How Does a Poor Economy Affect Tech Innovation?

sshuber writes "It's no secret that the US and other parts of the world are currently having some economic problems. How is this affecting new technologies under development? With the large numbers of layoffs, are we seeing projects, such as things under R&D, that are being axed? Are companies playing it safe and sticking with what they know sells in lieu of pushing the envelope? Finally, how is this affecting the open source community, either positively or negatively?" A lot of open source work happens with the backing or at least the sufferance of corporations. Do laid-off tech workers contribute fewer cycles to open source projects, or more?

Comments

Is It Really A Poor Economy?

[ergo98]

There's a lot of foreboding potential out there, and a lot of big numbers have been lost on the market...but the numbers just don't seem to support that poor of an economy.

Yet, at least.

Nonetheless, everyone keeps talking like the world is in the depths of a worldwide recession.

Re:Is It Really A Poor Economy?

[everphilski]

There are some who claim "it's" over already, based on historical indicators that have proved relatively reliable in past recessions.

no one really knows, I guess, is the answer, but "recession" is such a blanket statement it can't (and doesn't) apply everywhere. For example, Alabama home prices have gone up year-over year aprox. 5%, and the woods and fields around my home are still being torn town and built into subdivisions, even in this so-called "recession". So there are still people out there building and buying houses...

Re:Is It Really A Poor Economy?

[Jerry Coffin]

Just how many bad numbers do you need to see?????? Home values take the largest dump in 20 years. Oil hits all time highes [sic] everyother [sic] day. The dollar is weaker than ever in my life time (over 40). Food prices are on a huge increase.

All but one of those are really just symptoms of one number: the money supply. Look at the price of oil in terms of ounces of gold. Note that the bottom line of this graph is virtually dead flat.

Of those numbers, the only one that isn't an effect of money supply increases is the price of housing in the US -- it's the cause rather than the effect.

Re:Is It Really A Poor Economy?

[drinkypoo]

Stop all this "organic" and "natural" treehuggery. Because that's all it is. Well, that and money grubbing on the part of the people selling you that overpriced stuff.

"Organic" means almost nothing in the USA thanks to the influence of the USDA, and "Natural" means less than nothing.

However, you are sadly mistaken about the basic realities of farming...

"Organic" and "natural" crops cannot even remotely compete in terms of volume of perfectly safe, edible food with the genetically modified, pest free varieties.

The following things are true:

1. A hundred years ago, there was no such thing as agriculture which was not "organic", because we did not turn petroleum into fertilizer or, for that matter, pesticide.
2. The use of shallow tilling of soil, especially when done with heavy machinery, creates hardpan.
3. The use of petroleum-based pesticides and fertilizers (as well as other artificially-sourced pesticides etc) harms soil diversity. Good soil is over 60% organic material (ideally, over 80%!) and can be 20% or more living matter. The chemicals with which you are so enamored harm beneficial insects, the worms which we depend on to create soil (they are also defeated by our tilling practices) as well as nematodes and mycelium.

Enough facts, I don't want to confuse anyone with them. Let's get back to the battle. Again, a hundred years ago it was all "organic" farming. Therefore "organic" itself doesn't mean a whole lot. If you're fertilizing only with poop and the like you can still be horribly harmful to the environment by simply allowing topsoil to wash into rivers. Or, for that matter, by tilling it and leaving it uncovered, which allows it not just to wash away, but even to blow away. This results in harm to air quality and thus to our ability to breathe - living in agricultural areas is no fun. I am living in Lake Country now; I was living in Marysville last. Here it's vineyards, and you can find them south (Napa) or west (Hopland) where various items are sprayed on the plants - and into the air, where we get to breathe them. That shit sets off my asthma every time, so I really don't want to hear about how "safe" your inorganic farming is.

Now, let us discuss the issue of sustainability in more depth. "organic farming is mining the soil of its vital minerals, particularly phosphorus and potassium. ... Conventional farming, on the other hand, restores mineral balances through fertilization." This is amazingly empty-headed cheerleading bullshit. In fact, organic farming restores mineral balances through fertilization, but in conventional farming techniques (those of the so-called "Green Revolution") instead of correctly amending the soil with those things which it requires, and allowing natural forces to fix those nutrients and make them available to your crops (these "natural forces" are also called "other plants" or, by the ignorant, "weeds") we spray ready sources of the food into the soil and feed the plants. Feeding the soil is a basic tenet of true (i.e. nothing to do with the USDA) organic gardening, but I understand that there is always a temptation to simply ignore facts in the pursuit of a good argument.

It just so happens that in my yard there is an organic garden which produces food crops at an extremely economical rate. It is based on compost, poop (steer, llama, seabird, bat, and chicken shit) and the usual range of organic soil amendments including alfalfa meal, blood meal, bone meal, feather meal, seaweed meal and so on. Those with an eye for detail will note that much of this is actually recycled refuse from animal processing and the like - I'm no space cadet from Vega. The soil is better this year than it was the year before - it's been obvious for months because the cover crop (mustard) was about four times taller this year in spite of similar (if anything, less ideal) conditions otherwise.

Now, let me address the issue of

Re:Is It Really A Poor Economy?

[drinkypoo]

If by rural America you mean farmers, they are doing fantastic right now. They can either get paid to not grow stuff, grow wheat and sell it for food at record high prices, or grow corn and sell it at record high prices and get the ethanol subsidy from the gov.

The truth is that the small farmer has a hard time getting a large enough piece of the subsidies to make a difference in the hard times, the price fixing that the government engages in (due to lobbying from the various "boards" like the dairy council etc) prohibits them from charging a fair price for goods, and the major factory farming operations consume the lion's share of the subsidies (even getting larger percentages than the small farmer in many cases.)

When you couple that with the typical underhanded land-grab tactics that have pervaded human history, it's practically impossible to make it as a traditional small-time farmer. Farmers are overwhelmingly going out of business and their properties going up for sale to people who want to live there, or selling out to a megacorp for a paltry sum before that happens, or finally switching to selling a value-added product rather than simple produce.

I agree that the economy is pretty poor right now, but it's not the farmers who are currently suffering :)

I suppose you have some anecdotes to back that up, or something else equally worthless?

Re:Is It Really A Poor Economy?

[Chryana]

Why is this modded insightful? According to this chart, 0.51% of all the land in the US is certified organic. How can such a small percentage of all the farmland be responsible for the current food crisis? Or perhaps you are saying the organic farmland in Africa is the root of the problem? I will not question your claim about organic farming's sustainability, but I consider the implied notion that industrial farming is "sustainable" to be completely laughable. Here is another article which, unlike yours, does not look like a press release from Monsanto, with a juicy tidbit of my picking:

A 2002 study from the John Hopkins Bloomberg School of Public Health estimated that, using our current system, three calories of energy were needed to create one calorie of edible food. And that was on average. Some foods take far more, for instance grain-fed beef, which requires thirty-five calories for every calorie of beef produced. x Whatâ(TM)s more, the John Hopkins study didnâ(TM)t include the energy used in processing and transporting food. If you are interested on the topic, I suggest you read the book Fast Food Nation. They mention, among other things, that the heavy use of pesticides and the need of machinery has had for consequence the current situation, where for every dollar spent to grow crops by a farmer, an equal amount is given by the US government in subsidies.

The effects are obvious

[InvisblePinkUnicorn]

In a sagging economy, people couldn't care less about new tech. The only way I could see a poor economy effecting tech innovation is if the new tech will clearly effect a cost reduction to the consumer. Without those effects, tech innovation will continue to be negatively affected by the current economic downturn.

Depends...

[EastCoastSurfer]

When gas was 99c/gallon, people weren't all that interested in new fuel technology. Now with oil going up and up, I expect we'll finally start seeing some real break throughs in alternative energy research.

OSS should also benefit from a slower economy. Why pay MS 100k for MSSQL licensing when I can get postgres?

Innovation won't stop and will continue to happen. It just might be in different areas.

Depends on how long the downturn lasts

[daveywest]

Consider the small telecommunications company I work for. Our big projects are years in the making -- like trenching a fiber optic line across 3 states through a mountain range. You can't just put that on hold for 2-3 years.

We're cutting back on extravagances. I'll probably wait one more year for the new computer I was supposed to get last month.

An economic downturn will kill an already unhealthy company, but a good employer with a stable balance sheet knows how to weather the storm.

Acamedic enrollment

[gehrehmee]

It's been pointed out recently to me (at least here in Alberta, Canada), that university enrollment drops when the economy's strong, and picks up when the economy slows. There's at least a couple factors here. One, when the economy's not doing great, a university campus is a relatively secure place to be while you wait out a temporary drought. Secondly, while the economy's doing good, it's generally easy to get a well-paying job, which presents a stronger competition vs the academic route. On that note, the economy's looking pretty rosy up here right now, so we're definitely looking for potential students at the University of Alberta's Computing Science department!

My employer

[trrwilson]

My employer let go of 90% of the future projects staff, which equated to 75-90 people. No VoiP, or WiFi in the near future, PC/Laptop refreshes were put on hold, server refresh abandoned, the plan to change the entire server OS on file/print servers from 2000 to 2003 was abandoned...and some other stuff that I can't remember.

Large numbers of layoffs?

[Cutie Pi]

Have there really been large numbers of layoffs in the tech industries? I thought many tech companies, particularly those with large overseas businesses, were doing pretty well. See IBM for example.

This whole question reeks of someone wanting the Slashdot community to do their research for them, starting with some pretty questionable assumptions. Maybe the answer to this question is better served by looking at how past recessions hit the tech industry and their innovation output.

necessity the mother of invention

[bsDaemon]

We're having economic troubles because people are dumb - not because something has actually happened.

"oh woe is me, the housing market is collapsing!" no its not. Now's a great time to buy. In fact this is really the sort of situation that benefits people in their mid-late 20s. Real Estate values were inflated before. Now those people can more easily afford to buy houses.

now, back on topic... if there is any sort of actual shift taking place, it is not likely to be the big corps that want to try and ring every last drop out of "business as usual" who will benefit.

If people perceive times to be tough and getting worse, with regards to the environment, energy "crisis," etc - then the people who can move in and offer solutions to those problems are going to win. They're going to attract the money from the people that have it to get the stuff to market.

I'd like to think that in the next 5-10 years we're going to see a lot more people interested in home power generation -- solar and/or wind, appliances that use less power, etc.

We're also going to see people and companies wanting solutions which provide maximum advantage for minimum cost. That means we'll see a lot more open, standards-based solutions to problems. We're likely to see more foss solutions to software problems, open hardware solutions to hardware problems, etc.

Likewise, if programmers are now no longer employed by megacorp a, they'll likely have a few more hours a day to contribute to foss projects -- or start smaller ventures based on foss solutions to some of the more pressing problems of our day, and into the future.

or maybe i'm just high

Re:necessity the mother of invention

[a1056]

In a way you're right, this is a good time to buy. But this assumes two principles. First, you do not have to sell your current home to buy a new home. Second, creditors are now being very conservative with their investments, so you have to have impeccable credit, savings and income to get a mortgage these days.

That is also why many economists think this will be a time of very slow growth/recession, because mostly investors will only invest in knowns, safe investments that have guaranteed rates of return. They got overly interested in making easy fast money with mortgage brokering to people that could not maintain the mortgage and now they are gun shy. What this means for innovation is that people will not invest in new technology, or emerging companies, or finance expansion by companies looking to extend into new markets. This extends even into China and India as well because they were also investing in the mortgage markets, right now getting investment is tight world wide, so a lot of companies are loosing out on speculation.

There was a great NPR/This American Life that explained how the housing crisis turned into a global credit crunch that is the root of all the recession claims. http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1242

Re:necessity the mother of invention

[bsDaemon]

A few banks did some stupid things which should have been illegal and sold bad debts (mortgages to people who obviously couldn't afford them) to investors.

One they started getting fallout from being retards, more investors jumped ship. A lot of those people dumped money into oil and other comodities, running the price up -- creating another bubble to burst. Of course, even at ~4.00 a gallon, it's still cheaper than 1 venti green tea frap at starbucks, which even with a b&n discount card at the one in the store costs 4.37. Gas is 3.97 here, so if I buy 8 fraps to get the same volume, it costs me $3.20 more, which is a lot closer to a second gallon of gas than it is to another stupid frap. Gas is over 80% cheaper by volume than Starbucks is.

The Federal Reserve then kept lowering interest rates to "encourage growth" (because for some reason anything less than "growth" (and even then, the growth has to be at least thiiiiiiiiis big to count....) counts as "recession" these days), but that just created inflation and discouraged foreign capital investment, lowering the dollar's value.

If I were Congress or the President, I'd make trading petrol futures a capital offense. Margin trading would be earn you public floggings. Frankly, what I might do to the federal reserve board would probably have gotten me kicked out of the SS for inhumane treatment, I hate them so much for crimes of stupidity.

Re:necessity the mother of invention

[SatanicPuppy]

Commodities are irritating to a lot of economists, especially in times like these. It's the big finance equivalent of hiding your money under your mattress.

Lowering rates is weird; there is the risk of inflation, but frankly, the real lowering of the value of the dollar is our national debt, and the fed is really for trying to manage our economy by controlling lending rates.

Gas is relatively cheap; we're paying now effectively what europe has been paying for decades. In the long run, it's still enough to drive the adoption of alternatives, and that's beneficial for our economy.

We're the best placed in the world to come up with a good, marketable fuel solution, simply because most other countries have artificially screwed with their fuel demand. China and India are subsidising cheap gas to fire their economies; this prohibits the adoption of a solution, because economics don't favor one. On the other side, Europe's historically high fuel taxes have already pushed them to adopt fuel efficient cars and public transit...They're not going to feel the pinch like we will.

Interesting times.

Re:Food?

[SatanicPuppy]

I did a lot more, last time I was unemployed.

Partly it's because you can put, "Programmer for (insert OSS project here)" as your current occupation, rather than "sitting on the couch, watching the phone" and partly because the best way to put food on the table is to do some work, and the easiest sort of work to get is freelance work.

When you're freelance, you can't afford the licensing for the nice proprietary stuff. You can't afford to scratch build huge webapps. You absolutely have to jump on the OSS bandwagon, just because it's what you can afford.

And when the OSS app you're deploying turns out to lack some feature that's critical to your sale...You code it. Or you jump on the lists, and beg someone else to code it. Or you incorporate some other OSS project to provide that functionality, etc.

I made more when I was out of work than I do now, but I didn't get to post on Slashdot as much. It's all about how you decide to spend that time.

Project shifts

[Anonymous Coward]

I work at a small software shop, and we write custom software.

I've noticed a shift in our clients' thinking. New projects have to save the company money overall and more requests to include OSS libraries and products.

Personally for me, I like the fact we're including more OSS products (MySQL, Postgres, Linux, *BSD, etc...). When I first started, I was a little out of place due to the fact I had spent so much time working with open source. Now that experience is useful to my company.

But overall new software work really needs to have an immediate cost savings. For example, a client came back after a year. The client is a non-profit, we developed a system to allow them to keep track of their membership and invoicing. Most of the membership management is being shifted to the web. A year before, it cost too much and they didn't see any benefit.

Now they realize they save on things like stamps, maybe hold off on hiring a part-time person to process mailed in renewal notices. Plus they'll have a better system for calculating how much money they got.

It's good for open source companies

[kc8jhs]

I work for a company that is 100% open source based, and markets itself as everything open source to whatever needs our clients need. Usually this is either web presences, or local sysadmin work for businesses, schools, or non-profits. Anyway, this came up at our last monthly meeting, someone asked the CEO what he thought a downturned economy would mean, and the summed up answer was, it'll be good for business because more commercial companies and even non-profits are contacting us for products and services in order to streamline and save a buck here and there. He said that growth figures for this year should actually be up from previous years. So it all depends really.

Re:Heh.

[shbazjinkens]

Answer? Automation. If you can't automate, you'll outsource, and outsourcing itself often requires new technology.

It's surprising to me that an economist would say this, because as an engineering student I always believed it until I took economics. Automation involves a huge setup overhead and a few more expensive employees for maintenance. In the factories I've worked in they will throw a bunch of "temporary" employees in places where there were previously full-time employees making 2-3x the "temp" wages. From talking to engineers and managers I found it was cheaper to have those full-time workers there than robots, and way cheaper than robots to have temps. The reason for the robots was that it was hard to find workers willing to do the job at any wage, not that it was a cost savings.

So far as outsourcing goes, it's hard to argue that point. I get mixed messages from people on the cost/benefit of outsourcing, especially when quality is important.