Category: Uncategorized
In two cases this week, the Supreme Court preserved the integrity of our patent system. In the Stanford University v. Roche Molecular Systems, case the ownership of three patents for a diagnostic test used worldwide to measure the concentration of HIV in patients’ blood plasma was at issue. The Court emphasized that U.S. patent law is based on the concept that the inventor is the first owner of his invention.
“Since 1790, the patent law has operated on the premise that rights in an invention belong to the inventor,” Chief Justice John G. Roberts Jr. wrote for the court’s majority. “Although much in intellectual property law has changed in the 220 years since the first Patent Act, the basic idea that inventors have the right to patent their inventions has not.”
This would seem to strike a blow to America Invents Act, which is trying to change the law so that the first person to file a patent application is the owner of the invention.
The second case was Microsoft Corp v i4i Limited Partnership, in which Microsoft argued that prior art not considered by the Patent Office should only have to meet the “preponderance of evidence” test to invalidate a patent. The court disagreed and upheld the CAFC (Court of Appeals for the Federal Circuit) in requiring “clear and convincing” evidence. If Microsoft had prevailed it would have significantly weakened patent rights.
These two cases taken together seem to signal a change in the Supreme Court towards patent cases. For the last 3-5 years the Supreme Court has ruled on a number of patent cases that all weakened the patent right. For instance, the KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398 (2007), made it easier to find a patent invalid for obviousness. The eBay Inc v. MercExchange, L.L.C., 547 U.S. 388 (2006) case made it more difficult to obtain an injunction against an infringer, even after winning a case showing that there was infringement. The In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 case narrowed the scope of patentable subject matter. The Medimmune, Inc. v. Genetech, Inc., 549 U.S. 118 (2007), case overturned a long-standing rule that a licensed patent user cannot file a declaratory judgment action when they have not breached the license terms. These cases showed a Supreme Court that had become hostile to patents and was willing to ignore or rewrite the law to weaken patent rights. While neither of these cases strengthens the rights of inventors, at least they did not undermine patent rights. The timing of the Stanford case appears to be a way for the Supreme Court to weigh in on the Constitutionality of the America Invents Act before it passes.
Over half of the earnings of the S&P 500 companies are derived from foreign operation, according to Stuart Varney. As a result, the financial returns of these companies are not directly related to the UnitedState’s economy. This is part of the reason why the stock market is no longer a good a leading indicator of the American economy. There are a number of other differences that have led to a decoupling between main street and wall street. For instance, large companies have been able to tap the Federal Reserve for short term loans – see Federal Reserve Discloses $2.3 Billion Short-Term Loan to Harley-Davidson – $3.3 Trillion in Total to Others. Note that some of the companies the Fed bailed out were not even American companies. Wall Street was not only able to obtain short term loans from the Federal Reserve, they 
received TARP funds, and they have been able to use these funds to make money on carry trades.[1] It is clear that the interests of Wall Street banks and large multinational companies are not aligned with America’s.
Despite this lack of alignment in the economic interests of the American people and Wall Street, the Bush and Obama administrations and Congress only consult large businesses and Wall Street when setting policy. For instance, the Senate refused to hear testimony from individual inventors and startups when debating the “America Invents (not) Act.” This Bill contains a special provision for Wall Street that allows Wall Street banks to attack “business method” patents that they are infringing. This doesn’t extend to any other industry, only business methods—another Wall Street giveaway. Wall Street is not interested in competing based on merit, it wants to compete on political connections and pedigree, which is clearly un-American.
Securities laws have consistently skewed the rules to favor large Wall Street firms, including Sarbanes Oxley and Dodd Frank, which are so complex they drive out startup and small investment banking firms. The law on retirement saving was another big give away to Wall Street. These laws pretty much restricted IRAs, etc. to investment products sold by Wall Street. This drove investment dollars from home towns to New York to the detriment of main street and America. Wall Street also has a vested interest in government debt, since they get a commission for placing government bonds and make commissions every time they are traded. According to Charlie Munger 25% of the United States GDP is now earned by finance companies. Finance companies facilitate purchasing and investing transactions the do not make anything and only provide finance services. When they earn 25% of every dollar in the country, you can be assured that things are seriously out of whack.[2]
The interests and performance of Wall Street are no longer aligned with the interests of the American people. Wall Street is un-American.
[1] A carry trade is when the Federal Reserve allows banks to borrow money at a lower interest rate than they can loan it out at (risk free). The most egregious example is when political powerful banks (corporations) can borrow from the Federal Reserve at a lower rate than short term Treasury Bills are yielding. This takes absolutely no intelligence to make huge amounts of money, as long as the Federal Reserve will loan out money. This is how the TARP banks have been able to pay back their TARP loans. However, it is just a fraud and the cost of this fraud is being paid for by the American taxpayer/worker.
[2] This might be okay in a small banking oriented country, such as Luxenburg, but is devastating indictor for a large country like theUnited States, which requires a diverse economy.
This case, TEWARI DE-OX SYSTEMS, INC., v. MOUNTAIN STATES/ROSEN, L.L.C., in Texas shows the damage done by the publication rule for patents applied for a patent on a method of extending the shelf life of meat in a retail setting on May 8, 2003. The patent application was published on April 15, 2004 (earlier than 18 months because it was based on a provisional). In March of 2005 Tewari approached Mountain States on how they could increase the shelf life of meat products. Mountain States signed a Non-Disclosure Agreement (NDA) and Tewari explained how their process extended the shelf life of meat. Subsequently, Mountain States started 
practicing Tewari’s process. Tewari sued Mountain States for theft of their trade secrets. Mountain States claimed no trade secret existed at the time of the NDA because Tewari’s patent application had already been published and the court agreed.
If theU.S.had not adopted the publication rule, Tewari’s process would have been (probably) a trade secret. It is likely that Tewari eventually found that it was just too expensive to fight the “rejection equals quality” mentality of the Patent Office at the time they would have been arguing their case, although I did not examine the prior art. But, because of the publication rule Tewari did not have this choice. (If they did not foreign file, they could have opted out of publication, but the rules make this onerous.) As a result, Mountain States was free to steal Tewari’s trade secrets. This allowed a large company to free load off of the efforts of an innovative startup. Even if Tewari was legitimately denied a patent, it most likely would have had a defensible trade secret. Note that the Tewari’s patent application was published before they received their first office action. Tewari had no opportunity to determine if it was going to get a fair deal from the patent office before their invention was publicly disclosed to the world. The publication rules were sold under the theory that most patent application issue within 18 months. Now days the pendency time for the first office action is 25.2 months – seven months after the patent application is published.
Tewari was denied the rights to their intellectual property because of the publication requirement. A large, lazy, non-innovative company was the benefactor of this theft. This undermines investment in start-up technology companies that create most emerging technologies and provide high quality, high paying jobs. The publication requirement should be abolished.
According to Stephen Hawkins:
As a cosmologist, you may be interested to know that my illustrious predecessor Galileo Galilei had his design for a compass stolen, by his one time protege Baldassar Capra. I know that patent theft is one of the big issues that innovative SMEs face today. Galileo described such theft as ‘worse than murder, the victim feels the loss of fame, honour and merited glory, obtained not by nature, fate or chance… but from studies, hard work and long vigils
Hear is an excellent article, IT’S OFFICIAL: The IPO Market Is Crippled — And It’s Hurting Our Country in the Business Insider, on the damage we have done to our capital markets. The article starts out by showing that many of our biggest companies went public when they were very small. At the time there were numerous underwriters and often the main inventors were individual investors. For instance, the 
article explains:
As recently as 1986 Adobe had an IPO raising $6M. None of these companies could have gone public in today’s environment even adjusting for inflation. Virtually all the buyers at the time were individuals and there was a robust “over the counter” after market for young companies.
The article then explains that a company has to have a market valuation of $250M or more to be viable in today’s market. My estimates are higher. The article points out that a major reason for this change in the market is because of Sarbanes Oxley or SOX, which imposes onerous accounting requirements on companies. The article then discusses some attempted solutions to this problem. (I have suggested an alternative in my post Circumventing Sarbox and the IPO drought)
This has been a disaster for the venture capital industry. As a result, VCs are looking for companies that can exit by M&A at earlier states. VCs are also not investing in capital intensive companies.
Unfortunately, the article calls for half measures of curtailing but not eliminating SOX. They suggest this course of action despite the fact that they do not single benefit provided by SOX. The authors point out that:
The number of annualU.S.issuers listing IPOs onU.S.exchanges has declined since 1996 from 756 to a low of 36 in 2008 and 50 in 2009 and 120 last year according to Dealogic. By contrast, there have been 346 Chinese issued IPOs listed onChinaexchanges in 2010 even though the U. S. GDP is 3x larger thanChina’s.
This is just one more example of how were are exporting our innovation and jobs overseas.
The insane thing about our securities laws is that in the U.S. you have to hire a lawyer to invest in a non-public company, but you can blow your money in Vegas, Atlantic City, etc freely. One activity creates jobs and wealth and creates value. The other is a less than zero sum that destroys wealth.
Ayn Rand’s ground breaking novel Atlas Shrugged has been made into a movie. The movie is tackling the book in three parts. The first part 
opens on April 15th – how appropriate. Click here for a voice mail from Francisco d’Anconia.
A number of movie theaters appear to be boycotting the movie. If you want to demand that they bring the movie to your town click here.
The US is already actuarially bankrupt, meaning that our unfunded liabilities are greater than our assets. Our unfunded liabilities are estimated to be about equal to our total assets at $144 Trillion. A number of people take comfort in the idea that these unfunded liabilities are not due until sometime in the future. Of course this attitude would land you in jail if you ran an insurance company, but government officials make the rules, they don’t follow them. Unfortunately or perhaps fortunately, there are some rules they cannot change such as gravity and the basic laws of economics. One of the basic laws of economics is that total consumption (worldwide) cannot exceed production plus the store of goods and services (worldwide). Governments also cannot repeal the general rule embodied in the Laffer Curve, namely there is some level of taxation at which the total revenues received by the government decreases.
There are two general definitions of bankruptcy: 1) your liabilities exceed your assets, and 2) your cash flow is not sufficient to cover your obligations. The US is already bankrupt under the first definition. So the question is when we will bankrupt based on the second (both) definitions? I did a simple spreadsheet to figure out when this would occur. I defined cash flow bankrupt as the point at which the payments on the interest plus the cost of Social Security and Medicare equaled 100% of the likely U.S. federal budget. Naturally, this involved some assumptions. The assumptions included:
1) The inflation rate will increase by 1% a year for the next decade,
2) The number of retires on Medicare and Social Security will increase by 5000 per day (10000 baby boomers retiring a day less 5000 death a day),
3) The cost of retires today is $20,000 per year,
4) The US will grow at 2% per year,
5) The federal annual debt will increase at the rate of inflation,
6) The US will pay 1% over inflation for its debt (realized not unfunded), and
7) The cost of Social Security and Medicare per recipient will grow at the rate of inflation.
I believe the first assumption of inflation growing at 1% per year for the next decade with a starting level of 2% in 2011 is a very conservative estimate. Where conservative means that it errs on the side of the US not going bankrupt. The second assumption of 5000 net people per day going on Social Security and Medicare is based on the best estimates I can find. Note that there is no cost associated with Obama care in this calculation, which makes this even more conservative. The third assumption of the cost per retiree is based on the best available information I could find. The fourth assumption of the US growth rate is extremely generous. The long term growth rate of the US is 2% a year and presently it is very doubtful that US will grow at this rate this decade. The fifth assumption that the federal debt will only grow at the rate of inflation over the next decade is almost laughable. This would mean that the debt to GDP ration would actually decline. The Tea Party Republicans wanted to cut $100 billion dollars from this years budget and they were said to be cutting it to the bone. This $100 billion is just 1/16th of the total deficit and only 1/37th of the total budget. The seventh assumption that Medicare and Social Security costs per retiree will only increase at the rate of inflation is much lower than the growth rate over the last 20 years.
Below is a chart that shows how the total recognized federal debt grows
Here is a chart of these costs as a percentage of the Federal Budget
Here is the spreadsheet for anyone who is interested
| Year | ||||||||||
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
| GDP | 15.2464 | 16.00872 | 17.06872 | 18.26353 | 19.72461 | 21.49983 | 23.64981 | 26.25129 | 29.40144 | 33.22363 |
| Annual Deficit | 1.6 | 1.632 | 1.68096 | 1.748198 | 2.798198 | 2.96609 | 3.173717 | 3.427614 | 3.736099 | 4.109709 |
| Inflation | 0.02 | 0.03 | 0.04 | 0.05 | 0.06 | 0.07 | 0.08 | 0.09 | 0.1 | 0.11 |
| Growth Rate | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 |
| Social Security | 0.72 | 0.77163 | 0.8331039 | 0.906213 | 0.993134 | 1.060022 | 1.180578 | 1.2878 | 1.456261 | 1.621598 |
| Medicare | 0.756 | 0.810212 | 0.874759095 | 0.951524 | 1.04279 | 1.113023 | 1.239607 | 1.352189 | 1.529075 | 1.702677 |
| New enrollees | 1825000 | |||||||||
| New enrollees cost | 0.0365 | |||||||||
| medicar/ss ratio | 1.05 | |||||||||
| Total Deficit | 14.23 | 15.83 | 17.462 | 19.14296 | 20.89116 | 23.68936 | 26.65545 | 29.82916 | 33.25678 | 36.99288 |
| Interest payment | 0.2846 | 0.4749 | 0.69848 | 0.957148 | 1.25347 | 1.658255 | 2.132436 | 2.684625 | 3.325678 | 4.069216 |
| Federal Budget | 3.83 | 3.9066 | 4.023798 | 4.18475 | 4.393987 | 4.657627 | 4.983661 | 5.382353 | 5.866765 | 6.453442 |
| tot=int+ss+mdc | 1.7606 | 2.056742 | 2.406342995 | 2.814885 | 3.289394 | 3.8313 | 4.552621 | 5.324614 | 6.311014 | 7.393492 |
| tot/FB | 0.459687 | 0.526479 | 0.598027782 | 0.672653 | 0.748612 | 0.822586 | 0.913509 | 0.989272 | 1.075723 | 1.145666 |
| Total Deficit | 14.23 | 15.9906 | 18.0473415 | 20.45368 | 23.26857 | 26.55796 | 30.38926 | 34.94188 | 40.2665 | 46.57751 |
John Locke wrote “whenever the Legislators endeavour to take away, and destroy the Property of the People . . . they put themselves into 
a state of War with the People, who are thereupon absolved from any further Obedience.”
Is this not exactly what the U.S. government is doing today? Tax law is not about equitably raising funds for the needs of the government, but a method of punishing the politically unpopular. Patent Reform (America Invents Act) is not about protecting property rights, but weakening them for the politically connected large corporations. TARP was not about saving the economy, it was about taking money from the People to support politically connected Wall Street banks. Obama Care is not about helping the needy, it is about destroying the independence of the wealth producers in this country. Has the Government and the politically favored groups put themselves at war with the People? Is the U.S. on the verge of Dis-Integration?
In a January 2, 2011 column (Needed: A science stimulus) in the Washington Post, George Will points out that the US is suffering from a lack of innovation. He makes a token node to the patent system in the article and then he focuses on government spending on science and engineering and does not mention the patent office is underfunded. George reflects Washingtons and the elitists attitude that government spending is what drives the economy. He just believes government spending should be directed to science. In addition, he repeats the elitist comment that most of the science is done by the elite and us peasants don’t really contribute much.
The late Nobel laureate Julius Axelrod said, “Ninety-nine percent of the discoveries are made by 1 percent of the scientists.”
This elitist attitude contradicts all the available evidence. As the book, The Most Powerful Idea in the World, discussed in Georges’ article points out, sustained economic growth does not happen until property rights for ideas (patents) are enacted. This releases a flood of inventions, not by the elite, but by ordinary citizens. It was the democratization of the inventing process that lifted the masses out of the Malthusian Trap.
Senator Chris Dodd’s 1,400-page financial reform bill contains many economic land mines, and here’s one of the worst: Provisions that would make it harder for business start-ups to raise seed capital. Currently, wealthy individuals who want to invest directly in a new business can do so with minimum interference from regulators. The law requires only that the investor be “accredited” by meeting thresholds for net worth ($1 million) or income ($250,000). Entrepreneurs depend on these “angel” investors, since many new businesses lack the collateral for bank loans and are too small to interest venture capitalists.
Mr. Dodd’s bill would change all this for the worse. Most preposterously, it would require that start-ups seeking angel investments file with the Securities and Exchange Commission and endure a 120-day review. Rare is the new company that doesn’t need immediate access to the capital it raises, and a four-month delay is the kind of rule popular in banana republics that create few new businesses.The legislation also removes a federal pre-emption that prevents start-ups and investors from being subject to 50 different state regulators. The North American Securities Administrators Association, which represents state regulators, argues that federal pre-emption contributes to fraud. But angel investors don’t use broker-dealers and other middlemen linked to recent investment scandals. Nascent companies often seek financing from multiple investors in different states, and a state-by-state regulatory regime would mean higher compliance costs and more legal risks.The Dodd bill also raises the net worth and income thresholds to $2.3 million and $450,000, respectively. The Angel Capital Association, a trade group, estimates that these provisions would disqualify about 77% of current accredited investors. Accreditation matters in luring other potential investors, such as venture capitalists who enter the picture once a company begins to mature.
Please see the full Article
Judge Sweet’s opinion in ACLU v. Myriad is a mind numbing 156 pages. The opinion seems to be an attempt win an argument by boring the opposition to death. The opinion is inconsistent, wrong on the law, but most importantly a case study in judicial activism. Judge Sweet’s decision in this case is ultimate based on his opinion that “the overriding importance of DNA’s nucleotide sequence” means that
Myriad should not receive patent protection for genes that are an indicator of breast cancer.
The only legitimate question before the court was whether Myraid’s patents on isolated forms of genes are patentable subject matter under 35 USC 101. However, the opinion rambles on for pages listing so called “facts” that have nothing to do with the only legitimate issue. For instance, the opinion discusses how a clinic in Ontario is able to provide the same tests as Myriad for less money by “ignoring” – stealing would be the correct word, Myriad’s technology. There is a lot of typical liberal hand wringing over the cost of the tests, but of course the cost and effort of the research are ignored. The opinion in the “facts section” questions whether patents encourage innovation. These facts are irrelevant to the case, since they have nothing to do with whether the genes in question are patentable subject matter. The fact that the court cites these irrelevant “facts” or actually hypothesis shows that the court has no interest in law. It is a typical case of Judicial Activism where the judge sets themselves up as the philosopher king ready and willing to refashion the whole country according to their dictates. But, this is not the job of the court and the court does not have this authority.
The patent and trademark clause is the only place in the Constitution where a “right” is mentioned. The courts and even Congress have no authority to eliminate the patent system. Under the Constitution it is job of Congress to define the patent laws. The only job of the courts is to apply the patent laws. If there is some ambiguity in the laws the Courts may provide insight within the bounds of the statute, but it has no authority to rewrite the patent statue. As a result, all of Opinion’s examining of the value of patents and how they affect innovation is irrelevant at best and unconstitutional at worst.
Judge Sweet’s legal basis for his opinion that Myriad patents are not statutory matter under 35 USC 101 relies on Diamond v. Chakrabarty, 447 U.S. 303 (1980). This case is widely cited for the proposition that “anything under the sun that is made by man” is patentable subject matter. Isolated versions of human genes (i.e., BRCA1 and BRCA2 genes) do not exist in nature. While it is possible that they are naturally isolated from the rest of the chromosome at some point in time, they are never naturally isolated outside of a human cell. It is clear that isolated versions of the BRCA1 and BRCA2 genes are a product of man. So how did Judge Sweet reach his ruling that Myriad’s patents were directed to non-statutory matter? First, he quotes a dissenting opinion in Diamond v. Chakrabarty. Dissenting opinions are not the law and generally citing a dissenting opinion in a case directly on point is a sign you are wrong. Second, he states that the Supreme Court was wrong in their ruling in Diamond v. Chakrabarty. He points to the legislative history of 35 USC 101:
Section 101 sets forth the subject matter that can be patented, ”subject to the conditions and requirements of this title.” The conditions under which a patent may be obtained follow, and section 102 covers the conditions relating to novelty. A person may have ”invented” a machine or a manufacture, which may include anything under the sun that is made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.
The opinion specifically points to the underlined section for the proposition that there are some other conditions necessary to meet the requirements of 35 USC 101. This interpretation is clearly flawed. The underlined section above means that a person has to not only meet the requirements under 35 USC 101, but also the requirements of Novelty, Non-Obviousness, Enablement, Written Description, etc. I would like to believe that this clear error is an honest mistake, but it was apparent from the beginning of the opinion that Judge Sweet has no respect for Constitution or the law when it comes to patents.
Using this dishonest slight of hand, Judge Sweet then proceeds to state that just purifying a naturally occurring substance is not patentable subject matter under 35 USC 101. There are many cases on point that the Judge conveniently ignores. For instance, Merck & Co., Inc. V.Olin Mathieson Chemical Corporation, 253 F.2d 156 (1958), found that Merck had claimed an isolated and purified form of vitamin B12. Isolated vitamin B12 is not found in nature. Merck’s isolated vitamin B12 was better than the form found in nature since patients were spared having to consume a pound of liver in order to derive the same benefits. The discovery of isolated vitamin B12 by George Whipple, George Minot, and William Murphy resulted in them winning the 1934 Nobel Prize in Medicine.
The philosophical basis for Judge Sweet’s opinion is based on the flawed reasoning that an invention that includes a naturally occurring substance is not patentable. This reasoning is similar to the flawed reasoning that an invention based on a “combination of known elements” is not patentable or at least it is highly suspicious that such an invention should receive a patent. All inventions are combination of known elements, these elements are always made at some level of naturally occurring substances. This is a clear result of the conservation of matter and energy. These elements always behave in a predictable way in that they never violate the laws of physics. If Judge Sweet’s ideas on patents were applied consistently to all patents then only black magic would be patentable.
The sad fact is that both liberal, conservative, and strict constitutionalist judges have become activist judges with respect to patent law. (See Judge Scalia’s statements in the Bilski oral arguments) None of these judges has even a rudimentary understanding of the how the laws of physics apply to patent law. If these judges would stick to there job of applying the law instead of acting as philosopher kings ready and willing to refashion the whole country according to their dictates, then their errors would not be so damaging to patent law, the country, and our economy.
The Financial Crisis Inquiry Commission, being members of congress, are trying their best to pin the financial crisis on anyone but Congress. It appears the favorite whipping boys are Alan Greenspan and unfettered capitalism. Congress conveniently forgets that between Fannie, Freddie, FHA loans, Veterans Housing Administration, and the Community Reinvestment Act we don’t have unfettered capitalism. Not to mention to the Federal Depository Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Association, the Board of Governors of the Federal Reserve, the Department of Housing and Urban Development, the Federal Financial Institutions Examination Council, the Financial Crimes Enforcement Network, and state banking regulatory agencies. The only way someone can call that unfettered capitalism is to propagate The Big Lie: that the US is a bastion of unfettered capitalism, which causes all our problems.
As Alan Greenspan pointed out:
the surge in demand was the heavy purchases of subprime securities by Fannie Mae and Freddie Mac, the major U.S. Government Sponsored Enterprises (GSE). Pressed by the Department of Housing and Urban Development and the Congress to expand “affordable housing commitments,” they chose to meet them by investing heavily in subprime securities. The firms accounted for an estimated 40% of all subprime mortgage securities (almost all adjustable rate), newly purchased, and retained on investors’ balance sheets during 2003 and 2004. That was an estimated five times their share of newly purchased and retained in 2002, implying that a significant proportion of the increased demand for subprime mortgage backed securities during the years 2003-2004 was effectively politically mandated, and hence driven by highly inelastic demand.
As Greenspan points out Congress had no interest in reining in the subprime mortgage party or the securitization of these mortgages 
(CMO). In addition, Greenspan did warn about both the problems with Fannie and Freddie. In 2002, he expressed concerns to the FOMC, noting that “…our extraordinary housing boom…financed by very large increases in mortgage debt – cannot continue indefinitely.” It did continue for longer than he would have forecast at the time, and it did so despite the extensive two-year -long tightening of monetary policy that began in mid-2004. See Greenspan’s complete analysis at http://fcic.gov/hearings/pdfs/2010-0407-Greenspan.pdf.
Greenspan then points out that there “was a pronounced fall from 2000 to 2005 in both global real long-term interest rates and nominal long-term rates, which indicated that global saving intentions, of necessity, had chronically exceeded global intentions to invest. Yet the ex post global saving – investment rate in 2007, overall, was only modestly higher than in 1999, suggesting that the uptrend in the saving intentions of developing economies tempered declining investment intentions in the developed world. This statement is the most interesting and important statement in all of Greenspan’s testimony. Why had and has the developed world reduced its rate of investment? Why has investment not grown since 1999?
Has the rate of investment in the developed world stagnated because we have run out of businesses and ideas? No, since 2000 we have passed a number of laws and regulations that are killing innovation in the US. The incredible innovation of the 90s was based on technology start-up companies built on intellectual capital, financial capital, and human capital. All three of the pillars have been under attack since 2000. Our patent laws have been weakened reducing the value of intellectual capital. Sarbanes Oxley has made it impossible to go public reducing financial capital for start-ups and the FASB rules on stock options have made it harder to attract human capital to start-ups. If we want to create jobs, we need to have laws that encourage entrepreneurial start-ups.
These issues are discussed in more detail in my book The Rise and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation – http://www.amazon.com/Decline-Fall-American-Entrepreneur-Regulations/dp/1439261369/ref=sr_1_1?ie=UTF8&s=books&qid=1262911287&sr=8-1
Dale Halling will be speaking at the Night with a Futurist event at the Da Vinci institute on April 5, 2010 at the Madcap theater. As a patent attorney, Dale Halling deals with start-up entrepreneurs on a daily basis. He began noticing a significant difference between the types of projects his clients were involved with in the 1990s and 2000s. Clients, in the 90s, would come into his office with plans to build businesses that were disruptive or revolutionary. The technologies underlying these companies held the potential to completely redefine a market. Some of the ideas would increase the available bandwidth by 10x for minimal costs or allow data searches that were 10-100x faster than existing technologies. It was very exciting talking with these entrepreneurs. Their energy was infectious and the potential implications of their work was mesmerizing. However, the tech downturn of 2000-2001 changed all that.
After 2002, the start-up companies he came into contact with were all looking for narrow niche markets. Instead of trying to make dramatic changes to technology and go public, these companies were looking to develop incremental changes and be bought out by an existing company.
He started wondering if other people in the tech world were seeing similar trends.
Recent innovations like the iPod, the tremendous amount of money Intel was spending to build their next microprocessor plant, and the social media industry are certainly innovative, but they are not capable of altering the entire economy like the Internet of the 90s. The Internet in the 90s affected almost every business in the U.S. It drove PC sales, retail, electronics, telecommunications, professional businesses, marketing, newspapers, and much more. It also redefined whole areas of life, with email, online shopping, and online advertising. It was impossible to escape the effects of the Internet unless you crawled under a rock.
The personal computer revolution of the 80s had a similar effect. The iPod has been cool, but hasn’t affected the whole economy.
So what’s behind all this? The changes have seemed subtle from the outside, but the ripple effects have been huge.
Join us as we take a hard look at how the face of innovation has changed, and what we can do to turn it around.
EVENT: Night with a Futurist
DATE: April 5, 2010 – Monday
TIME: 6:30pm-9:00pm
WEBSITE: http://www.davinciinstitute.com/events/433/night-with-a-futurist-monday-april–5-2010LOCATION: MADCAP Theater, 10679 Westminster Blvd, Westminster, CO 80020
DIRECTIONS: Driving DirectionsCOST: $25, Members: Free, SuperMembers: Free
REGISTER: Register herePHONE: 303-666-4133
TOPIC: “The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation”
SPEAKERS: Dale Halling, Allison Taylor, Catharine Merigold, Gene Branch, Mike Schmidt, Thomas Frey
Here is an interesting article. David Murrin suggests that the passage of the health care bill is a signal that not only is the American Empire coming to and end but it is the end of the Western Empires.
The passage of the health care law shows that the US empire is declining because it illustrates the fact that people expect the state to take care of them, David Murrin, the co-founder of Emergent Asset Management hedge fund manager, told CNBC.
See the full interview.
The passage of the health care bill is the end of the American experiment with freedom. This experiment with freedom created the greatest country in the world that propelled the world out of the Malthusian trap into unprecedented wealth. This wealth and more importantly freedom was more widely distributed and benefited more people than any other time in the history of the world. You no longer have the right to “pursuit of happiness.” Here are some of the consequences of the health care bill:
1) Bankruptcy: The US will become insolvent in the next decade. By insolvent I mean either the US will renege on the terms of some of its debt or we will have double digit inflation.
2) Constitution: The Constitution is now a meaningless piece of paper. Any pretence that the government is limited has died. The government can enact any legislation requiring anyone to take actions that government deems in its interest. The government does not work for you, you work for the government; your only purpose is to serve the government.
3) Medical Innovation is Dead: This law ensures that we will have essentially no innovation in medicine. The US is the only major country that invests in pharmaceutical research. Most countries have been free riding on US medical research for years.
Here is a timely speech by Ronald Reagan on point
http://www.youtube.com/watch?v=qXBswFfh6AY.
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