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Paul Ryan: Good or Bad for Patents, Tech Startups and the Economy


Paul Ryan: Good or Bad for Patents, Tech Startups and the Economy

Congressman Paul Ryan has been selected as the vice presidential running mate of Mitt Romney.  Many in the Republican Party have hailed him as true advocate of free market principles.  Unfortunately, his voting record is much more conventional than we have been led to believe.

Congressman Ryan voted for the America Invents Act (AIA).  This Act was laden with crony capitalist gifts for Wall Street, Big Pharma, and large corporations at the expense of startups and individual inventors.  The Act was widely criticized as being unconstitutional.  This was more than enough reason to vote against the AIA, but Paul Ryan led the charge to gut the only redeeming feature of the Act – namely ending fee diversion.  When I called Congressman Ryan’s office to ask why they were doing this, they responded that it was important to balancing the budget.  REALLY, in a $3 trillion federal budget the $100M or so you are stealing from inventors is going to make the difference?  This is less than 0.1% of the federal budget.  This is less than we give to Egypt or the UN or any number of other extra-Constitutional spending.

I pointed out that the PTO was a self funded agency, meaning no tax dollars are used to fund its operation.  Diverting the money of inventors and using it for another purpose is conversion (stealing).  Their response was how is this any different than putting the fee you pay to enter a National Park going into the general treasury?  There are a number of differences.  First, when I pay a fee to enter a National Park, I immediately get the service I paid for.  In the case of patents, inventors have to routinely wait from three to ten years to get the service they paid for.   Second, National Parks were created with federal funds, but inventions are created with private funds.  Even the Patent Office was created with private funds, since it is a self funded agency and always has been.  If a private company or an attorney did what the federal government does with patent fees it would charged with fraud and conversion.  This attitude that the federal government is above the law is exactly what is wrong with our country Mr. Ryan.

Ryan is bad for patents

Congressman Ryan voted for Sarbanes Oxley.  SOX has made it impossible for startups to go public, which has made it very difficult for startups to raise money.  Historically, most of the growth and job creation of startups occurs after they go public.  The Kaufman Foundation has shown that all net new jobs since 1972 have been created by startups.  To the best of my knowledge, Congressman Ryan has not said he is in favor of repealing SOX.  This means he is bad for technology startups and bad for job creation.

Ryan is bad for startup funding

Paul Ryan is widely praised for coming up with a plan to reduce our budget deficit.  Since government spending crowds out money that could be used to fund startups, this is good.  As part of this proposal he has a plan to rein in entitlements, such as medicare, medicaid and social security.  In spite of this, Congressman Ryan voted for medicare part D.  The question is which Paul Ryan will show up if he becomes VP.

Ryan also voted for TARP, for the bailout of GM and Chrysler, for the economic stimulus of 2008 and 2009, and for extending unemployment benefits to 59 weeks.

Ryan deserves credit for advancing a fairly realistic plan to reduce the budget deficit, but even this plan does too little to cut the deficit.  It’s goal is to reduce federal spending to 20% of GDP in about four years.  It is unlikely that we have four years before we are hit with massive inflation, which will more than double our interest payments on our debt and break our budget.  In addition, his voting record shows that he is unlikely to have the backbone to follow through with even this weak proposal.

Ryan is not a fiscal Conservative

Ryan has put forth a moderate plan to rationalize our tax system.  It does not go far enough, but it is his most pro-growth proposal.

The Problem with Supply Side Proponents

Supply side proponents (SSP) such as Larry Kudlow are ecstatic with the choice of Paul Ryan.  The problem with SSPs is that they do not understand that the only way to continually increase real per capita income is to continually increase our level of technology.  This means we need to eliminate the barriers to the capital markets for technology startups.  This means we need a well functioning system of property rights for inventions.  It also means we need to reduce the tax burden on startups, reduce their regulatory burden, legal risks, and accounting rules biased against them.  But Paul Ryan does not seem to understand this and neither do most supply siders.  As a result, it is unlikely that Paul Ryan and Mitt Romney will be able to put  the US on a sustainable path to growth.

Paul Ryan will be better than Obama or Biden

Unfortunately, this is damning him with faint praise.  Don’t be surprised if Paul Ryan turns into a Bush disappointment instead of a Ronald Reagan.   (Note I hope I am wrong and have to eat my words)




3 Comments

  1. All politicians are deceivers.
    Some are more deceptive than others (as if being slightly less deceptive is a redeeming quality).

  2. I’m still naive enough to believe that, for a number of reasons, most of the politicians who voted for the America Invents Act were just unaware of the real issues at stake. Should I wake up and smell the coffee?

  3. Randy,

    I think all of us in the patent world would like to believe that patents are pure and have nothing to do with politics. This would fit our hope that only misguided politicians voted for the AIA. However, the historical evidence shows that patent are political. For instance, the FTC waged a war against patents and America’s businesses with their nine no-no’s of patents in the seventies. The intellectual roots of this attack on patents in the US is the advent of Antitrust law. The debate over patents is ultimately a debate over property rights. It should come as no surprise that the Marxists and environmentalists are against property rights, but what is surprising is the attack from supposed free market proponents such as the Cato Institute and the Austrians. These groups are against patents, because they believe property rights are not really rights at all, but just a convenient way of allocating scarce resources (Utilitarianism). I doubt Paul Ryan or most of the Republicans that supported the AIA are aware of these issues. But, they are either cynical enough to not care about patents or they have been infected enough by these supposed free market groups to be ambivalent about patents. Very few people truly understand the profound impact of patents on our economy – this includes most patent attorneys and inventors.

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