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By Root 664 0

and thus damaging enterprise as surely as real toll booths damage trade. Yet, of course, some intellectual property does help. A patent can be a godsend to a small firm trying to break into the market of an established giant. In the pharmaceutical industry, where government insists on a massively expensive regime of testing for safety and efficacy before a product launch, innovation without some form of patent would be impossible. In one survey of 650 R&D executives from 130 different industries, only those in the chemical and pharmaceutical industries judged patents to be effective at stimulating innovation. Yet even here there are questions to be raised. Even when such firms spend their patent profits on research rather than on marketing to exploit the temporary monopoly, most of the money goes towards me-too drugs for diseases of Westerners.

Copyright law, too, is becoming a thicket. Zealous enforcement, especially in the music and film industry has made it increasingly hard for people to share, borrow and build upon even small snippets of invented art. Smaller and smaller fragments of songs are copyrighted, and the US courts have made an attempt to lengthen the lives of copyrights to the life of the author plus seventy years (it is fifty today). Yet in the eighteenth century when composers had no copyright in their music, Mozart was not discouraged: only one country had allowed the copyrighting of music – Britain – and the result was a decline in Britain’s already dismal ability to produce composers. Just as newspapers have derived little of their income from licensing copyrights, so there will be ways to charge people for music and film in the digital world.

Intellectual property is an important ingredient of innovation, when innovation is happening, but it does very little to explain why some times and places are more innovative than others.

Government?

The government can take credit for a list of big inventions, from nuclear weapons to the internet, from radar to satellite navigation. Yet government is also notorious for its ability to misread technical change. When I was a journalist in the 1980s, European government bodies bombarded me with boastful claims for their latest initiatives in supporting various parts of the computer industry. The programmes had catchy names like Alvey, or Esprit or ‘fifth-generation’ computing, and they were going to help push European industry into the lead. Usually modelled on some equally abortive idea from MITI, the then fashionable but flat-footed Japanese ministry, they invariably picked losers and encouraged companies down cul-de-sacs. Mobile phones and search engines were not among their possible futures.

In America there was a truly breathtaking outburst of government-led idiocy at the same time that went under the name of Sematech. Based on the premise that the future lay in big companies making memory chips (which were increasingly being made in Asia) it poured $100 million into chip manufacturers on condition that they stopped competing with each other and pooled their efforts to stay in what was fast becoming a commodity business. An 1890 anti-trust act had to be revised to allow it. Even as late as 1988 dirigistes were still criticising the fragmented companies of Silicon Valley as ‘chronically entrepreneurial’ and incapable of long-term investing. This was when Microsoft, Apple, Intel and (later) Dell, Cisco, Yahoo, Google and Facebook – chronically entrepreneurial all, in their garage or bedroom beginnings – were just laying the foundations for their global dominance at the expense of precisely the big companies dirigistes admired.

Not that any lessons were learned. In the 1990s, governments poured their efforts into such dead-ends as high-definition television standards, interactive television, telecommuting villages and virtual reality, while technology quietly got on with exploring the possibilities of wi-fi, broadband and mobile instead. Innovation is not a predictable business and it responds poorly to dirigisme from civil servants.

So although government