Joe has a patent on the widget. You can't make an improved widget without either getting permission from Joe, or breaking patent law. So you don't invent your improved widget, you don't patent it, and if Joe is not interested in innovating, nobody else won't do it either. The world becomes poorer.

(In reality: enter China, who doesn't give a fuck and innovates anyway.)

(In real reality: unfortunately, the Chinese government is starting to enforce western IP more and more, due to economical pressures from the west.)