State of Innovation

Patents and Innovation Economics

Déjà vu All Over Again: Undoing the Reagan Revolution

The situation in Egypt is reminding me of the Iranian situation in 1979.  The reason the situation in Egypt is occurring is because the world economy has fallen apart and the people of Egypt are facing declining economic prospects.  Egypt is a socialist country, so the economic prospects have been mediocre at best, but with the decline in the world economy the prospects for the average person in Egypt have plummeted.  Already there is a Google executive missing in Egypt and I see the situation evolving along the lines of Iran in 1979.  Is this just random coincidence or is something more going on.  In 1979 we had a progressive (they should be called regressives, socialists, communists, Marxists, statists or just plain freedom haters) president who ruined our economy and apologized for America around the world.  Today we have a freedom hating president (progressive) who has spent the first two years apologizing for the U.S.  During the 1970s progressives (yes Nixon was a progressive – see wage and price controls) had spent the decade destroying the U.S. and world economy.  During the last decade progressives (yes Bush was a progressive – see Medicare Prescription Drug Program the biggest entitlement since Medicare) have spent the decade destroying the U.S. and world economy.  Luckily for the U.S., the Reagan revolution occurred and the U.S. had two decades of strong economic progress, won the Cold War, and pushed back socialism (freedom hating) around the world.  Unfortunately, it now appears that all the progress of the Reagan Revolution has been undone.  Here are the analogies between the U.S. before Reagan and presently.

Weak Patent System

It is a little known fact that a major part of Reagan’s economic plan included strengthening our patent system.  He started a process where our patent system was strengthened by a number of initiatives over the next 17 years.  Another little known fact is that we have consistently weakened out patent system since 2000.  We broke the social contract with inventors in 2000 when we agreed to publish patent applications at 18 months from filing even if the patent had not issued.  The social contract for patents is that in return for telling the public how to practice the invention the inventor receives a limited term property right.  By publishing how to practice the invention without having granted a patent, the public is receiving the benefit without fulfilling it side of the bargain.  Before 2000 patent applications were secret until they were allowed.  If an inventor felt he was not receiving adequate protection for his invention, he could withdraw the application and keep his invention a trade secret.  There have been a number of other changes to our patent laws that have weakened inventor’s property rights in their inventions.  This is exactly the situation the U.S. was in before Reagan became president.


Reagan significantly lowered our marginal tax rates, unlike the very minor changes made by President Bush.  In exchange for lowering the marginal tax rates the tax code was simplified and most deductions were eliminated.  Now we have a very complicated tax code, where the alternative minimum tax (AMT) now hits many middle class families.  Our marginal tax rates appear low, but the phasing out of deductions makes it much more onerous than it first appears.  Finally, the complexity of the tax code has grown to being even more burdensome than in the 1970s.

The ads on TV for “tax fixing” firms remind us that our government is at war against its own citizens.  In a truly free country, there would be no market for these firms.

Lawyer Ads

Much like the 1970s we now are being bombarded by tort lawyers looking to get rich off of other people’s misery.  In the 70s it was plane crashes, diving boards, ambulance chasers, and perceived environmental concerns.  Today it is “bad drugs”, ambulance chasers (some things never change), and asbestos.  In the 70s these lawyers killed off diving boards, killed off the nuclear (not nucular President Bush) power, and almost killed off the private aviation business.


Before Reagan unions were draining the life out of our corporations.  They received oversized pay checks and imposed productivity killing rules.  Today public sector unions have pay packages that are much larger than their private sector workers who are paying them.  The retirement packages are outrageous paying retirees six figure pensions to people who have committed felonies and are in prison.


The Reagan Revolution has completely undone.  Are we better off today now that Reagan’s agenda has been completely subverted?  Will regressives (freedom haters) admit the damage they have done to the world, freedom, and the US?



February 8, 2011 - Posted by | -Economics, Innovation, Patents | , , ,


  1. […] This post was mentioned on Twitter by Bob Zeidman, Dale Halling. Dale Halling said: Déjà vu All Over Again: Undoing the Reagan Revolution […]

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  2. Well, there you go again: pretending like the Spaceballs Raygun was the greatest thing since Tang in outer space.

    You can demand your “freedoms” all you want, except that Mom Nature ain’t changing her rules.

    What is happening in Egypt goes a little deeper than slinging mud ball words (commie, pinko, Marxist) into the wind. Egypt has a growing population and a shrinking resource base. But then again, so do we all.

    Patents and technology can’t save us from ourselves in the long run. However, maybe in the short run they can forestall our day of reckoning visa vie Mom Nature’s unwavering rules. Let’s hope so.

    Comment by step back | February 11, 2011 | Reply

    • The only long term limit on our resources is human imagination. Lack of freedom and property rights are what limit invention.

      It depends on how you define “long term”. Our Sun has 5 billion years left in its present form. If you mean more than 5 billion years, you may be right. Otherwise you are clearly wrong.

      Comment by dbhalling | February 11, 2011 | Reply

  3. The “only” limit?

    I thought it was “only” Sith Lords who speak in absolutes.

    There is this organization of rational thinkers called The Club of Rome and 40 years ago they wrote a tome (updated since then) called “Limits to Growth”.

    No Virginia, trees do not grow to the sky and beyond. We all have limits.

    Even the blindly worshiped Raygun had his limits, for example in mental capacity –significant limits.

    Comment by step back | February 11, 2011 | Reply

    • I think we have been over the Sith lord issue before. The world is only understandable because there are absolutes. If gravity changed randomly, the world would make no sense. But this does not mean the human prosperity has limits. You have absolutely no evidence that human prosperity has any limits. The closest you can point to is a limit to the rate of growth. For more information see Singularity by Kurzweil. As for Egypt, it is not suffering from any inherent limitation of natural resources. It is clearly governmental repression that is causing the economic problems. In the 1970 millions of people were starving to death in China. Today almost no one is suffering from a lack of food. In the 1970s China had the most brutally repressive government in the world (Communist, Socialist, freedom hating government). Today China has a relatively free market. This is not correlation, because the correlation is 100% (See India, even the US in the 70 versus the 90s) and the cause is lack of Freedom and invention. As Ronald Reagan said:

      “Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefiting from their success — only then can societies remain economically alive, dynamic, progressive, and free. Trust the people.”

      More on the Club of Rome below. But ascribing them with the label of rational is at best misleading.

      Comment by dbhalling | February 13, 2011 | Reply

  4. Check out Google’s logo today

    They are celebrating Tom’s 164th birthday

    Have a happy one Edison!

    Comment by step back | February 11, 2011 | Reply

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