I think that finding an economic model to subsidize fixed-cost development of ideas is the problem to solve right now. An effective solution would have extremely positive benefits for every human being on the face of the earth. If you don’t know what I’m talking about, here’s a simple example: The cost of developing a drug, testing it, and proving that it works so the satisfaction of various regulatory bodies is very high, on the order of one billion dollars. The cost of actually manufacturing the drug once it’s approved, howerver, is almost zero in most cases.
Currently, the way companies pay for development of drugs is through monopolies granted to them by the government: if you pay the cost to develop an idea, you’re the only one who can use the idea for a certain period of time. This worked well in the past, when fixed cost development was rarer. The patent model presents all kinds of problems now that most development in developed nations is of the fixed cost variety. Software patents are granted for absurd algorithms, and the question of ‘content ownership’ leads to manufacturers spending their time finding creative ways to break their products by incorporating ‘Digital Rights Management’ software. I think it’s also far from the ideal situation. In an ideal world, there would be no such thing as patents, and people would still develop ideas anyhow. How can we approximate this idea?
I have a simple solution that I think might actually work. It invovles government and taxation and redistribution of income, so I think it’s something that ought to be considered very carefully, but I think it would be quite effective. Although it is a form of government spending, If this system were implemented in place of other existing governmental systems, I think it could have a positive effect on the budget at as whole. Here’s how it would work:
Every american citizen gets a “basket” of money to spend annually. This basket of money is given to them by the government, but not in the form of cash. The ‘basket’ is given in the form of electronic tokens with monetary values. Americans can choose to spend these tokens however they want. Any person or group can sign up to accept these tokens. Signing up to accept the tokens requires you to agree to disclose as public knowledge all intellectual works you (or your company) produces, as well as your financial records.
I’m not sure what value these tokens would have, but my thinking now is that if every american had around $1,000 worth of tokens to spend, that amount of money ($300 Billion) would more than exceed the amount of public and private money spent to develop drugs and other fixed cost programs. By comparison, in 2007, the NSF recieved just 6 Billion Dollars.
Basically, it’s a micropayment system that people are forced to buy into, and which they can only spend on entities that agree to make public all intellectual works that they produce. The money could be accepted by charities, which would simplify the tax code by allowing us to eliminate the concept of a tax-exempt organizations. The money could be accepted by bloggers who agreed to make all of their information public,
The advantage it has over just having people giving that money away now is largely psychological, I think. People are reluctant to fork over money in a micropayment sense, especially for something they’re already getting for free. If you had $1,000 worth of these tokens, however, and you had to spend them somehow (or else the government would simply reclaim the money internally), people would spend them on things they thought were really important. Market-driven solutions, I think, are always best.
You could maybe extend this model further, and use it to pay for the entire education system. The more I think about it, the more I like it. What do you think?