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Is Open Source Recession Proof?
DaMan writes "ZDNet asks Is open source recession proof?
'So, how might a recession affect open source software? Well, first off, I think that any business model that relies on volunteers could certainly see interest decline if times get tough. There are a lot of businesses that rely on people working for them for free because they get a pay check somewhere else, and I think that a recession would make people question working without getting any dollars in return.'"
1) Employees of major corporations assigned to opensource could be laid off or reassigned to directly profitable projects.
2) People who work on opensource in their spare time could be laid off and
a) Be unable to buy computers, maintain an internet connection, etc.
b) OR... have lots of spare time and do a lot of cool stuff to build their resume.
3) Folks who are depressed are not every productive. In a deep recession there will be a lot of fear, anxiety, and depression.
4) Donations to opensource bandwidth, download sites, and so on could falter and lead to blackouts of key opensource resources.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
There are a lot of businesses that rely on people working for them for free because they get a pay check somewhere else, and I think that a recession would make people question working without getting any dollars in return.'
On the flip side of that, if you have a lot of unemployed coders who want to keep their skill-set up-to-date (as well as avoid a large gap in their work history), open source provides a way to do both.
If you can do anything besides just counting beans, and you stay out of debt, you are recession proof.
What?
Totally agree. Plus hard core coders who NEED to have an interesting app to work on might end up working on OSS in their free time because they were forced to take a boring job in a shitty market.
I think the main difference between the Bubble and today's impending recession is that back then the tech industry fell down and the "holdouts", namely brick and mortar stores, physical goods and services, etc were propped up because they could point to the .coms and say "We were never that audacious, we have business plans and 20+ years of experience blah blah blah."
Freelancing at that time was pretty clear because there still was a genuine need for getting wired and with the times and with the bust those still standing didn't want to invest heavily on an in-house version of what failed in the wild.
This US recession, at least, is being lead by the plummetting dollar and conversely skyrocketing oil prices along with just about every other commodity. Sub-prime fallout isn't helping and even with an impending intrest rate cut from the fed it's still not going to right itself anytime soon. This particular pain hurts every industry equally and IMHO there will be less money to go around altogether. With a shrinking pie, OSS might get a bigger slice of it but overall I don't see it getting better in the immediate future as far as funding.
More Twoson than Cupertino
Recession isn't when there isn't enough money, recession is when the money is hoarded and no longer used for exchange, leading those who are the owners of the real capital to foreclose on everyone and scoop up ownership of anything that isn't already theirs, and causing hardship because everyone just stops working.
The problem with a recession is that everyone just sits around doing nothing with no direction, not that the money supply dried up. It's a testament to the power of sheeple.
So, if people have nothing to do that will make them a quick buck one way or the other, and they haven't yet lost their tools of the trade, there's every reason to think they might contribute more just because they are idle.
Of course, when they've taken your house, it's kind of hard to write software while you're living in a tent city...
-1 Uncomfortable Truth
Actually, the US dollar is plummeting because of a very costly military expense. To pay for it, the US Treasury Department has been pumping out tons and tons of US dollars. In most cases, this causes devalulation immediately, but as the US dollar is a reserve currency, it held value purely because everyone wants to hold US dollars.
Oil prices skyrocket because of huge demand (China), and uncertainty in the supply market (rattling sabres in the middle east and in South America makes people nervous, which makes the oil production unsteady). THe devaluing US dollar also encourages it to rise, and oil-producing countries (which pay in their own currency) require more US dollars to pay for the oil extraction.
But this has been going on for years. What really brings it on is the change in the credit laws and the subprime mortgage crisis, as that leads to shortages of cash for borrowers. Companies can't borrow to expand operations and they lose potential profits, and the subprime mortgages causing foreclosures and a sudden glut of homes on the market (impacting construction and related industries, and the trickle-down effect).
Huge chain of events, but it looks like the subprime mortgages may be what broke the camel's back.
Recessions don't exist based on some Keynesian model (I'd love to know which one by the way, since most of Keynes' work was done in response to the great depression), and therefore it somehow transforms into reality? (Those are what? Imaginary? http://en.wikipedia.org/wiki/List_of_recessions )
Yes wealth can be created and destroyed, economy is _not_ a Zero-Sum Game.
Of course, the reality is that the central banks have been creating credit for one specific reason: to transfer wealth from the poor and middle class to the bank-connected elites.
Access to credit greatly improves living conditions for who? The middle class. (And the subprimes greatly improves the living conditions of the poor) Imagine the world for the middle class was there no credit, just for the housing. You'd keep putting money aside your whole life to be able to buy a house when you're close to retirement, imagine all the value lost for yourself if you had to wait that long instead of taking a loan...
The wealthy have been hoarding money for decades?
Are you serious? Why would someone keep their money in a vault (Return = 1 - inflation) when they can make much more money by investing in risk free securities (Short Term Gov. Bonds)? Being rich is all about investing in the market (whether it's through starting a business or investing in others), please show me one "rich" man who stacks his money in a vault... If you had kept your money (lets say $100) in a "vault" the last 50 years, you'd still have $100 dollars today (please note that 100 dollars back then is worth about 2500 dollars now), if you had put these same 100 dollars in equity, you'd have 45.000 dollars now... but yeah, stack your money in a vault, that's a real good investment.
Credit is NOT tight because those who have it don't want to risk letting the middle class earn it to invest it in their own wealth-growth schemes (please notice that he somehow abandoned the idea of rich people stacking their money), but because the risk premium on the market is growing (AKA Credit Spreads), therefore the creditors lend money only to people with better profiles, and ask a greater risk premium, this is a normal consequence of a slowing economy, since the risk taken by creditors is higher.
So if you're an OSS or a closed-source developer, and you're hurting, remember for the next time another bubble grows: stay out of it.
Oh yeah because bubbles are so easy to predict... All those analysts working in banks and other investment firms are just idiots, dada21 knows better.
God you should stick to IT, you obviously know nothing about economy...
I agree with everything you said, but would also like to add a few others.
Consumer credit ab/use is out of hand. People are spending themselves to insolvency, and then the first speed bump they hit (lost job, new roof, unplanned medical expenses) drives them under.
I'm not ascribing blame to corporations completely, but in the end every business sells a product. In order to increase the amount of money they make, they need to sell more product and/or cut operating expenses. That means, in part, cutting jobs and benefits while going out of their way to sell more product to people who can not, across the board, afford to buy more product.
Less-than-intelligent banks and people took advantage of too-good-to-be-true loans to do/afford stuff that they otherwise couldn't.
My personal bank account is at an old and large bank, still held in majority by its founding family. My business account is at a local credit union because they don't screw me on fees nearly as badly.
When I went to the credit union on Friday, I noticed banner ads suggesting people take out a second mortgage to go on vacation and take a 100-month car loan so they can drive a luxury car on an ecobox car budget.
The bank isn't forcing people to do it, but those are both such bad ideas that I can't even begin to clear the bile from my throat.
People just finance everything these days. First off, they don't realize how much extra they're paying in interest and second, it just allows them to eat up every dollar in their paychecks before they even get them.
My wife and I splurged a bit around the holidays and bought a relatively large flat panel TV. Across most of the stores we went to while shopping around, we had a hard time figuring out what the "buy it now" price was for the hardware. In most cases, the pricetag would say something like $129/mo in huge print and then $1699 in small print somewhere. Needless to say, we weren't interested in financing a TV.
I'm not saying credit or financing is inherently evil. Immediate needs (shelter, transportation, medical etc.) are ripe for financing. If you can pay cash, all the better. People confuse needs and wants. We didn't buy the big TV until just now because we didn't have the hard currency to do it. No way were we going to buy an unnecessary TV on a credit card.
We, especially the children of the platinum card spend-all 1980's need to take a minute (or a class) in personal finance and household economics. Where our parents might not have even had credit cards in their 20's and 30's, we grew up in their midst, moreso without the feel and smell of Bejamin Franklin in our back pocket on Friday. Plastic spends easier than cash.
Credit is a tool, but a dangerous one. We need to use it wisely.
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