Piracy

Piracy is known as the unauthorized use or reproduction of copyrighted or patented material. All items that are counterfeited can be known as pirated items. It is to copy or imitate in order to deceive, so pirate products although they carry the name of famous or important brands are not the real thing i.e. they are not produced by those who own the brand.

The effects of piracy are immense and harm almost every sector of the economy. When we look at the pharmacy industry, the main concern is the consumer’s health. Since, fake medicine does not have the ingredients as the real medicine has and instead of curing the disease they might make it difficult for doctors to find the right cure to the problem. Piracy of music and movie CDs is also very common in many regions of the world. This is a set back for the music and movie industries as their investments do not reach the expected return as the pirated versions are sold off for lesser prices leading to major loss for the industries. Another interesting case is of the automobile industry. There is a serious problem of safety involved in this industry since the fake parts sold in the pirate market are made of inferior material and are not submitted to a quality control program. These products don’t last long as the original ones are likely to cause serious accidents. Despite of the fact that they are copies of originals there is relatively no price difference.

When we think about what the state looses with piracy, the first thing that comes in our mind is money and more specifically tax evasion, the reason being that everybody knows that it is through taxes payment that the Government gets things done. But tax evasion is not the only way that a state looses. Another way is unfair competition. This causes a series of problems for industries like for instance bankruptcy or increase in sales losses. Due to this the company will lay off employees. This act would have effect in three fields, firstly, in the market since the unemployed employees will no longer consume as they did earlier. Secondly, tax revenue, since a reduction in consumption and sales will lead to a reduction in sales and income taxes paid. Thirdly, in social security, since the laid off employees will go under the welfare programs or look for informal jobs.

High rates of piracy also discourage both foreign and domestic investment, making the countries less attractive for new businesses and hence loosing the opportunity for new jobs for people. Hence when consumers decide to buy pirated products there are quadruple losses. Consumers loose because they are getting inferior quality products which can cause serious damage to their health. Business owners loose because since they are not selling products and their profits are declining because of which they are forced to reduce their employees and may even go bankrupt. Employees loose because they are fired or sometimes there wages are reduced. And lastly the state looses. Not only because the products of private market didn’t pay any taxes, which is a direct loss, but also because the state has to bear the indirect losses. And this leads the state into a recession.