The good news, of course, is that nearly all of those numbers are wrong -- as the Cato Institute's Sanchez argued in a blog post recently. It's worth reading, but I'll quote a bit to make the point: "The 750,000 jobs number had originated in a 1986 speech (yes, 1986) by the secretary of Commerce estimating that counterfeiting could cost the United States 'anywhere from 130,000 to 750,000 jobs.' Nobody in the Commerce Department was able to identify where those figures had come from." In 2010 the federal General Accounting Office took a look at those numbers and said they "cannot be substantiated or traced back to an underlying data source or methodology."
One reason (along with pure fantasy) that estimates get so huge, argues Sanchez, is that these so-called studies may start with a real number, but then use our old friend the economic multiplier to figure out losses due to piracy's ripple through the economy. But as the GAO pointed out, "Most of the experts we interviewed were reluctant to use economic multipliers to calculate losses from counterfeiting because this methodology was developed to look at a one-time change in output and employment."
When so-called experts throw around a bit of calculus and some jargon about multipliers, many of us simply stop processing and forget to use our critical faculties. Those bogus numbers are used to justify terrible legislation like SOPA and intrusive verification procedures by Microsoft, Adobe Systems, and other software companies.
I often write about complex research for Stanford University's Graduate School of Business, and I'm certainly no math whiz. So there's one question I always ask: "How do you know?" Real experts are never offended by that question. You should ask it too.
This article, "Scam: SOPA advocates' claims about piracy costs," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.