Globalization from the Ground Up - Republicans wrong on IP policy

Having formally left NDN at the end of last year, I am now travelling round Asia for a while before returning home to Britain. And, well, given I used to work with Rob on the Globalization initiative, I thought I’d offer a few occasional thoughts on globalization from the ground. This is the first of these, and hopefully not the last. For what its worth, this is posted from Bombay, India.

NDN rightly raises the issue of IP protection, and the problem of its constant flouting in developing countries. The problem here is simple. It is not in the long-term interest of developing countries to flout IP regimes. But, crucially, it is definitely in their short term interests. China does not want to pay for copies of Windows Vista, even if it understands in the long-run that growth is positively correlated with respecting IP rights. The trick, then, is what strategy should the rights holding countries (US, EU and Japan) prosecute to try and get the rights abusing countries (India, China, others in Asia, Brazil, etc) to get to the point in their development when they see that protecting IP is in their immediate interests. This point is roughly where Singapore is You know this because it is impossible to find counterfeit good in Singapore, while they are abundant – almost comically so – in neighbouring Malaysia, and Thailand. And, of course, in China.

And this is where it gets interesting. Because at the moment the US is following the wrong strategy. It is demanding that the developing countries just stop it: obey the rules, and get with the programme. This is clearly not going to work, as the US and its IP-holding allies have no powers of enforcement. Instead, it is clear that different strategies need to be followed for different regions. And here is the interesting thing: the private sector really gets this, even if the government doesn’t.

A case in point is the front page of this morning’s Times of India, India’s most prestigious broadsheet. On page 1 there is a big Microsoft advert. The gist of it says that: if India wants to be a modern country, it has to play by the rules. Accpetance into the west, the advert implies, will only come by not buying pirated software. This, very cleverly, taps into the Indian phobia about not being accepted as a modern country. India fears not being seen as a serious player, and frets that it isn't taken seriously.

So far, so obvious. But in China, that strategy would fail. China doesn’t care what people think about it. She is a vastly more confident civilisation. So instead, clever companies follow a different tack. One example: some turn a blind eye to some IP infringement, and instead sell their software with added “training” packages. The Chinese have a real thing for education, partly routed in Confucian values. And so while they will not pay any money for the software, they will pay for the training. In the long-run, the bet is that by getting the Chinese to pay for some of their software, they will gradually converge with the Western rights-respecting norm.

So, bottom line: The Republicans are following the wrong strategy on IP protection. Democrats should follow the more nuanced approach of the private sector. This might involve talking a zero-tolerance game. But in the end that is an empty gesture without the right incentives to get countries into line. And here, all the Presidential aspirants have to learn about globalisation from America’s business leaders.