Dr. Keynes Was Right

It's the Distribution, Stupid
JANUARY 7, 2012 4:56PM

Barbary Piracy

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I'm by no means a Cato Institute type, but a piece by one of their staff was linked from Groklaw.  It talks about the SOPA, and debunks the whole idea.  Nothing I hadn't long ago figured out, but it may be revelatory to those who don't do economics.

I don't recall, and am way too lazy to run it down, whether I've written up here my thoughts on the general topic of macro and sub-macro economics.  In a nutshell:  many (most? all?) numbers based arguments, distinct from outright policy ones, that promote some law or regulation to "save" or expand some industry or corporation are guilty of bad arithmetic.

Here in sunny Connecticut, there was a gaggle of data when the casinos were being considered.  Numbers were produced to assert that casinos would produce a bounty of revenue and jobs.  Didn't happen.  And the reason it didn't was that there was no net gain to Connecticut's economy; Connecticut folk spent at the casinos rather than movie houses or restaurants or whatever.  As the article points out, what's forever been obvious to me, the vast majority of "pirates" wouldn't/couldn't afford to buy the item without the pirate option.  Many of my Dear Readers are way too young to remember copy protection of common PC applications.  MicroSoft and Lotus were the vanguard, locking Word and 1-2-3.  There would be estimates of millions of illicit copies of the programs running in homes, and visions of $$$ danced in Bill's and Mitch's head.  Baloney.  Eventually, both gave up, although MicroSoft has been creeping back into the mire with Windows authentication.

What they ignored, because it was necessary to do so, was that such "pirated" copies were in search of employment where those programs were required.  The "pirates" would never have the cash to buy either, and certainly wouldn't.  They had no intrinsic demand for either.  It turned out that most of the pirating was happening in corporations, in any case.  Surprised?

The same applies to CDs and DVDs, but slightly differently.  Music and movies have intrinsic demand for their consumers.  Would a consumer buy that CD at full price if there were no other option?  Who knows?  But... for those who can't/won't pony up full price, the consumer's discretionary expenditures don't change.  Rather than spend $5 on an illict CD, s/he spends $5 on a graphic novel or a Big Mac meal.  The overall economy is no different.  Those who do pony up the full price then have to forego both the graphic novel and the Big Mac meal.  It's just a government sanctioned and imposed transfer of wealth from one industry/corporation to another.

Not something a libertarian would countenance.

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