Purported piracy costs made up out of thin air

Freakonomics writes on the current debate surrounding the proposed SOPA and PIPA bills in the US Congress. Choice quote: “Unlike stealing a car, copying a song doesn’t necessarily inflict a tangible loss on another. Estimating that loss requires counterfactual assumptions ..”

Supporters of stronger intellectual property enforcement — such as those behind the proposed new Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA) bills in Congress — argue that online piracy is a huge problem, one which costs the U.S. economy between $200 and $250 billion per year, and is responsible for the loss of 750,000 American jobs.
These numbers seem truly dire: a $250 billion per year loss would be almost $800 for every man, woman, and child in America. And 750,000 jobs – that’s twice the number of those employed in the entire motion picture industry in 2010.
The good news is that the numbers are wrong

One of the most astonishing aspects of the debate is just how much political influence is wielded by a comparatively insignificant industry. You can’t even escape this US lobbying groups reach as a foreign citizen living in a foreign country.
How Much Do Music and Movie Piracy Really Hurt the U.S. Economy?