BWorld 269, IPR, private property and prosperity

* This is my article in BusinessWorld last November 23, 2018.

“Every Man has a Property in his own Person. This no Body has any Right to but himself. The Labour of his Body, and the Work of his Hands, we may say are properly his.”

— John Locke, Two Treatises of Government (1689)

Private property, not collective or communal or state property, is the cornerstone of social order, innovation and prosperity in the history of humanity. The most prosperous economies are those that respect and protect private property of the means of production. Backward communist China and Vietnam realized this later so they instituted reforms that allow and protect private property even if they retain the one-party socialist government.

Such private ownership apply to both physical and nonphysical or intellectual property, the latter including trademark and brand, patent on inventions, copyright on compositions, and trade secret.

In Asia in particular, economies with high per capita income — Singapore, Hong Kong, Japan, South Korea, Taiwan — are also those with high scores and global ranking in intellectual property rights (IPR) protection. And countries with poor or low per capita income also have low scores and ranking in IPR protection. Exception here is Brunei, high per capita income due to gas and oil-based economy and not FDIs-based like the five economies mentioned, and low scores and global ranking.

Data below are from four sources. (1) International Monetary Fund’s (IMF) World Economic Outlook (WEO) October 2018 database, (2) Property Rights Alliance’s (PRA) International Property Rights Index (IPRI), (3) World Economic Forum’s (WEF) Global Competitiveness Report (GCR), and (4) US Chamber of Commerce’s Global Innovation Policy Center (GIPC).

IPRI is composed of three factors, one of them is IPR protection. WEF’s global competitiveness index is composed of 12 pillars, pillar #1 is about Institutions and among the sub-pillars is intellectual property (IP) protection, and global rank is out of 137 countries in 2017 and 140 countries in 2018.

Now there are IPR-busting policies in several governments like plain packaging for tobacco products. Australia was the first country in the world to do it in 2012, and in the ASEAN Thailand wants to do it too.

Plain packaging (PP) is a ban on branding, it removes trademark, certain graphics, colors and logo, and allows only a generic name in a standard font/size with graphic warnings. And this is where the danger lies.

Corporate branding is elaborate and complicated, the bar codes can even show where the product was manufactured and when. By removing corporate branding via PP, generic branding is less complicated, less elaborate, and very easy to copy and reproduce by illegal producers and smugglers. Since these smugglers did not invest decades of business developing their brand, they can sell at a much cheaper price. And this will attract more smokers, more smoking, not less.

IPR issues like forced technology transfer and outright IPR robbery are among the thorny issues in the ongoing US-China mild “trade war.” The US says its companies are losing as much as $600 billion per year via piracy, counterfeits, imitations, trademark infringement and other IPR robbery, but China denies it.

Health socialists and activists who hate tobacco, alcohol, soda, confectionery companies and their products should realize that both nature and the market hate a vacuum. Remove the legal products and demonize their manufacturers, and that gives room for smugglers, criminal gangs and terrorist organizations to produce and sell their own fake, substandard but cheap products. This results are more smuggling and corruption, more smoking and drinking, not less.

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See also: 
BWorld 238, Trademark ban and health alarmism, August 04, 2018

BWorld 266, Inflation, GDP and Duterte, November 16, 2018 

BWorld 267, Poverty data vs banking, mobile phones and Internet access, November 23, 2018 

BWorld 268, Market-oriented reforms in the Senate, November 24, 2018