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July 17, 2013

Copyright Review Must Not Fixate on the Ideological Leading to Economic Harm

 
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While the House Judiciary Committee is certainly busy with a raft of issues these days, sooner or later they will continue to hold hearings about the copyright system in the U.S., considering how it works in an age of rapidly advancing technology, business models, an ever growing pool of content and new means to access that content. Such conversations are often cast as a fight between “Big Hollywood” and “Big Anti-copyright Activists” which is not only wrong but is also a mistake. In fact, such conversations, and any resulting actions, implicate the entirety of the U.S. economy, and the economy must have a seat at the table.

According to the American Intellectual Property Law Association  intellectual property related industries generate one-third of the GDP while providing approximately twenty percent of, or about 18 million, U.S. jobs.  And those numbers will only grow. According to government statistics, intellectual property in the U.S. accounts for forty percent of our economic growth, not least because it accounts for fifty percent of our exports and, in total, is valued higher than the GDP of any other country, at $5.5 trillion. 

And in fact, that GDP figure is currently understated but soon will be corrected. Beginning at the end of this month the Bureau of Economic Analysis will begin to track "R&D and for entertainment, literary and artistic originals as fixed investment," and creating a new investment category of "intellectual property products," which will also include expenditures for software. Of course, such research and development should always have been included. Why would ticket sales to a Broadway musical count as GDP but not the time spent writing the songs and dialogue?  Those are the inputs into the final product, the production line of intellectual property. 

According to the Wall Street Journal  the change will finally recognize the $400 billion that had not been included in the count of the GDP. The take away?  The U.S. economy is increasingly a knowledge economy, that is, an economy based on intellectual property. 

Already, theft of intellectual property, such as copyright piracy, has a very direct impact on our economy. Approximately 750,000 jobs are lost, or not created, every year even as $300 billion in sales are lost. See both the IP Commission report  and IPI’s often cited report for more details on all that is lost from the U.S. economy every year. 

Counterfeit goods are also a very real problem. As noted here counterfeit drugs total approximately $75 billion each year worldwide, doubling in the last 7 years.  These drugs are, of course, sold without FDA evaluation and hence have the potential to be ineffective or even poisonous. Of course, the ill-gotten gains from the sales of such products end up lining the pockets of criminals around the world. 

But the impact of such theft, piracy and counterfeiting, pales in comparison to the economic damage wrought if Congress were to make unwise changes to the IP protections we have now. 

This is not just some intellectual exercise or ideological fight. Before any changes are made to the current copyright regime law makers must be absolutely sure they understand all of the potential consequences. The wrong alteration, weakening copyright protections, could easily result is weakening our current and future economy is very real ways, from jobs to GDP. The excuse of unintended consequences will be met with little patience by a public weary of policy makers cavalierly making ideological decisions that result in economic costs for the country.




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