Obviously it would be better in the long-term, global perspective for no one to pay. If no one paid, no one would continue making ransomware.

But that requires that the everyone hit by ransomware before people give up on making it be willing to sacrifice their own good for the good of those who would be hit after them, since equally obviously it's better for a company to lose $20k than $20MM worth of information.

It is very difficult to get people to sacrifice their own good for the good of others in the future, even when that future global good vastly outweighs the present local good.

See also: Climate change

It is simple, as others have said. It is a small cost to pay to get back in business quickly.

That said, what is going to happen is no different then what has happened in history for other forms of "terrorism" (which essentially ransomware is, someone is terrorizing an organization by holding them hostage).

Once a company has been hit multiple times or has had enough the company will assemble one or more response teams, they will spend money to go after the people and start preventing it, that is when companies will stop paying. Companies already get the authorities involved, but face it that is an investigation after the fact right now. It won't change until companies essentially protect themselves better and become more offensive in nature, which in some corners they are doing. BTW -- offensive doesn't mean they are out killing people, just that they are putting on an offense to prevent this stuff instead of waiting for shit to happen and being forced into paying a ransom.

Because the cost of paying is often far lower than the cost of not paying due to lost productivity.

I think that this is basically a case of the Prisoner's dilemma. In the long-term, big-picture, it would be best not to cooperate, but each business that has been targeted is in a situation where they need immediate access to their files. Their immediate survival is at stake and they can't afford to make an investment in the long-term view. While it doesn't exactly parallel the formal statement of the dilemma (all victims not participating wouldn't get their files back), in the long term it does by removing the motive for creating the ransomware in the first place.

https://en.wikipedia.org/wiki/Prisoner%27s_dilemma

Because they forgot to pay for backups, so don't have copy of the data they need.

Well, what's your proposed alternative?

for the same reasons we pay taxes.

Its not that we are not capable to crowdfund the construction of a bridge without gov. intervention.