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Introducing a licensing requirement for the development and adoption of generative AI systems would have profound economic implications.

Barrier to Entry: Given the vast number of works an AI training dataset might need to use—and the fact that thousands or millions of individuals might own those works—obtaining licenses for all underlying content becomes a significant challenge. This could act as a barrier to entry for smaller companies or startups that lack the resources to negotiate and secure such licenses.

It doesn't need to be an economist to realize that, high and unpredictable inflation is not good for business confidence because they cannot be sure of what their costs and prices are likely to be. As a result, this uncertainty could lead to a lower level of capital investment spending. In fact, a high rate of inflation is widely considered to be damaging for an economy. What's more important is that money becomes worthless with very high inflation.

It's a common trend that inflation occurs when an economy grows due to increased spending. However, we're not sure what method will be applied by the central bank to keep inflation under control. Whatever the method might be; we hope it would be sustainable.

What are the main challenges facing businesses in terms of IP protection? The main challenges are registry issues, backlogs, delays in trademark and patent registration, lack of experts in patent claims drafting, the cost of protection, lack of awareness of IP rights among SMEs, and IP lawsuits. What are the steps involved in the patent registration process? The most important step in the patent registration process is the drafting of the actual patent application, which needs to encompass as much of the innovative processes as possible and be written with the expectation of opposition in mind. What is the cost of trademark registration? To register a trademark, one can expect to pay between $225 and $325 per class code, not including search or attorney fees. What is the issue with IP awareness among SMEs? In Africa, over half of the SMEs have never heard of intellectual property due to a lack of awareness-raising efforts in the business world. What is the impact of IP lawsuits on businesses? IP lawsuits can be time-consuming and expensive, with a price tag of between $2.3 and $4 million. They can also be detrimental to a company's reputation. What is the solution to the lack of awareness of IP rights among SMEs? Raising public awareness of IP through media outlets and government initiatives that reach commercial settings is the first step in solving the lack of awareness issue.

“The copyright and patent laws we have today look more like intellectual monopoly than intellectual property,” wrote Brink Lindsey and Steven Teles in their recent book about the U.S. economy. Concerns about overprotection of intellectual property acting as a barrier to innovation and its diffusion are not new. But they have gained greater salience now that knowledge has emerged as a dominant driver of economic activity and competitive advantage.

Digital technologies have enabled the emergence of an “intangible economy,” based on soft assets like algorithms and lines of code, rather than physical assets like buildings and machinery. In this environment, intellectual-property rules can now make or break business models and reshape societies, as they determine how economic gains are shared.

Column: How intellectual property rules help the rich and hurt the poor

Economy Oct 28, 2016 2:54 PM EDT

Increasing intellectual property rights (IPR) poses a risk to both consumers and economic growth. The United States scored 4.9 out of 5 in 2005, up from 3.8 in 1975, according to the Park index for evaluating the strength of patent protection. 1 This trend has continued to gain strength, as evidenced by the over one billion dollars awarded to Apple for its infringement case against Samsung. Economic considerations dominate the arguments favoring this trend towards strong IPR, namely the "incentive to invent" theory. This rationale, however, falls short in its justification for continuing to strengthen IPR. Firstly, the "incentive to innovate" theory fails to discuss the implications stringent IPR have on consumers. Secondly, the Endogenous Growth Model demonstrates the role imitation plays in fostering economic growth. Finally, this article will examine a policy solution to these conflicting social and economic standpoints. The "incentive to invent" rationale appears to satisfy capitalist ideals. This rationale relies upon the presumption that the propensity for a prospective inventor to invent would be increased by protection against imitators. This protection secures an inventor's investment of time and capital with the prospect of market control, thereby gratifying Lockean notions of property and profiting from the fruits of one's labor. This article will argue that, while IPR justification is valid, greater incentives for innovation and economic growth can be achieved by balancing IPR with appropriate levels of imitation; at the same time maximizing utility for society as a whole. Effect on Consumers and Society Through Waste [*49] Patent holders incorporate high levels of rent protection activities (RPA), to ensure rent is paid by imitators. 2 RPA discourage cumulative innovations, advancements on existing innovations, thereby forcing R & D towards horizontal innovations, essentially just differentiations of an existing patent. 3 For example, iPhone software and Android software are the result of horizontal innovations, they both achieve similar functionality but were developed independently (infringement suit aside) to avoid patent infringement. In contrast, vertical innovations, or cumulative innovations, resemble a step-by-step process of imitation followed by improvement (this process is discussed at length in Competition, Imitation and Growth with Step-by-Step Innovation 4Link to the text of the note). This process is analogous to "standing on the shoulders of giants," where previous ideas are seen as building blocks for future developments. To the degree that strong IPR allows only horizontal innovations among competitors, "incentive to invent" holds true, but how much do these innovations benefit society? Resources would be better spent advancing technology rather than simply developing similar technology a different way to avoid infringement. Society is ultimately left advancing at a slower rate than the equilibrium between imitation and IPR protection. A company's goal is to reduce competition. IPR allow for horizontal innovations, so companies have been increasingly utilizing design patents as additional barriers to entry. 5 6 Design patents are the stylistic, in essence the fashion, components of a product that may be valuable to clothing companies, but do little to enhance the utility of a technology product. A company will invest in hoarding design patents, making it difficult for a competitor to avoid infringement, even after independent development. The adverse effects of incentivizing design patents in technology as quasi-RPA are twofold: 1) innovators will be discouraged from attempting enter the market due to an additional barrier and 2) societal advancements will be even further slowed. With the continuation of this trend, [*50] resources will be increasingly allocated away from utility enhancing R & D and placed towards fashionizing technology. Despite, its "incentive to invent" rationale, strong IPR create a number of disincentives for potential innovators. Effect on Economic Growth In contrast to strong IPR, the Endogenous Growth Model discourages disincentives towards imitation. 7 The Endogenous Growth Model relies on innovation to stimulate economic development, 8 so why are IPR an inefficient means for growth? When IPR are highly protected, monopolistic effects occur as a result of the high levels of RPA. 9 With strict IPR, patent holders will typically be the industry leaders, so by utilizing effective RPA they create barriers against competition giving them price control. This creates the monopolistic effect of unfair pricing with little incentive to innovate. Furthermore, it increases benefits for allocating funds into RPA instead of R & D. Aghion et. al. uses the Endogenous Growth Model to suggest some imitation will mitigate these monopolistic effects. The logic behind this idea is that through imitation competitors are placed on a more level playing field. The ultimate result of the Aghion et. al. system is that the "top" will be in constant flux; terms as market leaders will be cyclical. In this competitive atmosphere resources would be better spent on vertical innovations instead of RPA. IPR protection will be sufficient to compensate investment through cyclical market leader profits. In fact, incentives for prospective inventors and start-ups will be increased by the greater prospect to be a market leader. In summary, economic growth depends on vertical innovation, 10 and the allowance of imitation improves the quality and rate of innovations. Advocates for strict IPR protection argue that U.S. firms receive investments over firms abroad because of our strong protection and enforcement. If the U.S. were to reduce its IPR protection, the gap between domestic investments and investments abroad may shrink. However, more firms in close competition [*51] coupled with increased economic growth would mitigate investment risks. Consider the following relationships: 1) diversity reduces investment risk while lower IPR protection increases diversity among competitive firms; 2) economic growth reduces investment risk while lower IPR increases economic growth. These relationships would encourage a greater quantity of investments mitigating the potential loss to foreign innovators. Overall, the benefits from a policy encouraging some imitation with moderate IPR protection could greatly improve societal welfare.

Deutsche Bank no longer expect the U.S. economy to tip into recession this year, given cooling inflation and the labor market returning to a "better balance" without unemployment rising significantly.

The brokerage earlier expected the economy to enter a mild recession as the Federal Reserve tightened interest rates to tame inflation, narrowing the window for a soft landing.

Treasury Secretary Janet Yellen thinks the Federal Reserve could hit its 2% inflation target in 2025, with a soft landing well in her sights.

Yellen told Yahoo Finance in an interview published Monday that she does “not see the basis” for a U.S. recession, pointing to the Fed’s caution around cutting interest rates too soon to avoid tipping the economy into the red as “the balancing act that they have.”

The recession, predicted by business executives, economists, and investors, refuses to show up.

Steady hiring continues to fuel consumer spending and, in turn, an economic expansion unlike any the U.S. has seen. Employers added 2.75 million jobs over the last 12 months, including 272,000 in May, the Labor Department said Friday. The unemployment rate has been at or below 4% for 30 months, something that last occurred during the Vietnam War in the late 1960s and the Korean War in the early 1950s.

Confidence among the state’s employers bounced back in a big way in May, buoyed by a steady stream of new hires and predictable — if inflated — economic conditions, according to the latest survey by Associated Industries of Massachusetts. The Association’s Monthly Business Confidence Index showed confidence grew among the Bay State’s employers by a full 1.4 points to 53.3% on the up-side, rebounding “as the state and national economies continued their tenuous expansions” and ending a two month slide toward pessimistic territory. Massachusetts business owners are feeling better about the state of things after months of stable hiring in the midst of historically low unemployment and, while inflation remains higher than would be ideal, it’s at least been a relatively consistent problem, according to the Index. “Steady hiring nationally continues to fuel consumer spending. US employers added 2.75 million jobs during the past 12 months, including 272,000 just in May. Payroll employment in Massachusetts also grew 2.2 percent on an annualized basis during the first quarter, just above the national growth rate of 2.0 percent, and well up from the state’s annualized job-growth pace of 0.7 percent in the fourth quarter of 2023,” Sara Johnson, the Chair of the AIM’s Board of Economic Advisors, said with the report’s release. Despite the optimistic turn among most employers, not every sector is feeling better about the future, according to the survey. Manufacturing companies reported a “significant confidence gap” compared to their non-manufacturer compatriots, coming in at 46% confidence versus 54.7%. Confidence also varied according to region. Sentiment climbed out of the pessimistic range in the Worcester region, up from 45.9% to 50.6%, but fell dramatically around Springfield, from 48.4% to 44.8%. Confidence among businesses on the North Shore, “remained firmly in optimistic territory” at 55.7%. Despite the overall increase in business confidence, AIM economic advisory board member Barry Bluestone, a retired Professor of Public Policy and Urban Affairs at Northeastern University, said that the survey also shows that employers are concerned about their ability to hold onto top talent in the face of an ongoing statewide housing crisis. “The fact that Governor Maura Healey and the Massachusetts House of Representatives have put forward proposals to increase the supply of housing in the Commonwealth is a good sign that elected officials are determined to address this important economic issue,” Bluestone said said. AIM surveys more than 140 Bay State businesses to produce their monthly index, the first of which was published in July of 1991. According to AIM, business confidence hit historic highs in 1997 and 1998, with two months in either year showing 68.5% confidence, and hit a low in February of 2009, when it was 33.3%. Seperately Wednesday, government economists released data showing consumer prices excluding volatile food and energy costs — the closely watched “core” index — rose 0.2% from April to May. That was down from 0.3% the previous month and was the smallest increase since October. Measured from a year earlier, core prices climbed 3.4%, below last month’s 3.6% rise, representing the mildest such increase in three years. Overall inflation also slowed last month, with consumer prices unchanged from April to May. Measured from a year earlier, prices rose 3.3%, less than the 3.6% increase a month earlier.

Dive Brief: Confidence among small businesses hit a post-pandemic high in recent weeks as fears of recession waned, the U.S. Chamber of Commerce and MetLife found in a quarterly survey. Sixty-six percent of small businesses said they are in good financial health and 72% report solid cash flow, according to survey results that bode well for the economy. Small businesses generate about 44% of gross domestic product, nearly half of private sector workers and, from 1998 through 2021, created 63% of net new jobs, according to the Small Business Administration. “Main Street employers are showing remarkable resiliency in the face of high inflation and a shortage of workers,” Tom Sullivan, the U.S. Chamber’s vice president of small business policy, said in a statement. “With fears of a recession likely in the rearview mirror and inflation starting to ease, small businesses owners are feeling a lot better than they were a year ago.” Dive Insight: Several private- and public-sector economists have marked up their forecasts for economic growth in recent weeks. Moody’s Analytics on Thursday forecast GDP will grow 2.1% this year and 1.4% in 2024 — both 0.1 percentage point higher than August projections. “The U.S. economy continues to show significant resilience,” Moody’s said in a research note. “Economic data for the third quarter have been surprisingly strong,” Moody’s said, noting robust consumer spending and progress by the Federal Reserve in slowing inflation without quashing the expansion. CEOs also project 2.1% economic growth this year, an increase from 1.5% in a second quarter survey, the Business Roundtable found in a Q3 survey of 143 chief executives. The Atlanta Fed forecast on Tuesday that the economy during Q3 will grow at a 4.9% annual rate, a one percentage point increase from its Aug. 1 estimate. The following day the Fed released median projections showing that central bank officials expect GDP to increase 2.1% this year and 1.5% in 2024. In June, as Fed economists abandoned a recession forecast, central bank officials forecast just 1% expansion for 2023 and 1.1% growth for next year. “The economy has remained strong as the FOMC [Federal Open Market Committee] has tightened monetary policy,” Fed Governor Michelle Bowman said in a speech Friday, noting that “real gross domestic product has been growing at a solid pace. “Consumer spending has been robust, and the housing sector appears to be continuing to rebound,” she said. “The most recent employment report showed a labor market with solid job gains.” The Fed, in order to curb inflation to its 2% goal, will probably need to push up the federal funds rate from its current range of 5.25% to 5.5%, Bowman said. “Further policy tightening will be needed to bring inflation down in a sustainable and timely manner,” she predicted.

The headline number for the NFIB Small Business Optimism Index rose to 90.5 in May, the index's highest level of 2024. The latest reading was better than the forecast of 89.8 but marked the 29th straight month the index has been below the series average of 97.9. The index is at the 10th percentile in this series.

Here is an excerpt from the opening summary of the news release.

“The early PMI data signal the fastest economic expansion for over two years in June, hinting at an encouragingly robust end to the second quarter while at the same time inflation pressures have cooled. “The PMI is running at a level broadly consistent with the economy growing at an annualized rate of just under 2.5%. The upturn is broad-based, as rising demand continues to filter through the economy. Although led by the service sector, reflecting strong domestic spending, the expansion is being supported by an ongoing recovery in manufacturing, which so far this year is enjoying its best growth spell for two years. “The survey also brings welcome news in terms of job gains, with a renewed appetite to hire being driven by improved business optimism about the outlook. “Selling price inflation has meanwhile cooled again after ticking higher in May, down to one of the lowest levels seen over the past four years. Historical comparisons indicate that the latest decline brings the survey’s price gauge into line with the Fed’s 2% inflation target.”

A key measure of underlying US inflation stepped down for a second month in May, a pleasant surprise for Federal Reserve officials looking for signs that they can start to lower interest rates.

The so-called core consumer price index — which excludes food and energy costs — climbed 0.2% from April, Bureau of Labor Statistics figures showed. The year-over-year measure rose 3.4%, cooling to the slowest pace in more than three years, according to data out Wednesday.

The American economy expanded at a 1.4% annual pace from January through March, the slowest quarterly growth since spring 2022, the government said Thursday in a slight upgrade from its previous estimate. Consumer spending grew at just a 1.5% rate, down from an initial estimate of 2%, in a sign that high interest rates may be taking a toll on the economy. The Commerce Department had previously estimated that the gross domestic product — the economy’s total output of goods and services — advanced at a 1.3% rate last quarter. The first quarter’s GDP growth marked a sharp pullback from a strong 3.4% pace during the final three months of 2023. Still, Thursday’s report showed that the January-March slowdown was caused mainly by two factors — a surge in imports and a drop in business inventories — that can bounce around from quarter to quarter and don’t necessarily reflect the underlying health of the economy. Imports shaved 0.82 percentage point off first-quarter growth. Lower inventories subtracted 0.42 percentage point. Picking up the slack was business investment, which the government said rose at a 4.4% annual pace last quarter, up from its previous estimate of 3.2%. Higher investment in factories and other nonresidential buildings and in software and other types of intellectual property helped boost the increase.

Growth in the US economy continues to come in above expectations, despite elevated interest rates, weakness in other major economies, and the drawdown of excess savings. Although real GDP growth slowed in the first quarter of this year, it is looking increasingly as though policymakers have managed to avoid a recession, all while bringing down inflation closer to the 2% target. Deloitte’s baseline scenario is still positive in the near term. Consumer spending is expected to remain strong for the first half of 2024 due to sustained improvements in the labor market and stable levels of spending by the business and government sectors. These factors are projected to support real GDP growth this year. While Deloitte’s baseline forecast remains hopeful, we have once again included a scenario that is more optimistic than our baseline—one where labor productivity gains surpass baseline expectations, and structural changes to the labor market occur in the longer term. However, economists are often skeptical of embracing pure optimism. We have therefore developed a scenario highlighting the short-to-medium-term downside risks still clouding the outlook. In this scenario, continued geopolitical conflicts and trade actions cause inflation to stay higher for longer, driving the Federal Reserve to hike rates.

Business investment Investment is spending that helps grow the long-term productive capacity of the economy and, as such, is the most important sector for understanding an economy’s potential. One of the challenges of higher interest rates is that while high rates help rein in inflation in the short term by bringing down demand, they can paradoxically cause inflationary pressures to persist for longer by making it more expensive for firms to invest in the capacity to produce more and relieve supply pressures. The average corporate borrowing rate shot up to nearly 7% by the end of 2023, up from a low of 2.3% in 2020. On the bright side, in the first quarter of 2024, the cost of borrowing fell to an average of 6.6% and is predicted to continue declining throughout most of 2024. As a result, although we predict growth in business investment to slow overall in 2024 compared to 2023, average growth for this year is expected to come in at 3% and is predicted to rise further in the medium term. Like all countries, the United States will have to face the challenges caused by rapidly changing climate conditions. Some of these challenges are from a higher prevalence of extreme weather events such as hurricanes and drought, which lead to loss of life and property from flooding, wildfires, and damage to farmland. Other challenges are related to the need for increased economic investment to prevent even worse effects of warming going forward. After falling almost 0.3% in 2023, the forecast shows spending on machinery and equipment rising 1.3% this year and 2.7% in 2025. Machinery and equipment expenditures have rebounded to their pre-pandemic levels but have plateaued there. This type of spending—which captures everything from plant machinery to computers and software—typically has had a strong upward trend over time, and we expect that strong trend growth to return by mid-2025. Investment in structures, which includes both buildings and engineering structures such as power plants and oil platforms, has typically been much more cyclical. Spending here is driven by commodity price booms and economic cycles. Although on the rise since the last quarter of 2022, investment in structures remains below its pre-pandemic peak, which in turn is below the all-time peak in 2008. We expect structures investment to continue rising, growing by 4.2% this year and by a further 1.6% in 2025. However, some sectors are seeing strong investment in structures, while others are facing declines. Mining structures investment is expected to be strong due to elevated oil prices, especially if geopolitical upheaval increases. Likewise, legislation such as the Inflation Reduction Act and the CHIPS and Science Act will likely incentivize investment in manufacturing structures. On the other hand, the outlook for the office segment of the commercial real estate market remains under stress. With office space prices down and vacancy rates up, the office market is likely to remain in a rebalancing phase over the near term, although the prospects for the office market will differ across metro areas.10 The final major category of business investment is investment in intellectual property, which includes software purchases and research and development spending. Investments in intellectual property increased significantly during the pandemic, especially in software, as firms scrambled to adapt to new remote work realities. Although we expect growth in intellectual property investments to slow from pandemic-era gains, we forecast growth to remain elevated and continue to be the largest driver of growth in business investments overall as many sectors incorporate the use of AI and other technologies.

WASHINGTON, June 21 (Reuters) - U.S. business activity crept up to a 26-month high in June amid a rebound in employment, but price pressures subsided considerably, offering hope that a recent slowdown in inflation was likely to be sustained. S&P Global said on Friday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, nudged up to 54.6 this month. That was the highest level since April 2022 and followed a final reading of 54.5 in May. A reading above 50 indicates expansion in the private sector. Both the services and manufacturing sectors contributed to the gain in activity. The elevated composite PMI reading suggests that the economy ended the second quarter on a solid note. So-called hard data, however, paint a different picture. Retail sales barely rose in May after falling in April. Housing starts extended their decline, hitting the lowest level in nearly four years in May. The economy is slowing following 525 basis points worth of interest rate hikes from the Federal Reserve since 2022 to tame inflation. The loss of momentum together with easing inflation pressures are keeping a rate cut this year on the table. The U.S. central bank has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range since last July. The S&P Global survey's measure of new orders received by private businesses increased to 53.4 this month from 51.7 in May. Its measure of employment rose for the first time in three months amid what S&P Global said was "improved business confidence for the year ahead" as well as "renewed pressure on operating capacity from rising demand." The drop in the prior months had raised fears among some economists of a looming sharp slowdown in job growth. So far the labor market has continued to churn out jobs at a solid clip. The pace of increase in input prices slowed as did the rate at which businesses are raising prices for goods and services. The prices paid for inputs measure dropped to 56.6 from 57.2 in May. The output prices gauge fell to a five-month low of 53.5 from 54.3 in May. The moderation was in both manufacturing and the services sector, where the rise was among the slowest over the past four years. "Historical comparisons indicate that the latest decline brings the survey's price gauge into line with the Fed's 2% inflation target," said Chris Williamson, chief business Economist at S&P Global Market Intelligence. Inflation moderated in May, with the consumer price index unchanged for the first time in nearly two years. The survey's flash manufacturing PMI edged up to 51.7 this month from 51.3 in May. Economists polled by Reuters had forecast the index for the sector, which accounts for 10.4% of the economy, dipping to 51. S&P Global said "manufacturers' commonly cited concerns over the demand environment in the months ahead as well as election-related uncertainty, notably relating to policy." Its flash services PMI increased to 55.1, a 26-month high, from 54.8 in May. That exceeded economists' expectations for a reading of 53.7.

The biggest consistent threat to investment returns is human behavioral malfunction. Examples include herd mentality, confirmation bias, overconfidence, and recency bias. Several studies support this assertion, including one from , which calculates that investor behavioral coaching could add two percentage points of return per annum. We can harm our portfolio returns a little bit each year and hardly notice it because of the slow erosion (plus, of course, we don’t see or are in denial of our own weaknesses). The damage we do see very clearly is a sudden drop in portfolio value. The most significant drops occur when our portfolio is holding too high an allocation of equity up to and through an economic recession. Investors may not have to worry excessively about that for now. According to the , the risk of a recession just past the horizon is low, which supports holding stocks. The Conference Board describes the index as a barometer of the health of the U.S. economy from the perspective of U.S. chief executives. The index is based on CEOs’ perceptions of current and expected business and industry conditions. The survey includes insights on CEOs’ company plans regarding capital spending, employment, recruiting, and wages. Despite the myriad of challenges, U.S. CEOs are demonstrating remarkable resilience, maintaining a sense of cautious optimism in this complex economic environment. They are navigating through regulatory uncertainty, cybersecurity threats, geopolitical instabilities, and more with a steady hand. (omitted chart) The Measure of CEO Confidence rose to 54 in the second quarter of 2024, up from 53 in the previous quarter, which is the highest it has been for two years. This marks the second consecutive quarter the index has been above 50. A reading above 50 indicates more positive than negative responses. (omitted chart) Most U.S. CEOs no longer anticipate a recession in the coming year. (omitted chart) The Measure of CEO Confidence index is considered a leading indicator, which means that it is a metric that can be used to predict the trajectory of economic growth (as opposed to being used as a trailing or current measure). However, improvement in CEO optimism may be less predictive and, perhaps, more of a self-fulfilling prophecy. CEO’s confidence levels can influence their decisions regarding capital expenditure, expansion plans, and hiring. Improved confidence can lead to increased investment, which can boost economic growth. The index can, in turn, influence investor sentiment and, consequently, stock market performance. It is important to emphasize the “cautious” qualifier of CEO optimism. Chief executives are not so wildly bullish that their optimism should trigger higher stock prices. Nonetheless, CEOs are confident enough to suggest that the economy remains less of a threat to stock portfolios than investors.

Despite ongoing concerns with inflation, entrepreneurs' revenue projections are finally starting to outweigh their anxiety about the broader economy, according to a recent survey.

For founders, an optimistic view of the months ahead is now outweighing the nagging problem of inflation, according to The MetLife and U.S. Chamber of Commerce Small Business Index.