mim’s blog

Malcolm Gladwell seems to be everywhere I want to be. He wrote an article in the New Yorker in October about movie hit prediction, which is related, albeit tangentially, to my own research on music recommendation. This week, he has an article entitled Open Secrets, which is about a lot of things, but mostly the idea that the answers to important questions are no longer unavailable, but are instead hidden amongst other, less useful facts. It focuses on the data indicating Enron’s impending collapse, but also touches on the Allies’ inferences from Nazi propaganda, Woodward and Berstein’s investigation of the Watergate scandal, and the diagnosis of prostate cancer.

The part that I found the most interesting, though, was a quotation about regulating modern businesses,

“In order for an economy to have an adequate system of financial reporting, it is not enough that companies make disclosures of financial information,” the Yale law professor Jonathan Macey wrote in a landmark law-review article that encouraged many to rethink the Enron case. “In addition, it is vital that there be a set of financial intermediaries, who are at least as competent and sophisticated at receiving, processing, and interpreting financial information . . . as the companies are at delivering it.”

This seems to be the same problem that the US Patent and Trademark Office is up against, namely evaluating the work of experts in their fields.

The patent system in the US seems to be straining, if not buckling, under the weight of an ever-increasing number of purported inventions, which must be evaluated against all of the other granted patents, prior art, etc, before a patent is granted. What greets the patent evaluator is a river of paperwork, from which ideally could be plucked those truly new inventions. What seems to happen is that the government would rather allow as much as possible to be patented and let the courts decide which patents should hold.

Since businesses spend a lot of money on lawyers for patents, SEC filings, and IRS filings, one would think that they would throw their political weight behind the reform and simplification of these systems. While I don’t exactly have my ear to the rail of government regulation, I haven’t heard much along these lines. I’m sure that people are thinking through these problems, but you’d think there would be more urgency. One possible explanation is that businesses have figured out how to deal with the current system well enough to prefer it to an unknown new system, which will also incur the menu costs of retuning business practices.

Hopefully some time soon a politician who wants to improve our country instead of destroying others will gain the political capital to sort out some of these problems. To be sure, there are many issues more pressing to the general public, but the general public has less political muscle than the business world, and this is one positive change that even the business world could love.

This entry was posted on Tuesday, January 2nd, 2007 at 11:47 pm and is filed under reading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.