Thursday, January 07, 2010

Law and Economics

I heard from some friends in my alma mater, the University of the Philippines (UP), that there is a plan to offer a course in Law and Economics that will be co-taught by both the UP School of Economics (UPSE) and the UP College of Law.

I believe this is a good and bright move. Law and economics.
Rule of law + proper allocation of limited resources.

I suggested to them an unsolicited opinion. That one of the focus of the subject should be on property rights. Both physical property and intellectual (or non-tangible) property.

Property rights is the cornerstone of a free society. For instance, remove or garble the security of your property rights to your car, then other people can say, "Your car is also my car, so I can open and drive it anytime I want". Extend such absence of exclusive property to your house, your cell phone, your land, etc., and you will have zero peace of mind.

It's the same with invention and intellectual property rights (IPR) for certain patents like a new medicine or new vaccine. The current Cheaper medicines law allows compulsory licensing (CL) in cases of national health emergencies as determined by the DOH Secretary. While there are safeguards against its abuse, this provision nonetheless would allow, if not encourage, some local or non-innovator pharma companies to say, "The cost of your expensive R&D, the losses to your unsuccessful drugs are yours and yours alone. But your successful, blockbuster and highly saleable drug invention is also my invention."

Then we can see the impact on the economy. Certain studies have shown that countries that promulgate the rule of law and private property rights have more developed economies. While countries that make a mockery of the rule of law and private property rights are underdeveloped. See for instance,

That's law and economics. That should be an exciting subject in the future in both prestigious colleges in UP.

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