From Psuedo-science to Gospel

“Counterfeit and pirated goods are a big problem for global business, costing hundreds of billions of dollars, according to manufacturers and trade groups. But their estimates tell more about how difficult it is to assign a value to lost sales than about the actual size of the counterfeiting problem.

“Washington business groups such as the U.S. Chamber of Commerce and the International AntiCounterfeiting Coalition calculate that global counterfeit sales equal $600 billion to $650 billion a year -- numbers parroted in news releases by companies claiming to fight piracy. They build on the often-cited claim that counterfeit goods represent 5% to 7% of all world trade. That claim got its official launch in a 1997 report by the International Chamber of Commerce, which cited these percentages as only a ‘general assumption.’

“‘It is virtually impossible to find accurate statistics to substantiate these perceptions’ that counterfeiting is on the rise, the ICC author wrote.

“The barriers to accurate data on piracy are clear: It's a shadowy business run by criminals.

“Yet from these shaky foundations, a new gospel was born: 5% to 7% became the ubiquitous estimate. It was used in a 1998 report by the Organization for Economic Cooperation and Development and is often attributed to that group – ‘unfortunately,’ OECD Deputy Director for Science, Technology and Industry John Dryden wrote earlier this year, because the number is based on methodology that is ‘not clear’ …

“The OECD's recent attempt to improve on the guesstimate put all counterfeit trade… at $200 billion at the high end, extrapolating from customs seizures and guessing at how many illegitimate goods are missed at border patrols. But the OECD acknowledges in a report to be published soon that the number is based on incomplete information. Researchers asked countries to submit data on seizures of counterfeit goods; just 45 countries did, and only 15 of those offered details beyond broad categories about which products were fakes.

“Moreover, the data were extrapolated to the countries that didn't respond. Researchers then guessed at a factor that would reflect the rate of counterfeiting for the most-pirated goods in the most-pirate-prone countries. They decided 5% was the most likely figure, but they were seeking a ceiling, so they doubled it, got a total of $100 billion, and doubled that again to account for ‘statistical variability’ in their model…

“Such numbers fill a vacuum.”

(“The Numbers Guy: Efforts to Quantify Sales of Pirated Goods Lead to Fuzzy Figures.” Carl Bialik. Wall Street Journal: October 19, 2007. pg. B.1)

WE FEEL COMPELLED to rely on numbers. So, in the absence of validity, we manufacture phony numbers, purge them of assumptions, instill them with authority through repetition, and now know the unknowable.

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