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You are assuming that some one using pirated software would have bought it.If you replace "it" [that particular good] with "something" [that good, or a similar one], then yeah. People used to buy music, after all.
> "I suspect that if there really was a way to stop piracy, many more people would use Linux and all it's alternatives for free. "
How many people pirate their OS? Windows comes bundled with just about every retail PC out there. Enthusiasts who assemble their own devices are in the minority.
> "IMHO, given the lack of large software houses going out of business actually due to piracy, I don't believe piracy has any real effect."
That makes no sense. Simply because the largest companies aren't literally going out of business piracy therefore has "no real effect"? That's a bit like saying the financial crisis in Europe isn't having any effect because Germany isn't deep in recession.
> Addition Edit: Also, most people spend the money they have. If they did buy all the stuff they pirated, software, games, music, movies, etc, there would be another sector that lost out. For example, pirating Far Cry 3 instead of buying, means £40 (whatever) to spend on clothes, food, cinema, fuel, etc. Its the same money, there is no extra. It just goes to different places.
Yeah, but so what? Not only is that statement irrelevant, but it obfuscates that where resources are allocated is just as important as whether or not they are allocated to begin with. The allocation of resources (money) is a reflection of what society deems important.
For illustration, a society that spends 20% of disposable income on alcohol & tobacco is radically different from one that spends 20% of disposable income on tools, woodworking sets & raspberry Pis. Moreover, for the protectionists out there, allocating resources domestically is different than abroad.