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1. Discounting Costs and Benefits. Opponents of copyright term extension observe that extending the term of copyright protection by twenty years will do little to increase private incentives to produce copyrighted works. On the universally accepted premise that, as measured by present value, a dollar to be received tomorrow is worth less than a dollar received today and that a dollar to be received seventy-six years from now has a present value of pennies at most — these opponents argue that, because the present value of a distant twenty-year stream of income will be so low, it cannot appreciably affect present incentives to create new literary and artistic works.
Thomas Babington Macaulay captured the effect of economic discounts on private copyright incentives when, in an 1841 House of Commons debate on whether to extend copyright from twentyeight years to a term measured by sixty years from the author's death, he cited the example of Samuel Johnson. "Dr. Johnson died fifty-six years ago. If the law were what my honourable and learned friend wishes to make it, somebody would now have the monopoly of Dr. Johnson's works." But, Macaulay asked, "would the knowledge that this copyright would exist in 1841 have been a source of gratification to Johnson? Would it have stimulated his exertions? Would it have once drawn him out of his bed before noon?" While the added incentive to Johnson would be small, the added cost to readers would be high. "Considered as a reward to him, the difference between a twenty-years' term and sixty years' term of posthumous copyright would have been nothing or next to nothing. But is the difference nothing to us? I can buy Rasselas for sixpence; I might have had to give five shillings for it.... Do I grudge this to a man like Dr. Johnson? Not at all.... But what I do complain of is that my circumstances are to be worse, and Johnson's none the better; that I am to give five pounds for what to him was not worth a farthing."
This argument is valid, so far at it goes. But it does not go far enough. The beneficial effect of an extended copyright term on private incentives should be discounted to present value; but so should the social costs of extension. Taking the present as the starting point, it is necessary not only to discount monetary incentives to their present value, but it is also necessary to discount the future social costs — whatever they may be — to their present value. An extension to life plus sixty years would have been worth less than a farthing to Dr. Johnson; but so, properly discounted, would the present social cost of such an extended term.
In short, the error in comparing present — and low — incentive benefits with future — and arguably high — social costs is that it mixes apples with oranges. Presently valued private benefits can properly be compared only to presently valued social costs. In dollar terms, the result of that comparison is that the extension of copyright term is a standoff