PolitiFact Trashes Lamar Smith: Says His Claims About Economic Impact Of Piracy Are Flat Out False

from the fact-checking dept

We’ve pointed out before that Lamar Smith based his entire argument for why SOPA was needed on misleading or simply incorrect claims — but who are we to say that? Thankfully, it appears that the professional fact checkers are in agreement that Smith’s argument for SOPA isn’t based in reality. The famed PolitiFact fact checking operation has completely dismantled Smith’s claim that “illegal counterfeiting and piracy costs the US economy $100 billion every year.”

It turns out (as we’ve pointed out) there’s nothing true about that statement. PolitiFact tracks down the key points on which Smith bases this claim, noting that it’s a Chamber of Commerce report that says, “the U.S. consumption-based share of counterfeit and pirated goods is between $66 billion and $100 billion.” Smith, obviously, just takes that higher number (already a questionable move), and insists that’s the “harm.” But, as PolitiFact points out, that’s not what the report actually says.

In fact, the report flat out states that it “has not attempted to estimate business losses associated with counterfeiting and piracy.” So to pretend that’s what the report says is, well, lying.

PolitiFact checks in with a number of experts — including someone from the Chamber of Commerce who produced the report — who admits that it’s simply not true to say that $100 billion is the cost to the economy. Add everything up, and PolitiFact says that Smith is being anything but truthful in his claims:

Smith’s statement draws on a high-end estimate also based on flawed assumptions for the U.S. “consumption-based share of counterfeit and pirated goods” in 2008. The cited $100 billion figure doesn’t reflect the costs to the economy, contrary to Smith’s claim; the 2011 study did not assess such costs, which are understandably slippery.

Maybe there is no solid estimate of the cost to the economy. Smith’s CNN.com statement rates False.

Unfortunately, there still doesn’t appear to be any punishment for trying to pass a really bad bill by using misleading stats, other than public ridicule.

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Comments on “PolitiFact Trashes Lamar Smith: Says His Claims About Economic Impact Of Piracy Are Flat Out False”

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76 Comments
KeithV (profile) says:

There is no cost to the economy

The reason that they can not estimate the “cost to the economy” is because the net is $0.

Even if consumers spent the reported $100B on counterfeit goods, that is still what the consumers spent. That went into the economy.

Now, if consumers spent less than $100B, including down to $0, they still would have spent that on something else.

No net difference TO THE ECONOMY.

Josef Anvil (profile) says:

huh?

Maybe my math is just THAT bad. I thought the music and movie industries took in roughly $14 billion each in 2011. So thats $28 billion, but lets just say $100 billion for fun. I know there are counterfeits out there and let’s not forget software and books, but I’m guessing that ICE and the MPAA and RIAA are more focused one movies and music.

So Lamar Smith wants us to believe that revenues for these companies would double if we eradicate piracy ? If you do adjusted dollars for all the industries impacted by piracy for 1992, will we find that the revenue is double what it is now?

$100 billion loss to the economy??? So all of the money would have to leave the US and not be processed by US financial institutions. Kim Dotcom must be rolling in cash.

Anonymous Coward says:

Oh, I do have to add, BTW: Mike, BTJunkie is gone. Other Torrent sites (according to your wonderful source torrent freak) are considering shutting down.

Why stories about Lamar and not about issues that directly touch copyright? Could it be that perhaps you don’t want to discuss the negative issues, the widespread realization by those in the piracy community that perhaps they can’t hide out from the law, etc?

It would seem to me that two items bullshitting about Lamar is overkill, compared to what is happening in the real world.

Dave (profile) says:

Smith objected to Sanchez as an expert, saying in an email that because Sanchez is opposed to the anti-online-piracy act, he “cannot provide an objective or unbiased analysis.” /boggle

Well, I object to Smith’s analysis because he is *in favor* of the ‘anti-online-piracy act’. If he is in favor of it then he “cannot provide an objective or unbiased analysis.”

Total and utter logic fail.

Franklin G Ryzzo (profile) says:

Re:

With the outrageous costs of some medication, some people have no choice than to try and obtain a more cost effective source. It’s sad and detestable that people try to take advantage of that demographic by selling them counterfeits, but that is a symptom of a larger problem. If we provided cost effective medicine to the disadvantaged they would not be forced to try and get their medications from shady online businesses.

Franklin G Ryzzo (profile) says:

Re:

Torrent sites shutting down is not really that newsworthy. It happens all the time. The nature of the hydra is that when one head dies, at least two more spawn in it’s place. BtJunkie closes down and the void is filled shortly. This is just business as usual. Some very large sites have already indicated that they aren’t going to be pressured into closing and some others indicated that they might. There’s your coverage.

Anonymous Coward says:

Re:

Shills like you will find anything and everything to whine at Mike over.

When he posts about torrents, you claim he’s a piracy apologist. When he posts about law, you claim he’s a poor journalist. When he posts about politicians, you claim he’s a lobbyist.

He’s never going to satisfy your twisted inconsistencies, and you know it.

JMT says:

Re:

“Yet, if all of the counterfeit goods had been purchased legally, there would be an economic BOOST of 66 to 100 billion.”

I like the way you just pulled $100B out of your butt. Wouldn’t it be neat if the real-world economy worked that way.

“Not losses, just good business that never happened.”

Most of which would never have happened anyway, and some of which will encourage more business in the future.

Anonymous Coward says:

Re:

“Well, I object to Smith’s analysis because he is *in favor* of the ‘anti-online-piracy act’. If he is in favor of it then he “cannot provide an objective or unbiased analysis.””

That and the fact that he’s received 100s of thousands of dollars from Hollywood to pass these laws. Like his views are in any way “objective or unbiased”.

Prisoner 201 says:

Re:

“if the counterfeit wasn’t available, they might buy another alternative (creating the potential for a low cost brand) or, horrors of horrors, actually save up enough to buy the real thing.

The only reason people buy the $20 one is because they can.”

Yeah, saving up so you can buy those $2000 medicines is the right thing to do. I’m sure that painful, debilitating and/or lethal illness you have will wait for you to get the money.

Of course, being in pain, debilitated and/or dead your salary might not be too peachy. But never you fear, you are doing the Right Thing(tm).

Badger (profile) says:

There is no cost to the economy

No net difference TO THE ECONOMY

Not necessarily true. I buy something from a reputable shop and part of that money goes into the economy through taxes, rent, wages, buying the product, etc.

If I buy something from the man-on-the-corner, he takes all that money and none of it needs to be seen within the wider economy – he might buy a Rolls Royce and so allow someone else to pay taxes, etc. or he might just ship the money abroad. Either way, I suspect that he doesn’t see a social responsibility in sharing his wealth.

If the counterfeit goods are sold in reputable shops then, again, some of that money does make it into the economy through the taxes, etc. but the majority for the product will just disappear.

Badger (profile) says:

Re:

The problem isn’t anywhere near as bad as how he and SOPA supporters presented it to be

But that sort-of begs the question “how much money does the problem have to represent before we’re bothered?”.

Even if the problem were only a tenth of that quoted, $10billion, that still sounds like a lot of money to me.

(Not that I agree with the SOPA approach)

The dillflower says:

Piratey things

That figure of lost money is wrong. Many people who pirate would not go out and buy the product if they couldn’t pirate it. Let’s say a movie got illegally pirated 1 million times. That doesn’t mean that if people didn’t have access to pirate the movie, that 1 million people would have went out and purchased it. Many people couldn’t afford to purchase it and others are interested in it enough to view it for free, but not interested enough to actually go out a buy it if they couldn’t get it free.

scott says:

the music industry is a mess

The definition of piracy is expanded by these know nothings in Congress to fit whatever purpose they see fit just to have more control, more of a monopoly over creativity when they lack it altogether. The recording industry doesn’t even know who the great bands are right now, and I did a list of best songs for the last 40 years, and two other lists for 2010 and 2011. Half of the songs on those lists or more don’t even get any radio airplay where I live and it’s absolutely inexcusable and ridiculous that these bands and their songs aren’t being promoted. The fact that I write about/review and list those songs means that I know something they don’t. But then the recording industry only cares about money, not about what music is really among the best.

scott says:

the music industry is a mess

The definition of piracy is expanded by these know nothings in Congress to fit whatever purpose they see fit just to have more control, more of a monopoly over creativity when they lack it altogether. The recording industry doesn’t even know who the great bands are right now, and I did a list of best songs for the last 40 years, and two other lists for 2010 and 2011. Half of the songs on those lists or more don’t even get any radio airplay where I live and it’s absolutely inexcusable and ridiculous that these bands and their songs aren’t being promoted. The fact that I write about/review and list those songs means that I know something they don’t. But then the recording industry only cares about money, not about what music is really among the best.

scott says:

i’m opposed to file sharing but i’m strongly in favor of people sharing their opinions and standing up against the attempts at intimidation by Congress and their SOPA, PIPA, or whatever other names they might come up with to stifle thinking and creativity. If Congress is so concerned about MONEY, then why don’t they balance the federal budget. What is wrong with them anyway!

bobby b says:

Politifact?

Let me start by saying, I’m on your side here – SOPA was just another instance in which the entrenched government mandarins give magnificent gifts to their friends that they’d just stole from us for that purpose. And that was the best, highest aspect of it.

My point is, Politifact has whored itself out too obviously and too dishonestly, too many times. Even when they call it 100% correctly, as I think they did here, their rep drags you down when you cite to them.

bobby b says:

the music industry is a mess

“But then the recording industry only cares about money, not about what music is really among the best.”

Well, of course they do. And, artists go to the recording companies because the companies care only about money.

Artists who go to recording companies usually have an interest in getting their music out in the world, for the bucks or for other reasons. When a rec company works hard in order to earn bigbucks off of someone’s music, that usually means they’re striving to sell as many copies as possible.

Thus, both sides are working towards a common goal – building and satisfying huge quantities of demand – even though success might be measured and accented differently between them. For most artists, running their own free music site isn’t going to get them nearly the distribution that even a small rec company campaign can build. If an artist is giving away millions of free downloads, you can usually bet the artist is already a big seller – usually because of past rec company efforts.

Don’t get me wrong – I’m not arguing your basic points about IP clamps. I’m speaking only to your sort of contemptuous dismissal of the value of a free market in maximizing everyone’s satisfaction of their wants, needs, and desires.

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