Economic and Social Consequences of Piracy
1. Introduction
Piracy is the illegal use and sell of somebody’s product without his or her legal consent. It is the production of counterfeit material such as musical, software and other related products for personal gain (Kanwar and Robert, 2003). This practice affects both the individual rights and the economy of the country but it can also have some moral effect on the person producing the pirated products. It is also possible for the practice to affect the overall economy of the state and social configuration of the people living in the country. Piracy is found in very much business in the World since very many people tries to produce counterfeit products so that they can make huge profits before the owner of that item benefited from it. It is very common in the music industry, software industry, movie industry and other related products which are protected by the copyright act (Kim, 2004). The musical piracy is the process in which someone copies a song from the CD from a friend or downloading an artist work from the internet without paying the royalties. Software piracy is the illegal act of copying the original copies of the software without legal acceptance of the owner.All these illegal acts of piracy affects both the owners of the product and the economy as a whole. Therefore the act of piracy is both criminal and civil wrong which should be avoided in the country with the strongest terms possible. The person found committing the crime should be forced to face the arms of the law of the land.
2. Economic Consequences
The production of pirated products in the country affects the overall economy of the state. The original producer of the product will not benefit from the products which they innovated since other people with illegal motives would sell the product before the owners. This will reduce the income level of the owner hence will have poor living standards. The reduction of the owner’s income will also affect the Government revenue since the producer of the product will pay less tax which is a major source of Government revenue (Kim, 2004). The reduction in the revenue of the Government affect the budget of the Government therefore it will be impossible for the Government to finance its projects with less revenue. It will therefore force the Government to depend on public debt or borrowing to finance its capital projects at the end of every financial year. Musical piracy affects very many people found in the music industry. They include those who write the song, producers, those who are in charge of recording and those who perform the music in stage (Husted, 2000). The piracy affects the incomes of all these people in the musical industry and this leads to increased reduction of Government revenue.
a) Kills the Morale of Creativity and Innovation
The act of piracy also kills the moral of those who have the ability to come up with innovation. This will demoralize them when they work hard and some people who are not in the industry are the one who derives the benefit from the product. This lack of motivation can make the whole staff in the industry of software and music to vacate the industry since they can perceive it as a waste of time. The vacation of very many people from the industry increases the rate of unemployment which reduces the income of very many people in the country.
b) Acquisition of Illicit Profits
Piracy also has a very positive consequence in the life of those who produce pirated products. This is because they generate income which is tax free from the skills of others who worked very hard to come up with the business idea (Kim, 2004). The will illegally increase their income when they sell these products to different people who are interested in the use of counterfeit products. The consumers of these products would not get quality products and therefore the products they purchased will not last for a long time before it is damaged. This will makes them not to maximize the benefits of the products which they have purchased from the illegal producer. These pirated products are purchased at a very low cost since their production cost is very low hence the profit from them is very huge. These profits are not subjected to tax and therefore the Government fails to get revenue from them.
c) Low Quality Products
Pirated products have very low quality since those who produce them have very limited knowledge and skills of manufacturing them. The poor manufacturing knowledge disadvantaged the consumers to buy the products which are of low quality to satisfy their wants. They are made with fear when those who make them are in fear to face the law and therefore their quality and quantity are doubted (Lee and Edwin, 1996). During the production all processes cannot be followed because the people producing them have no interest of customer’s satisfaction but have personal agenda of profit maximization.
d) Unnecessary Competition in the Market
The increased piracy in the country increases the rate of competition with the real owner of the products. The pirates will produce more items within a short period of time so that they can get high profits before they are detected by the owners. They struggle to produce the exact copy of the product which they sell in the market. The increase in the pirated quantity of the product exposes the original producers to face unnecessary competition from their own products which reduces sales level in the economy. Therefore the original producers will have to face double competition which comes from the competitor and pirates. The pirates will be advantaged because they incur very little cost to produce the product which they sell at a high profit.
3. Social Consequences
Piracy in the country creates social problems between the original producers of the product and those who produce counterfeit goods in the market. There is also a social problem between the pirates and the Government (Kim, 2004). The Government has to create laws which governed the criminal offence of piracy and the original producers must also be very active in the fight against piracy in the country. This is because both the Government and the initial producers will not benefit from the product in which they have full right to protect and benefit from.
a) Imprisonment
Piracy is both criminal and civil wrong which is committed by the pirate. The act is prohibited by the constitution of any nation in the World and therefore the person found committing the crime is liable for five years jail term or $2500 fine (Husted, 2000). This consequence is to fight the crime in all countries of the World since it kills the morale of innovation and creativity in the country. It is also a civil offence because it affects the producer’s right of enjoying the benefits of his or her invention to the later. The pirate is also liable to pay damages or to stop doing the pirating act which affects the rights of the producer.
b). Creates Conflicts between the Pirate and the Producer
There is a great conflict between the producers and the pirate in the country since the producers view the pirates as thieves who steal from them indirectly. The pirates illegally benefit from the innovation of the producer which they have no rights over and therefore they are the people who should be persecuted and jailed for life (Helpman, 1993). The Government also perceives them as the people who lower the economic growth of the country since they kill the innovative power of some people in the country which helps it generate more revenue. This effect forced the Government to legislate some law to govern the act from spreading in all over the country.
4. Conclusion
Piracy is a very dangerous act in the country because it affect both the social and economic development .piracy causes unemployment in the country by killing the morale of those people who have come up with an idea of generating income .These innovation opens job opportunities to very many people in the country but when it is discouraged by pirates there will be high unemployment level in the country which affect the entire economy of the country (Grossman and Elhanan, 1991). Piracy in the country also increases unnecessary competition to original producers of certain products. This makes the producers to compete with the pirates who can sell the same products at a cheaper cost. The income of the producers will reduce since they will have low sales of their commodities in the market. Therefore I appeal to the Government to work very hard to come up with legal policies to control the problem in the economy.
