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Underworld Inc - Knock-offs


Family man and criminal

One of the points that counterfeiters make time and time again is that they are just making a living. They get to work (just like everybody else), they make a wage or profit (just like everybody else), they have bosses and employees (just like everybody else), they are responsible for them (just like everybody else) and they have families to support (just like everybody else). The idea that these people are "criminals" is ludicrous. They work for a living. Mostly they are not defrauding people. Most people understand that brand name items on deep, deep discount are counterfeit but that's the only thing they can afford.

But why would people choose to become a counterfeiter? Counterfeiters also answer this question; because they need to make a living and without "papers" (i.e. work permits or visas) they cannot do it "legally". And so we return to the same issue time and time again. People want to work for a living but thanks to government actions they cannot (in this case immigration laws). Thus, they work in whatever they can to support themselves and their families. This is your prototypical counterfeit "criminal".

But what about those who do it only for money? Same story. They may be able to work legally but why should they do so? Work implies dis-utility, this is, the expenditure of our time and energy doing something we don't want to do. In order to receive compensation from this dis-utility, we seek the highest possible reward. In this case, this would be counterfeiting. All counterfeiters are doing is behaving economically, which is exactly the way they should behave; the way we all behave. It is only government action that "criminalizes" their jobs.

The 500 billion USD market

And what about the 500 billion USD market? Well, what about it? First off, is it 500 billion or is it 1000 billion or 250 billion or 3 dollars and 37 cents? Nobody knows and "officials" pull these numbers from where the light does not shine. Is the market in counterfeit goods large? Probably. How large? Nobody knows. Is it important to know? Not really, unless you are in the business of selling political spin for your own convenience, such as "law officers" and "politicians".

The real size of the market is irrelevant. What is relevant is that people want and need those products and counterfeit items are the only way to get them. In China an iPhone costs about 2 month's worth or average wages. That's right. Two months. Who do you believe can afford something like that? Nobody. Hence, everybody buys counterfeits. It is counterfeit or nothing. But this is not unique to China, this happens around the world. We must remember that North America and EU are the exception to the world. Most of the world is far, far poorer (mostly due to government economic "actions"). All these people have needs that cannot be provided for by "regular" products. For them The Black Market To The Rescue comes and it indeed rescues them.

Market share and profits

One of the strangest and glaring omissions in this episode is the lack of perpetual whining and complaining about lost profits by brand name companies. We would assume because when compared to average Chinese needs the profits of such monster companies may develop some nasty PR, but that's only our assumption. Nevertheless, there is private investigator that puts is very clearly, counterfeit goods are stealing "market share" from the rightful owners of the IPR in question. But as we explained ad-nauseum in our A New Theory Of Intellectual Property Rights once a product is produced the producer is taking a risk with their IP. Placing a product with an IP on the market is simply a business risk and nothing more. Brand name producers are free to do whatever it takes on their products to ensure differentiation between originals and counterfeits. But what is not acceptable is the curtailment of the absolute rights of property of counterfeiters. In other words, it is OK to protect their IP and advertise so, but it is not OK to shut down counterfeiters because counterfeiters are only managing their property as they see fit. If this would not be the case, then counterfeiters should be able to shut down brand name manufacturers with the argument that they are infringing on their property rights! Fair is fair, don't you think?

And one more thing. Most people are outraged on the insanely astronomical profits that brand leaders make. In order to ameliorate these perceived "injustices" all manner of stupid rules, regulations and limitations are constantly being proposed and pushed into laws. This is, of course, nothing but stupidity and illiteracy for should the free market be allowed to operate freely, it would take care of such profits naturally and for the real "greater good".


If counterfeiters would be allowed to operate freely then the market share (and profits) of such brand name companies would decrease drastically with the side benefits that a great deal of people would now be able to purchase similar products at an affordable price. Presto! Widespread satisfaction, higher employment and lower profits. Yet, it would seem that this is "not acceptable" and to achieve this we have laws to protect the ill-gotten profits of brand leaders through the exploitation of their invalid IPRs. Yeah… this situation is soooo much better… yeah… Whatever….

Credit card fraud and embezzlement

The last item we need to address is credit card fraud through cloning. In this process blank credit cards are populated with stolen information from a real person whose money is then stolen through purchases, ATM withdrawals and so on.

From a Libertarian perspective, cloning credit cards and even embedding them with personal information (even with real information) is not a breach of contract. It is simply copying a product and copying information. Up to this point, there is no interaction with other people's properties without their voluntary agreement. However, the second this credit card is used to embezzle then the situation changes dramatically because now the user is stealing other person's property without a valid contract. The difference is a crucial one. In a Libertarian system possession of cloned items purchased through voluntary agreements means nothing and it carries no consequences because these clones are the absolute property of the buyer. However, the second this property is used to interact with other people's property without a voluntary agreement (in this case theft) then the user is liable to the fullest extent of the damage.

As you can see, in a Libertarian system fraud and theft is not condoned, but at the same time there is no assumption of use. People are not punished for what they may do, but only on what they actually do that causes unwanted damages to the property of other people.

But this is just in the US

But that's OK, right? You don't live in the US and you don't plan to ever live in the US. So, who cares, right? Well, we do. We most definitively do not live in the US and have no intention whatsoever to live in the US. That's not the point. The point is that this ridiculous stance against copiers is a world-wide phenomenon. Each country does it differently but they all do it. Some are more brutal than others. Some are more corrupt than others, but they all do it. Take a look at how your customs organization works in your country. Take a look at what your police does in your country. Take a look at so-called "criminal" counterfeit laws in your country and you will be astonished. Many countries around the world have far harsher laws and "enforcers" than the US. The malaise of government is a world problem, not an US problem… however handy it may be for us to use them as examples.


Counterfeit goods may be illegal but they are valid. Laws, on the other hand, are invalid because they are promulgated by governments who base their "principle of authority" to do so on social contracts and Social Contracts Are A Scam. It is this concept that "criminalizes" an activity that is completely valid, if we fully understand that the modern concept of Intellectual Property Rights is bunk (see Intellectual Property Compilation).

Counterfeiters are in reality copiers. That's it. They don't pretend to be what they are not and they provide goods at affordable prices. In so doing they create jobs for many people ensuring support for their families.

Furthermore, it is pathetic than a counterfeit product is not counterfeit and therefore OK if it is identical but not branded. The brand makes the counterfeiter. What this means is that this is all about "intangible" IPRs as a sticker or a label makes the difference between jail and business. Copiers do not obligate anybody to buy their products as governments do with laws. There are no copiers with guns and badges forcing you to buy their products as governments do with their laws.

Let's say this again. An intangible property, and idea, can send (and it actually is) sending people to jail for many years! This is nothing short of mindboggling. This is nothing but governments running wild. Let's say this again. People are going to jail because of labels. The only other time in recent human history that this had happened was in the USSR where "dissidents" were severely punished by exposing their views on public demonstrations with signs. Yes, governments had sunk that low… and continue sinking. Now we have task forces and militarized police persecuting and prosecuting copiers. Just like bank robbers. Or terrorists. What's the difference; crime is crime right? A counterfeit Channel perfume is as dangerous as a car bomb. Obviously.

But as strange as it may sound, this is your choice. Support governments and you will only get more of the same. Reject governments and things will begin to change. It is your inaction, your refusal to cooperate that makes a difference. Your enlightenment that keeps the world evolving. Evolve or die. You choose.

Note: please see the Glossary if you are unfamiliar with certain words.

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