Slashdot Mirror
China Plans Domestic Software Quotas
October_30th writes "In order to fight the alleged Microsoft monopoly, the Chinese government is establishing quotas for foreign software. While the details are still unclear, the government may require that up to 70% of software on Chinese computers is produced domestically. Regulations like this are, of course, expected to come under fierce criticism from the WTO."
WASHINGTON--A federal judge has determined that Microsoft holds a monopoly in computer operating systems, strongly criticizing the company in a decisive statement that could signal the outcome of the landmark antitrust case.
Like tariffs, quotas are used to protect domestic industry at the expense of foreign industries and more importantly consumers. They usually require this protection because they either have a poor product or a product that costs much more than their competetitor's. Preventing imports forces consumers to spend more than they normally would on the same good.
However in terms of software this may be a blessing for China. Linux's problem isn't price so much as it is marketing. However the real question is whether China will be able to use Linux or must they code their own O/S?
Corporations: your universal scapegoat for all society's ills.
This will just backfire on them. Irregardless of whether this is designed to reduce Microsoft's monopoly, a quota that restricts the use of ALL foreign software is going to have a negative impact on China's ability to advance their economy.
It will help local software companies, but there will probably be no net gain to the nation as a whole. When you restrict the ability for domestic companies to use foreign software (especially when it is the best tool for the job) you are handicapping economic growth.
This is a bullshit argument.
You really have to put yourself into a Chinese man's shoes to understand. If a company goes overseas and offers you a job that pays $0.70/h, 12 hours a day, in a tiny little hot room, there's no way you would do it, right?
Not necessarily. Getting $0.70/h may be a blessing if the alternative is making $0.40/h for a domestic company, or more likely not working at all. We can only assume that because this Chinese man freely accepts the job that no other better alternatives exist. To remove this job opportunity for him may make us feel morally superior, but it won't help him put food on the table.
Corporations: your universal scapegoat for all society's ills.
I'd wager that their domestic software industry will do well, but their domestic industry as a whole will not.
Why?
Ok, limiting software that people can use limits people's choices (obvious), but it also removes the ability for people to choose the absolute, best software they need to do their job. Consequently, you'd have to make some purchasing decisions which might actually affect the ability of your company to do work. Imagine how a video post production house trying to get by without AfterEffects, Flame, 3D Max, Maya - you get the picture.
The only way they could possibly circumvent this is by loading their machines up with 70% worth of crap they don't want - hey ho, I think I've found the solution!!
This could be one of those rare cases where the enemy of my enemy is not my friend.
I agree with much of what you said except:
"While other countries respect trade laws at the expense of their workers, industry and economy, why should China be allowed to be any different?"
The whole point of trade is that it isn't an expense. It's the only 'free lunch' there is in economics. If Japan were to put up big barriers to US imports, the US would be MUCH worse off by putting up barriers to Japanese imports.
Protectionist policies hurt everybody, except for a minority of grossly inefficient competetitors interested in keeping their profits high by exploiting consumers through tariff legislation.
Corporations: your universal scapegoat for all society's ills.
Yessir, I love it when people discriminate like that. Nobody screams about enforced quotas for US Government jobs and contracts, but let a foreign government demand a quota on something as simple as software, and look out! Love double standards! Love 'em to death!
This is an explanation, not a suggested course of action. It may seem an 'unfair' disparity, but any attempt to legislate against such 'unfairness' will ultimately make things even more unfair.
One such 'suggestion' is tarrifs. This will undoubtedly put millions of Chinese laborers out of work, and will also drive up the price of the good that consumers pay. The only 'benefit' is allowing a domestic competetitor to overcharge their customers. That is what I would call unfair. Even if x number of Americans become unemployed I can guarantee they will be infinitely better off than if 100x Chinese are unemployed.
Corporations: your universal scapegoat for all society's ills.
While the details are still unclear, the government may require that up to 70% of software on Chinese computers is produced domestically.
implies that they plan to issue a general nationwide ban on too much foreign software. However, that's not what the article says. It actually says:
Officials say a new law will be announced by this summer requiring a minimum percentage of software purchased by the government be produced in China.
So we see that this policy would only apply to government purchases. Thus, this is little different from when a corporate IT department standardizes on choosing certain software products and not others.
The U.S. federal and state governments also promote a variety of policies by placing extra conditions on their procurements and contractors.
So, while this is somewhat interesting, this doesn't look to me like as big a trade issue as a lot of posts seem to be making of it.
If the Chinese were doing something illegal wrt to clothing, the most likely of which would be dumping products in US markets, then the US would likely appeal to the appropriate trade organization and ask the practice to stop. This might result in tariffs placed on China and theoretically increase sales of US domestic products in that category.
The interesting thing is that MS claims it is not a monopoly, and the prices it charges are determined by a competitive market and are generally the cheapest it can sell the products for and still make a profit. If we accept this as fact, and look at the deep discounts offered to in certain US and non-US markets, it appears that in fact MS is dumping product, a practice that is defined as unacceptable under many treatise.
We therefore have a situation in which MS is a monopoly and charges arbitrary prices not controlled by the free market, or it is the habit of dumping product onto certain markets, with the assumed intention of destroying competition. In either case, the action warrants defensive measures to protect those markets.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Software cannot be a "basic social right." By definition, software must be created by someone. Someone must do work to create software. Therefore, software is a product for a consumer.
Free speech is a right. Software is a commodity.
--
http://nemilar.net - Not your grandmother's soup kitchen
At any rate, the economics of sweat shops don't make sense. In the US the typical garment worker earns around $.25 per T-Shirt manufactured. That means we could double that person's salary by increasing the cost per T-Shirt by another $.25. Somehow I don't think that an extra quarter per T-Shirt is going to be a crippling economic disadvantage to you and me. Hell, we could double your example Chinese worker's salary at a cost of much less than $.25 per T-Shirt. How would this be a bad thing?
My point here is that there is no real economic reason for garment workers to be so economicly screwed. For those who are interested, here in the US a company called SweatX is producing quite nice clothing at prices comparable (maybe $.25 more per item) to other manufactureres. Look at their website here: SweatX
"Mission Accomplished" -- George W. Bush May 1, 2003
I agree that in the short term, globalization drops prices and thereby increases the standard of living... however, in the long term the labor force moves inexorably toward the area of least resistance... the lowest wages, the worst conditions, the least regulations. The idea is that unfettered capitalism will find a balance on its own, and in a way it will... maximizing profit by minimizing expensess... including the standard of living of those in its employee.
In other words, when people locally can't find work because it's legal for someone else to do it for seven cents an hour in another country under sweat-shop conditions, that $49 DVD player is even more out of reach to them than it was a few years ago when it was $299 and they were making 20K.
Still, the original speaker was talking about labor practices, not quotas and terrifs. I believe these 'solutions' may be too heavy-handed... by cutting out the opportunity for domestic companies to exploit cheap labor, they will find themselves at a large disadvantage to international companies who can. Either way, the rich westernized nations will lose because their standard of living is simply too far above the rest of the world to maintain without complete isolationism if these practices are allowed to continue.
Perhaps there is no way to keep a line in the sand between the haves and have-nots of today on an international scale. Still, this mass-employment of slave labor and sweat shop workers doesn't seem to bode well for the eventual average global standard of living that will emerge. I would argue that it would be in the international community's best interest to ban, not globalization, but these these practices of exploitation. Cheap labor is great for CEOs who want to squeeze a few more bucks out of their companies and make their investors happy at the same time, but it will only serve to internationally reduce the value of human labor itself.
The parent and grandparent are both right, with more elaboration:
The parent is correct that if everyone earned 70c/hr, yet remained as product as they are now, the value of the dollar would be much higher, so the purchasing-power-parity in 2003 dollars would remain the same, and hence the "real" cost of living (in PPP 2003 USDs).
The grandparent is correct that if everyone *WERE* to earn 70c/hr, we would have a depression.
How can the parent and grandparent be correct? The fourth-dimension, time, the axis Mardy (Michael J Fox) wasn't very good at in Back to the Future, needs to be remembered. When experienced with RAPID deflation, which implies the power of the dollar increases rapidly, we enter an economy which is reluctant to make investments. The best investment, in a deflating curency, is to hold on to your bank notes or bonds, not to lend loans on houses that this year will cost $100k but if the owner forecloses five years from now will only fetch $20k of a much stronger greenback.
Thus, if we have rapid deflation, or sustained deflation, we will enter a depression where the financial elite close their purses and reap the rewards of monetary growth without making loans to those paupers we commonly refer to as ourselves.
Right. I'll take this a lot more seriously when the WTO starts throwing fits about the well documented abuses of Microsoft's own monopoly power in the marketplace. Until then, it seems a bit hypocritical of the WTO to be barking about -- fundamentally -- Microsoft being victimized by a the presence of an uneven playing field.
The Chinese appear to be acting unilaterally in what they perceive as their best interest. Maybe they're just following the U.S. lead.
I honestly believe the rule of international law is an important value, but also believe the U.S. could stand some introspection on this very same point. And as for Microsoft, I can't tell that the company has learned anything from its run-in with the Justice Department, except for how to be sneakier in extending its monopoly, a reinforced appreciation for the power of public perception, and perhaps a clearer understanding of why it's worthwhile to donate generously to politicians who don't believe that the power of large businesses should in any way be restrained.
Because I would get sick and angry. The American govt. and many American institutions always talk in favour of free trade and try other nations to come into the WTO. But while talking like the biggest supporters of globalisation abroad (maybe because of jobs they talk different at home) the US has never been very supportive of free trade.
They only allow free trade when it serves their interest. This is not to say they are the only ones, because the EU also protects their markets wherever they can.
Only Americans seem to think that the US allows free trade, which it doesn't. The only countries that swallowed this load of crap and opened their boarders to foreign products were developing and least developed nations.
While the EU and the US heavily protect their markets (mainly through subsidies, 'cause they can afford to) in some areas China is now doing the same in other areas.
What China is doing is bad, but they are just following up on the example set by the US.