Chapter 20 and Genetic Engineering

 

Technological change

Positive externalities

Imperfect competition

Patents

Intellectual property

R & D

WTO

TRIPS

Intellectual property

Green revolution

monocropping

terms of trade

biorevolution

'life science' companies

Seed saving

common resource (commons)

life patents

GMO agriculture

Precautionary principle

transgenic

biodiversity

 

Research has positive externalities – thus the government would like to encourage research.

 

Trade-off btw efficiency and innovation – patents give firms monopoly power. The idea is to encourage innovation. In the short run patents reduce Q and increase P. (See graph done in class. Do not need to know graph on p. 407)

 

Questions policy makers face include:

How broad should patents be?

What time frame/product scope should be included?

Is it ok to patent life forms?

Who should be able to claim intellectual property?

 

Other questions – does this system privilege those who already have economic power?
What does it take to do R & D/file for patents?

 

What other policies can the government use to encourage R & D?

Public funding – universities such as UC Berkeley

Subsidies (graph – opposite of a tax) – this leads to a higher Q and a lower P.

 

WTO also oversees intellectual property issues, which are even more controversial than free trade. TRIPS – Trade Related Aspects of Intellectual Property

 

Standard economic analysis - patents and copyrights provide firms with temporary monopoly right so they can recoupe their R & D costs and be rewarded for innovation.

These are seen as necessary to stimulate positive externalities/public goods. (see pp. 403-406)

 

Questions that must be asked include:

1. What is the appropriate length of time for granting a patent or copyright?

2. When does a firm have the right to claim something as intellectual property?

 

Both issues are linked to questions about efficiency and equity.

 

The first question is less controversial - the government simply has to identify a time frame for granting patents and copyrights (what is the case in the US?)

 

The second question is more controversial - Why?

 

Is it ethical to patent life?

 

When is something a common resource and when is it private property?

 

Where is this issue being raised? In discussions about agriculture. Is it acceptable to patent agricultural products.

 

Helpful to examine this problem from a historical perspective -

 

Long history of farmers experimenting with cross-breeding/refining seed/varities

 

Sometimes this occurred accidentally because of intercropping, sometimes it was more deliberate/experimental. None of these farmers were able to claim their intellectual property, but they benefited from improved harvests etc.

 

In the postcolonial period, as concerns about hunger grew, development agencies began pushing the green revolution. This involved encouraging third world farmers to change their farming habits - monocropping (why might this be an economic (dis)advantage) and increased use of fertilizers/pesticides (to increase yield.)

 

What are advantages and disadvantages of monocropping and use of chemical additives? Who benefited?

 

increased yields, but also increased uncertainty/risk. Economies of scale, export earnings, but also possibly worsening income distribution and terms of trade. Clear winners - Western chemical companies.

 

Some argue that this was simply an attempt to increase yields and thus the well-being of the 3rd world, with the hopes of eliminating hunger.

Others argue that this was an attempt to increase the 3rd world's dependency.

Why was the hunger problem not solved - because hunger is as much a matter of distribution as it is a matter of production.

 

The article then discusses a 2nd phase of the revolution - the biorevolution

 

Monsanto and other firms are

developing very specialized seeds:

seeds that only respond to application of Monsanto herbicide (what economic strategy are they following?)

seeds that are sterile (what economic strategy is this?)

genetically engineered seeds

 

All these seeds are being patented.

 

What are the consequences of these moves?

 

Is this the hope for the future, or simply another ploy by these firms to grab more profit?

 

Some argue that these innovations will help reduce hunger. Others again argue that this is simply another ploy by companies to grab profits. Farmers become dependent not only on a particularly company for inputs, but cannot even reproduce their own seeds.

 

 

This is also setting a precedent for the patenting of life.

 

Now we see the use of government resources to enforce these 'property rights' - (Law suits against farmers who try to save seed.)

 

One question to be raised is: is the whole notion of a single inventor a myth - is a product ever created by a single genius? Monsanto's innovations depend on a long history of innovations that were never patented.

 

Another question is: Can life forms be the intellectual property of a firm or are they part of the common resources? This seems to be a key ethical issue.

 

A final question concerns the environmental and long term impacts of these changes - Are there negative externalities associated with these innovations? Should we be encouraging such innovations?We don't really have a good idea of what the impact of all these genetically altered seeds will be in the long run. What will the impact on biodiversity be?

 

Reactions:

 

Many farmers have challenged these changes.

 

Alternatives - ecological farming (replace chemicals with labor power) have been developed.

 

Cuba held up as example of successful alternative. This is rather ironic, since historically communist agriculture has been viewed as extremely inefficient.