It’s amazing how many times the same stuff can be recycled as “new ideas” to get high praise from the serious people. The latest effort at recycling comes from “investor” Owen B. Libby, who wants to promote growth with equity, but touts ideas that have been around forever. The Washington Post tells us that he has won the ear of House Democratic Party leader Hakeem Jeffries, and apparently also the Washington Post.

Owen Libby is supposed to be handing an olive branch to progressives because of his support of a “strong floor,” which according to the Washington Post includes a universal basic income. But he also wants to make it so people can get very rich, hence the “no ceiling” part of the story. I haven’t read the book, but the one policy the WaPo cites is longer patent protection for drugs, which is supposed to provide incentive for more innovation.

That’s a great story. We are spending more than $720 billion a year on prescription drugs and other pharmaceutical products. We would likely spend around $150 billion a year if these items were sold in a free market without government-granted patent monopolies. The difference of $570 billion a year comes to $4,500 per household, which would be a pretty good start for a universal basic income.   

By my calculations, government-granted patent and copyright monopolies transfer a total of well over $1 trillion a year to the people in a position to benefit from them out of the pockets of the rest of us. They not only hugely raise the price of items like prescription drugs, medical equipment, computers, and software, they also are an enormous source of waste and corruption. 

This is especially the case in the pharmaceutical industry, where patent monopolies give drug companies an enormous incentive to lie about the safety and effectiveness of their drugs. The most extreme example of this corruption was with the opioid crisis, but the problem occurs all the time.   

We need to provide incentives to develop new drugs, but we have more efficient mechanisms than patent monopolies, most notably directly paying researchers. We already do this to the tune of more than $50 billion a year through the National Institutes of Health. 

It would be necessary to triple or quadruple this spending to make up for the patent supported research by the industry, but directly-funded research has the huge advantage that it could be open source, which means the entire community of researchers would immediately benefit from breakthroughs, as well as being warned off from pursuing dead ends. In addition, open-source research would largely eliminate the incentive and opportunity to misrepresent research findings. It’s not surprising that a writer interested in appealing to billionaires would not pursue this issue.

As regular readers know, patent and copyright monopolies are not the only way that we have structured the market to give all the money to the rich. We have promoted a bloated financial system in order to give huge amounts of money to Wall Street millionaires and billionaires. 

An efficient financial system is a small financial system. Finance is an intermediate good, like trucking. It makes no more sense to want a large financial system than to have a hugely expanded trucking sector where many millions of people are moving goods around from place to place. 

If we went the efficiency route, we would have a government-run payments system, like the PIX in Brazil. This would save the country tens of billions on transactions fees every year. We would also have a modest sales tax on sales of stocks, bonds, derivatives and other financial assets, similar to the sales tax most of us pay when we buy food or clothes. 

We also wouldn’t have free government insurance in the form of bailouts of failed financial institutions, as we did in the 2008-10 financial crisis and more recently when we saved the crypto bros by bailing out the Silicon Valley Bank in 2023. And we could take away the major tool that has allowed many private equity partners to become billionaires by restructuring bankruptcy law. There is no reason that private equity firms should be able to put one of the companies they control into bankruptcy and then walk away from its liabilities.

There is a longer list of items (e.g. restructure Section 230 for Elon Musk and Mark Zuckerberg) that could be put on an efficiency-oriented agenda that restructures the market in ways that gives less money to the billionaires. I talk about some of these in Rigged (it’s free). Obviously, politicians and newspapers owned by billionaires are not interested in these ideas. Instead, they tout the same crap they have been pushing for decades as something new and interesting.