OneManga shutting down

[Epsilon]

I have a couple of questions then. If the law is used to determine what harms other people then what happens when the law is amended to suit a new situation?  Does one then have no objections to the new status quo? Also what happens when people exploit the letter of the law but do not break it?
If this was say a slightly different situation, like a group of local food wholesalers objecting to international aid workers distributing food away for free in a disaster situation what does the social contract say about the people claiming to be harmed then? 

The social contract actually goes deeper than law. One segment of it is "obey the law" but that's only one segment of it. There are lots of other parts of the social contract that are not purely legal. "Don't cheat on your spouse" is a part of the social contract in most modern western countries, for example. It's not illegal to do so, but when someone cheats in such a manner we tend to think of them as something of a slimeball for breaking the contract.
This means that sometimes the wider precepts of the social contract and actual law come into conflict. It's a complex situation when that happens and there are no simple answer to such a problem. That's why they are dillemmas. The example you give of food aid in a disaster is spurious, however. Almost no social contract maintains we must protect someone's profits, especially in a case where lives are at stake.

I can understand your
point of view about how the system should work except that the
subculture you describe does bring benefits to the industry. Say for the
sake of the argument that fansubbing did not exist in the first place. I
think what you'd end up with is the pre-anime boom community in
America.

Nope. Sorry. There were plenty of anime fansubs for, like twnety years before the big anima boom. The big anime boom happened because of the success of Pokemon and Dragonball Z, which proved to North America media companies that imported Japanese cartoons could be massive money machines. This lead to more anime on TV, which lead to more exposure, which lead to more anime being brought over and so on and so forth.

What
would then keep the prices for this hobby in check? Other competitors?
Maybe. After prices have soared to double or triple to what they
currently are. It would then up as an even more exclusive hobby for
really the really well to do people.  

Yeah, I really doubt this would happen. Your railing against a hypothetical worst case that isn't going to happen, ever.

The part about dozens or
hundreds of people that do not buy manga is true, but assuming that this
only harms the industry isn't right. Just because one hasn't bought any
products doesn't mean that the situation might not change later. From
another point of view this group are customers that haven't happened
yet. I'll try to explain that a little more. Say for example you see a
commercial for a drink. From it you've gained the vital information
about the product but have not spent any money on it. So at this point
the drink company has actually lost money because they've put the
message out there. Later on one does indeed pickup the advertised drink.
Cha-ching. Customers that haven't happened yet.   

The problem is that we are teaching our society that IP has no value, especially the children of society. The more we support illegal filesharing the more acceptable it becomes the more common it becomes the more we support it and so on. Once again, look at societies like Taiwan where there IS no copyright law, or China where there is no respect for software patents. If we don't respect IP law pretty soon people will (gasp) stop respecting it. Actions have consequences.
Not to mention it encourages the Me First, Instant Gratification consumerist society which is at the heart of many of our current problems. The resources to produce and distribute media are NOT free. We do not live in a post-scarcity society and we should not be encouraging people to think that.

Please
explain to me the difference here. It is an acceptable access to
materials because... Nobody has thrown the legal hammer at libraries
yet? At what point does the creator of the works put into libraries get
to have their say?

Libaries are part of the current social contract. It's basically like me lending my copy of Final Fantasy X to Ayiekie (which I just did). It's my copy, I can do what i want with the copy (even resell it). I can't. however, COPY it (thus Copyright). Similarly a Library has a copy (maybe multiple copies) of a book. They can lend those copies. They can't copy them however.
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Epsilon