The Birth of Plenty

Based on a quote used in a P.J. O’Rourke book from an obscure Scottish economist, William J. Bernstein goes to great lengths to show that prosperity is the result of four factors:

1. property rights
2. scientific method
3. capital
4. technology (communication + transportation)

Bernstein shows that efficient and secure property rights ensure that land will move from being concentrated among a few owners to being held by those who can use it far more efficiently – usually a much larger number of land owners.

But does this same belief in the power of property rights and the tendency for property to flow to where it is most useful fly when applied to intellectual property?

I’m not wholly convinced that intellectual property will naturally flow into the hands of those who will make the most efficient use of it. It seems our laws governing patents mimic too closly the flawed property mechanisms of the Spanish – allowing a few companies to inefficiently hold onto knowledge that might otherwise enrich society.

I’m thinking of medical advances here, but this certainly applies to any patentable technology. Without addressing it, Bernsteins book seems to question the logic of the United States’ continual extension of a patent’s timeframe.

If you’re not going to take the time to read this phenomenal book, you can read more of Bernstein’s work on the horribly designed efficientfrontier.com. However, I cannot recommend this book enough. Great stuff.