SPEAKER_00: Amazing, fascinating stories of inventions, ideas and innovations. Yes, this is the podcast about the things that have helped to shape our lives. Podcasts from the BBC World Service are supported by advertising.
SPEAKER_01: 50 Things That Made The Modern Economy with Tim Harford
SPEAKER_03: In January 1842, Charles Dickens arrived on American shores for the first time. He was greeted like a rock star in Boston, Massachusetts, but the great novelist was a man with a cause. He wanted to put an end to cheap, sloppy, pirated copies of his work in the United States. They circulated with impunity because the US granted no copyright protection to non-citizens. In a bitter letter to a friend, Dickens compared the situation to being mugged and then paraded through the streets in ridiculous clothes.
SPEAKER_02: Is it tolerable that besides being robbed and rifled, an author should be forced to appear in any form, in any vulgar dress, in any atrocious company?
SPEAKER_03: It was a powerful and melodramatic metaphor. From Charles Dickens, what else would one expect? But the truth is that the case for what Dickens was demanding, legal protection for ideas that could otherwise be freely copied and adapted, has never been quite so clear-cut. Patents and copyright grant a monopoly. A monopoly is a bad news. Dickens' British publishers will have charged as much as they could get away with for copies of Bleak House. Cash-strapped literature lovers simply had to go without. But these potential fat profits encourage new ideas. It took Dickens a long time to write Bleak House. If other British publishers could have ripped it off like the Americans, perhaps he wouldn't have bothered. So intellectual property reflects an economic trade-off, a balancing act. If it's too generous to the creators, then good ideas will take too long to copy, adapt and spread. If it's too stingy, then maybe we won't see the good ideas at all. One might hope that the trade-off would be carefully weighed up by benevolent technocrats, but it's always been coloured by politics. In Dickens' day, American literature and American innovation were in their infancy. The US economy was in full-blown copying mode. They wanted the cheapest possible access to the best ideas that Europe could offer. American newspapers filled their pages with brazen copying, alongside their attacks on the interfering Mr Dickens. A few decades later, when American authors and inventors spoke with a more powerful voice, America's lawmakers began to take an increasingly fond view of the idea of intellectual property. Newspapers, once opposed to copyright, now rely upon it, and we can expect to see a similar transition in developing countries today. The less they copy other ideas, and the more they create of their own, the more they protect ideas themselves. There's been a lot of movement in a brief time. China didn't have a system of copyright at all until 1991. The modern form of intellectual property originated, like so many things, in 15th century Venice. Venetian patents were explicitly designed to encourage innovation. They applied consistent rules. The inventor would automatically receive a patent if the invention was useful. The patent was temporary, but while it lasted, it could be sold, transferred or even inherited. The patent would be forfeited if it wasn't used, and the patent would be invalidated if the invention proved to be closely based on some previous idea. These are all very modern rules, and they soon created very modern problems. During the British Industrial Revolution, for example, the great engineer James Watt figured out a superior way to design a steam engine. He spent months developing a prototype, but then put even more effort into securing a patent. His influential business partner, Matthew Bolton, even got the patent extended by lobbying parliament. Bolton and Watt used it to extract licensing fees and crush rivals. For example, Jonathan Hornblower, who made a superior steam engine, yet found himself ruined and imprisoned. The details may have been grubby, but surely Watt's famous invention was worth it? Well, maybe not. The economists Michaeli Baldrín and David Levine argue that Watt truly unleashed steam-powered industry was the expiry of the patent in 1800, as rival inventors revealed the ideas they'd been sitting on for years. And what happened to Bolton and Watt once they could no longer sue those rivals? They flourished anyway. They redirected their attention from litigation towards the challenge of producing the best steam engines in the world. They kept their prices as high as ever, and their order books swelled. Far from incentivising improvements in the steam engine, the patent actually delayed them. Yet since the days of Bolton and Watt, intellectual property protection has grown more expansive, not less so. Copyright terms are growing ever longer. In the US, they were originally 14 years renewable once. They now last 70 years after the death of the author, typically more than a century. Patents have become broader. They're being granted on vague ideas. For example, Amazon's One Click US patent protects the not entirely radical idea of buying a product on the internet by clicking only one button. The US intellectual property system now has a global reach, thanks to the inclusion of intellectual property rules in what tend to be described as trade agreements. And more and more things fall under the scope of intellectual property. For example, plants, buildings and software have all been brought into its domain. These expansions are hard to justify, but they're easy to explain. Intellectual property is very valuable to its owners, which justifies the cost of employing expensive lawyers and lobbyists. Meanwhile, the costs of the restrictions are spread widely over people who barely notice them. The likes of Matthew Bolton and Charles Dickens have a strong incentive to lobby aggressively for more draconian intellectual property laws, while the many buyers of steam engines and bleak house are unlikely to get politically organised to object. The economists, Baldrini and Levine, have a radical response to this problem. Scrap intellectual property altogether. There are, after all, other rewards for inventing things. Getting a first mover advantage over your competitors, establishing a strong brand or enjoying a deeper understanding of what makes a product work. In 2014, the electric car company Tesla opened up access to its patent archive in an effort to expand the industry as a whole, calculating that Tesla would benefit from that. For most economists, scrapping intellectual property entirely is going too far. They point to important cases, for example, new medicines, where the costs of invention are enormous and the costs of copying are trivial. But those who defend intellectual property protections still tend to argue that right now they're too broad, too long and too difficult to challenge. Narrower, briefer protection for authors and inventors would restore the balance and still give plenty of incentive to create new ideas. Charles Dickens himself eventually discovered that there's a financial upside to weak copyright protection. A quarter of a century after his initial visit to the United States, Dickens returned. His family was ruinously expensive and he needed to make some money. And he reckoned that so many people had read cheap knockoffs of his stories that he could cash in on his fame with a lecture tour. He was absolutely right. Off the back of pirated copies of his work, Charles Dickens made a fortune as a public speaker, many millions of dollars in today's terms. Perhaps the intellectual property was worth more when given away.
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