We had the Renaissance without copyright laws. There are other ways to help artists, putting an end to Hollywood accounting, for example.
Then they'd be worth nothing, because you couldn't distribute them to a large enough audience to recoup your costs.
I agree that, specifically, music and movie estimates are ridiculously overstated. However, we have no means of measuring the total, fundamental economic losses due to a culture which no longer values intangible things.
Assuming you're a software engineer, do you want to proceed into a world where people shell out thousands of dollars for an iPhone, but scoff at paying $1 for software you've worked hard on? Current (and presumably future) attitudes toward (intangible) IP are dangerous to the economy we're developing.
Comparison infringement to things that kill people don't help you, even if that wasn't the main point.
Okay, substitute something non-lethal. People send their kids to school even when the kids are sick. This is bad for everyone. Do we just accept it, or do we remind people to keep their kids at home when they're sick? If you want more analogies, I'm sure I can come up with them, but I would prefer to simply have the question answered with regards to giving up on IP enforcement.
Finding ways to make money off of that is another matter. There are many things one can do: charge for support/customization, find patrons/sponsors who benefit from your work to fund it, etc.
I don't believe that copyright laws are a good way to fund innovation. And I believe there are a lot of alternate business models that remain unexplored.
Every law has a cost to enforce it. Many worry that the costs (both monetary costs and reduced freedoms) are ever-increasing while the benefit is static, and mostly going to middle-men. After all, I don't believe that the RIAA shares the proceeds of the infringement lawsuits with the artists (feel free to correct me if you can prove that belief wrong).
Rather than trying to make this law work, I think we should look to successful businessman/artists for the way forward. Web comic authors in particular have done rather well for themselves, in spite of giving pretty much everything away for free. For example, if you want the website of one particularly business-savvy author (who has a lot of good advice for anyone trying this), look no further than here: http://www.schlockmercenary.com/
He's done very clever crowd-sourcing (he gets fans to help him ship books), has partnered with fans who make cool merchandise to sell it (rather than shutting them down over trademarks), and does a lot of other things to make his products more compelling than the piracy option. Howard was a business manager before starting that webcomic and I've learned more by watching what he does than I've found in most articles.
Wouldn't it be much easier to know beforehand that you will get the money? That's the way contract work works: someone has a problem, and he would like to get someone to solve it. You set your hours, haggle for a price, then go to work, deliver the solution, get paid. This is another way to get paid: find someone to make a contract with. I believe that it is the most important way for professional work.
This actually also works for "apps" and other self-initiated projects, through crowdfunding (e.g. through Indiegogo or Kickstarter).
However, even completely unfunded work needs not be financial waste, as you build a portfolio with which to gain contracts.