Michael Heller on Governmental Solutions to Gridlock
Michael Heller is one of America’s leading authorities on property. He is the Lawrence A. Wien Professor of Real Estate Law at Columbia Law School.
His new book The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives was released in 2008. In The Gridlock Economy, Heller draws on everyday experiences - from airport delays to new-style rap music - to show why the structure of ownership matters so much more than people may realize. Private ownership usually creates wealth, but too much ownership has the opposite effect - it creates gridlock. This is a free market paradox that Heller discovered and it's the dynamic at the center of our gridlock economy.
Question: What is your recommendation for how government should approach this issue?
Michael Heller: This is an area where there’s lots of room for regulatory tweaking, and lots of room, even more important, for citizen advocacy and activism, and we can go area by area and talk about those regulations that I think could help fix gridlock. Those change from week to week, month to month, but just to give you an example of what’s happening right now, last week I was down in DC, talking with the people who are working on patent reform. Our basic patent law in this country was set up 1952, the current version of it. So, we have patent law that was set up for a 1950 style economy, which is before DNA was discovered, before the Internet was invented. The old style of wealth creation in this country was you got a patent and you created a product, or you got a copyright and you sold your album, or you got a piece of land that you built a house in. Today, the way we create wealth in all these areas is by assembly. Assembling patents, assembling copyrights, assembling land. There’s been a radical shift in the nature of wealth creation in America, but we still have old style laws. We still have a licensing scheme [for inspection] from 1920’s, we have a patent regime from the 1950’s. So, on the patent one, there’s been a bill kicking around in the hill now for 3 or 4 years, a bi-partisan bill, Leahy for Democrats or Hatch for Republicans are co-sponsors, that would fix a lot of the defects in the patent system, the gridlock defects that weren’t so visible with 1950 style innovation but are really very visible today. But that bill keeps being blocked by fights, not left-right, not Democrats-Republicans, but fights within industry. So, on the one side you biotech companies and Big Pharma, and on the other you have all the rest of high tech America: telecom, semi-conductors, banking, all the people that basically create wealth by assembling intellectual resources, and all of them are saying we’re being frozen out of the market. We’re having to shift our markets overseas. But they can’t get this patent law bill. So, if you want to talk about political reform on patent law, pass the patent reform bill. It’s not a great bill. There are a lot of things we can do better, but it’s a step in the right direction to understanding that the underlying problem is gridlock in the modern economy, and [underlying] solutions have to be one that fix gridlock.
Question: How can people become more perceptive with regard to gridlock?
Heller: So, to get fixes on the right track, you have to diagnose the right problem. So, my hope is that by adding the conceptual tool of the tragedy of the commons, by having people begin to see that gridlock is everywhere, that itself becomes the unifying language that we then use to have these, to begin to address the right problem. Now, getting politicians to take a longer term view is very hard to do, just like it is for corporations. Corporations respond to the shareholders and that’s a, you know, month by month, day by day response. But if you have the right diagnosis and you have people of good will, like you do both, Democrats and Republicans on the hill, they can begin, and it takes a while. They can begin working for these, working for these reforms. So, on the patent bill, it’s already been 3 or 4 years now that Democrats and Republicans have been trying to get industry to come to a compromise. So, we do have a fairly long term view there. The notion there is that unless we do fix this, innovation will simply flee this country, and you’re beginning to build a coalition and a critical mass of companies saying, hey, Congress, you’ve got to fix this. You’ve got to fix this.
The next president must work to reform patent law in order to address a major source of gridlock, says Michael Heller.
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