Ever since the Canadian dollar dropped back below the USD the $1.39 value menu prices feel a lot more reasonable.  But lest we take the value on the menu for granted, McDonalds recently hiked the price of a popular value menu item: the $1.39 double cheeseburger is now $1.69.

While the price increase itself is not surprising, the manner in which it was implemented was worth noting; the double cheeseburger was moved off the $1.39 value menu and is now priced at $1.69.  A new Value Menu item was introduced, the McDouble; whilst the double cheeseburger comprises two regular-sized patties and two slices of cheese, the McDouble has one slice of cheese between two patties.

In effect, McDonalds has combined two tactical measures to improve their bottom line.  Knowing that people are so accustomed to ordering a  ”double cheeseburger” without specifying the Value Menu edition, most sales will translate to a 30 cent increase.  Those of us who do notice the price change will still improve earnings by giving up a slice of cheese for the same price.

I did not have to wait long for evidence that their pricing tactic will likely pay off–right behind me in line was a young boy who ordered two double cheeseburgers and a dessert.  Expecting the usual price, he had in his hand a $5 bill and a few coins.  The new total, $6.86, was more than he was given by his parent and he had to run back for more money.  There was no mention of a price change to the double cheeseburger and doubtless had he ordered two McDoubles instead of two double cheeseburgers he would have had enough money.

Those of us who don’t eat quite as much as the average Ontario McDonaldvore will also notice another price change shortly.  In Ontario, restaurant subtotals over $4.00 are assessed a 5% GST federal value-added tax as well as an 8% provincial sales tax; since my normal McDonalds order is two $1.39 burgers, I have for many years avoided the 5% GST for a total of $2.92.  The province, however, is moving to a Harmonized Sales Tax system, which will mean a 13% HST will be levied on all sales (with the federal government remitting the provincial portion).  Although a sub-$4.00 meal is almost as extinct as the coelocanth, those of us who don’t “Super Size” will notice the increase in taxes on our modest meals and some of us might even give in to the delicious siren call (to use a mixed metaphor) of an Angus Burger with fries and Coke–and Super Size it!

(ps. I don’t know how many of you remember this, but in the late 80s just before I started high school, I remember there were still coin-operated toilet stalls in some shopping malls.  Inasmuch as I write this post so that people don’t become complacent about all these surcharges and hidden price increases, I also want to express my relief that–at least for the time being–all of those pay-toilets are still a thing of the past here.)

Ignorance abounds in the world around us.   While it’s great people are able to be passionate and committed enough to join activist groups and try to effect change, I think they’re not being as effective as they could be.  And certainly not as compelling.

I’ve written previously about my well-established non-conformist beliefs.  And yet having completed an honours Bachelor of Science in Biology and Biotechnology, as well as an MBA in an AACSB-accredited (top 10% in the world) school, I can also say that I was able to play by rules others’ established as well learn not only what I was interested in, but a standard set of knowledge and complete a standard set of requirements.

Most people that know me well, know well that I am largely heterodox when it comes to economics and the financial system.  I don’t believe that the current system is the best suited to either of human nature or of the world in which we live.  But in order to bring about change, I believe the most compelling way to do it is to become a part of the mainstream myself, and from a position of knowledge and credibility in that system, bring about change that I know will work.  Change that I know is compatible with the system.  Change that I know will be effective in the world.  Change that I know is realistic given the business and economic environment.

One example of this situation is my well-known stance against the current implementation of the open- versus closed-source system of innvoation.  Because my father spent over a decade as a physician in the Canadian Government approving medical devices and drugs for use in Canada–and I have some consulting experience in the field also–I will use the following as an example.

A drug company, on the verge of making a lifesaving drug discovery, still faces an uphill 10-year battle that will require another $5 billion in R&D expendituresa nd 10 years of regulatory affairs work simply to bring that drug to market.  What sane investor would put money into that drug company to carry out the R&D and regulatory applications without an assurance that another company, once the drug has been approved, will not simply swoop in and produce the same drug with only the costs of production to recover–no R&D or 10 years of patenting/government regulatory procedure costs?  The simple answer is, none.   Introduce the Patent.

Many people understand the concept of a patent, in its simplest incarnation, to be a limited monopoly within a limited jurisdiction, to allow the exclusive commercialization of an invention by the patent-holder.  The current system has the two-fold advantage of 1. encouraging innovation by ensuring that an inventor will be able to recover time and resources invested in developing the creation by legal protection ofa  limited monopoly; and 2. ensuring that an inventor participating in the patent system will make available completely the full details of the invention such that other competitors in the arena can have the choice of benefiting or leap-frogging on that invention after the limited monopoly expires.  Companies and inventors that wish to benefit from a closed-source development ad infinitum, therefore do not choose to patent their discoveries but rather to maintain them as trade secrets.  A Trade Secret, on the other hand, I do not believe fosters innovation and creativity the same way a patented one does.  The secret behind the invention is not published and released to the public domain as it is necessarily done in the patenting process so no other competitors can incrementally innovate based on the prior art, nor can others access the invention.  This move is purely an economic one–one that benefits naught the spirit of innovation.

Having completed my MBA including senior studies in Intellectual Property Law taught by the university’s General Counsel (who, himself, only recently completed his own MBA), Marcel Mongeon, I had the opportunity not only to learn the conceptual implications of patent law, but also the practical experience of taking one of my own inventions and putting it through a patentability and commercialization feasibility study.  In doing this, I learned that not only a patent is a very jurisdiction-specific thing, but also that while the protection is only afford in jurisdictions in which you formally apply for and receive a patent, the disclosure to the public domain regarding the details of this patent are necessarily still made to the public; thus, the priority date at which the first patent application is made, begins a countdown toward the deadline that any patent anywhere in the world may be filed.  Further complicating the matter–if I can only secure investors to commercialize my invention in Canada and the US, for example, and only apply for patent protection through CIPO and US PTO, then Paris Convention and World Patent convention may or may not apply at all.

What does this have to do with letting him who is without sin cast the first stone?

Many, many idealistic young computer users with whom I correspond often decry closed- over open-source systems.  They have not, however, bothered to understand the economics of running a business.  They do not understand that investors will only invest in companies that can prove they will bring the investor more returns than a lower-risk investment.  They also do not realize that necessarily as part of the patent application process, the entire technology behind the invention is published and in the process of becoming part of the public domain.  It is open for scrutiny.  It is open to be used as prior art in further innovation; however, it can only be commercialized by the patent-holder.  At no point in this process is innovation hindered because of trade secrets.