Wednesday, December 2, 2020

Review of The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives by Michael Heller

This review was written by Eugene Kernes

Short Description

Elaborate Description

The tragedy of the commons is well understood and its effects are clearly seen as resources are overused.  But Heller noticed there are also anticommons whose effects are not salient.  Lack of ownership creates incentives for overuse, but too much fragmented ownership prevents resources from being used creating underuse.   Too many people owning pieces of the resources reduces the ability to coordinate each individual piece which prevents the utilization of the resources.  Each owner believes their piece is important for the whole and require a high price to use or buy the piece, but the total cost in trying to assemble each individual piece can be higher than the potential gain from the whole resources, thereby preventing the creation of wealth.  Each piece is not worth much individually, but assembling them into wealth creation is can be onerous.

The anticommons is the term for overwhelming fragmented ownership, as apposed to the commons when there is no coherent ownership.  Much like commons can be governed to prevent overuse of resources, anticommons needs a set of tools to enable underused resources to be used.  Much of this book is about making the covert cost on society due to anticommons, overt.  Naming it tragedy of the anticommons enables a language to be built to facilitate a discussion of the wasted wealth and lives lost due to the anticommons, and facilitates the creation of solutions to anticommons. 

Anticommons impose a cost to society in usually unseen ways.  Innovations that innovators cannot make due to an inability to obtain all relevant patents with the expectancy that even then, there will be a potential legal dispute.  Pharmaceutical industry has created many life savings drugs but cannot market them as it requires patents held my many who want more for their small piece of the drug than it is worth.  Usually, anticommons can be seen in relation to other countries such as the more technologically advanced countries have better internet connections because the US spectrum bandwidth anticommons creates a lot of dead air.  What it takes is a single owner of an anticommon to prevent wealth creation for everyone. 

The solution to the anticommon problem is not collectivization, but tools to reassemble ownership for efficient use.  Ownership that is not too centralized but not too fragmented.  Much like commons can be governed to prevent overuse, anticommons do not by necessity create tragedy (nor are they the only source of gridlock).  Governments can use eminent domain to assemble rights, but that carries many risks.  Private corporations who are part of the innovators submit their patents for public use to try to have other do the same which reduces the costs to innovate, but corporations cannot be readily relied upon to give up valuable assets. 

This is an eloquent book in which the cases presented support a deeper understanding of the tragedy of the anticommons.  No easy solution is given as property rights are complex social constructs.  The complexity of the issues are given their space. 

Questions to Consider while Reading the Book

•How are gridlocks formed? 
•Why more jargon? 
•What are the anticommons?
•What costs do gridlocks impose on society? 
•Can property be reassembled?
•What are some tools to deal with anticommons?

Book Details
Edition ISBN:  9780465018987
Pages to read:   203
Publication:     2010
1st Edition:      2008
Format:            Paperback

Ratings out of 5:
Readability    5
Content          5
Overall           5