Re Lew Rockwell's latest post about Richard Epstein's pro-patent comments--Epstein writes, "'Patented goods are subject to a lawful monopoly created by the state in order to induce their creation. No one thinks that new pharmaceutical drugs will be invented by private firms that cannot receive a rate of return sufficient to recover [various costs]. ... 'The legal monopoly granted by the patent is the only mechanism that allows the producer to recover those fixed costs...."
Obviously, this is a utilitarian argument; Austrians and libertarians are well aware of the economic and ethical problems that plague utilitarianism. But besides this, another problem with Epstein's argument is that there is no logical stopping point. For it is not that "drugs" either will, or will not, be produced. By Epstein's logic, there will still be some drugs that will not be produced, namely those whose cost can't be recovered even with patent profits. The current patent term is about 20 years. If it were longer, more monopoly profit could be obtained, thus allowing more drugs, currently not produced, at the margin, to be profitable. So let's extend the term to 30 years. Or 40. And so on. But why stop there? Why not impose criminal liability for infringement of patent rights--say, life in prison or the death sentence. We could also lower the statutory standards for obtaining a patent, so that more drugs would be subsidized by the patent monopoly. We could triple the budget and salaries for the Patent Office, so that patents are issued more quickly (they take 2-3 or more years, now).
What's more, even the strongest patent rights in the world simply might not give enough extra profits to justify the generation of some "really useful" drugs. So by using the standard utilitarian reasoning underlying Epstein's advocacy of patent law (and also undergirding his defense of the power of eminent domain in his book Takings), why not let some administrative commission dole out taxpayer-funded subsidies to the pharmaceutical industry. Yes, taxpayers would be harmed (just as private property owners are harmed by patent law--as the drive to outlaw reimported medicines attests), but drugs that would not otherwise be invented, would be. Presumably the "value" of these drugs would "exceed" the "value" (to whom?) of the money taken from taxpayers.
I better shut up. They might not realize I'm being sarcastic.