WASHINGTON D.C. — Traditionally, when the government has estimated the costs that illegal or criminal acts impose upon law-abiding citizens, it has not offset those costs to account for the "positive economic effects" that crimes can confer upon criminals. Nevertheless, anonymized academics who saw crimes as mere "redistributions" seemingly convinced the authors of the recent GAO report, Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods, that when estimating the economic costs of counterfeiting and piracy, their "positive effects ... on the economy should be considered, as well as the negative effects."

In "Punk'd: GAO Celebrates the 'Positive Economic Effects' of Counterfeiting and Other Criminal Racketeering," PFF's Thomas Sydnor, Senior Fellow and Director, Center for the Study of Digital Property, refutes this absurd conclusion. Deliberate counterfeiting and piracy are illegal, criminal, and predicate acts of criminal racketeering. Respect for property rights, the rule of law, and the effects of civil and criminal penalties thus requires American auditors and citizens to value at $0 the speculative "positive effects of counterfeiting and piracy."

Sydnor also concludes that the findings of this flawed Observations Report were misrepresented by groups claiming that it proved that leading estimates of the costs of piracy are "bogus, "baseless," and "false."

Sydnor shows that these copyright-piracy studies are as good or better than most of the cost-of-crime data that the GAO has relied upon for decades—thus proving that groups attacking the piracy studies succeeded only in accusing the GAO, FBI, DHS, and many industries of using far more "bogus," "baseless" and "false" cost-of-crime data that concealed the "positive economic effects" of, say, counterfeiting consumer electronics.

The paper may be viewed here. If you'd like more information, or would like to speak to the author, please contact Mike Wendy at mwendy@pff.org; 202-969-2957.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.