Home > Uncategorized > FOIA Request Shows That GAO Is Still Stonewalling on Sources for “Stealing is Good” Report

FOIA Request Shows That GAO Is Still Stonewalling on Sources for “Stealing is Good” Report

December 27, 2011

[This post appeared earlier in 2011–but given the rogue sites debate that demonstrates just how much money is being made from online theft, understanding who influenced this GAO “report” that found that “stealing is good” is even more necessary.]

Some of you may remember the report by the Government Accountability Office that studied the problem of online theft of artists’ work and discovered that no one was able to prove anything and that everyone failed to take into account the positive effects on the economy of theft–in other words, stealing is good.

The report, specifically the April 2010 Government Accountability Office publication “Intellectual Property: Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods” (GAO-10-423) was required under by the PRO-IP Act (P.L. 110-403), specifically Section 501(a) of the Act directed the undertaking of a “a study to help determine how the Federal Government could better protect the intellectual property of manufacturers by quantification of the impacts of imported and domestic counterfeit goods on—(1) the manufacturing industry in the United States; and (2) the overall economy of the United States.”

In my view, the report fails utterly to respond to the requirements of the statute–instead, the GAO spent the public’s money “observing”. What the GAO failed to observe and report is that at least in the view of the AFL-CIO, there are thousands of American jobs being lost due to the negative effects of piracy. This is also very clear to the Obama Administration and has been clearly enunciated by Vice President Biden, Attorney General Holder, Director Morton, IPEC Espinel and many others in law
enforcement.

If there was any doubt as the to view of at least the Congressional judiciary committees on this subject, try viewing the hearings in the Senate and House on “Parasites”–which sums it up rather well. Remember that for later–the judiciary committees.

The GAO report contains many references to the “positive effects” of counterfeiting and piracy of intellectual property rights of Americans.

Specifically, the Report states “some experts and literature point out that certain stakeholders may experience some positive effects from counterfeits and piracy, though there is little information available on potential positive effects.”

Even though there is “little information available on potential positive effects”–a bizarre position–the Government  Accountability Office then goes on to offer readers a table reference to the “positive effects” of criminal activity.

I’m not the only one who finds it astounding that our government would offer “observations” regarding the “positive effects” of crime. I have discussed this report with friends in federal law enforcement, and all are incredulous that anyone who was ostensibly on their side would spend public money developing a government document that celebrates the “positive effects of crime”. I’ve discussed the GAO report with friends in government and they had a similar reaction. All wanted an answer to the same question. Who are these shadowy “experts” the report refers to because none of them were interviewed and they didn’t know anyone who was interviewed. And they really are experts. Anecdotal, I know, but interesting.

The Report offers no original study and is replete with references to “experts” who are not identified. It relies on controversial studies without considering opposing views,experts such as Oberholzer-Gee and Strumpf who produced a music study that contains this statement:

“A…decline in industry profitability might not hurt artistic production [or] artist motivations. The remuneration of artistic talent differs from other types of labor….[Artists]might continue being creative even when the monetary incentives to do so become weaker [because] many of them enjoy fame, admiration, social status, and free beer in bars – suggesting a reduction in monetary incentives might possibly have a reduced impact on the quantity and quality of artistic production.”

So don’t worry about piracy because artists will work for free beer. Tell them that at the AFL-CIO. The labor movement has never heard that kind of thing before, oh no.

In the case of the Oberholzer-Gee and Strumpf study, the Report does not consider or even reference the significant criticisms of the study, its methodology and conclusions. For example, Professor Stan Liebowitz has offered substantial criticisms of this study (see The Oberholzer-Gee/Strumpf File-Sharing Instrument Fails the Laugh Test, available at http://ssrn.com/abstract=1598037), yet a reference to this relevant academic work is nowhere to be found and it appears that the conclusions of the controversial “free beer” study are accepted without critical evaluation.

Having been unable to find any relevant law enforcement personnel or academics who were interviewed for the GAO report, I then spoke to the organizations that typically would have been consulted. Again, I can find no one–no one–in the music, movie, artist or songwriter groups who were asked for their side of the “positive effects of crime” story. In fact, I am unaware of any stakeholder in the music or motion picture industries who have been contacted by the GAO in connection with the Report. Yet the Report is replete with references to “interviews” with “experts” including “industry associations”. Anecdotal, I know, but interesting nonetheless.

Given who was not included, the list of experts that the GAO discloses appears suspect at best and at worst to have been very carefully elected by the GAO to produce particular results. The GAO Report has met with harsh criticism (see Thomas Sydnor, Punk’d: GAO Celebrates the “Positive Economic Effects” of Counterfeiting and Other Criminal Racketeering available at http://www.pff.org/issues-pubs/pops/2010/pop17.10-Punk%27d_GAO.pdf). On the other side, the Report has been trumpeted by the Consumer Electronics Association, the Computer and Communications Industry Association, Pubic Knowledge and others as demonstrating that there is no quantifiable harm done to the music or movie industries by piracy (see David Israelite, The New Enemy available at  tp://www.billboard.biz/bbbiz/search/article_display.jsp?vnu_content_id=1004099016).

The Government Accountability Office is not really subject to the Freedom of Information Act–they agree to disclose certain aspects of their work as though they were. Turn that over in your mind a couple times–the Government Accountability Office is not subject to the Freedom of Information Act…

I sent the GAO an inquiry under the non-FOIA FOIA and received an answer that was fairly forthcoming on certain points. However, I have yet to receive an answer to this simple question:

“2. A list by name and any affiliation of each “expert” you refer to in the report.”

And if they won’t answer that question, they definitely won’t answer these questions:

“3. Copies of notes and correspondence between anyone at the GAO and such experts;

4. A written description of the methodology used in selecting such experts and the names of all persons who participated in such selection;

6. The names of each person who produced any written work product that was included in the Report or commissioned in connection with the Report regardless if it was used.”

The response to Question 2 (who are the experts?) was very cagey in my view:

“Please refer to Appendix I (page 31) of the report for a list of the experts that we interviewed to obtain their views on efforts to quantify the economic impacts of counterfeiting and piracy and methodological approaches, the range of impacts of counterfeits and piracy, and insights on counterfeiting activities and markets. Appendix I, also includes a description of the methodology we used for selecting the experts.”

Or, as they say in Washington, nothing to see here, move along. Which would be true except that it’s not.

I sent a follow up letter to the GAO about their response regarding Appendix I and specifically this section:

“We developed a common list of structured interview questions that we asked of each of the experts. [Which list of questions and responses GAO refuses to disclose.] We pretested our questions with two of our initial respondents [who GAO will not identify] and refined our questions based on their input [that GAO will not disclose]. The structured interviews included questions on definitions of counterfeit and pirated goods; effects of counterfeiting and piracy [such as the positive effects of crime, perhaps?]; and their views on methodologies and studies that quantify the effects of counterfeiting and piracy, as well as assumptions used . Individuals or organizations that we met with for these structured interviews are listed below:

Business Software Alliance (BSA)

Peggy Chaudhry, Villanova University International

Joe Karaganis, Social Science Research Council

Keith Maskus, University of Colorado

OECD

Felix Olberholzer-Gee, Harvard University [the free beer guy]

Stephen Siwek, Economists Inc.

John Spink, Michigan State University

Thorsten Staake, ETH Zurich, Department of Management, Technology, and Economics

Office of the U.S. Trade Representative”

If you read many bureaucratic reports, you become alert to what information follows a long list–in other words, what  information is hiding in plain sight that you might miss because your mind is slightly numbed from a long list. And here it is:

“We also met with representatives from other industry associations and other organizations outside of the structured interview process in order to gain more in-depth information and additional perspectives on both of our objectives.”

Now this phrase could literally mean anyone–“representatives from…other organizations” could mean anyone walking the  planet. So when the GAO in a formal response simply points to the Appendix and says you will find your experts there–among the “representatives from…other organizations” that response seems non-responsive in the context of a FOIA request. I pointed this out to the GAO and told them I thought their answer was non-responsive.

The reply I got was equally interesting:

“This letter responds to your April 10, 2011, follow-up request pertaining to my March 1,2011 (PRI-ll-043), response letter to you. Specifically, you are asserting that my response to question 2 of your December 30,2010, request was non-responsive. Upon receipt of your follow-up request, I consulted with our International Affairs and Trade team that issued GAO-1O-423 entitled INTELLECTUAL PROPERTY: Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods. They advised me that on page 30 of the report at Appendix I, we provided the criteria for selecting experts and on page 31, we list our 12 experts, of which 8 were the names of individuals and 4 were the names of organizations and federal agencies.

Consistent with GAO’s practice, we did not provide the names of the officials who were speaking as representatives from the 4 organizations in our report. In addition, the Prioritizing Resources and Organization for Intellectual Property Act of 2008 (PRO-IP Act) mandated that GAO conduct this work GAO addressed this report to the Chairman and Ranking Member, U.S. Senate, Committee on the Judiciary, and the Chairman and Ranking Member, House of Representatives, Committee on the Judiciary. GAO’s policies and procedures related to the public availability of GAO records require that we must first obtain authorization from the congressional committees that requested GAO to do the work before we review records for release. See 4 C.F.R. § 81.6(a). We consulted with the congressional committees of jurisdiction regarding your December 30,2010, request and received limited authorization to address the questions raised in your letter about the experts referred to in the report. The committees did not authorize release of any additional identifying information about experts we interviewed, other than what we have already noted in the report. Therefore, we decline to release the names and/or any affiliation of the experts referred to in the report pursuant to 4 C.F.R. § 81.6(a).”

Now read this sentence again: “We consulted with the congressional committees of jurisdiction regarding your December 30,2010, request and received limited authorization to address the questions raised in your letter about the experts referred to in the report. The committees did not authorize release of any additional identifying information about experts we interviewed, other than what we have already noted in the report.”

What that sentence says is that GAO got authority to disclose in response to my first request, but did not go back and address the substance of my second request with the same committees. Meaning they did not want to go back and point out to the committees (which have likely had some staff changes since December 30, 2010) that there was an issue with responsiveness and for a very specific reason.

I think it is a fair question to ask for further disclosure on what is clearly a government report that reaches the bizarre conclusion that the positive effects of crime must be considered in policymaking–conclusions that are inconsistent with the fundamental principles of the United States–indeed, inconsistent with the fundamental principles of societies since Man crawled out of the palaeozoic ooze.

Who are these people? Why were they chosen? Why was no one from the creative community consulted? The GAO’s assertion that the committees authorized their response is particularly bizarre after the hearings the judiciary committees of both bodies just held on parasites at which such theories were resoundingly rejected in no uncertain terms. And how do you think they phrased their request?

The public’s money appears to have been spent on a results-oriented report relying at least in part on secret “experts” and elite professors who think musicians work for “free beer” and “admiration” (and any major dude–even a college professor–can tell you what “admiration” means).

We’ll see.

See also: Artist Rights are Human Rights: How the UN Missed the Point in their “study” of Piracy as a Human Right

See also: Tom Sydnor’s Comment on this article

  1. tsydnor
    May 11, 2011 at 08:01

    Chris,

    This is Tom Sydnor. I find the GAO response incredibly disappointing. As you may know, I did a paper about the GAO Observations Report soon after it was released. Here is a link:

    http://www.pff.org/issues-pubs/pops/2010/pop17.10-Punk%27d_GAO.pdf

    I am also pleased to note that the GAO reply, when examined, shows that GAO was unable to find any domestic source that actually does support its daft approach.

    Fundamentally, the real problem is that GAO just seems to lack the basic competence required to understand that the term “consumer surplus” derives—as OMB notes—from market economics, (specifically, from Alfred Marshall), and thus presumes that exchanges occur only as a result of voluntary, mutually beneficial exchanges between consenting producers and consumers of some socially valuable resource. Consequently, if I mug someone, loot my local Best Buy or download music illegally, I may grab some cash or valuable products for free, but I do not acquire “consumer surplus,” as economists use that term.

    To forget this is to imagine that market economics, like Emile Proudon, equates property with theft. And that is just plain stupid. But perhaps Nobel Laureate Douglass North put it best: “[I]f the institutional framework rewards piracy, then piratical organizations will come into existence; and if the institutional framework rewards productive activities then organizations… will come into existence to engage in productive activities.” Douglass C. North, Economic Performance through Time, (1993),
    http://nobelprize.org/nobel_prizes/economics/laureates/1993/north-lecture.html.
    Perhaps one day, GAO will again display some remedial grasp of economics. –Tom

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