Looking at both intangible investments and political activities to explain the 20% rise in Tobin’s q in the U.S. since 1970, a new working paper by James Bessen from Boston University concludes that activity associated with increased Federal regulation is the most important explanatory factor, especially after 2000. In fact, spending on R&D and other intangibles has fallen relative to conventional assets since 2000.
Noting that operating margins for these firms have also risen since 1990 by over 2% in aggregate, Bessen’s study also found that variables associated with regulation and corporate campaign contributions account for about half of this increase.
Pointer from Mark Thoma. The article is a long interview with Bessen, interesting throughout. For example,
In 2011 a new patent law passed, the Leahy-Smith America Invents Act. This patent law was essentially negotiated between a small number of large pharma companies and a small number of large tech companies.
…all of a sudden you have a whole lot of small businesses in every state in the country who are now upset about getting sued for patent infringement over these very ridiculous claims.
Once again, I wonder how much of the trend toward industry consolidation and loss of dynamism in the past twenty years is due to regulation and rent-seeking.
Have to note that you call regulation others call property rights.
The others are wrong. There is neither a theory of discovery nor an argument from first principles that leads to intellectual property rights being actual property rights.
Even as granted by the Constitution, patents are plainly pragmatic constructs. And for the most part, and most especially in software, patents fail the pragmatic cost-benefit tests. They need to be rolled back greatly, and the fiction that they are actual rights needs to be completely eliminated.
There is a well known theory under which IP rights are “actual property rights.” It’s called legal positivism and it is the leading theory of law today.
That is also one point for that school of thought being garbage. They are obviously not property rights. They are entitlements. I know that seems like semantics, but what is law but semantics?
Plus, it’s so funny. Nobody that Lord is talking about actually calls regulations property rights. Because for them to do so would open their mind to questions people like me would be asking them.
Our ancestors who tamed fire, flinted stone, forged metal, and eventually invented the alphabet were total fools for not patenting that stuff.
“…due to regulation and rent-seeking.”
My read of the article is that rent-seeking largely begets regulation, but AK’s concluding question glosses over this distinction.
MikeP — all property rights are conventional, even “actual” ones.
It is striking how quickly the justification gets to might makes right. It does save time, what with squelching any normative argument from first principles or economic efficiency.
On the bright side, it also makes any self-consistent legal system perfectly acceptable. Is Godwin’s law conventional as well?