The analogy would be if someone broke into my house (without actually damaging my windows/doors) and copied the floor plan of my house. I’m only worse off if I am an architect trying to sell that floor plan.

This is a great example Tad! It’s much cheaper for the Chinese businesses to steal our floor plans (software, pharmaceuticals, industrial designs, technology, manufacturing techniques) and use them to compete with us than it is for them to create their own.

It hurts everyone, the businesses they are stealing the “floor plans” from and the businesses who have to compete with them. Hence, the “global subsidy” worth hundreds of billions of dollars the Mr.Fishman describes in the book. (page 231

Your argument that Microsoft needs to innovate to protect what they create is like saying that it’s your own fault if someone breaks into your house and steals your stuff, after all you should have a had a better security system right? And to Tad’s 1st argument, they couldn’t afford a plasma TV so they are justified in stealing yours.

This is the classic fallacy when it comes to IP law. Me stealing Microsoft Windows is not comparable to you stealing my Plasma TV. The crucial difference here is that in any case of IP theft (digital music files, software, text, etc.) the original content holder still owns that content. I’m not taking it away from anybody, I’m just making a copy.

The analogy would be if someone broke into my house (without actually damaging my windows/doors) and copied the floor plan of my house. I’m only worse off if I am an architect trying to sell that floor plan. And then, I’m really only worse off if the person who copied it would have purchased it otherwise. (So I should really learn to lock my doors if I don’t want people harmlessly walking into my home and copying the floor plan!)

Ironically, I think Brandon H used an “apples to oranges” comparison directly after scolding Dan for doing the same.

2. I am not finger pointing, I was only trying to expose the realities of the market (the book is). The fact is that capitalism has flourished here in the US due to property rights. The government strictly protects our right to own property and when we innovate (if they didn’t, why innovate?), Americans believe you should be able to realize the value of the innovation. Chinese “capitalism” has flourished due to the subjugation of laws and a lack of property rights, from kicking people en mass off of their property to stealing the innovations of American businesses.

Your argument that Microsoft needs to innovate to protect what they create is like saying that it’s your own fault if someone breaks into your house and steals your stuff, after all you should have a had a better security system right? And to Tad’s 1st argument, they couldn’t afford a plasma TV so they are justified in stealing yours.

3. Tad , you are correct, contract law and IP law were not delivered on a stone tablet but, they work to foster innovation in the long run. Lets take on one of the biggest targets, big pharma. If they didn’t have copy protection for their medicines, they would be immediately copied (as they are in China) and the profit would be so spread out from the innovation that further R and D funds would be scarce, prohibiting or at least inhibiting further innovation.

I cannot justify the stealing of entire automotive designs, industrial techniques and software that adds to China’s might. In Dan’s words China is the “cheater that started the whole thing” in many aspects. I am not throwing stones, just pointing out the many methods they use to beat us at our own game. After all, you can’t compete with them if you don’t take the time to understand how they gain their advantage.

When companies in the US are competing on contracts where 2-10 cents per item can make a difference a few million dollars worth of software can kill a deal!

It’s not just software though, the chinese have literally stolen designs for cars that took billions to develop from chevy and other global manufacturers. (see the first part of the pirate nation chapter) And their government refused to penalize them! China knows it is benefiting from theft and refuses to deal with it. The same thing happens in the drug industry. The chapter is pretty extensive.

What we can learn from China is how to inspire work ethic and motivate students to study engineering and math. They are quickly surpassing us in these areas due to desperation and necessity. I would rather not emulate their widespread abuse of intellectual property, if we did we never would have had the funds to support the development of the innovations they do not hesitate to steal.

I’m having trouble thinking of the kind of company or product where the software costs are going to significantly impact product price. I would think that employee wages & benefits would vastly outweigh any difference in software costs. (Not to mention the relative value of the dollar vs. RMB)

Another question: what can we do about it? In some ways it’s like the drug trade–when there’s overwhelming demand for a product, there’s simply nothing you can do to stop producers from servicing that demand. Or so we’ve learned after 30 years of a failed “drug war”.

China has a lot to teach us, and we clearly need to mold and bend our business rules to fit this new global giant. Very interesting topic to consider!

It’s not just consumers in China, the argument you used is the exact one debunked in the book. Software piracy is widespread across most business, only 10-13% of software packages used in business in China are legitimate. What effect does this have? If a business here in the US has to buy 1000 copies of windows and office at $1000 dollars a license, they have a far higher fixed cost to spread out over the units they sell. Chinese companies barely pay $2 per seat on average for pirated copies of windows and office. Would you rather startup a business with $2000 in software costs or $1,000,000. It’s just another reason they can charge less for what they produce.

It’s easy to blame big companies like the RIAA and MPAA but, this isn’t a matter of “old business models”, it’s a matter of intellectual theft that gives a huge advantage to Chinese businesses.

The book details the effects of all intellectual theft in the chapter Pirate Nation that starts on page 231.