Trump’s Silly Idea Of Tariffs Over China’s IP Thefts


    We had all rather assumed that the Know Nothing Party was just an historical episode in US politics, not something we were about to see a re-run of. But with this latest threat from Trump, to impose trade tariffs upon China over intellectual property rights, seems to be reviving the idea of a second go over. It’s entirely possible, of course it is, that Chinese companies are stealing American intellectual property. But it’s still also true that making Americans poorer isn’t the solution to this problem.

    One part of the error here is the very idea of including IP in trade talks. This is known as the TRIPs process and it’s just not a good thing to be doing in the first place. Poor places which cannot afford to pay for IP won’t pay for it because they’re poor. Yet lives will be made better there if that IP is ripped off. There is no loss to Microsoft of a ripped off copy of Windows if the user would never have bought Windows anyway. So, let poor people rip off such IP.

    Don’t forget, there is no natural right to IP. It’s a purely invented property right done on purely practical grounds. We note that more people will invent things, produce IP, if they’ve a manner of earning money out of having done so. If the people stealing it never would pay for the IP then there’s no change in incentives to produce IP from the ripping off. It just makes no difference. We invent IP for practical reasons, poor people stealing it doesn’t violate of change those reasons, therefore it’s not a problem.

    Sure, that’s not quite what is being complained about here with China but there’s another solution to that too:

    The Trump administration is preparing to impose some $50 billion worth of tariffs on Chinese imports, in a major escalation of the president’s “America First” trade policy. President Trump is also calling for new limits on Chinese investment in U.S. technology, in an effort to protect what the administration calls America’s “economic seed corn.”

    The tariffs are a response to longstanding complaints that China unfairly requires U.S. companies to share their technology as a cost of doing business in that country. The administration is also concerned that China is strategically acquiring innovative technologies through investments in the United States.

    Even if you share those concerns tariffs still aren’t the solution:

    The White House said an investigation of Chinese policies ordered by Mr Trump in August found a range of “unfair” practices, including using restrictions on foreign ownership that pressure companies into transferring technology.

    The US also found evidence that China imposes unfair terms on US companies; steers investments in the US to strategic industries; and conducts and supports cyber attacks.

    The White House says it has prepared a list of more than 1,000 products that could be targeted by tariffs. Businesses will have the opportunity to comment before the final list goes into effect.

    One very useful definition of a rich economy is that it’s one which creates intellectual property. It’s almost definitional in fact, once you get to a certain level of sophistication, for which read level of wealth or GDP, you must be inventing things. Because that’s how you get to a certain level of wealth or GDP, by having invented things. Thus we’ve an extension to our point above. There I said that poor people should be left alone as they rip off IP because it doesn’t make any difference if they do. But richer people, sure that makes a difference. But then richer countries must, by definition, be producing IP. The correct answer to our IP being ripped off is therefore to rip off their IP. If China doesn’t protect US IP then the US should just not protect Chinese. No patents, no copyrights, not even trademarks. We’ll respect your IP to the extent that you do ours.

    OK, maybe you don’t like that idea but even then it still doesn’t mean that tariffs are the solution. For tariffs on 1,000 Chinese products make all US buyers of those 1,000 products poorer. So, our solution to the Chinese stealing our stuff is going to be making Americans poorer, is it?

    Well, quite, it’s obvious lunacy and I’m being polite by only describing it as a silly idea. Whatever the problems with, whatever the varied possible solutions to, Chinese theft of US intellectual property making American consumers poorer as a retaliation is a silly, even stupid, idea.