We’re firm believers that the 25-year economic expansion that started in 1982 and lasted through 2007 was due in large part to adoption of policies that rewarded investment capital, by encouraging its formation, incentivizing its deployment, and resisting the devaluation of inflation.
But it’s also undeniable that a key driver of the increase in productivity that buoyed the economic expansion was technological innovation and its adoption throughout the economy.
We would argue that, in fact, this was a virtuous cycle, with increased investment capital helping to fund and to drive innovation in the American economy.
Innovation also requires human capital—where knowledge and understanding, thinking, experimenting, trying and failing, and eventually succeeding result in innovation.
In other words, human capital + investment capital = innovation, and innovation drives increased productivity and economic growth.
We’re concerned, therefore, at the apparent lack of appreciation for the importance of rewarding investment capital and human capital among policymakers today. The current Congress and Administration are not pursuing policies designed to reward investment capital, which is the key to expansion of existing enterprises and funding new startups. Where do they think venture capital comes from, anyway?
And the most significant way we reward human capital is through the intellectual property system, which creates incentives for human capital, encourages the deployment and commercialization of the results of human capital, and protects the products of human capital against devaluation.
Our policies should reward human capital, if the goal really is to increase economic growth. This means understanding the importance of intellectual property, and both protecting and expanding incentives to innovate through the IP system. But today, we’re seeing signs that policymakers either don’t understand or don’t appreciate the important role of the IP system.
For instance, isn’t it time to codify in law that the Congress may no longer siphon off patent fees paid to the U.S. Patent Office in order to spend them on other things? If our economy would benefit (as it undoubtedly would) from retaining experienced patent examiners and cutting down on the backlog of over 700,000 pending patent applications, the Patent Office at least needs to be able to retain its own income.
And isn’t it entirely appropriate for IP protection to be an integral part of trade agreements, if in fact our economy is dependent on stimulating innovation through respecting and rewarding human capital?
We think so, and on April 30th, IPI will be hosting our annual World IP Day event in Washington DC to discuss the ways that human capital is rewarded through intellectual property protection, and how important such protections are to our economy. We hope you can join us.