Mid-sized cities outperform major metros at turning economic growth into patents
governance.fyi
governance.fyi
I've been wondering this. It seems that, they were the right model, back in The Day. Back then, what you had (in my model) was a few inventors, cash-strapped or with wealthy benefactors, and they wanted to protect their inventions. Poor inventors, in other words.
I imagine that, back in the day, with smaller government and regulations, and everything 'cheaper' even 'litigating' the case would have been achievable for such poor inventors. In such a scenario, the patent could be a tool of the tiny against the behemoth exploiter (ye olde robbere barron). Ie, true protection.
These days however? Not so much. To litigate takes years and millions, effectively denying the protection to those who could most benefit from it. The "high bar" to protect your protection creates an incentive where you see conglomerates emerge that use that cost to coerce settlements, and make a business out of it by purchasing many such supposedly 'protective amulets'.
It's also a good model for the 'protective amulet forging guilt' (ie, lawyers). Who will often tell you, "Have you considered a patent? We can help if you choose to go that route."
But is the patent, once so lauded, useful and genuine - really the right model for protection today? Could it be reformed? Or should it be relegated to the past? Like mint coin collections of yesteryear - now without real value, except for collectors and traders (ye olde patent trollus).
I don't know. Thoughts, anyone? Especially valuable I think would be personal experience and the thoughts gained from that, as well as any big picture reflections.
They are really only useful today to protect companies during their enshittification phase. Is enshittification useful to society? Maybe.
Probably tech patents should have been reformed when IBM went around trying to protect its BIOS. Or when Microsoft started pushing its weight around with FAT.
A large company protecting itself against competition is almost definitionally anti productivity.
Some kind of category protection might be useful. Protect only the latest (or maybe latest x) genuinely novel innovation in a category while open sourcing everything prior. Keeps the incentive to innovate, removes patent trolling and reduces enshittification. Will need a strong hand to ensure that people dont just try and create a bunch of new categories.
I’m not defending the system, I’m simply explaining. Likewise, forever copyrights exist to increase the value of artistry so that artists get something back when they sell them. Again, not defending.
Patents are government granted monopolies on ideas. The case for them is that you need the carrot of a monopoly to incentivize innovators (empirically untrue). The case against them is that government mandated monopolies immediately dampen all subsequent innovation until expiry (empirically true across industries throughout history).
> Patents are an extremely noisy and biased measure of innovation; conflate innovation with a million other variables, etc. but we have all of the patents and patent applications available for free since the beginning of the time, so that's what we'll use. If you find another good measure as comprehensive let us know and we'll use that instead; meanwhile <shrug emoji>
The downside of this is that companies who are using trade secrets instead of patents are no longer publishing either. Many areas of R&D that are primarily done outside of academia are becoming increasingly opaque because there is no up-to-date literature around the state-of-the-art.
Ironically, the situation that patents were meant to prevent is becoming common again now that patents are often effectively useless.
This probably deserves a more expansive discussion in its own right. I think what has become clear is that the tools we have (patents, trade secrets, copyright) are extraordinarily crude. Nonetheless, they worked pretty well in a time when intrinsic friction and overhead in markets was high.
Now that we’ve eliminated almost all friction in markets, everything has become extremely sensitive to the intrinsic cost and supply chain structure of the IP being protected and the speed at which those supply chains can adapt to competitive opportunities. To make matters worse, these intrinsic cost and supply chain structures tend to vary considerably depending on the particulars of the domain. Consequently, the IP protection tool in any particular case is the one that in practice has highest cost burden (both money and speed) on anyone trying to circumvent it with the lowest cost to both implement and defend. Patents rarely win that argument anymore for many things.
The most robust protection these days is information asymmetry, and trade secrets are good at maximizing that. Unlike patents, it is also extremely cheap to implement, so it is economically favorable. Defending that information asymmetry has become more difficult in some ways (more sophisticated reverse engineering) but easier in others (hello cloud). Unfortunately, we lived in an age of trade secrets in past centuries and it had many downsides; patents were essentially invented to mitigate those downsides.
The entire dynamic has many downsides but trade secrets are essentially winning out. Information asymmetry still has a lot of market power if you are good at exploiting it, much of the benefit isn’t even the secrecy per se in many cases.
But I think the opposite may legitimately be the intuition for people of generations before ZIRP and the notion of inventiveness when resources are scarce or you're simply out of work. You can see it in the themes of many movies and other media in the 80s and early 90s, too, the hero arc of the inventor down on their luck. I think the idea carried forward for people in their formative years then.
The hypothesis was that firms invest in innovation in busts, when the opportunity cost is lower.
The study finds that it’s nuanced and it depends on the industry. Too close to a boom, like an oil firm, and you face high opportunity costs, and innovate less during the boom. There is a sweet spot where you are near enough to benefit from higher capital but not too close to be crippled by opportunity costs
I would imagine that some of the best patent lawyers in the whole country are actually in little nothing towns in East Texas since that district is where much of the patent suits for the nation get filed. For a variety of reasons, most patent law is litigated in Texas. Texas handles more federal patent suits than any other state by a margin of ~2x.
I remember reading a story about the early days of transistors (Walter Brattain, is described as being a "farm boy and a born tinkerer”), and first having this thought.
My (probably wrong) tl;dr is that cities are great for spreading/growing products and technology, but that the monotony of suburbs is better suited for the exploration of unknown territory.
I’d love to be wrong about this (building in SF atm), but it’s been a nagging thought in the back of my brain (move to Silicon Valley proper).
What am I missing?
Related post I came across recently that highlights some of the effect quite well:
Smaller sparse cities are way more human-friendly compared to monstrosities like Manhattan. Childcare becomes easier (sorry, but "walkable neighborhoods" are children-hostile), commutes are much faster, and you don't have to deal with transit.