The economic freedom we enjoy as Americans depends on many factors, and National Taxpayers Union is a major player in the most visible ones – a simpler, less burdensome tax system, prudently limited government budgets, transparency in fiscal policy, and a sensible regulatory framework that accounts for costs, not just benefits. Yet, taxpayers should not overlook the role of intellectual property (IP) rights in this calculus, as a recent coalition letter signed by more than 60 organizations and individuals from various disciplines illustrated.
The intent of the letter, addressed to Members of the new 114th Congress, was to provide “guidelines as you review and discuss existing laws and regulations governing IP.” Although the statement touched upon several facets of our society and its legal framework (including of course Article I, Section 8 of the U.S. Constitution), IP’s contribution to the economy was front and center. The signatories marshaled evidence to support their point that “IP rights create jobs and fuel economic growth, turning intangible assets into exclusive property that can be traded in the marketplace.” Specifically:
- According to the most current data available from the U.S. Department of Commerce and the U.S. Patent & Trademark Office, in 2010 27.1 million jobs were directly attributable to “the most IP -intensive industries” in America, while another 12.7 million jobs had at least an indirect connection. This calculation is based on a variety of sectors, from computer design and technical consulting (which tend to have more of an interest in original creative inventions) to retailers of food, clothing, and other goods (which tend to have more of an interest in trademarks).
- A landmark 2010 study by Kevin Hassett and Robert J. Shapiro concluded that “the value of IP in the U.S. was between $8.1 trillion and $9.2 trillion, or the equivalent of 55-62.5 percent of GDP.”
Fortunately, when it comes to IP protection, the letter highlighted the contributions of “voluntary initiatives to address illegal conduct.” Late last year NTU discussed these efforts in detail here. Even prior to that time, in July of 2013, the Interactive Advertising Bureau and the White House Office of the U.S. Intellectual Property Coordinator cooperated to produce a voluntary “best practices” agreement aimed at denying advertising revenues to websites that allow or condone piracy. A wide range of companies and associations signed on to the standards, among them Google, Microsoft, and the Motion Picture Association of America.
And this week, the Trustworthy Accountability Group, a consortium of associations in the online advertising ecosystem, unveiled its Brand Integrity Program Against Online Piracy. The private-sector project, which has broad support among industries, is designed to “help advertisers and their ad agencies avoid damage to their brands from ad placement on websites and other media properties that facilitate the distribution of pirated content and/or illegal dissemination of counterfeit goods.” Here is just one more example of how good-faith cooperation can work better than unwieldy regulations.
Still, as Americans have discovered with fiscal policy, IP policy demands careful forethought on the part of public officials, who are often tempted to up-end superior solutions developed privately. There’s also the matter of how much forethought needs to be given to the ways changes in existing law (such as the “fair use” doctrine) could have economic impacts.
Which takes us back to the beginning of this post and the need for taxpayers to keep an eye on many different ways that government affects the economy. The Heritage Foundation/Wall Street Journal Index of Economic Freedom, for example, is based on 10 elements one of which is property rights (defined by Heritage more broadly than just IP). According to Heritage, the U.S.’s property rights score just barely made the highest of the five levels, at 80 percent. The worst performance was in government spending, at a dismal 51.8 percent. Our terribly uncompetitive tax laws make matters worse as well.
All 10 factors considered, the United States places 12th out of 178 at 76.2 percent, a static performance that the authors attributed to “broad-based deteriorations in key policy areas, particularly those related to upholding the rule of law and limited government.” Our good friend, syndicated columnist Deroy Murdock, put it another way – “The good news is that America has stopped sliding in economic freedom. The bad news is that we’re stalled as Earth’s twelfth-freest economy.”
To get out of that stall and into maximum drive, our economy needs to be running well on all cylinders – including those that affect the freedom to innovate and enjoy its rewards.