that the claims are unsupported by any evidence
linking job creation to intellectual property.
Where the report heads into stickier, more speculative
ground is when it argues that "some of the jobs created by IP
may harm the economy instead of helping it". One reason offered
for this is that consumers would spend more money on other
products and services were it not for the higher expenditure on
|Is Kickstarter a
viable alternative to IP protection?
They also point out that it is not the case that every job
in IP-intensive industries would not exist but for the
existence of IP. "The fact that an industry is IP-intensive, as
defined by IPUSE, does not necessarily indicate that an
industry’s output or employment is IP-dependent."
As an example, they say blogging does not rely on the
copyrights that are automatically awarded.
Less persuasively, the report goes on to say IP is not the
only way to incentivise creation and invention. "Prizes and
awards can stimulate production of new innovations or creative
works," the report says. It adds that assurance contracts such
as those enabled by crowdfunding platform Kickstarter are
another way creation can be awarded.
"An odd report"
Mark Schultz and Adam Mossoff at the Center for the
Projection of Intellectual Property (CPIP) at George Mason
University have hit back. Rather than walking around the corner
to the Mercatus Center and having it out in person, they wrote
an article on Tech Policy Daily’s website and
a follow-up post on their website in which they outline
their disagreements. In the Tech Policy Daily article they
begin with the obligatory-among-IP-proponents hat tip to the
nation’s Founders, before going on to concede that
there is "certainly a lot of empirical research to challenge".
The first problem with the Mercatus report, they say, is that
it mischaracterises the studies they are attacking.
Schultz and Mossoff point out that the reports savaged by
Mercatus make "far more modest claims than the report
suggests". Rather than claiming IP creates all the jobs in the
industries identified as IP intensive, they merely develop a
method for identifying these industries and then describe the
contribution of these industries to employment and economic
Schultz and Mossoff say it is perfectly valid to try to
understand IP’s importance by looking at the
economic contribution of IP-intensive industries.
"Additionally, it is hard to dispute that IP creates
some jobs – most likely a lot of jobs
– in America, given the size and importance of its
innovation and creative industries."
|Pie in the sky?
The USPTO's report on jobs in IP
They point out that the US and Great Britain seemed to do
just fine in the past 200 years when it came to balancing IP
rights and economic innovation.
One of their biggest problems Schultz and Mossoff have with
the Mercatus authors is they do not back up their claims that
the US would enjoy even greater prosperity with weaker IP
protections with any empirical evidence of their own.
"Apparently, the authors of the Mercatus report presume that
the burden of proof is entirely on the proponents of
IP, and that a bit of hand waving using abstract economic
concepts and generalised theory is enough to defeat arguments
supported by empirical data and plausible methodology," say
Schultz and Mossoff in their article on the CPIP website.
Noting that "you can’t beat something with
nothing", Schultz and Mossoff challenge IP sceptics to stop
making "faux originalist arguments" and offer some
They also give short shrift to some of the alternatives
offered by the Mercatus report, especially the idea that
prizes, Kickstarter, government funding, or patrons can take
the place of IP.
"But none of these alternatives is problem-free," say
Schultz and Mossoff in the Tech Policy Daily piece. "It is
bewildering, for example, to find a libertarian think tank
arguing that government projects are superior to private
property rights as a means of directing resources to innovative
activities. While prize systems may seem innocuous, they also
have a historical legacy that should make free market advocates
blanche, such as political logrolling and rent-seeking
machinations that denied actual innovation due recognition and
These are all good points in an argument that will never be
won by either side. Which side are you on?