They always have since the creation of fractional reserve banking. Supply & demand forces keep the creation in line with growth in value in the economy.
Ever since the Fed started up in 1914, however, they create far more money, are not constrained by supply & demand, hence endemic inflation.
The world has seen at least 3 currency regimes since 1914 (pre-Bretton Woods, Bretton Woods, post-Bretton Woods) and possibly more. Exactly what 'monetary creation' means changes depending on the system and isn't as much a problem as government interference when the market tries to purge big chunks of the economic elites from power.
If the market is blocked from getting rid of idiots, it is expected that idiots will end up in charge of important things. Anyone can see these banking collapses a mile away; look at Uber's valuation vs losses! The problem is that blindly optimistic idiots are being given far too much money to play with and big players are allowed to dodge the pain when obvious risks become realities in a crisis.
8 years later and you can buy a beginner's 3D printer for $250, a very reliable open source machine for $1000, and a super high end machine for $15,000.
To say that patents always stimulate innovation is obviously false to me. Patents may stimulate innovation at times but they also clearly stifle it. I was thinking today how the Prusa 3D printer is no more technologically complex than a pen plotter from the 1980's. If it had not been for patents, many companies could have competed for the high end 3D printer market in the 1990's, prices would have been perhaps a few thousand dollars for a printer in the year 2000, and the spread of personal computers would have led to the same hacking and innovation to lower costs we've seen but perhaps ten years earlier.
And the second order effects of this are I think dramatic. 3D printers accelerate innovation by dramatically reducing the cycle time for iterative development of mechanical parts. In the 1990's if you designed a mechanical part you had to wait weeks for it to come back from a machine shop if you could not hire a 3D printer. With a 3D printer in your office you can get a mechanical sample of your design the next day, and go through 5 design iterations in a week.
Instead of allowing for cheap and ubiquitous 3D printing, we chose to give a legal monopoly to stratasys who got to profit greatly for it. And I think society suffered economically because of it.
It is a source of great frustration to me that people dogmatically believe patents cause innovation. It is quite obvious to me that there are benefits to innovation even without intellectual property protection. Prusa Research still makes all of their products open source and they appear to be a healthy, growing, multi-milion dollar a year business. Chinese clones flood the market and are great for broke students, but those who want more reliability still source from Prusa. It seems there is room in the market both for the OEM and clones as they serve different groups.
The only reason business people love patents is that in a world where patents exist, you have an incentive to collect them. But I think the second order negative effects of this dramatically slow innovation and harm society economically. If Prusa can exist without patents in a market where competitors still use them, we can obviously make functional an entire economy with less intellectual property restrictions.
Unfortunately this is seen as arcane or obscure and nobody cares. Its a HUGE issue that I think affects our ability to innovate broadly but I fear the business community would be against the change we need.
My only hope is that competent and respected economists could examine this issue. People who know China well already know how much innovation can flourish in an open business community [2] but we need to convince the American business community to buy in to IP reform.
[1] https://www.businesswire.com/news/home/20120217005877/en/Str...
You make some interesting points, however generalizing one example from 3d printers and concluding "patents are clearly bad" is really oversimplifying the issue by a lot.
There are plenty of examples of patents stifling innovation (oftentimes purposefully, where a company buys a patent just so nobody else can use it). There are much more complicated examples though, such as the pharmaceutical industry. At least in the US, which funds most of the world's drug research, the entire business incentive for developing new drugs would evaporate without patents. Now there are lots of problems with the pharmaceutical industry, however developing new innovative drugs (with the intent of profiting from them, often viciously) is not one of them.
Everybody agrees the patent system is broken. The problem is nobody can propose a better alternative.
Say, the year it is granted the patent costs $1000. The next year, $2000. Ten years since granting, a bit more than million, etc.
If this patent fuels your hockey-stick growth, you have no trouble keeping it.
Keeping a patent defensively becomes much less affordable.
Sharing patent rights for a part of the profit becomes a reasonable way to keep the patent for a few more years.
Even megacorps will eventually face the cost of keeping a patent, and decide to abolish it before it expires, just for economic reasons.
Administration does not become any harder, or more expensive.
[Edited: spelling]
Here are two proposals, pick the one you like better:
1) Abolish patents completely.
2) Abolish patents, except for pharmaceutical industry.
If anything, proposal number 2 should be strictly better than the status quo.
So what are the boundaries we'd place? Only companies whose primary income source is parmaceuticals are allowed to own patents? Are all the non-pharma companies still required to avoid patent infringement?
Or is it that patents can only exist if they're relevant to pharmaceuticals? If so, where do you draw the border? If a pharmaceutical company comes up with a new process for synthesizing some compound Z which they use for their drug, is that patentable? What if it turns out that compound Z is also useful for weather-treating surfaces, and gains widespread use in construction? Now, what if we switch to an alternate timeline where compound Z was invented by a construction company first, and then pharma started to use it? What's the patent situation look like?
#2 seems rather arbitrary to me, even moreso than existing patent law. I'm not convinced it's any better than the status quo, though also it's not clear to me exactly what you mean with it.
To avoid any worries that the drug research will cease if drugs are no longer patentable, the practical solution is to leave patents in place for drugs. Drugs are regulated in million of ways already. Patent system already has special provisions applicable only to drugs. Just craft the new intellectual property category that will cover 95% of ways patents are now used for pharmaceutical research and call it a day.
It doesn't have to be justified from first principles or fully cover all the edge cases because: 1) patent system is already justified on purely consequentialist grounds (at least in the US) 2) existing patent system already fails basic sanity checks, let alone perfectly handling all the edge cases.
Yeah, the historical record says it doesn't work. The same for copyrights. In the 1800s Germany had no copyright laws and their economy and innovation boomed. US industry was founded on ignoring British patents.
Today, look at innovation in open source software - without patents and copyrights, it proceeds at a breakneck pace.
Ignoring IP laws is a great way to catch up to stronger economies that are growing on innovation. Once you catch up, though, the only way to keep growing is to develop your own innovations... at which point you start caring more about IP laws. The U.S. went through this transition and China will too, pretty soon I think.
In my opinion, open source is so successful because the current copyright laws have overreached. My feeling is saner copyright duration would probably make open source all but disappear.
Other countries run into hard foreign accounts restrictions when loosening monetary policy too much (the LOCALMONEY/USD rate shoots up, and with it commodity prices, oil etc.) Bernanke-type QE is something out of Derrida or Baudrillard. Conservative economists have railed against QE thinking of old-school macroeconomics models that only hold for other countries.
I guess there's social and political dysfunction to come from this lack of restrictions. It mirrors the folk sociology of "boomers" e.g. https://www.youtube.com/watch?v=mBNKUda-s6M
* It has a higher tax:GDP than China [1]. That is to say, the nominal ratio of money siphoned into government vs money retained by private citizens is less free than China's. There isn't really a point of comparison here because the two countries are so different (eg, China has state ownership) but there is some shock value in just how large the US government is in the economic sphere.
* It has socialised access to capital. Large banks have the power to create new money and the US government steps in during crisises to pick winners and losers when the lenders are proven to be incompetent at taking risks (eg, 2008 era). China does this too, but the battle becomes which government is more astute at supporting bad risks rather than which system is more effective. China is probably more long-term strategic, using the money to build useless infrastructure instead of the US using money to uselessly boost asset prices. This point is a huge deal to me and really undermines my faith in the effectiveness of free markets used elsewhere in the system.
* A complicated IP law system where people are prevented from doing things they know are good ideas. China largely ignores this system.
This article teases at one point; which is socialised access to capital favours companies that are too large to compete but can negotiate for loans and are known to government/large investors.
[0] https://www.epi.org/publication/charting-wage-stagnation/ & EDITED from 1980s, a decade too late.
[1] https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven...