Thank you Paul Krugman!  Though your thinking is completely backwards you did manage to clarify a point I've been trying to make for a while now so for that, I owe you one.  Here's the quote I'm referring to...

In 1994, one of those gurus, Esther Dyson, made a striking prediction: that the ease with which digital content can be copied and disseminated would eventually force businesses to sell the results of creative activity cheaply, or even give it away. Whatever the product — software, books, music, movies — the cost of creation would have to be recouped indirectly: businesses would have to “distribute intellectual property free in order to sell services and relationships.”

I'm someone who has put a lot of time into the study of morality.  I try not to let that bleed into this blog because I believe technologists, in most cases, should be amoral.  If you start holding back science and technology because of what you feel is moral you lose out on a lot of great discoveries.  Its better to discover how to do something and then decide whether to use it.

But see, THAT is the point.  Once something CAN be done it is our duty as a society to decide whether it SHOULD be done.  Technology is amoral which is why people must be all the more conscious of morality when using it. 

File sharing, against the wishes of the people who created the media being shared, is stealing.  Simple as that.  Someone put a lot of effort into creating something and if you take possession of that thing without compensating the creator you are stealing from them.  Justify all you want about non-existent media cost or the (flawed) economic theory of 0 production.  In the end, the fact that you feel the need to justify betrays you. 

I don't feel the need to justify paying for something honestly. 

But here's the thing: People could always steal.  Technology has, in the grand scheme of things, just recently made it harder to steal with things like motion detectors and alarm systems.  Before that people simply locked their goods behind a door and trusted that their neighbors would not break in.  So nothing has really changed here. 

It is no easier for a file trader to download a song than it would be for someone in the 1800s to jump over a fence and steal a chicken  (or at least not by that much).

That is the flaw in Ms. Dyson's theory.   She is essentially saying that, because everyone can now steal easily, media creators need to accept their goods will be stolen and just give them away.  But things have always been easy to steal and, for the most part, people still choose to pay honestly. 

The number of people who use file trading to get their music is still miniscule in comparison to those who pay for it. 

That, by the way, is why Mr. Krugman's extension of Ms Dyson's theory is wrong.  The instinct not to steal is what has stopped this from being an epidemic.  But it is important to realize the logic behind that.  We as people can not allow our society to descend to a place where stealing becomes accepted just because it is easy.  It is each person's duty to remember why taking from someone is wrong and to prevent ourselves from doing it no matter how easy it gets.  Only then can we all be secure in our belongings, both physical and digital. 

File Trading Caveat: Just to put it out there, I'm not against business models that give media away for free.  If you can make the money you want giving away your book/music/video/software/whatever I say more power to you.  My issue is with forcing people to give their music away for free.

Addendum: Techdirt takes the dishonest route on the issue by saying this...

It looks like Paul Krugman is the latest economist to join the growing group of folks who recognize the impact of infinite goods on business models -- and how it's not a bad thing, just an inevitable shift in the market.

A couple things to consider here.  First, Mr. Krugman wasn't giving an opinion as an economist nor was he necessarily referring to the theory they espouse. 

Second, Techdirt's supposed economic theory, which I alluded to above, doesn't hold water.  Their basic premise is to take the real economic theory that the cost of goods will fall when the cost of producing those goods goes down and extend it to say that when the cost of production equals 0 so too will the cost of the goods equal 0. 

This is flawed in too many ways to count but the two big flaws are that (a) cost to produce in an economic sense includes labor to create and cost to distribute meaning the production costs aren't 0 and (b) even if they were 0 that wouldn't mean anything because 0 holds a special significance in mathematics (which is why, for example, 0 is the only number you can't divide by).

I point this out because it is a hallmark of the "free content" movement.  Rely on theory as if it somehow trumps reality. 

Second Addendum: Mike Masnick of Techdirt checks in below and asks that I retract the use of the word dishonest above.  I think the word is absolutely accurate in the context so I'm not going to retract it.  But I encourage anyone reading this to check out his comment below so you can make your own judgement.