A New York Times article on the newest growth forecasts from the International Monetary Fund (I.M.F.) described the I.M.F. as "the most ardent defender of traditional free-trade policies." This is not accurate.
The I.M.F. has been fine with ever stronger and longer patent and copyright protections. These government imposed monopolies raise the price of protected items by factors or ten or even a hundred above the free market price, making them equivalent to tariffs of hundreds or thousands of percent. These protections both have negative economic impacts, as would be predicted from any tariff of this size, and also are major factors in the upward redistribution of income that we have seen in most countries in recent decades.
The impact of these monopolies is most dramatic in prescription drugs. In the United States, we will spend more than $440 billion this year on drugs that would likely cost less than $80 billion in a free market. This gap of $360 billion is almost 2.0 percent of GDP. It is roughly five times what we spend on food stamps each year. It is more than 20 percent of the wage income of the bottom half of the workforce.
In addition, the huge gap between the protected price and the free market price leads to the sort of corruption that economists predict from tariff protection. It is standard practice for drug companies to promote their drugs for uses where they may not be appropriate. They also often conceal evidence that their drugs are not as safe or effective as claimed.
The cumulative cost of these protections in other areas is likely comparable. Anyone who supports these government granted monopolies cannot accurately be described as a proponent of free trade.