Councilwoman Margaret S. Chin in New York City would like to make purchasing imitation goods a crime, punishable by up to a $1,000 fine. The New York Times recently profiled the debate between those who want to curtail the trade of counterfeit designer merchandise and those who just want to get a taste of the good life at a discounted price.  In the article, Councilwoman Chin argues: “What happened to the traditional value of saving up for something you really want that’s valuable?  If you really like it, save money to buy the real thing.”

Meanwhile, the shoppers interviewed “insisted that not everyone can afford the real thing, and that they should have the option of spending less for a purse that, at first glance, looks nearly indistinguishable from a bag with a designer label.”

From a consumer point of view, I can see where those interviewed in the article are coming from.  No doubt that a genuine Burberry or Coach is very expensive and as these counterfeiters have shown, the actual cost of producing a leather bag with a logo on it is not high.  However, the reason for the high cost of a genuine item is the equity that has built up in certain brands.  High end designers can charge the prices they charge because their brand is worth that value.  Valuing a brand comes in many forms and is not as precise as valuing a certain piece of real estate or a piece of manufacturing equipment.  However, brands do have a value and businesses have an interest in protecting that value.

In addition, this industry exists outside of city laws governing sales taxes and Councilwoman Chin’s office said the counterfeit trademark industry cost the city $1 billion a year in tax revenue.  As anyone who knows me can attest, I am usually skeptical about most attempts at a city to try and squeeze tax revenue wherever they can find it.  Here, however, I am sympathetic to Councilwoman Chin’s attempt to reign in the explosion of illegal sales.  Those against the law stated that tourism to certain parts of town would go down if there was a crackdown on this underground city.  However, that discounts the ability for that cash to be spent in legal businesses in that area or in other parts of the city.

One interesting quote from the article came from shoppers on the infamous Canal Street:  “It’s illegal because it puts people out of work for the real thing, but how many people will be out of business if this passes?”

Yet, I wonder if these are the types of jobs as a society we should be concerned about if the law passes?  Certainly, I am sympathetic to anyone who loses a job and must cope with that stress.  However, would these same individuals be concerned if there was a crackdown on the mob and a mobster was thrown in jail?  Or if a major drug distributor was busted and the street level dealer suddenly had nothing to sell?  The idea that we should value the job of someone who sells counterfeit goods as equal to that of those who sell the genuine thing is ludicrous if we are to respect the rights of the trademark holder.  Those who produce and create legally should be rewarded and those who provide no value and try to profit off the work of others should not.

I concede that as any study of prohibition will show, just because something is illegal, or the punishment is increased, will not end the trade of counterfeit goods.  Selling imitation goods is already illegal and current laws have done little to stem the tide for knockoffs.  However, I find it irksome that the argument against the law is basically consumers should have a right to buy whatever they want, regardless of the rights of the businesses that have built the brand to the point where people try to bootleg it.  One person interviewed in the article stated: “not everyone can afford $300 or $500 for a bag” to which I would reply, why is that a bad thing?  Many functional bags exist at discount stores such as Target or H&M.  If you desire something more expensive, then you should pay for that luxury.

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