Lawrence Lessig has an excellent essay, “In Defense of Piracy,” in which he argues that current copyright regime has externalities which are damaging the very rule of law itself:

It is time we recognize that we can’t kill this creativity. We can only criminalize it. We can’t stop our kids from using these tools to create, or make them passive. We can only drive it underground, or make them “pirates.” And the question we as a society must focus on is whether this is any good. Our kids live in an age of prohibition, where more and more of what seems to them to be ordinary behavior is against the law. They recognize it as against the law. They see themselves as “criminals.” They begin to get used to the idea.

That recognition is corrosive. It is corrupting of the very idea of the rule of law. And when we reckon the cost of this corruption, any losses of the content industry pale in comparison.

Unfortunately, I couldn’t agree with him more. Lessig is now concerning himself with the challenge of reducing corruption. One key element of that is driving respect for the rule of law. The fact that the “content industry” would sacrifice it in a pointless attempt to maintain their profits (or even their existence) is morally corrupt and a perfect example of putting profit before the common good.

Interestingly, I just took a peek at Pete LIndstrom’s blog, where he’s pondering a similar question, asking, “Should I let my kids lie on the Internet?“:

Or even force them to?

I was at a security conference today and two folks were talking who said they never let their kids fill out any online forms with real information. It’s actually a pretty interesting protection mechanism but I am having a hard time getting past the lying part…

In this case, I believe that the negative lesson that comes from teaching small children that there are cases where it’s OK to lie is, like piracy, corrosive to the larger themes that I want my child to learn. I think that it’s more important to teach children lessons about what constitutes unsafe online behavior than that they must hide their identity at all times. We forget that the reality is that, with a little education and higher brain function, using the Internet is extremely safe. This is a much more productive model to impart to our children or elders than, “Lie about who you are on the Internet. That way they can’t find you to kidnap and kill you,” which is the implicit lesson, and along with the corollary, that no one is who they claim to be on the Internet (phishers, the widows of Nigerian dictators and children of over-protective parents notwithstanding).

So, Pete, to answer your question:
Don’t teach your children to lie on the Internet–or pretty much anywhere else for that matter. They’ll learn it just fine on their own when the time comes. The externality, loss of respect for the truth, is too great a cost to pay. Instead, teach them to mitigate the risk by using their brains. After all, the risk is actually quite low and in reality, when kids do dumb things with people they meet on the Internet, they’re probably going to need to lie to you about what they’re up to and you don’t want them to be too practiced at the skill.