At the point where the rents are being collected, a patent or copyright monopoly is simply a monopoly on a particular item. It doesn't matter one iota whether the monopoly was awarded due to some brilliant innovation or whether it was awarded due to a payoff to a Trump friend or family member. The monopoly means that the holder gets to charge a price far above the free market price.
With this in mind, suppose the government decided to auction off monopoly selling rights to a number of goods and services. (We can even call them "patents" to make people feel better.) We surely could raise enough to pay off the national debt.
Just to take my favorite example, patent rents on prescription drugs will be over $400 billion this year. (I explain how I get this figure here.) Patents have a limited lifespan, but let's imagine the ones we auction off to continue in perpetuity. The current interest rate on 30-year Treasury bonds is roughly 3 percent. This means that to generate the $400 billion in rents earned on prescription drugs, we would need $12 trillion in Treasury bonds.
Therefore, the claim to patent right on prescription drugs lasting in perpetuity should be worth roughly $12 trillion. If we had this auction and got $12 trillion, we could reduce our national debt by an amount equal to 60 percent of GDP. That should make the debt whiners very happy.
In fact, we can go further. I calculated that total patent rents in the economy come to over $1 trillion a year. If we auctioned off these rights (again being carried on in perpetuity) it should raise more than $30 trillion, more than enough to eliminate the national debt altogether.
And, we aren't limited to just auctioning off patent rents on the items where companies currently get them. We can auction off monopoly rights on anything, on selling cars, computers, bread, haircuts, anything. We can raise vast amounts of money through this route and make the debt whiners very happy.
Of course, these rents do have real economic costs. They create large economic distortions (think of tariffs of many thousand percent) and they create perverse incentives. We see this with the patent rents we currently have. For example, pharmaceutical companies misled physicians about the addictiveness of the new generation of opioids to maximize their sales. As economic theory predicts, patent monopolies give drug companies incentives to push their products as widely as possible, even if it means misleading doctors and the public about their safety and effectiveness.
But the debt whiners only care about the debt issued by the national government, they don't care at all about the burden of patent and copyright monopolies. So, we can answer their concerns simply by issuing enough of these monopolies to bring the debt down to a level that makes them happy.
The National Debt is a Meaningless Number
Perhaps some folks will read the prior section and decide that we need to auction off a large number of monopolies to reduce the national debt. The sane ones will instead recognize that the debt is a largely meaningless number. It can imply larger debt service burdens, and that can be a problem, but this is a very small part of the economic picture, especially compared to items like patent rents that get almost no attention at all from economists. What really matters is the underlying strength of the economy and society that we pass on to future generations.
I have no idea if the debt whiners understand this point and try to obfuscate reality, or are just confused. As the old saying goes, "economists are not very good at economics." But anyhow, the rest of the country need not take their debt whining seriously.
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