Monday, March 23, 2015

Economics, Ethics, and Piracy: Why Downloaders are Homo Economicus

Det grå fyr (The Grey Lighthouse), painting of the lighthouse in Skagen by Danish artist Christian Blache, via Wikimedia Commons

To me one of the worst hypocrisies in the modern world is the way that people who'd roll their eyes about ethics in most domains then turn around and use ethical shaming against the people they want to control.

Generally if you try to bring ethical considerations into a discussion where people are using economics and business reasoning, there'll be a general mood of eye rolling. Oh, ethics. Don't get in the way please -- we are doing grown-up business here.

But once the little people aren't doing what they want -- no one hesitates to play the ethics card.

For example, when it comes to downloading and internet piracy, corporate representatives who'd otherwise be first at the extreme capitalism table suddenly turn around and show us their school-marm side. Oooh, downloading! You bad person, you!

If you think about it for even a minute, content downloaders are doing exactly what the economic model predicts that they would do. They are acting to maximize their own self-interests. Their interest is in getting content for the least cost, and that is what they are doing.

Content downloaders are homo economicus.

What I didn't realize until I started learning more economic theory is that there's actually a framework for thinking about the kind of things that make internet content susceptible to the effects that it is. You can read details at this post but I'll go through the basics here.

Basically, "rival" or "rivalrous" goods are ones where if one person's consumption of that good decreases the amount another can consume. Food is a rival good, and in a sense most physical objects are, since if one person is using them another can't, at least not at the same time.

Under this definition, internet content is non-rival, since one person's consuming it doesn't decrease another's ability to consume it.

A good is "excludable" if there are ways to prevent people from consuming it. You can put food behind a wall and lock the door so it's excludable - and same with most physical objects.

And it's very difficult to stop people from sharing internet content, even when you really really really want to.

Goods that are neither rival nor excludable are called "public goods," and the usual examples are national defense, fresh air, and lighthouses. Technically, at least, it seems internet content also fits the description of a pure public good.

Isn't it interesting how little discussion you hear about this? 

To propose this discussion is not in any way to deny that artists and intellectuals should be paid for their work. Of course they should be. It's just to point out that there are various ways of making that happen, and we sure do hear a lot about some of them (DRM, huge lawsuits against poor people) and very little about the others.

What are those others? Public goods can be supported through grants, through government funding, through payments from consumers who opt to pay in for various reasons. Maybe everyone could have a minimum income.

In a sense, the alternative model is how some intellectual content already works. Professors get salaries, and produce intellectual content -- adding to the already compelling reasons that such intellectual should be freely shared. You can read a further discussion of alternatives in the body and comments of this post.

Are these good options? Honestly, I don't know. But isn't it strange how seldom we talk about them? Instead, we're subjected to a barrage of moralizing, largely from giant corporations -- who obviously have a huge interest in the old models -- and who wouldn't hesitiate to crush or mock anyone who used ethical reasoning in any way against their interests.

What a bunch of hypocrites.

No comments: