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Post by blueneck on Jan 5, 2011 11:35:08 GMT -6
From Huffington Post
By Ralph Gomory
In the United States, innovation has become almost synonymous with economic competitiveness. Even more remarkable, we often hear that our economic salvation can only be through innovation. We hear that because of low Asian wages we must innovate because we cannot really compete in anything else. Inventive Americans will do the R&D and let the rest of the world, usually China, do the dull work of actually making things. Or we'll do programming design but let the rest of the world, usually India, do low-level programming. This is a totally mistaken belief and one that, if accepted, will consign this nation to second- or third-class status.
The latest offender to advance this line of thought is Thomas Friedman, who has prominently displayed this familiar and entirely incorrect line of thought in the New York Times. Unfortunately, this idea is one that is widely accepted without careful thought about either its truthfulness or its consequences.
Truth and Consequences
Cheap labor abroad is cited as the incurable handicap that explains why the United States cannot compete. But cheap labor doesn't explain the fact that Japan and Germany, both high-wage countries, are successful in the automobile industry. Nor does it explain how semiconductors, a model of a high investment, low-labor content industry, are mainly made in Asia. The premise that the inescapable burden of competing against low wages means failure is simply not correct.
Perhaps even more disturbing than the lack of truthfulness is the fact that we are not addressing the consequences of not competing. There are some inescapable truths about any economic good, be it a manufactured good or a service: (1) you either produce it in your own country, (2) you trade something you do produce for it, (3) you do without it, or (4) you import it and promise to pay later.
We are moving steadily away from producing what we need in this country. We are also moving away from producing on a scale that enables us to trade for what we do need. Rather than do without, we are increasingly importing things with a promise to pay later. This cannot go on. When our trading partners, especially China, no longer want to loan us hundreds of billions of dollars a year to be paid later, we will have little productive capacity left and we will be a poor nation.
Friedman is only the latest to assume that we can avoid this fate by emphasizing designs, ideas, and R&D and trading them for the items we need. This is an attractive idea; we often hear about innovation parks and university research centers and often their work is both exciting and good.
But the chasm-sized flaw in this otherwise alluring proposition is scale. Balancing trade on ideas and R&D simply cannot be done. The most elementary analysis shows that the scale is entirely wrong. As one who spent many years as the head of research of a large corporation, I know how much R&D matters; I also know how small it is. Eight percent is a very large percent of revenue to spend on R&D. Even in manufacturing, which is relatively R&D intensive, 4 to 5 percent is typical. It is really wrong to think that you can scale up R&D to be big enough so we can trade it for the huge quantity of things we need but don't make in this country.
A Strange and Unworkable Strategy
Ignoring the issue of scale, Tom Friedman goes on to quote authoritative Chinese sources who say that by the end of the decade China will be dominating global production of the whole range of power equipment. To Friedman's approving eye this just means that China is going to make clean power technologies cheaper for itself and everyone else. Friedman says that Chinese experts believe it will all happen faster and more effectively if China and America work together with the United States specializing in energy research and innovation, at which, he asserts, China is still weak, while China will specialize in mass production.
It is probably true that all this will happen faster with the specialization Friedman describes, but where will we be at the end of that process? China will be making power equipment cheaply, but the chasm is still there, so what will we have to trade for it? Power equipment will be cheap in China, but if we adopt this approach it may well be unaffordable in the United States.
Meanwhile the Chinese wisely welcome our nascent innovations and turn them into products. They are building plants, making things manufacturable, and adding them to their growing GDP. Friedman's article contains an excellent example of this. He describes a U.S. developer with a new approach to solar-thermal power, whose proposal to the U.S. government asking for small scale support was easily outbid by a Chinese offer that was far larger and was aimed at much larger scale plants.
Specializing in R&D, but sending its fruits on to others is a strange and completely unworkable strategy for a nation.
Other Issues
Thinking of innovation as a standalone activity without production has other major flaws. First, our global corporations, understanding that innovation and production are in fact closely tied, are rapidly moving not only production but also R&D overseas. Intel's CEO made this very clear when he said that the goal of Intel's new plant in China is to support a transition from "manufactured in China" to "innovated in China".
In addition, the standalone innovation approach leaves most Americans entirely out. After all, only a very small portion of Americans are engaged in R&D. At a recent meeting I heard "The only thing that matters is innovative and passionate people." These people do matter, but they are very far from being the only ones. This attitude misses the point that it was all our people, working in many different work settings, that made this country prosper. And all of them will all be needed in any viable future for our country.
What We Must Do - The Role of Trade
We need successful industries and we need to innovate within them to keep them thriving. However, when your trading partner is thinking about GDP rather than profit, and has adopted mercantilist tactics, subsidizing industries, and mispricing its currency, while loaning you the money to buy the underpriced goods, this may simply not be possible.
The ability to compete in a world that is half-mercantilist, half-free is inescapably tied to effective trade policy. Our present policy is to beg. We ask countries like China to stop the subsidies and currency mispricings because they are creating a one-way flow of underpriced goods; goods that are destroying jobs on a large scale in many of the most productive sectors of our economy. But why should they stop? It's working for them.
We must move to balanced trade. With balanced trade every dollar of imports is matched by a dollar of exports of goods or services produced here in the U.S.A. We are fortunate that there are in fact ways to balance trade. One very attractive way is to adopt some version of Warren Buffet's Import Certificates plan, which Buffet has described in a remarkably insightful Fortune article.
We should act now to balance trade. We should not continue to beg while jobs disappear and our productive ability erodes.
What We Must Do - Motivating our Companies
Today our companies are motivated to take innovations abroad, produce there and import the goods into the United States. Increasingly we can expect services also to go overseas. We must produce here in the U.S.A., to employ the people of this country, and we must keep their activities effective by a steady stream of innovations in design and production. While other countries roll out a welcome mat of tax breaks and subsidies for our companies because their common sense tells them that their people being employed in productive work is the road to being a rich country, we provide no incentive for U.S. companies to produce here.
We cannot continue to have our corporations, faithful only to the interests of their shareholders, engage in a one-way flow of jobs, technology, and innovation out of the country. We need to realize that with globalization the interests of our country and of our global corporations have diverged. We can realign the interests of corporations with those of our country by rewarding companies that are productive here. And that can be done in ways that are consistent with our history and with the limited capabilities of our government.
Conclusion
Specializing in innovation is an attractive idea, but a misleading one; an idea that blinds us to what we really need to do.
We need to do more than produce exciting new ideas; we must also be able to compete in large productive industries. This requires us to both balance trade and to motivate our corporations not only to innovate, but also to produce in this country. While this is hard to do, it can be done. Specializing in innovation, though often recommended, is in fact a delusion, an alluring path that in reality will lead us straight downhill.
Yers - I have been saying for years, the maximum benefit of new technology is derived from not only developing it, but producing it as well
innovation and manufacturing go hand in hand, neither can exist in any meaningful way without the other
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Post by graybeard on Jan 6, 2011 0:25:13 GMT -6
Why innovate, when the Commies will steal the ideas anyhow?
GB
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Post by fredorbob on Jan 6, 2011 20:56:22 GMT -6
We are moving steadily away from producing what we need in this country. We are also moving away from producing on a scale that enables us to trade for what we do need. Rather than do without, we are increasingly importing things with a promise to pay later. Oh no, hehe, there's another option. Most Americans will become so poor we will no longer be able to afford to purchase much, but the rich will be able to afford importing luxury items by exporting raw materials and other low value added items like cotton, tobacco and our oil. Sort of like the old South and slavery before the Civil War. We did it before, we can do it again.
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Post by blueneck on Jan 6, 2011 21:04:34 GMT -6
Yes. The agrarian south,that relied on trade, and was ruled by an elite few exploiting the labor of slaves and working class whites.
Despite having superior military leadership, the south also lost, be cause the industrial north was able to produce all the materiel they needed
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Post by unlawflcombatnt on Jan 7, 2011 2:21:21 GMT -6
Yeah, maybe we can drive wages down enough to where American workers' are so low that they can compete with Chinese labor. And since they'd be so low that Americans couldn't buy anything, the most profits Corporate America could achieve would be selling products overseas--to consumers and workers that now have more buying power than American workers. But hey, this might fulfill the Obamamessiah's goal of "doubling US exports." That would be still another campaign promise that he came through on.
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twk
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Post by twk on Jan 13, 2011 10:45:40 GMT -6
"What We Must Do - The Role of Trade"
To help balance US trade, we need to start somewhere. We need a simple across the board plan that has minimal favoritism built in. One that does not allow congress to decide the winners and losers.
Proposal: Convert the payroll tax (social security and medicare) into a retail sales tax. This puts the payroll tax burden on both foreign and domestic goods and helps to level the playing field at Walmart etc. It also reduces the cost of goods produced here and sold abroad.
Some argue that it will put too much of a burden on the poor. If it is a retail only sales tax, it does not put as much burden on the poor, because they can and are likely to buy used items as well. The tax can be removed from unprepared foods to reduce the tax burden on the poor. The working poor are already paying their share of the the payroll tax. Social Security is collected on almost the first dollar earned and it is not scaled, unlike the income tax that is scaled. Also a poor self employed person pays almost double, say around 14% of their income, even if they make only $10,000 per year.
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Post by fredorbob on Jan 13, 2011 11:04:39 GMT -6
"What We Must Do - The Role of Trade" To help balance US trade, we need to start somewhere. We need a simple across the board plan that has minimal favoritism built in. One that does not allow congress to decide the winners and losers. Proposal: Convert the payroll tax (social security and medicare) into a retail sales tax. This puts the payroll tax burden on both foreign and domestic goods and helps to level the playing field at Walmart etc. It also reduces the cost of goods produced here and sold abroad. Some argue that it will put too much of a burden on the poor. If it is a retail only sales tax, it does not put as much burden on the poor, because they can and are likely to buy used items as well. The tax can be removed from unprepared foods to reduce the tax burden on the poor. The working poor are already paying their share of the the payroll tax. Social Security is collected on almost the first dollar earned and it is not scaled, unlike the income tax that is scaled. Also a poor self employed person pays almost double, say around 14% of their income, even if they make only $10,000 per year. Taxing imports as well as domestic goods equally, what would that accomplish?
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twk
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Post by twk on Jan 13, 2011 12:08:50 GMT -6
Taxing imports as well as domestic goods equally, what would that accomplish? I am an engineer and I have worked at companies such as IBM, Lexmark, Textron, General Dynamics and I am presently working part time at a machine shop while trying to get my tiny business off the ground. So I am talking from experience as a small business owner and I have understanding of how manufacturing works. This is a very simple example and you can poke lots of holes in it, so remember it is just for illustration purposes. In our simple example, we will ignore all of the other costs for now. Lets assume I am a US based company and I pay an employee $10/hour. Out of that $10, the employee pays about 6% to 7% payroll tax and the employer matches that amount. So it cost at least $12/hour when you take into account all of the government pay work just for complying with the payroll tax. The tax compliance is not free, someone has to do it. Now the employee only gets say $9/hour after paying their portion of the tax. So it costs $12/hour to make the item but the employee only gets $9. If the employer/employee no longer had to pay the tax, then the employee could be paid $9 or even the original $10 per hour and the cost of making the item would be $2 per hour less. Lets say you make 1 item per hour. So you can reduce your cost by $2 per item made. So you can sell it to Walmart for $2 less. Now a retail tax is placed on both your item and the one made in China to collect an equivalent tax to the payroll tax. So the government still gets it tax money. Also the US based manufacturer now sells more goods at Walmart because the goods are more competitively priced. More US goods sold and less Chinese goods so our trade imbalance improves. The employee has a job because the company stayed here and hopefully the increased take home pay to makes up for the increased cost due to the sales tax hike. Also Mr big-wig rich man, who derives most of their income from dividends and investments, now pays into Social Security and Medicare fund when they buy retail items. They can no longer completely avoid this tax by deriving their income from dividends and investments. Now since the US goods are cheaper to make, the manufacturer also finds more customers outside of the US and the US sells more exports. And our trade imbalance improves some more. There are also secondary factors that come into play. For example, as manufacturing volumes increase, the cost to produce the item goes down. I know this is not a complete solution, but we have to start somewhere and large corporations might support this, since it also decreases their costs. Large corporations have lots of resources to keep other solutions from happening, such as increasing tariffs. Note: I am NOT supporting a VAT, that puts too much government into the equation and therefor greatly increases the cost and complexity.
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Post by waltc on Jan 13, 2011 16:28:32 GMT -6
The problem is with taxing foreign and domestically products the same, is that it punishes American workers. It's nothing but a regressive consumption tax that hammers the working poor above all.
The thing is, off-shoring will still be attractive to domestic companies regardless of the tax since the wage differential between both is dramatic. American workers simply can't compete with people who make in a day what a service worker here makes in a half hour. In addition China has almost zero worker safety, labor or environmental laws that companies have to comply with. That makes China a very attractive place to set up shop.
Also look at it from the executive's POV. By off shoring production and reducing wage costs from say $14.00 hour to $.60 a hour his yearly bonuses will skyrocket and the company bottom line will look great.
Hell even the Japanese companies have went this route and they're no slouches when in comes to government support and manufacturing competency.
Bottom line: we need to take a page out of the Chinese playbook. If they want to sell their products here, they have to build the factory here. That's what they did to American car manufacturers and others.
The fact is they protect their markets and we don't. Even the Germans do that and why they remain a powerhouse in Europe while their neighbors are coughing up blood.
We don't and we're economically dying as a result.
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Post by unlawflcombatnt on Jan 13, 2011 17:27:56 GMT -6
"What We Must Do - The Role of Trade" To help balance US trade, we need to start somewhere. We need a simple across the board plan that has minimal favoritism built in. One that does not allow congress to decide the winners and losers. Proposal: Convert the payroll tax (social security and medicare) into a retail sales tax. This puts the payroll tax burden on both foreign and domestic goods and helps to level the playing field at Walmart etc. It also reduces the cost of goods produced here and sold abroad. I see 2 major problems with this idea after reading your subsequent post. #1. The $2-3/hour reduction in labor cost is not going to offset the difference between a Chinese worker making $1/hour and an American worker making $10. The Chinese worker will still be much cheaper. #2. Raising sales taxes increases the after-tax price on American made goods--which is the ultimate total price the consumer pays. As such, it will reduce the purchasing power and amount of goods that are sold to American consumers. This will reduce demand for the good, thus reducing demand for workers to provide the good. And since the sales tax money is not going back to the producer, it will reduce the profit margin of the producer. At the risk of sounding like a broken record, the real solution is Tariffs. Rather than trying to reduce the production cost of American goods, Tariffs would raise the price of imports that compete with American goods. If nothing else changed, more American goods would be sold since their price would now be lower in comparison to imports. No amount of tax reduction for business is going to offset the lower cost of Chinese labor--which is can be as low as 50¢/hour.
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Post by agito on Jan 14, 2011 5:36:21 GMT -6
$2-$3/ hour is HUGE. granted it doesn't mean every job in china will be transferred to the united states, but we only need 22million of... Wait for it.. 813.5 million workersif the median wage of chinese is 3,421and the median income of american workers is 28,403 the difference is 24,982. If you had a $2 an hour deduction or rebate to wages paid, that would be a yearly amount of $1600 and that would lower the difference of median wages between the 2 countries by 6.4% now if that meant 6.4% of those 814 million jobs were now up for grabs- that would be 52 million jobs for america. unfortunately- that last "if" is fallacious because income is distributed logarithmically and not linearly, but it does give some perspective and makes you think about it some more. For more perspective, back in 2008 when the repubs where moaning about lowering the corporate tax rate from 35% to 25%- i tried to factor out what that would be if it was applied as a rebate per worker- it came out to $1 an hour. Which means knocking off $2 per hour would be equivalent to a reduction in the corporate tax rate from 35% to 15%. (notwithstanding the usual observations that noone actually pays %35 because of other deductions. but this would be one more deduction on the list- and the best part is that it would be conditional on whether the company hired american workers) it has to be noted that applying tariffs to foreign made goods would also raise prices and reduce demand. This makes american made goods more competitive because all the prices are now raised, and that diminished demand never really goes away. That's not a nail in the coffin argument ender, but i do bring it up because you can't say "sales tax is bad because it reduces demand" and not say "tariffs are bad because it reduces demand" A better solution? offsetting the $2 by a tax on investment capital and not retail sales.
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Post by fredorbob on Jan 15, 2011 10:31:54 GMT -6
Taxing imports as well as domestic goods equally, what would that accomplish? I am an engineer and I have worked at companies such as IBM, Lexmark, Textron, General Dynamics and I am presently working part time at a machine shop while trying to get my tiny business off the ground. So I am talking from experience as a small business owner and I have understanding of how manufacturing works. This is a very simple example and you can poke lots of holes in it, so remember it is just for illustration purposes. In our simple example, we will ignore all of the other costs for now. Lets assume I am a US based company and I pay an employee $10/hour. Out of that $10, the employee pays about 6% to 7% payroll tax and the employer matches that amount. So it cost at least $12/hour when you take into account all of the government pay work just for complying with the payroll tax. The tax compliance is not free, someone has to do it. Now the employee only gets say $9/hour after paying their portion of the tax. So it costs $12/hour to make the item but the employee only gets $9. If the employer/employee no longer had to pay the tax, then the employee could be paid $9 or even the original $10 per hour and the cost of making the item would be $2 per hour less. Lets say you make 1 item per hour. So you can reduce your cost by $2 per item made. So you can sell it to Walmart for $2 less. Now a retail tax is placed on both your item and the one made in China to collect an equivalent tax to the payroll tax. So the government still gets it tax money. Also the US based manufacturer now sells more goods at Walmart because the goods are more competitively priced. More US goods sold and less Chinese goods so our trade imbalance improves. The employee has a job because the company stayed here and hopefully the increased take home pay to makes up for the increased cost due to the sales tax hike. Also Mr big-wig rich man, who derives most of their income from dividends and investments, now pays into Social Security and Medicare fund when they buy retail items. They can no longer completely avoid this tax by deriving their income from dividends and investments. In order for a sales tax to generate the same amount of revenue as a replaced income tax, the cost of sales would basically be the same as the cost of the income tax; whether it's added into the cost of the item and/or employee wages.
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Post by fredorbob on Jan 15, 2011 10:33:41 GMT -6
At the risk of sounding like a broken record, the real solution is Tariffs. I like that song though.
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Post by fredorbob on Jan 15, 2011 10:36:05 GMT -6
No it's not. China is a Communist country with dictatorial powers of it's economy; China would simply devalue their currency even more. They use their own people as slaves for crying out loud, I don't think their government give a crap.
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twk
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Posts: 58
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Post by twk on Jan 15, 2011 12:35:41 GMT -6
I agree that tariffs may be the solution, but it seems to never happen. Unfortunately we now have a Plutocracy in this country. I was trying to find some middle ground that at least points us in the right direction. Also I would like to take some of the government off of the back of the little guy. A tiny business (say 10 employees or less) is more likely to stay here and use US based employees. Computer technology is allowing tiny businesses to do what small to medium sized businesses did. Examples are: 1) CNC machines in small machine shops, 2) hardware design 3) electronic design Your can even buy a cheap computer controlled engraving machine that you can put in your garage. You could make money engraving name tags for office doors. Yes the engraving machine is probably made in China, but maybe just maybe some of these could be made here, if tiny businesses had the government off of their back. Service and support are reasons to buy a locally produced item and pay more money for it. I am not talking about government's official "small" business. www.sba.gov/content/table-small-business-size-standards click on "13 CFR 121.201" These sizes are ludicrous. These supposed "small Businesses" are large enough to move their operations overseas and/or use offshore based or onshore based foreign labor such as H1-B visa labor.
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twk
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Posts: 58
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Post by twk on Jan 16, 2011 17:18:18 GMT -6
The original topic was innovation.
Innovation might not be an illusion if you have a million tiny businesses making things, continually making small innovations to improve their businesses.
Or take my case. I am doing both programming and some hardware design. I am helping another tiny company create a product that calculates wear and predicts failure before it happens. A machine shop could use it to calculate tool wear and replace their tooling before they make bad parts. Or before the tooling breaks and causes damage to the machine. Eventually I feel I can shrink the algorithms, where they fit on a cheap micro controller and maybe this product could be inside your car monitoring the rings and bearings for example.
I am barely scrapping by, trying to get this product developed. I need to spend my time working on the complexities of the product, not spending time on government crap. Sometimes I feel like throwing in the towel and giving up, especially when you add to the equation too much government on the back of the little guy.
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Post by fredorbob on Jan 17, 2011 16:03:18 GMT -6
Innovation happens under a government sponsored Patent system (also in the Constitution), which the neocon/Libertarians constantly propagandize against.
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Post by unlawflcombatnt on Jan 18, 2011 2:00:30 GMT -6
Innovation happens under a government sponsored Patent system (also in the Constitution), which the neocon/Libertarians constantly propagandize against. And lack of innovation also occurs under a patent system where patent exclusivity is constantly extended past the original expiration date. Extension of patents in the pharmaceutical industry is almost a universal occurrence--and is definite step backwards regarding innovation. Allowing companies to live off patents that should have long since expired allows them to profiteer of an old patent in perpetuity, without any new innovation. Our overly Corporate-protective patent system is a major hindrance to innovation. It allows certain innovations to remain under control of one firm--such as a pharmaceutical company--for decades after its original discovery. In many cases, the patent and its exclusivity are simply sold to another company, who maintains its exclusivity until its patent time is over, and then sells it to another company who again retains exclusivity. There are a number of drugs that have been available for over 40 years, yet have never been produced by more than one manufacturer at any given time period. The current functioning (dysfunctioning) of the US patent system is a major reason why US pharmaceutical prices are so high. Patents grant one producer a monopoly on production of that drug (or other product). When that company buys out all generic competitors, and then sells its patent to another company, the production of that product still remains the property of a single entity.
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twk
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Posts: 58
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Post by twk on Jan 18, 2011 14:19:18 GMT -6
endsoftpatents.org/... Every company is in the software business, which means that every company has software liability. We estimate costs of $11.2 billion a year due to software patent suits (see our 2008 State of Softpatents report), and not just by Microsoft and IBM—The Green Bay Packers, Kraft Foods, and Ford Motor are facing software patent infringement lawsuits for their use of the standard software necessary for running a modern business. Software innovation happens without government intervention. Virtually all of the technologies you use now were developed before software was widely viewed as patentable. The Web, email, your word processor and spreadsheet program, instant messaging, or even more technical features like the psychoacoustic encoding and Huffman compression underlying the MP3 standard—all of it was originally developed by enthusiastic programmers, many of whom have formed successful business around such software, none of whom asked the government for a monopoly. So if software authors have a proven track-record of innovation without patents, why force them to use patents? What is the gain from billions of dollars in patent litigation? en.swpat.org/wiki/ArgumentsSoftware arguments that could apply to patents in general * After 20 years, the disclosed ideas are almost all useless * Companies in the software industry are banding together for the sole purpose of patent defence (ex: OIN), illustrating the system is broken. * In the United States, the Constitutional purpose of patents is to "promote the progress of science and useful arts", but there are numerous studies and reports showing that software patents retard progress, and have a great cost to the economy. * Software is usually built upon thousands of different ideas, which all could be patented. There is not one patent for one product, as it is mostly the case for physical products. * Arguments against software patents really shouldn't even be necessary and the anti-software patent side should not allow itself to be forced into a defensive position simply because of the historical status quo. The burden of proof rests upon the shoulders of software patent defenders and advocates. The only acceptable justification for the negative ethical and economic consequences of patent eligibility for software would be hard evidence demonstrating that it substantially increases technological progress and economic and social welfare despite the harm it does. * The Internet has made collaboration and distribution at a massive scale extremely cheap. All problems with software patents get magnified when we consider the synergies from collaboration that would be lost to monopolies (ie, we lose more than the fruits of many working alone). Further, the cost risks for the software/information business (marketing and distribution) are extremely low. * Digitalization (and miniaturization) has revolutionized the creation of machines (and made software possible). Thanks to this, it's now much cheaper to add brains and control of a very sophisticated nature to where it was not possible before. This has created a host of areas where the abstract nature of software leads to the innovation for the particular machine. Specifically, we see this in the design of many circuit topologies (using algorithms to try and test all or many possible layouts or in specifying the actual logical states that are hard-coded). For reasons described above on this page, the current patent system is unfit to fairly handle these inventions as well. It makes little sense to allow someone to buy and use a more expensive glorified calculator ahead of others to compute values before everyone else and then bar others from directly leveraging equivalent results once they are able to also produce the automatic calculations. Such a patent rewards the already wealthy and the one already with the first mover advantage. Surely, 20 years would be too long to hold others back. Generally, advanced technology and other economic and social gains should have already resulted in patent duration terms having been reduced well beyond the dates used hundreds of years back. [edit] Arguments against patents in general (see also: Should the whole patent system be axed?) * SMEs and individuals can't afford to do patent searches * SMEs and individuals can't afford to defend themselves * When a standard is patented, the only way to avoid the patent is to avoid the standard * There is no practical disclosure of the patent due to the sheer volume of patents and the legal risks that arise from non-patent lawyers interpreting patents. (so there is little benefit to society from granting the company a monopoly in return for disclosure) * Patents dampen the competitive drive that feeds capitalism. * It's too difficult for the patent office (or anyone else) to consistently and objectively assess the worthiness of a patent (how to prove non-obviousness ?). Many patents are overturned when they reach the courts (citation needed) which suggests current assessment methods are not good enough. note: SME ==> small and medium enterprises
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Post by fredorbob on Jan 21, 2011 15:12:11 GMT -6
Innovation happens under a government sponsored Patent system (also in the Constitution), which the neocon/Libertarians constantly propagandize against. And lack of innovation also occurs under a patent system where patent exclusivity is constantly extended past the original expiration date. Extension of patents in the pharmaceutical industry is almost a universal occurrence--and is definite step backwards regarding innovation. Allowing companies to live off patents that should have long since expired allows them to profiteer of an old patent in perpetuity, without any new innovation. Our overly Corporate-protective patent system is a major hindrance to innovation. It allows certain innovations to remain under control of one firm--such as a pharmaceutical company--for decades after its original discovery. In many cases, the patent and its exclusivity are simply sold to another company, who maintains its exclusivity until its patent time is over, and then sells it to another company who again retains exclusivity. There are a number of drugs that have been available for over 40 years, yet have never been produced by more than one manufacturer at any given time period. The current functioning (dysfunctioning) of the US patent system is a major reason why US pharmaceutical prices are so high. Patents grant one producer a monopoly on production of that drug (or other product). When that company buys out all generic competitors, and then sells its patent to another company, the production of that product still remains the property of a single entity. It's better to have extremely long patents then to have no patent protection at all, which the Libertarian/Neocons want.
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Post by fredorbob on Jan 21, 2011 15:15:43 GMT -6
endsoftpatents.org/... Every company is in the software business, which means that every company has software liability. We estimate costs of $11.2 billion a year due to software patent suits (see our 2008 State of Softpatents report), and not just by Microsoft and IBM—The Green Bay Packers, Kraft Foods, and Ford Motor are facing software patent infringement lawsuits for their use of the standard software necessary for running a modern business. Software innovation happens without government intervention. Virtually all of the technologies you use now were developed before software was widely viewed as patentable. The Web, email, your word processor and spreadsheet program, instant messaging, or even more technical features like the psychoacoustic encoding and Huffman compression underlying the MP3 standard—all of it was originally developed by enthusiastic programmers, many of whom have formed successful business around such software, none of whom asked the government for a monopoly. So if software authors have a proven track-record of innovation without patents, why force them to use patents? What is the gain from billions of dollars in patent litigation? en.swpat.org/wiki/ArgumentsSoftware arguments that could apply to patents in general * After 20 years, the disclosed ideas are almost all useless * Companies in the software industry are banding together for the sole purpose of patent defence (ex: OIN), illustrating the system is broken. * In the United States, the Constitutional purpose of patents is to "promote the progress of science and useful arts", but there are numerous studies and reports showing that software patents retard progress, and have a great cost to the economy. * Software is usually built upon thousands of different ideas, which all could be patented. There is not one patent for one product, as it is mostly the case for physical products. * Arguments against software patents really shouldn't even be necessary and the anti-software patent side should not allow itself to be forced into a defensive position simply because of the historical status quo. The burden of proof rests upon the shoulders of software patent defenders and advocates. The only acceptable justification for the negative ethical and economic consequences of patent eligibility for software would be hard evidence demonstrating that it substantially increases technological progress and economic and social welfare despite the harm it does. * The Internet has made collaboration and distribution at a massive scale extremely cheap. All problems with software patents get magnified when we consider the synergies from collaboration that would be lost to monopolies (ie, we lose more than the fruits of many working alone). Further, the cost risks for the software/information business (marketing and distribution) are extremely low. * Digitalization (and miniaturization) has revolutionized the creation of machines (and made software possible). Thanks to this, it's now much cheaper to add brains and control of a very sophisticated nature to where it was not possible before. This has created a host of areas where the abstract nature of software leads to the innovation for the particular machine. Specifically, we see this in the design of many circuit topologies (using algorithms to try and test all or many possible layouts or in specifying the actual logical states that are hard-coded). For reasons described above on this page, the current patent system is unfit to fairly handle these inventions as well. It makes little sense to allow someone to buy and use a more expensive glorified calculator ahead of others to compute values before everyone else and then bar others from directly leveraging equivalent results once they are able to also produce the automatic calculations. Such a patent rewards the already wealthy and the one already with the first mover advantage. Surely, 20 years would be too long to hold others back. Generally, advanced technology and other economic and social gains should have already resulted in patent duration terms having been reduced well beyond the dates used hundreds of years back. [edit] Arguments against patents in general (see also: Should the whole patent system be axed?) * SMEs and individuals can't afford to do patent searches * SMEs and individuals can't afford to defend themselves * When a standard is patented, the only way to avoid the patent is to avoid the standard * There is no practical disclosure of the patent due to the sheer volume of patents and the legal risks that arise from non-patent lawyers interpreting patents. (so there is little benefit to society from granting the company a monopoly in return for disclosure) * Patents dampen the competitive drive that feeds capitalism. * It's too difficult for the patent office (or anyone else) to consistently and objectively assess the worthiness of a patent (how to prove non-obviousness ?). Many patents are overturned when they reach the courts (citation needed) which suggests current assessment methods are not good enough. note: SME ==> small and medium enterprises Sounds like corporate propaganda to me, Libertarian B.S. It's the corporate whores, the ultra-rich, who steal other people's work so they can get richer. Without a Patent system, there would be very slow technological progress.
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Post by fredorbob on Jan 21, 2011 16:27:04 GMT -6
According to the History Channel, lazers, semiconductor ships, internal combustion engine, jet engine were invented by Nazi Aliens living on Mars or Templars (aka Stone Masons), so you guys may be right, we don't need no Patent law.
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