Two recent U.S. political developments trouble me deeply. One is the split that seems to be occurring within the Republican Party. The second relates to court rulings that will change the landscape of campaign finance.

These developments raise a critical question: Will the loosening of restrictions within the world of campaign finance exaggerate our political differences and accelerate the creation of new factions and political parties in the United States?

I worry it might.

But why is this worth fretting over? Many Americans would like to see an increase in the number of political parties. They are tired of the traditional Democrat-Republican split. They want options. They long for a "democratization" of the two-party system.

Two great thinkers, as well as recent experience in many parts of the world (especially Latin America), however, point out the potential havoc that such changes could wreak.

Presidents, Multiple Parties, and Painful Politics

Juan Linz, a preeminent political scientist and Professor Emeritus of Yale, has written extensively on the breakdown of democratic systems and the causes of such breakdowns. His work, "The Failure of Presidential Democracy," points out that successful presidential democracies are the exception and not the rule (with parliamentary systems being much more common and generally more stable).

But what would make a presidential democratic system more vulnerable to breakdown? As Linz sees it, the key factor is the way power is divided between a democratically elected executive (i.e. president) and separately but also democratically elected legislature. When different parties control the two branches, stalemate often occurs and little gets done. New legislature is vetoed by the executive, and the president's agenda is stalled by an uncooperative congress.

If you think this has created problems in the U.S. where we only have to worry about two parties sharing power, consider the situation in Latin America, for example, where most nations are presidential AND multi-party. There, you frequently have a president who is elected not by a true majority but only as a result of multiple rounds of voting. In addition, power in the legislature may be divided between dozens of different groups with little in the way of inter-party coalitions (which are a necessary part of the parliamentary system).

With political "ownership" so severely fragmented, governments may accomplish virtually nothing and, in so doing, prevent society from adequately progressing. In the case of Latin America, this exact scenario has been a key factor in de-legitimizing both democracy and capitalism in the eyes of many constituents.

Potential Gridlock in the Political Economy

Now consider Michael Heller, professor of law at Columbia and author of "The Gridlock Economy." Heller is a widely recognized expert in how markets can breakdown as a result of fragmented private ownership.

Common sense states that a strong patent system and intellectual property rights are critical to creating the incentives needed to spur innovation and economic progress. But Heller shows that overly fragmented private ownership - going too far with private property - actually prevents progress.

When commercial flight began to take off in the early 20th century, property rights nearly killed the nascent industry. At the time, U.S. common law held that ownership of land gave the proprietor rights to not just the surface area of the land, but rather to what was essentially a column of property running from the center of the earth up to the heavens. So any plane flying over your house, and then your neighbor's house and your neighbor's neighbor's house, was technically trespassing. Similarly, Heller discusses Quaker Oat's Klondike "Big Inches" promotion in the 1950s. In an attempt to boost sales, Quaker Oats gave away a title to a square inch of land in the Yukon to each individual who bought their product.  With millions of owners each claiming a tiny piece of such a large plot of land, developing it for any reason would have been impossible.

These types of "tradegies of the anti-commons" are all around us.  And they are killing innovation and costing lives, argues Heller.

Tying it all together, fragmentation within the U.S. political party system could create a game of "big inches" that would make legislating exceptionally difficult and stall political and economic progress.

That's why I'm concerned. What do you think?

Step 1) Build a patent system that allows for innovation monopolies and fragmented ownership of new technologies.

Step 2) Watch it eat itself to death.

Ok, maybe it's not quite that simple.

Here's a bit more context. Earlier this week I had the opportunity to exchange tweets with @nakisnakis on some of the challenges surrounding the patent system in the U.S.

The U.S. patent system was developed with the intent of promoting innovation in order to serve the social good and spur economic growth. As patent theory goes, by providing inventors with a temporary monopoly on their technology or method you provide greater incentive for innovation.

While U.S. patent law has in some ways served these ends, over the years it also has proven significantly flawed.

Excessive Patenting

For example, @nakisnakis's original tweet reminded me of an outstanding set of books by Henry Chesbrough - "Open Innovation" and "Open Business Models" - that confront the problem of excessive patenting within U.S. corporations. Chesbrough's claim was that corporate R&D labs have come to patent any and every new development, just in case maybe, perhaps, someday, they might just use that patent to bring a new product to market.

In reality, the vast majority of these patents go unused because the products they support ultimately don't fit the business strategy or business model of the company that originally filed the patent. Since nobody else can use the patented technology, however, the innovation is never allowed to benefit society.

In "Open Business Models" Chesbrough argues for more efficient and transparent secondary markets in intellectual property that would allow for these idle patents to be licensed to companies who will actually use them.  Not a bad idea.

Independent Inventor Defense

A great blog post @nakisnakis shared with me during our twitter conversation talks through yet another problem with the patent system - the lack of an "independent inventor defense."  

With the copyright system, the post states, people who develop similar ideas or works independent of one another have no claim to each other's "property." Not so with patents.  There, the first to win the patent gains exclusive rights to the idea, even if it has been developed independently by others.

The Tragedy of the Anti-Commons

Finally, in a nice stroke of coincidence, I happened onto a recent EconTalk with Michael Heller, law professor at Columbia, discussing cases of excessive and ineffective use of private property in the U.S.  His book, "The Gridlock Economy," outlines, among other things, how the existing patent system fragments ownership of ideas and thus makes it overwhelmingly difficult to generate breakthrough innovations with the ability to improve health, transform industry, and save lives. This is because many major breakthroughs involve the innovative aggregation of more narrowly applicable existing technologies that are already patented.  Identifying and gaining access to all of these patents would be so ridiculously costly that these types of innovations are left unrealized.

All in all, lots of reasons to not be very happy with the patent system (if you want to help change it, check out the bill proposed by Senators Leahy and Hatch). What's more disturbing is that this same phenomenon is playing out in a whole other and even more crucial part of our economy, with potentially very similar impacts. More on that to come.