What is wrong with the idea of gold standard?

Kumud Mittal, New Delhi

Nothing except that it simply is not feasible. In its pristine form, gold standard started off as gold specie standard under which currencies were minted in gold.

Then there was a migration to gold bullion standard in which paper currencies were backed by gold with central banks prepared to give the promised gold represented by the paper currency on demand.

Gold standard resulted in jockeying for gold and plundering of gold-rich nations, especially South Africa. In any case it worked against nations that either were not blessed by nature with huge gold reserves or lacked the acquisitive zeal. It would in addition be unfair to nations that are rich in other minerals, say oil.

But those pining for the return of gold standard do have limited point - today no currency is under gold standard or for that matter under any standard at all so much so that currencies are printed with gay abandon in the absence of any restraint.

Of course, countries mindful of financial prudence do not do so; but the US dollar itself is not backed by any assets.

Reverse engineering

What is reverse engineering, a term used in the discussions on patent?

K.S. Panchapakesan, Mannargudi

It is less heard now in India specially after 2005 when India agreed to amend its patent law to forbid cloning of patented products through reverse engineering under a convenient arrangement called process patent. Process patent gave a leg up to reverse engineering, a euphemism for plain copying. On the contrary, a product patent brooks no exception whatsoever.

A product enjoying patent protection cannot be manufactured by other without licence from the patent holder even through a different process.

The western drug firms were upset with India for encouraging cheap medicine substitutes through process patents. But that is no longer possible now. Generic drugs can be manufactured cheaply after they come out of patent i.e. once they become off patent.

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(This article was published on May 1, 2011)
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