Wednesday, 24 October 2012

Made In Britain: Book Review (Part 2)

by Viva Avasthi

Last time, we left 'Made in Britain' halfway through, with a detailed analysis of the first and second parts of the book. In this article, Part 3: Intellectual Property will be explored. Part 4: Services will be reviewed in the final of this series of  three articles.

evan davis, made in britain, economics for teensintellectual property, teen economist, economics for teens

To allow this review to make better sense, I think it is best to mention what intellectual property is. Intellectual property is a term categorising the ideas that are created by our minds and have some commercial value. Examples of intellectual property include films and music as well novels, architectural designs and scientific inventions. Developed countries tend to have a 'Harry Potter economy' which means that the creativity and originality of the comparatively well-educated public is used to create intellectual property, which helps the nation generate its income (as opposed to manufacturing which can be done by fairly basic economies).  That's not to say that manufacturing ceases to remain important, of course. In this section, Davis mentions that some forms of intellectual property effectively combine with manufacturing in the UK.

Part 3: Intellectual Property

Chapter 7: The Science Bit 

glaxosmithkline, teen economist, economics for teens
The Industrial Revolution has led to
the success of companies such as GSK

Davies opens this chapter with an explanation of how British innovation allowed the country to become a world-leader in the glass industry. Although he later mentions that Pilkington Brothers, the company which invented the technique used by around 90% of flat-glass producers today, has been taken over by NSG of Japan, his narration is powerful. It really highlights the idea that the Industrial Revolution and the period of Enlightenment in Britain provided a massive boost for the country in terms of its global standing. The Industrial Revolution and Enlightenment allowed Britain to become rich enough to start educating the masses effectively and investing in research. Today, of the many things that this has resulted in the success of, one is the British pharmaceutical industry. GlaxoSmithKline, for example, is currently ranked 5th globally in the list of biggest pharmaceutical companies. British universities, particularly the 'golden triangle' of Oxford, Cambridge and London, are also among the best in the world due to the fact that they have been so well maintained and utilised over hundreds of years, attracting the best students to carry on the work of many of the best academicians the west has produced.

However, the main idea here is that Britain needs "to ensure [it] uses its historic privileges well" because although "Britain boasts more winners of the Nobel Prize than any other country apart from the US" and it is difficult for countries like China to copy academics and the ability to create intellectual property as it did methods of manufacturing, "there is no reason why a country such as China could not achieve a dominant position in such industries in the long term." Britain clearly still has a great advantage in its academic and scientific industries over the Newly Industrialised Countries, but it needs to concentrate on how it will be able to sustain its advantage. Any opinions on how it could do this?

Chapter 8: Branding and Advertising 

cadbury, cadbury gorilla advert, teen economist, economics for teens
Cadbury's gorilla advertisement is an example of Britain's
advertising and branding prowess 
This chapter analyses the development of Britain's success at branding and advertising, focusing on 'Sunlight Soap' (now known as 'Lux'), the Kit Kat brand, and the various unique advertising techniques created by the British. One of the most recent is the advertising scheme used by GoCompare, which has been explored in another article on this site entitled Go Compare: Major Hate or Clever Scheme?

One argument that Davis makes in this chapter is that we should be proud of our ability to sell products through creating successful brands even if this means that customers are charged more for a product when it is not necessarily superior to the unbranded version. Although lots of moral arguments could be raised about this, I really like how he dismisses them:

...where the label and design associated with [a product] are an integral part of the appeal...our consumption of a brand...allows us the luxury of enjoying a connection to a world that we like to identify with, or to express an aspiration that moves us. I see nothing pernicious about this and no reason to think someone is a victim of it any more than they are a victim when they watch television or read a book.
It is an intriguing thought that perhaps the profits made through creating brands and then advertising them are not actually 'wrong' because customers choose to buy the branded products over unbranded ones. But do branded products mean that it becomes harder for newcomers into various industries to do well and grow as companies, or does the idea that many people like branded products make it easier to grow? I think it would depend on how easy or difficult it is to develop and promote a successful brand. The answer to this question could mean many contrasting things for Britain's economy. Please share your thoughts below!

Chapter 9: The Drawbacks of Being Clever

harry potter and the philosopher's stone, teen economist, economics for teens
Many think stealing this book from a
shop would be worse than stealing it
through a file-sharing website

This chapter looks at the obvious risks related with developing intellectual property: the ease with which it can be copied or stolen. Davies mentions how it is hard to strike a deal with a company about your idea without telling them the idea in the first place, after which they can easily steal it without paying any further attention to you. Copyright and trademarks laws, as well as patents, have been created to protect ideas, but it is still relatively difficult to claim intellectual property. Davies gives the example of how the comedian Tim Vine faced problems when a viral email with some of his one-liners was circulated. The jokes had been falsely attributed to the late Tommy Cooper which meant that Tim Vine found himself being unjustly accused of plagiarism! When a joke is repeated, the joke's creator gets no financial reward or attribution and "economists worry about this kind of thing" because people might not want to come up with ideas themselves when they could easily copy them from someone else. 

Other things he mentions are that sometimes, people do not see it as stealing when ideas rather than physical goods are stolen. It seems far more serious to most people if a physical DVD is stolen from a store than if a pirated version of the film is watched. Both, however, are forms of stealing. Thus there are clear problems with an economy becoming too dependent on developing its intellectual property, especially as a completely foolproof solution to these problems has not been developed.

Davies mentions how physical objects compare to ideas in terms of how they are available to customers and how they function in the market. When there is demand for physical objects, the market ensures there is usually a wide range on sale due to the high-quality expensive products competing with the low-quality cheap products and there being a wide range of customers with different budgets and needs. However, when there is a market of competing ideas, the best idea (for a novel, for example) comes out as the winner, taking 100% of the market. This happens because there is a very low cost for reproducing ideas and there are only marginal differences in 'quality' as such, especially not with things like novels and music.

A related thought is that of the unequal distribution of wealth that might be being created through the fact that a lot of intellectual property has been created through the efforts of a single person. The person or small team of people gain all of the financial rewards, which means that a large amount of wealth becomes concentrated in the hands of very few people rather than being distributed throughout the economy. For example, J.K. Rowling alone has accumulated about half a billion pounds of wealth from the Harry Potter franchise (according to the 2010 Sunday Times Rich List).

Unlike manufactured items, which have to be painfully manufactured one at a time, a single Harry Potter can satisfy a very large number of people almost simultaneously.[...] In the case of the small factory, the thousand employees had a claim to the income created. In the Harry Potter example, however, the money accrues to J.K. Rowling.
Davies argues that J.K. Rowling's income is still distributed in the economy because she spends her money on various things such as a gardener, for example, who spends the money with a baker, who spends the money with a hairdresser and so on. He also mentions that when, being a charitable person, she donates some of her money, it can then be used by many different people. However, I feel that the multiplier effect in that case would not be as large as if the money had been split between thousands of people, because the money would not be used in thousands of different ways at the same time if it were just used by Rowling and the few people she spends the money with. Please comment below to share your thoughts on whether you think it would be better if the money could somehow be split, or if you think it does not make much difference either way.

What are your opinions on the ideas explored in this part of the book? 
The publishing date for the final part of this series of articles will be posted on the 'Future Articles' page.


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