By Nelson Schneider - 08/13/23 at 03:58 PM CT
This week, Fortune Magazine published a fantastic little article revealing the root of the United States’ economic woes. In a surprise to no one with two functioning synapses, it turns out that overweening copyright and Intellectual Property laws have been stifling economic ‘dynamism’ for the last 40 years.
Based primarily on the economic theory of a Turkish economist from the so-called Chicago School of economics, a man with the too-epic-for-English name of Ufuk Akcigit, the article opines that the American economy’s decades-long creep toward a small group of enormous business monopolies has edged-out a force known as “Creative Destruction,” which we have really only seen in recent decades in the form of the DotCom Bubble and the huge number of formerly-analog business services transforming into online-only things, but in the process further entrenching themselves as the only option in their respective sectors.
And how do businesses entrench themselves? Simple: They build their industries on proprietary and protected trade secrets, and sue-to-oblivion anyone who dares reverse engineer or attempts to copy an existing business model with reduced overhead or modified methodology. In short: Even the way businesses do business has been locked-down by IP law to the point where only entrenched players who own the IP rights can afford to operate a business. And without pressure from competition, there is no need to innovate or provide a better service, thus allowing the established players to simultaneously stagnate and attempt to squeeze blood from a stone in their endless pursuit of perpetual revenue growth. Where once there was so-called “Knowledge Diffusion,” which allowed for people to take all sorts of existing ideas, remix and combine them in novel ways, and generate a constant churn of innovation, now we have risk-averse businesses that not only refuse to change and innovate on their own, but actively attempt to stop would-be competitors from doing so.
We see these economic phenomena all the time in the Games Industry. Anytime a mildly-creative developer, publisher, or hardware manufacturer comes up with a new idea, it gets infinitely copied into the ground, flooding the market with knock-offs if the original idea wasn’t protected by trademark or other IP rights. Likewise, entrenched players in the Industry, like the former Big Three of EA, Ubisoft, and Activision, refrain from any and all forms of creativity outside of finding new ways to monetize what already exists.
The long-and-short of what our Turkish friend Ufuk is telling us is that the very act of protecting Intellectual Property is killing the American economy, and to a similar extent, the global economy in any regions that still respects IP rights. Until something forces the issue of Democratizing information, bringing back Knowledge Diffusion in the process, we can look forward to our economic doldrums continuing, and even worsening as desperate plutocrats innovate in finding ways to stifle innovation.
Comments
Matt - wrote on 08/20/23 at 09:38 AM CT
Crony capitalism! It becomes more advantageous for business to lobby instead of actually compete. It’s so sad that the government for the people and by the people is really only for corporations. The constitution should read, I say this tongue-in-check, for the business and by the business.
