Friday 23 March 2012

"Won't deliver, doesn't deliver?" When it comes to evidence, can economists deliver?

In an era in which evidence-based law reform is the gold standard and pressure-groups are damned as practitioners of the dark art of lobbynomics, we are beginning to disbelieve a great deal of what we hear from groups and organisations which formerly were our main sources of information. It's therefore worth asking the question: "does the fact that the Alliance Against IP Theft is both pro-copyright and pro-enforcement undermine its objectivity when it comes to making pronouncements about the economic impact of copyright reform proposals?"  Arguably the answer is "no" when the opinion which it articulates comes from a respectable, objective and methodologically rigorous economics research body such as Oxford Economics.

According to the Alliance:
"Copyright reform won’t deliver predicted growth

The Alliance Against IP Theft has [on Wednesday] published an analysis from Oxford Economics of the Government’s Consultation on Copyright which found its economics seriously lacking. ...

The Government is looking to the recommendations in the Consultation to encourage economic growth and increase UK GDP. In this first detailed economic analysis of specific aspects of the Consultation, Oxford Economics finds that that the assumptions made are overly optimistic in a number of cases, lack economic rigour, and fail to adequately analyse of the harm they may cause to existing industries that rely on copyright.

The report found that:
• A number of the Consultation’s Economic Impact Assessments lack neutrality and fail to take the interests of producers of content sufficiently into account. Whilst time appears to have been taken attempting to quantify the benefits of reform, there has been little analysis of the costs associated with the reform.
• There is a lack of empirical evidence to suggest that copyright is economically inefficient to start with [interesting point: this blogger has been led to believe that economic inefficiency is a given in the case of every IP right, since it distorts market efficiency by its mere existence. Can we put economics to demonstrate empirical proof of the validity of their own discipline?].
• Several of the Impact Assessments fail to provide sufficient evidence to warrant changes to the copyright framework.
• The Consultation’s predictions regarding the growth that would accrue from changes to the copyright framework may be overly optimistic.
Commenting on the analysis, Susie Winter, Director General of the Alliance Against IP Theft said:

“Today’s analysis supports what we all instinctively knew – that a number of the Government’s proposals for reform are based on bad economics and won’t deliver anywhere near the predicted economic growth.

“We believe that copyright sectors can contribute to the UK’s economic growth, but the Consultation is looking in the wrong place to stimulate increased GDP. If these reforms go ahead they are likely to be damaging to our economy and simply siphon off money to global tech giants from our British creators.

We urge the Government to think again before ploughing ahead with its proposals”.
Given the tight time limits imposed on the UK's copyright reform exercise, it would be surprising if any cogent evidence in support or or against copyright reform could be obtained, analysed and integrated into a single picture. Even if it could, it would need to be separated out again since every market sector behaves differently while IP legislation is presumed to be enacted on the basis of one-size-fits-every-market.

Rather than keeping on taking short, staccato stabs at copyright reform, as the UK government has been doing on a regular basis over the past decade or so, wouldn't it have been better to let reform progress at a pace at which the competing voices of creators, consumers, performers, investors and carriers can be heard and properly understood?  The very worst that could have happened is that the current system would carry on until a replacement was devised to replace it.

You can read the Oxford Economics report in full here (thanks go to Amy Bourke for finding the link).

1 comment:

Tor said...

If customers can "do more with content" thanks to relaxed private copying regulation then this report argues that there will be a downward pressure on price due to reduced sales.

That seems like a strange argument to me. Let's say that I sold cars and the buyers had to sign a contract promising not to sell the car on the second-hand market or drive it on the country-side. Obviously that would reduce the value of the car. Now if I did away with those restrictions the value of the car would obviously rise and probably the price too.

Another thing I find hard to understand is why the status quo always should be preferable in case there is a lack of data supporting either the status quo or the proposed change. Wouldn't it be much preferable if different countries could test different legal frameworks since that would make it possible to study and learn what system works best.

Btw. the section about foreign vs. national benefits is a bit funny. It would indeed be interesting if the status quo were to be analysed from this perspective too...