GigaOM:

A U.S. judge yesterday threw aside a much-anticipated trial between Apple and Google-owned Motorola Mobility over smartphone patents. The decision and a blog comment by the same judge could prove to be a watershed moment for a U.S. patent system that has spiraled out of control.

In his remarkable ruling, U.S. Circuit Judge Richard Posner stated that there was no point in holding a trial because it was apparent that neither side could show they had been harmed by the other’s patent infringement. He said he was inclined to dismiss the case with prejudice — meaning the parties can’t come back to fight over the same patents — and that he would enter a more formal opinion confirming this next week.

This’ll make some heads explode:

Over time, however, a reverse Nirvana Fallacy took hold of many economists, most famously Alan Greenspan. This was the idea that capitalism was a self-regulating system; market failures were, with few exceptions, either self-correcting, or less harmful than regulation aimed at eliminating them. Such thinking influenced the regulatory laxity that contributed (decisively in my view) to the financial collapse of September 2008 and the ensuing worldwide depression, and to the disbelief until then of many economists that there would ever again be a major depression. Greenspan and other like-minded economists and political leaders were wrong to think capitalism self-regulating; they neglected the need for an institutional structure, and a culture, that differentiate successful from unsuccessful capitalist economies.

The institutional structure of the United States is under stress. We might be in dangerous economic straits if the dollar were not the principal international reserve currency and the eurozone in deep fiscal trouble. We have a huge public debt, dangerously neglected infrastructure, a greatly overextended system of criminal punishment, a seeming inability to come to grips with grave environmental problems such as global warming, a very costly but inadequate educational system, unsound immigration policies, an embarrassing obesity epidemic, an excessively costly health care system, a possible rise in structural unemployment, fiscal crises in state and local governments, a screwed-up tax system, a dysfunctional patent system, and growing economic inequality that may soon create serious social tensions. Our capitalist system needs a lot of work to achieve proper capitalist goals.