With the dust now settling after Congress went toe-to-toe with the Internet and lost, it’s a good opportunity to assess the wreckage. The majority of said dust was kicked up by the protest blackouts and obscured the issue that Congress was trying to address in the first place: internet piracy. Internet piracy is, by and large, something that major media companies complain about, and something that our generation has done its best to socialize as far less sinister than the “stealing” that the media companies brand it as.
Let me be clear, I sympathize with the pro-piracy crowd (or are they anti-stopping-piracy? Or anti-“censorship”? Is this the reverse of the anti-life vs. anti-choice conundrum?) I find the prospect of having to pay for content that could be free intensely annoying. To think, the only thing standing between me and watching the new Katherine Heigl movie for free is the greed of some multinational corporation! I’ll try not to consider the possibility that my desire to avoid parting with my own hard-earned cash is fundamentally similar to the desire of an artist to be paid for their work.
Leaving aside the individual moral implications of internet piracy, let’s take a look at some of the blogosphere’s arguments on the economic and policy implications.
Our own Tom Leberg runs down the ways that SOPA and PIPA were hopelessly flawed and would have negatively impacted sites that don’t help people pirate. These problems make the proposed legislation unpalatable. The idea of enforcing intellectual property protections online in general, though, deserves a more realistic discussion than the one it is currently receiving.
Matt Yglesias, in his infinite trendiness, is against stopping internet piracy and in favor of “illegal competition [as] a valuable consumer pressure on the industry.” ¡Viva la revolucion!
Yglesias argues that the deadweight loss created when a producer charges money for an extra copy of a TV show episode that was essentially free to produce is mitigated by illegal downloading. This blatantly ignores the fact that while the copy of the episode was free to produce, the episode itself was not. Yglesias, perhaps, would prefer if producers covered their costs from the ticket fees of live studio audiences only.
Caleb Crain, also of Slate, does a fairly good job of taking apart Yglesias’s argument that piracy is OK because the money not spent on a pirated item enters the economy in other ways:
If I were to visit the Slate cafeteria, sit in Yglesias’ chair, and eat his lunch, it’s not as if the money that I failed to spend on a lunch of my own would vanish into a black hole. No! The economy will not suffer! Yglesias, after all, will have paid for the lunch I ate, and the money that I didn’t spend would still be in my pocket or my checking account or whatever. So I could take that money and spend it on, say, the new Shins album. Now I can afford vinyl! Flourish, Keynesian multipliers, flourish!
Still, I think he misses the point as much as his colleague. Poking holes in a flimsy Yglesias argument is a far cry from suggesting a better intellectual framework for the discussion.
Yglesias takes a stab at using deadweight loss to justify his position, and Crain somehow manages to take apart this justification despite the fact that he clearly doesn’t know what deadweight loss is. I think it makes sense, then, for me to take a stab at explaining the reality of internet copyright laws with another topic from introductory economics: the excludability of goods.
As defined by Harvard Economist, Mitt Romney’s continually ignored economic advisor, and prolific textbook author N. Gregory Mankiw, a good is excludable if “someone can be prevented from using it.”
So, for example, a private party with N. Gregory Mankiw is excludable because I can station bouncers at the door to prevent you from entering unless you’ve paid the cover charge. Conversely, a fireworks show in celebration of N. Gregory Mankiw’s birthday is not excludable, because I can’t realistically prevent you from standing 100 yards away from where I’m launching the fireworks and enjoying all of the pretty colors.
What isn’t immediately obvious, but is immensely important to this analogy, is the government’s role, or lack of role, in these two scenarios. In the case of the private party, if you somehow manage to overpower my bouncer and get into the party, the government will intervene by sending a police car and arresting you for trespassing.
In the case of the fireworks, the government isn’t going to help much. But they could. If Congress decided that you “stealing” my fireworks show was a grave concern worthy of sparing no expense to solve it, they could build really high walls around my fireworks display, or put together a special anti-fireworks-stealing-task-force to hunt you down and shield your eyes. The reason they don’t do these things is because they’re impractical. The cost of government enforcement of my profit-earning-potential outweighs the benefit.
This same logic holds for things like music and movies. If the government can cheaply and easily prevent you from pirating stuff (and if our elected officials want to), they should. If, on the other hand, the costs—which might include, I don’t know, the internet shutting down in protest—outweigh the benefits, they shouldn’t. This issue isn’t so much one of morality, or even of government incompetence (although it is that too). It’s an issue of practicality. If a law isn’t worth enforcing, it shouldn’t be enforced.
The other interesting wrinkles to this are the international implications. Whereas Yglesias’s argument about the health of the market might hold to a certain degree within the US—that is to say, the US economy probably isn’t hurt a great deal by something like an American pirating a song owned by an American record label, assuming they spend the money they’re saving from pirating on American products, a big caveat—it’s a whole other ballgame when we go global.
At the risk of generalizing, the US has a competitive advantage over the rest of the world in creating things (designs for iPhones, pharmaceuticals, and even media), and a competitive disadvantage over the rest of the world in making things (assembling those same iPhones). Because of this, the US government is right to be preoccupied with international intellectual property law. It’s why you see it near the top of the agenda for every trade negotiation with a foreign country. The relationship to copyrighted material on the internet is this: even if it isn’t worth the government’s time and resources to prevent Americans from pirating, it certainly is worth at least some resources to prevent foreigners from pirating.
Unfortunately, this is where practicality rears its ugly head once again. The internet has no borders, and there’s a good chance that any site that assists Russian kids in pirating music helps American kids do the same. From there, things are complicated further by the fact that the Russian kid might spend that surplus income on an American product, and the American kid might spend his surplus on a Russian product. In the end, the walls that would have to be built to keep American intellectual property excludable may be just too tall. Our conversation, at the least, should be about what shape those walls would need to take, and if they are worth building.
