Intellectual Property and Inequality

That’s the displacement story, but suppose that robots are extremely cheap. There is no obvious reason they shouldn’t be cheap. After all, we probably won’t need any rare materials to make robots. And presumably robots could be mostly manufactured by other robots, so the labor involved wouldn’t be expensive. In this case, we should be able to buy a robot at our local hardware store or from our favorite internet retailer for a few hundred dollars.

Once we buy the robot, we can have it clean our house, cook our food, mow our lawn and do all sorts of other tasks that we may not want to do ourselves. We can probably even save on our food budget by having the robot plant and tend a vegetable garden. If robots are doing all this work for us and we no longer need to buy and maintain a car to meet our transportation needs, we should have all have a high standard of living.

But suppose that patents and related protections keep the price of robots high. And instead of technology driving down the cost of transportation with self-driving cars to almost nothing, patent monopolies allow the top executives and shareholders of Uber or its equivalent to get very rich at the expense of the rest of the population. In that scenario, most people may not benefit to any great extent from technology. In that case, robots may take our jobs, but instead of the benefits from productivity growth being passed along in higher wages and lower prices, as was true in past decades, the benefits go to minority of well-situated individuals.

Of course we do need a mechanism to support research, innovation and creative work. But there is little evidence that the lengthening and strengthening of intellectual property protection in the last four decades has led to a faster pace of innovation. Furthermore, there are other mechanisms for financing research. We spend over $30 billion a year supporting biomedical research at the National Institutes of Health. This mostly supports basic research, but there is no reason that the funding could not be expanded with additional funds devoted explicitly to the developing and testing of new drugs.

Most importantly, we have to understand that the incomes that people earn as a result of intellectual property protections are due to government policy. They are not the result of technology. If we are bothered by the upward redistribution of income of the last four decades, we should be looking at how we support the process of innovation, not blaming robots.

How intellectual property rules help the rich and hurt the poor