Home > Uncategorized > Innovation and knowledge: Who has more to “steal,” the United States or China?

Innovation and knowledge: Who has more to “steal,” the United States or China?

from Dean Baker

The Washington Post repeated a standard theme in reporting on Trump’s trade war with China, that our main concern is not the trade deficit but rather China’s alleged theft of our intellectual property. I have written about this issue before, but there is an important aspect that seems to have gone largely unmentioned, China is likely to have more at risk in this story than the United States.

Using the purchasing power parity measure (clearly the appropriate one for this issue), China’s economy is already 20 percent larger than the U.S. economy. In a decade it will be twice the size of the U.S. economy. Given these facts, it is almost certain that China will be spending far more on research and creative work than the United States. This means that it will have far more to lose than the United States if there is no internationally agreed upon mechanism for sharing the cost.

This doesn’t mean stronger and longer copyright protection as our policy makers would insist. That is a great way to redistribute income upward, which has been a major goal of economic policy over the last four decades, but not a very efficient way to support innovation and creative work in the 21st century. 

We can and should be looking to more modern mechanisms than these relics from the feudal guild system. (I have some ideas in chapter 5 of my [free] book Rigged.)  However, the point is that China actually has more interest in a workable mechanism for sharing costs than the United States does. Anyone looking to benefit the U.S. economy as a whole would be noting this point and the enormous leverage it gives us. On the other hand, if the goal is simpler to make Microsoft, Pfizer, and Disney richer, and then wring our hands over inequality, the current focus of policy makes sense.

  1. patrick newman
    June 25, 2018 at 4:06 pm

    It won’t be long before China does not need USA goods and technology and becomes self-sufficient in producing goods and services as well as consuming them! Breaking news – Harley Davidson is planning to relocate EU bound production to countries that have no interest in pursuing a trade war! (https://www.bbc.co.uk/news/business-44604280)

  2. Helen Sakho
    June 25, 2018 at 11:48 pm

    China and other giants have no interest and equally importantly no need to purse trade wars. They have to wage a war though against obesity and pollution which has already been exported to them and to us all. Are we to witness a marginal but extremely profitable and “timely” revival of traditional Chinese medicine by the younger generation?Yes, perhaps by a handful of people who have now had the right to travel elsewhere and seen that Mc Donaldisation of life is not the final solution, that their ancestors were wiser and healthier than they or their children or grandchildren or families and friends will ever be. However, they do need to have excellent business development skills to succeed on a larger scale. Economies of scale is relevant here, as are all the factors mentioned above. Who, however, is going to pay for all that is lost already? The dreaded leader Chairman Mao (RIP)? A more likely candidate is Disneyland, adjusted culturally and in every other way to its new home, offering both the old and the new at equal prices. Finally, intelligence and intellectual rights and copyrights , etc are a very new phenomenon which have always been subject to changing rules and regulations to suit whoever can employ the highest paid or most successful lawyer around. With the advent of new technology and a handful of genuinely interested younger generations who are truly independent and can protect themselves, even this will become obsolete.

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