Economics Lesson for Senator Leahy

Senator Patrick Leahy, the sponsor of the Protect Intellectual Property bill, claimed that if Congress rejected his bill it would "cost American jobs." This is almost certainly not true.

Insofar as individuals are able to able to gain access to copyrighted material for which they would otherwise have to pay, they are able to save money. This if effectively the same thing as a tax cut, putting more money in their pocket, the vast majority of which will be spent on goods and services in their community, thereby creating jobs.

If they are denied access to this material, most would not be paying the copyright-protected price. Insofar as some of these people would pay the copyright protected price, it would mean some additional revenue to companies like Disney and Time-Warner. Most immediately this would mean higher profits for these companies. It may have some marginal impact on their employment, but the jobs lost from the money taken away from consumers would almost certainly be larger than the jobs gained by allowing these entertainment companies to gain more revenue. This is similar to imposing quotas on imported clothes. This will lead to more jobs in the textile industry, but fewer jobs everywhere else.

Senator Leahy's bill will also impose additional cost on search engines like Google and intermediaries like Facebook. These costs are like a tax on the Internet. They pull money out of the economy and make these providers less efficient.

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written by Kat, January 18, 2012 5:02 AM

Senator Patrick Leahy, the sponsor of the Protect Intellectual Property bill, claimed that if Congress rejected his bill it would "cost American jobs.

I think he meant his job. Would cost his job. http://www.opensecrets.org/pol...=N00009918

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written by S. D. Jeffries, January 18, 2012 8:34 AM

I doubt this bill would increase employment at Disney or other providers of copyrighted material at all. Production of the material would have already been paid for before any fees or royalties had been collected.

SOPA, PIPA and the SANTA MARIA - Protect Property From Competition
written by izzatzo, January 18, 2012 8:38 AM

Leahy understands the American heritage steeped in the protection of private property every since Columbus set foot on its shores and started drawing boundary lines across the land to prevent the original property owners - Native Americans - from competing with all the illegal immigrants.

Everyone should thank Leahy for prompting the Wikipedia blackout as one more success story in killing off common property to reduce the tragedy of commons.

Stupid liberals.

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What is the difference?
written by AndrewDover, January 18, 2012 8:49 AM

So if a consumer was able to avoid paying for copyrighted material, this is beneficial to the economy and does not unfairly force the legal consumers to pay for the freeloader's consumption.

How about a worker who was able to avoid paying union dues? Do they unfairly freeload on the union? Is it not beneficial to the economy in the same way?

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Obama's tech team against it
written by Peter K., January 18, 2012 9:32 AM

https://wwws.whitehouse.gov/petition-tool/response/combating-online-piracy-while-protecting-open-and-innovative-internet

?
written by Andrew Clearfield, January 18, 2012 11:50 AM

You say it is "almost certainly not true" that allowing theft of copyright will kill jobs. But that is way too strong of a statement. If a company expects - because of theft of its intellectual property - that it will make less money by producing a movie, than it will make fewer movies, as you correctly point out. There is no reason, unless you've actually somehow done the empirical number crunching (which you obviously have not) to assume that the lost movie industry jobs in this example will be outweighed by increased jobs resulting from the enrichment of the IP thieves.

Saying that the Senator is "almost certainly" wrong is the type of reckless overstatement that you usually do such a good job of pointing out in others' work.

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Clearfield is right.
written by fairleft, January 18, 2012 11:57 PM

Your case is quite strong, Dean, but you oversimplify it so much here that you leave yourself open to attack in the ways Andrew Clearfield points out. For example, one reason you almost certainly are right is that the redistribution effects will mostly be to the wealthy owners and investors in and executives of large multinational corporations, and this redistribution up generally reduces jobs, but it's an argument that takes a little time and careful explanation.

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Clearfield and fairleft are wrong.
written by Unsympathetic, January 19, 2012 3:55 PM

If a company expects to make a profit from a movie when factoring in all costs, it's going to make that movie. If lowered profit would stop the making of a movie, you know that movie would not have been made anyway. The notion that you're going to "stop" piracy of movies is both bizarre and ludicrous, unproven assertion. Are you going to pat down all people who enter a movie theater? Remember, movie theaters are private, not owned by the production houses.

I saw Girl with a Dragon Tat on opening night. I could have easily brought a flipcam and made a digital copy of that movie.. and AMC would have known nothing of it. I could have also talked to a friend who works at that movie theater and made a digital copy for myself.. and again, AMC would have known nothing.

Any calculation of "damages" due to piracy is purely imaginary, because someone who's going to steal WILL NOT PAY FACE VALUE. They simply won't, because they don't have the cash.

SOPA/PIPA are horrible bills and need to be tabled. Piracy does not eat into profits, because there's zero chance the person utilizing the pirated good would otherwise consume that good if only offered at full price.

This may not be pleasant to contemplate for the technologically illiterate who promote SOPA/PIPA, but it's the reality of the world. Deal with it.

Economics Lesson for Senator Leahy

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