Counterfeiting Statistics Watch, CFO Edition

Randy Myers has a 2200-word article on the economics of counterfeiting in CFO magazine, which displays none of the critical thinking for which the Economist Group is famous. Instead, it just regurgitates all the bullshit statistics which have been thoroughly discredited. Counterfeiting "has grown more than 10,000 percent over the past two decades"! It accounts for "7 percent, or $600 billion, of all goods sold globally"! And, my favorite:

The U.S. Customs and Border Protection agency blames counterfeit merchandise for the loss of more than 750,000 American jobs.

Er, no it doesn’t. The US Customs and Border Protection agency is charged with looking after customs and border protection. It has neither the ability nor the inclination to start estimating job losses from counterfeiting.

The improbable assertions aren’t simply the numerical ones, either. Here’s Frank Vogl, a lawyer at Jones Day:

"I’ve noticed a real upswing in the amount of interest we can generate with law-enforcement authorities, even on relatively mundane product categories, because they recognize terrorists are funding themselves through these counterfeit sales," Vogl says.

It’s a nice raising of the stakes, there: once upon a time, such lawyers would talk only about "organized crime". But "terrorists" has a much more alarming ring to it, no? Of course, Myers has been able to find none of these authorities who "recognize" that counterfeiting has anything to do with terrorism, but if an anti-counterfeiting lawyer says they exist, then he must be telling the truth, right?

On the other hand, the authorities seem to be really good at pumping large amounts of money straight into the counterfeit economy:

In February, New York City police and Mayor Michael Bloomberg’s Office of Special Enforcement raided and closed down 32 retail shops in an area of Chinatown that Bloomberg called the "Counterfeit Triangle," which includes sections of Canal, Walker, Baxter, and Centre streets. The crackdown followed an investigation, prompted by complaints from Swiss watchmaker Rolex SA and others, in which undercover officers and agents purchased more than $1 million worth of counterfeit goods, many of them luxury items.

They really spent more than $1 million on counterfeits? Somehow I doubt it. My guess is that they bought a handful of watches at say $25 apiece, which they then "valued" as though they were the genuine item.

So long as the likes of Frank Vogl know that they can assert pretty much anything they like and that supine reporters like Myers will simply take it all at face value, any attempts to get a grip on the real extent and importance of counterfeiting will go nowhere. Instead, we’ll just get ever more fearmongering and deceit. Which plays well in Washington, but isn’t necessarily in the public interest.

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