NSF Wants To Know How Much Software Really Costs

eldavojohn writes "It's no secret that the actual cost of software is very complicated. Sure, the companies that write software are spending money on it, but when that software is released, it doesn't stop costing money. You can probably think of a number of relatively tiny things that add up — especially if you're a system administrator — like the man-hours spent patching software to avoid a nasty infection spreading quickly. The bigger debt is that old piece of software you paid a bunch of money for back in 1998 that you're critically dependent on, but it has no support and hasn't been updated in years due to any number of reasons. Well, the National Science Foundation paid Gartner almost half a million dollars to find out what it truly costs to bring an organization to a fully supported environment. According to Gartner, this hidden liability or 'IT debt' is at $500 billion worldwide right now, and in five years it will be at $1 trillion. Along similar lines, a company called Cast that makes software quality tools reported that your average business application comes with a million in IT debt (PDF). And if that's not misapplied enough for you, they estimate that the debt is $2.82 per line of code in the application and also that it's on average higher in the government sector."

Comments

If no one would sopy software illegally

[tsa]

It could cost $5,- per game and people would still make big profits. Illegal copying drives the price up, however.

Re:If no one would sopy software illegally

[AvitarX]

Yes because things like:
like the man hours spent patching software to avoid a nasty infection spreading quickly would go away if there was no piracy.

I would actually argue the maintenance costs are down for things people pirate, as admins with real world experience or even just familiarity from dicking around at home, are easier to find.

Re:If no one would sopy software illegally

[CarpetShark]

Illegal copying drives the price up, however.

--
There. I said it.

No, you regurgitated the meme without any awareness that you're a memetic breeding ground.

Re:If no one would sopy software illegally

[ComputerGeek01]

I think you're ignoring about half of the equation. You see when someone wants to sell something, no matter what it is or what it cost them, they want to sell it at the highest point possible in order to make the most money, this is called the Price curve. This is only mitigated by something called the Demand curve which is what people are willing to pay for the item. Where these two points meet determines the price.

The market has already determined what people are willing to pay for games, the cost of production of the game does not factor into the Price vs Demand chart. Driving costs down only means more money for the producer, and possibley increased competition due to a lower entry point into the market but this would likely only open a secondary market of "cheap games" leaving the "Million Dollar" productions priced where they are.

Re:If no one would sopy software illegally

[ScrewMaster]

It could cost $5,- per game and people would still make big profits. Illegal copying drives the price up, however.

Ha, I notice you got modded "Funny" which is appropriate in this context. This is about support costs, not sales prices, and there are very, very few companies that will provide support for unauthorized copies of their software. Do you work for the BSA, by any chance? That's the kind of out-there comment I would expect from them.

But okay, just to roll with it: do you honestly believe that the majority of software outfits would dramatically lower their prices if (ahem!) "piracy" dropped to zero? Of course they wouldn't. It's whatever the market will bear, baby. Matter of fact, they'd probably claim increased losses due to piracy and increase their prices even further. Yeah, there's dishonestly and sleaziness on both sides of this particular issue. Now, I will agree, a certain percentage of those who acquire software products illegally might have purchased said products if they were not readily available for free. But that number is nowhere near 100%, which is one of several fundamental flaws in the arguments put forth by the RIAA, MPAA, BSA and the like.

Re:If no one would sopy software illegally

[Anonymous Coward]

Illegal copying drives the price up, however.

--
There. I said it.

No, you regurgitated the meme without any awareness that you're a memetic breeding ground.

Slightly different than the T-1000, he's a poly memetic ally. [sic]

Re:If no one would sopy software illegally

[vlm]

This is about support costs, not sales prices, and there are very, very few companies that will provide support for unauthorized copies of their software.

You meant to write:

very, very few companies will provide support for their software

The only "support" I get for any software is free (except my labor) from google.com. I don't need to pay hundreds/thousands for some guy in India to read me a script telling me to wipe the drive and reinstall, which after some decades of experience is all I now expect.

Re:If no one would sopy software illegally

[Binestar]

You're not using the type of software they are trying to figure out the price for then. Software such as AdvantX (A medical software package) or Siriusware (A POS system used commonly by Theme parks and Ski Resorts and other places where they have ticket tracking/rentals/etc). Call either of those companies for support and you actually get quality support.

Re:If no one would sopy software illegally

[sjames]

More probably, they would increase the price until piracy returned.

Re:If no one would sopy software illegally

[ScrewMaster]

You're not using the type of software they are trying to figure out the price for then. Software such as AdvantX (A medical software package) or Siriusware (A POS system used commonly by Theme parks and Ski Resorts and other places where they have ticket tracking/rentals/etc). Call either of those companies for support and you actually get quality support.

Yes. You'll mostly see that in vertical-market apps which serve critical business functions, have a limited market, and cost a lot of money. They also usually have support contracts, so you're paying for that support on top of the actual cost of the software itself. Consequently, they damn well better provide good service.

Re:If no one would sopy software illegally

[Anonymous Coward]

More probably, they would increase the price until piracy returned.

Yeah, good point.

Re:If no one would sopy software illegally

[Stan92057]

You actually think they would pass the savings on to customers??? God bless you lol.

Re:If no one would sopy software illegally

[QuantumBeep]

A memetic mimetic, if you will.

Re:If no one would sopy software illegally

[Blackajack]

If games could not be copied at all.. The prices would increase because nintendo.

Re:If no one would sopy software illegally

[Anonymous Coward]

Where these two points meet determines the price.

Two points can't meet unless they're the same point, in which case they must meet. And who says there's only one price that everybody pays?

Congratulations - you fail geometry and economics simultaneously.

Software cost = programmer's salary

[nbauman]

That doesn't sound too bad.

Re:Software cost = programmer's salary

[Gorobei]

The figure actually seems very low, though perhaps not unreasonable for medium size (400K LOC) apps.

I estimated $3-$30 per line of code PER YEAR for one big (10M+ LOC) app at a previous job.

Re:Software cost = programmer's salary

[Hotawa Hawk-eye]

Software cost = programmer's salary ...
+ the cost of the computer the programmer used to write the code ...
+ the cost of the electricity to power said computer ...
+ the cost of the software the programmer used to write the code (which may be $0) ...
+ the salary of the QA staff that test the code ...
+ the salary of the documentation staff that write the documentation for the code ...
+ the salary of the HR staff that hired the programmer, QA staff, documentation staff, etc. and ensures they receive their paychecks ...
+ the rent/mortgage payment for the office where the programmer, QA staff, documentation staff, and HR staff work ...
etc.

Re:Software cost = programmer's salary

[poetmatt]

of course the importance is realizing the opposite side of the perspective - how much money is gained from these costs?

This is the part corporations have a harder time measuring.

Re:Software cost = programmer's salary

[roman_mir]

Don't forget about the risk and about the cost of opportunity. There is always a risk associated with any endeavor (well, supposed to be, until the gov't 'insures' something against risk and crashes the economy) and there is cost of opportunity - money could be spent on other things that really could provide more benefit for the sunk costs.

Re:Software cost = programmer's salary

[morgan_greywolf]

If the costs ended there, that'd be great. But they don't.

Someone has to do the requirements gathering draft up a specification. So you need a systems analyst. Then someone needs to take that specification and turn it into a real systems design. So you need a systems architect. Then someone needs to start writing code, so you need some developers. Someone needs to test all this code, so you need some testers. Someone needs to integrate all this into the existing environment and get it up and running; so you need some systems integrators. Then integration testing must happen, so you need some more testers. And, over all of this, you need at least a project manager or two to do timelines and communicate with management. Someone has to assure the quality of this system, so you need a quality assurance guy. Someone needs to maintain the system while it's running and even during development, so you need some systems administrators. Then management gets wind that all this is way too inefficient, so they hire some "Six Sigma blackbelts" to figure ways to improve the whole process by minimizing errors. They also might hire some management consultants to bring the whole team out on a retreat and give them motivational pep talks.

And after all of that, someone comes along and says "hey, you made it do this, but it also needs to do that." Everyone groans and the timeline slips.

Lather. Rinse. Repeat.

And all you wanted to do was write some damned code!

Re:Software cost = programmer's salary

[elashish14]

Easy solution

Re:Software cost = programmer's salary

[PaulMeigh]

+ the cost of maintaining a support organization to answer the phone once the software is in the field

Re:Software cost = programmer's salary

[grapeape]

That would be nice and is how business used to be...but now its more about investor profits...then the rest of that stuff. Society has created an unsustainable monster of necessary yearly increases in revenue. Its no longer about generating a nice profit and making a decent living. I really think its a mind set that is beginning to come back to bite society in the ass though. Look at any main street in any small town and its pretty evident that we're in trouble. In the town I live the corner grocery store shut down when they just couldn't compete with the conglomo grocery store moved in less than a mile down the road, then the drug store that had been in business for over 8 years closed down when CVS and Walgreens decided to both move in right next door to each other in the same area as the big grocery store. Supporting businesses around them like the bakery/donut shop, appliance store, mom and pop book store, pet store, etc have all been replaced by big corporations down the road. The argument has been that it created jobs, but most of the jobs are paying far lower than the small stores and services paid that were vacated due to their demise. Business is supposedly booming the new "central" part of town sure has lots of familiar stores and restaurants but the funny part is the per capita income of the town has dropped significantly over the past decade or so since this change started. Do I think Wal-Mart needs to die? NO...but I do think in many instances the "convenience" the corporate world brings does more harm than good over the long term. Sadly I think its too late to really do anything about it.

Re:Software cost = programmer's salary

[ObsessiveMathsFreak]

Which all pales in comparison to....

+ the cost of managements bonuses.

Re:Software cost = programmer's salary

[Anonymous Coward]

+ the cost of the marketing department who make sure that you write software that someone will want to buy
+ the cost of the sales department who make sure that people actually buy it
+ the cost of the financial department who make sure that people actually pay for it and that your company's bills are paid on time thus keeping the electricity on.
+ the cost of the provisioning/deployments department who ensure that your customers can get what they've paid for.
+ the cost of the operations department who ensure that other systems that your software relies on are running 24x7
+ the cost of the support department who resolve customer issues keeping them happy and more likely to buy more or recommend your products to others.

Your post is exactly the reason why most developers hit a career ceiling. You're unable to see much of anything beyond your own cubicle. You don't even understand what QA do. (Testing is a small part of the role, and about the least important factor in creating quality software).

Re:Software cost = programmer's salary

[KingMotley]

You forgot:
Corporate taxes.
The salaries for the accountants, the sales/marketing guys, managers, and executives.
Advertisements (email, radio, tv, magazines).
Normal office equipment (Phones, Email, firewall, desks, chairs, pens, paper).
Website for support/advertising/patches.
IT support staff to keep the network, email, firewalls, anti-virus, and patches going.
Network equipment (Switches, routers, firewall, internet connection).
401K matching, partial subsidized office perks (gym membership, etc).
Interest paid on the money fronted by investors/loans.
Most likely a conference room for company meetings, sales pitches, etc.
Sales/Marketing expenses (trips, meetings, persuasion/entertainment monies).
Legal Fees (Trademarks, Contracts, lawsuits).
Possibly head hunter/placement fees associated with hiring your programmers, QA, HR, Financial staff.

Probably a ton more as well.

Re:Software cost = programmer's salary

[Anonymous Coward]

+ marketing

That's a huge cost. Doesn't matter if you have the greatest game in the world if everyone is busy playing something else.

Re:Software cost = programmer's salary

[Anonymous Coward]

If people knew the real cost of software, we'd all go back to abacuses.

Every time someone screams "Just Git 'R' DUN!" or "All You Have to DO Is...", another set of hidden expenses lines up waiting to make themselves felt at exactly the wrong moment.

And any cost estimates based on the amount of work the developers think they have to do is going to actually come to at least twice that much. And that's if they're giving the numbers voluntarily. If you squeeze them to provide more "realistic" numbers - meaning the estimates you want to hear - then expect the cost to be even higher. Because IT work sneers at estimates.

Re:Software cost = programmer's salary

[TheRaven64]

Irrelevant. Most software (around 90%) is developed in house and either not distributed, or distributed only to a few companies who request it. Money is made using it, not selling it.

Re:Software cost = programmer's salary

[HungryHobo]

Well of course it has to make or save money somehow or there's no point.
But we're looking at costs, not net profit/loss.

And of course it varies by app.
A small, simple and easy to maintain app it'd be fairly low, some software causes so little trouble that people forget it's there.
some applications eat the majority of the time of a few highly skilled engineers to keep it from crashing and burning.

I've fairly sure TFA is more about the average.

Re:Software cost = programmer's salary

[DragonWriter]

I notice that you forgot all the costs that precede writing the code -- the business analysts and subject matter experts time who goes into analyzing the business need and developing the specifications for the code -- whether well in advance of the code being written in the waterfall model or in meetings alongside developers in short iterations in agile methodologies.

Of course, that's perhaps appropriate, because a lot of the "technology debt" is a direct result of other people neglecting the importance of that part of the equation.

Re:Software cost = programmer's salary

[dcollins]

+ programmer's benefits (health, etc.; ~doubles salary)

Re:Software cost = programmer's salary

[WeeBit]

Don't forget the drinks, snacks, lunch, and the need for music or TV noise to drown out the silence.

Re:Software cost = programmer's salary

[Anonymous Coward]

Yes sir/madam... nice story. Now please look up "purchasing power" in an economics dictionary and do the math again. One would assume most people go to "the conglomo grocery store"/CVS/Walgreens etc. because prices are substantially lower. So the average income may have decreased nominally, but overall prices have decreased as well. So the end effect is far from certain, you may well have ended up (on average) with higher incomes (in purchasing power, not dollars).

I agree with you on the quality of life aspect though...

Re:Software cost = programmer's salary

[shaitand]

The end effect is still fairly certain. conglomo/cvs/walgreens all export their profits permanently and do not help to stimulate the local economy outside of jobs and additionally do not purchase goods and/or services locally. The goods and services these stores allow do not support profit-making so they can't stimulate the local economy in that way either.

The contribution of these stores can be trivially summarized as salaries - profits - federal withholdings and if the result ever became close to a positive figure they would close the store. By definition, if these stores weren't bankrupting the community they would be bankrupt themselves.

Software metrics are bullshit.

[Anonymous Coward]

Software metrics are always a huge load of bullshit. It doesn't matter which "methodology" you choose when making such "measurements". Any time that something can be distilled down to "cost-per-line" or "errors-per-line", you can know right away that it's total nonsense.

Re:Software metrics are bullshit.

[lwriemen]

You should qualify that statement with your experience. There are valid software metrics that aren't tied to lines of code. I recommend reading Applied Software Measurement by Capers Jones.

$10,000 Per Verb

[Anonymous Coward]

The common estimation formula where I work is $10,000 per verb. Considering all the bad / inconsistent requirements we get that sounds about right.

I think we should be able to do better, but I'm too exhausted by my job to truly care. Oh well... off to work.

And..?

[Thyamine]

I know companies that don't bother figuring out the 'hidden' cost of keeping their workstations or servers up to date. Then one day they realize they need to upgrade 30+ system all at once for some new piece of software they want. When they can't budget/manage/understand something as straightforward as hardware maintenance and upkeep, how are they going to understand something less physical like software 'debt' or whatever they are labeling it now.

Re:And..?

[cryfreedomlove]

I know companies that don't bother figuring out the 'hidden' cost of keeping their workstations or servers up to date.

Why do companies still have servers? This issue largely goes away if you build you company in the public clouds.

Re:And..?

[Anonymous Coward]

Maybe because "public clouds" are not the answer to everything?

Re:And..?

[Technician]

Many companies are transitioning to general purpose software as the features expand. High debt software is often replaced with an off the shelf solution with a much lower cost.

As examples, at home, I no longer use Photoshop. Gimp is the replacement. Open Office replaced MS Office. Natulus replaced Nero or EZ CD Creator. Ubuntu replaced Windows on most machines. I don't pay for expensive upgrades when possible. Many small companies are making the same move.

Only one machine has the MS Debt software for the few things that just have to have it. I no longer upgrade high debt software on the various desktops and laptops we use.

Ernie Ball figured this out years ago and published his story online.
http://news.cnet.com/2008-1082_3-5065859.html/

Re:And..?

[Darkness404]

Because what happens when the "cloud" shuts down? What happens when your internet goes down and you can't even access what should be local files? What happens when the "cloud" has a major security breach and all of the files that normally wouldn't ever leave your company are now able to be downloaded to crackers everywhere?

Re:And..?

[ScrewMaster]

Because what happens when the "cloud" shuts down? What happens when your internet goes down and you can't even access what should be local files? What happens when the "cloud" has a major security breach and all of the files that normally wouldn't ever leave your company are now able to be downloaded to crackers everywhere?

I agree. Frankly, I don't trust anyone to host my confidential files, especially when I find that they're stored in another country. No thanks.

Re:And..?

[JonySuede]

you misread, the debt in question is into custom built in-house software. We are in the planning step of a rewrite from CA-IDEAL and Java and DB2 to Java and Oracle here at work, the cost of the preliminary study is well over a 1M$, now imagine the complete cost of the rewrite

Re:And..?

[Anonymous Coward]

Proprietary data?
Legal requirements?
Heard of PCI or HIPAA?

Have you ever worked with sensitive data at all?

You probably use Apple products too. If you deal with entertainment data, I can understand why you'd think the "cloud" is fine.

For many medium and large companies, running your own servers is actually cheaper than "the cloud." And for the last 2 of a 5 yr server life, you actually have "free" hardware. If you've ever priced Cloud contracts, you know they aren't as cheap as everyone thinks on an annual basis for core servers needed inside businesses. Sure, if you need some extra front-end servers for a marketing push, leveraging cloud systems probably makes sense. Not so much for back end databases with client data or for financial systems used by the finance and accounting and project management departments.

I have a very quick way to determine if the cloud makes sense for different types of data. If the data is placed on the front page of the NY Times, would that be good or bad for the company finances and image? What does an unintentional data release mean to the company's reputation?

Re:And..?

[Crudely_Indecent]

Maybe your work is so super secret that you don't want it connected to a public resource.
Perhaps bandwidth is so scarce at your location that a local server makes more sense from a performance standpoint.
Or bandwidth is so expensive at your location that a local server makes more sense from a financial standpoint.
Alternatively, you may be enamored with blinkenlights.

Re:And..?

[arivanov]

It is nice if it is just a workstation. Imagine if it is for example a small country size phone system.

Anything that is more than 5 years old usually has unknown upgrade costs as well as unknown upkeep costs. I have never seen anything trying to deal with such a beast hit time, targets and money.

There is the answer of "continuous upgrade" of course , however explaining that to a business is often a very difficult task especially if the 30 year old system still works and generates revenue.

Re:And..?

[digitalhermit]

The whole cloud concept is still being defined.. It's, um, cloudy....

That said, there are many reasons why some companies could benefit from the idea. For example, say that you want to build a global enterprise. Up until recently, this would take lots of money in order to have a physical "presence" in many different countries. With a global internet it's possible and it doesn't matter where the physical server is located as you can make the best use of local resources. Extend this concept a bit further and you realize that it doesn't matter where your physical server is located. Companies began to co-locate servers so they didn't need to have offices in Singapore to have a geographically ideal location for business, political, financial and even technical reasons.

The same challenges faced with local, company hosted resources are there with the cloud model. What happens when your company hosted server shuts down? what happens when your company network connections go down and your customers can't access your servers? What happens when an internal employee gets fired and sends out your customer list?

What the cloud concept can offer is reduced expense of hosting a large data center. For example, in the US land prices in areas where talent is located is generally high. It goes hand in hand. If a city is popular with technical folks then land prices will be high. The solution may be to host the personnel offices in one location and the servers somewhere in the cloud. Remember, building a data center is not a trivial thing. You need air conditioning, water, ducts, conduits in the floor, power, backup batteries and generators, fire suppression systems, etc..

No, clouds don't magically make standard IT problems disappear, but they can give a lot of flexibility in how you approach them.

Re:And..?

[zippthorne]

Parent is not missing the point.

The point was this: as the library of off-the-shelf solutions grows, it's possible that what what you once had to do with custom software is now neatly covered with some vendor's standard offering, or in the parent's case, what he had to do with expensive vendors' software can now be done with even less expensive open source solutions.

Re:And..?

[Lonewolf666]

Then one day they realize they need to upgrade 30+ system all at once for some new piece of software they want.

If that is the only problem, "they" may actually be doing it right. Because up to this point, the systems did all that was required. And this also puts the need to upgrade in the proper perspective:
Do you want that one piece of software badly enough that you are ready to buy new hardware too?

Re:And..?

[PCM2]

High debt software is often replaced with an off the shelf solution with a much lower cost. As examples, at home, I no longer use Photoshop. Gimp is the replacement. Open Office replaced MS Office. Natulus replaced Nero or EZ CD Creator. Ubuntu replaced Windows on most machines. I don't pay for expensive upgrades when possible. Many small companies are making the same move.

I'm sorry, but I think you'd have to be a very, very small company for such changes to make much of a difference to your bottom line. Compare $700 spent on a licensed copy of Photoshop to the $50,000 you might spend on one employee to use that software for a year. The trade-off you've made is that you've forced that employee to use the Gimp, which, being a less functional, less well-supported program that has fewer qualified professional users (potential employees) than Photoshop, incurs much more "IT debt" over the employee's tenure at your company in the form of work-arounds, Google searches, and other support and maintenance.

TFA isn't talking about "MS debt" (whatever that means). It's talking about how the neverending tendency toward complexity in IT systems -- adding modern features as bolt-on upgrades to legacy systems, for example -- increases the amount of support and maintenance that is necessary to sustain them.

Re:And..?

[mini me]

Well...

1. Take your backups to the next cloud.
2. While I have not seen any downtime from my ISP in several years, if by rare chance it did happen, you can jump on another provider's network. These days, many consumers already subscribe to multiple internet services (wired to home, wireless to cell, etc.), and that is not even for business purposes.
3. While possible, I would trust the abilities of a company whose sole business is providing computer services over the company who picks up the $25,000/year sever admin to secure their local servers.

I don't think "the cloud" is always the answer, but I'm not sure any of those points are a good reason to stay away from it either.

Re:And..?

[Technician]

Not all in house software has better support than the open source replacements. Often the reverse is true. Many replacements for commercial software offerings is much easier to use than the commercial product. If I have to burn ISO images to CD or DVD, I find it much more convienent to right click on the file and select "Write to Disk" instead of opening Nero or EZ CD creator and finding it needs a premium upgrade to provide the function. One works, one has a debt that has to be paid to add the function. It's a no brainer to know which machine to use to write ISO's.

Re:And..?

[Anonymous Coward]

Yeah maybe, but again, this is not what TFA is talking about. Word processors, CD burning, and graphics apps are pretty small-potatoes compared to real business software systems.

Re:And..?

[Anonymous Coward]

I know companies that don't bother figuring out the 'hidden' cost of keeping their workstations or servers up to date.

Why do companies still have servers? This issue largely goes away if you build you company in the public clouds.

Just FYI, the "public cloud" is just a buzzword for "Use somebody else's servers".

Tired old argument is tired and old

[Anonymous Coward]

No, unauthorized copies of software are not driving prices up. Prove that the users of those unauthorized copies would have paid for an authorized copy, and you might have a case.

Why must we repeat these arguments over and over again?

Re:Tired old argument is tired and old

[ciderbrew]

Learning on unauthorised copies enables companies to hire a person with the needed skills. The company then buys the software that the sole person could not afford. So unauthorised copies increase sales at the corporate level.

/The argument may not work for games software sales.

Re:Tired old argument is tired and old

[Hognoxious]

Learning on unauthorised copies enables companies to hire a person with the needed skills. The company then buys the software that the sole person could not afford.

tsa (15680) said "It could cost $5,- per game". Do you know anyone looking for an experienced TAK fortification architect/ballistic synergist?

Re:Tired old argument is tired and old

[tnk1]

Do you know anyone looking for an experienced TAK fortification architect/ballistic synergist?

No, but goddamn that sounds like something I should put on my resume.

Re:Tired old argument is tired and old

[shadowrat]

somehow i think most companies aren't eagerly looking for someone with extensive bioshock play time either legally purchased or pirated.

Re:Tired old argument is tired and old

[ciderbrew]

That would be the bit of the argument may not work for games software sales.

Re:Tired old argument is tired and old

[JWSmythe]

    Use it? I can't even figure out what it means.

    TAK? The closest I can guess is T-AK which would be a DoD cargo ship.

    The rest, all I can guess is that it's creating ways to take incoming projectiles and gracefully return them to their origin, presumably at high velocities.

Re:Tired old argument is tired and old

[Anonymous Coward]

I'd guess it means Total Annhialation Kingdoms, which is full of trebuchets and catapults.

Re:Who needs karma?

[tsa]

Nice joke. If I say something completely bullocks I get one point from you and -4487564 points from other moderators. If I say something insightful or whatever, adding valuable content to the thread I get my positive modpoints from everybody and don't need your pityful one point ;)

And bloody hell, now I have to wait 5 minutes before clicking 'Submit' because of /.'s annoying posting rules. That annoys me no end.

Wow, another $1 trillion we didn't know we owed

[Anonymous Coward]

Next, the automakers will get creative and figure out the national "automotive debt" that details the long-overdue cost to update everyone's wheels to the current standards. Of course, once they do, the "debt" starts rolling again.

And don't forget the national "old charcoal grill debt".

As for IT, if everyone upgraded to the latest software that would make life easier for hackers, no? They wouldn't need to waste cycles studying the vulnerabilities of 10-15 year old applications each used by a widely scattered customer base.

Re:Wow, another $1 trillion we didn't know we owed

[boristdog]

Exactly. The perfect software/car analogy.

Cost of new car + cost of gas + licensing and taxes + cost of regular maintenance (oil/tires/filters) + cost of unscheduled maintenance.

Of course, I still haven't convinced my teenage daughter that these costs far exceed the cost of the car itself.

Re:Wow, another $1 trillion we didn't know we owed

[Rockoon]

My current estimate (I have records) is about $1000/year, regardless of the age of the car, so I am not sure that "far exceeds the cost of the car" is correct unless you are talking about a used car.

Re:Wow, another $1 trillion we didn't know we owed

[boristdog]

You don't think I bought my 17-year-old daughter a NEW car, do you?

An unfortunate choice

[some-old-geek]

The NSF wants to know something about the computer industry and they ask Gartner? Gartner, the company that advocated OS/2 and I-CASE?

Re:An unfortunate choice

[nacturation]

The NSF wants to know something about the computer industry and they ask Gartner? Gartner, the company that advocated OS/2 and I-CASE?

To be fair, like any research group Gartner will advocate whatever you pay them to. Within reason, of course.

Re:An unfortunate choice

[TheRaven64]

Asking Gartner is usually a good idea. They are so consistently wrong that you can guarantee that anything that they said is the opposite of the truth. Other market research agencies are occasionally right by mistake, which makes them less useful.

Re:An unfortunate choice

[rijrunner]

Well, yes.. of course. How many companies can you contact that will give you the answer you are looking for without you have to spell it out?

    The NSF is restricted legally from putting the result right into the RFQ. So, you have to have a company that is savvy enough to puzzle out the answer you are looking for by reading between the lines. That takes skill and experience. Something that Gartner has spent a lot of time and effort developing.

Re:An unfortunate choice

[lwriemen]

OS/2 would have saved the industry a ton of money in the long run. Better robustness, a more extensible user interface, better performance, ... Even outside of OS/2, if it wasn't for the Microsoft monopoly, the computing industry would have benefited from competition in the operating system arena bringing more innovation and a better user experience. Microsoft's monopoly has set us back at least 20 years. Windows is still playing catch-up to the design of OS/2.

Re:An unfortunate choice

[Dabido]

And if we had of listened to Gartner we wouldn't be in the mess we are today!!! We'd be in a different mess ... um ... can I be excused?

Cost-of-Decommit

[FellowConspirator]

Hehe. We had one of those IT department brainstorming sessions once (I was in research at the time) and they were talking about this shiny new platform that they were going to roll out, I simply asked what the cost was. They threw out some figures about how they priced it an it would cost X dollars to implement over Y years. So, I asked "does that include the cost of decommission?" and got blank stares all around... The notion that you estimate the cost of getting out of abandoning / migrating away from a product never occurred to them! Products tend to not be all that flexible, they change over time, and business needs and processes often diverge from the product or a better product comes along -- we have fairly good ideas on what the platform turn-over is going to look like, how open various platforms are, etc. We can estimate the CoD with some accuracy. So why don't we? We're still buying into products that are readily identified as "dead-ends" and screwed when they are no longer supported, needs change, etc.

Wrong

[Hognoxious]

It's no secret that the actual cost of software is very complicated.

It's just a number. Calculating it is complicated.

Re:Wrong

[elashish14]

No, no, no - the value is clearly complex (to avoid singularities at zero of course).

Re:Wrong

[Anonymous Coward]

Yeah, but it has 2s and 5s in it. Those are all curvy and change direction, so they're hard to write, not like 1s and 0s.

Not to mention that dollar sign. Whew!

Push for SAS

[roman_mir]

Obviously software cost depends on what you measure it in. For example Linux kernel is estimated to cost near 1.4 billion US dollars (at the bottom), but IF you measure this in chickens.... it could cost 35,008,752.2 chickens.

In ounces of gold it would be around 1,040,041.6 ounces. In DOW it would cost approximately 127,186

It is also possible to estimate its cost in terms of Libraries of Congress, man years and many such wonderful things, however note that many Keynesians say that gold has no value but what is 'speculated' to be value while they do not see the same thing about their cherished and printed fiat, so then we could argue that Linux kernel is worth nothing if 1,040,041 ounces of gold priced at current levels in USD are worth nothing.

It's all a matter of point of view.

Re:Push for SAS

[heathen_01]

[incredulously] A certain point of view?

Re:Push for SAS

[roman_mir]

You haven't seen what you thought you saw. You don't want to talk about it. You want to go have a cookie now. Cookies are good.

Re:Push for SAS

[heathen_01]

Your mind tricks wont work on ... One sec ... x-factor is on ...

Slashdot Economics section

[roman_mir]

I wonder why /. does not have a section on economics. Isn't it long overdue to have one?

So many stories really belong in economics.

We could discuss what things are worth.

We could point out stories that appear on front pages of various portals and news sites and discuss what really is going on behind the title on them, just like the title I linked to:

Stocks Rise on Renewed Hope for Fed Action

- which sounds as if it is a positive for the economy that stocks rise on 'Hope for Fed Action', when in reality, those who understand can tell you that "Fed Action" means more money printing/borrowing, which implies more inflation and debt, so rising stocks (and rising gold) in this situation means that there is an expectation of yet more inflation, so stocks will go up in nominal terms, but all US holdings will lose more purchasing power.

Isn't /. 'news for nerds' and isn't economy yet another 'nerdy' subject?

Re:Slashdot Economics section

[Anonymous Coward]

@roman_mir #slashdorks have no understanding of economics. might as well have a #vagina section.

Re:Slashdot Economics section

[roman_mir]

OTOH I am sure this place is literally crawling with Anonymous Coward vaginas.

Re:Slashdot Economics section

[Anonymous Coward]

Anonymous Coward Penis here, Looking for an Anonymous Coward Vagina...

Re:Slashdot Economics section

[Anonymous Coward]

Roman Mir, and our twitter troll are friends. Never would have figured.

Re:Slashdot Economics section

[tronbradia]

I wonder why /. does not have a section on economics...

We could point out stories that appear on front pages of various portals and news sites and discuss what really is going on behind the title on them, just like the title I linked to:

Stocks Rise on Renewed Hope for Fed Action

- which sounds as if it is a positive for the economy that stocks rise on 'Hope for Fed Action', when in reality, those who understand can tell you that "Fed Action" means more money printing/borrowing, which implies more inflation and debt, so rising stocks (and rising gold) in this situation means that there is an expectation of yet more inflation, so stocks will go up in nominal terms, but all US holdings will lose more purchasing power.

Isn't /. 'news for nerds' and isn't economy yet another 'nerdy' subject?

And of course, people that know things could point out that since we're falling into a deflationary spiral, money printing is actually an attempt to stabilize inflation at its historic 2%, permitting job growth and preventing a Japan-like lost decade (currently 10-year expectations are down to 1%, which increases the expected real burden of pre-crash debts and in turn creates a money shortage and severe job losses). I could provide links but you could also just go find a macroeconomics textbook and look up 'disinflation' and 'great depression'.

I really don't need to hear the misinformed opinions of slashdotters that think they know things about economics, thx.

Re:Slashdot Economics section

[Anonymous Coward]

I wonder why /. does not have a section on economics. Isn't it long overdue to have one?

Yes. And then I can filter it out.

Re:Slashdot Economics section

[Mr2001]

which sounds as if it is a positive for the economy that stocks rise on 'Hope for Fed Action', when in reality, those who understand can tell you that "Fed Action" means more money printing/borrowing, which implies more inflation and debt, so rising stocks (and rising gold) in this situation means that there is an expectation of yet more inflation

You say "more inflation" as if we've been experiencing high inflation already, when in fact inflation has been unusually low for quite some time (lower than the Fed's target level, and it's only just now they've considered doing anything to bring it back up).

so rising stocks (and rising gold) in this situation means that there is an expectation of yet more inflation, so stocks will go up in nominal terms, but all US holdings will lose more purchasing power.

Many economists believe that since the main problem with our economy now is a lack of demand, an increased money supply and higher inflation is what we need to get it moving again. In light of that, what makes you think the rise in stocks wouldn't be able to outpace inflation?

Also, if you're going to mention the negative effects of inflation on purchasing power, isn't it also worth mentioning the positive effects of inflation on debt?

Re:Slashdot Economics section

[roman_mir]

Well, when your own opinions do not hold water, then somebody who knows can point out all of the fallacies of a comment such as yours and explain how it is incorrect and why, not for the sake of a person such as yourself, who is uninterested in opinions, but for the sake of people who may have legitimate question and are interested to see what is happening not only from point of view of Keynesian shamanism.

And of course, people that know things could point out that since we're falling into a deflationary spiral,

- definitely there is deflation, but it is completely overpowered by the existing inflation.

Recession is about deflating prices, but inflation is about increasing money supply, both things can and are happening right now simultaneously.

The prices on such things as houses, seem to be stable, this is the inflation in action. In reality prices should be falling. Of-course the gov't doesn't want to have falling house prices, in fact just about a week ago Bernanke came out with a statement that the Fed now has a new mandate: mandate to increase prices.

Gov't doesn't want house prices to fall because banks (and by proxy the gov't) are holding toxic mortgages right now on the books, if the house prices fell (which they should do, because jobs are disappearing, so clearly dwelling prices should go down) then most banks would have failed immediately. You'd have banks crash right away, it would force US bonds to crash and then US gov't would go bankrupt because it wouldn't be able to refinance its short term mortgage (it is running on short term teaser rate mortgage right now).

money printing is actually an attempt to stabilize inflation at its historic 2%, permitting job growth and

- this person, who wrote it, is insane. Saying that you STABILIZE INFLATION BY INCREASING MONEY SUPPLY. That's right. He thinks (it's a he, right?) that inflation can be STABILIZED by printing money.
No, you do not stabilize inflation by printing money. You cause inflation by printing money. Inflation is an expansion of money supply.

Also saying that this will permit job growth - this comes from Keynesian shamanism. You see, by devaluing the US dollar, Bernanke believes he'll make US labor less costly, meaning that capital investments will come back to the USA if its labor is seeing as cheap. However while it is true, that inflation causes people to lose purchasing power and thus make them cheaper in those terms as opposed to nominal terms, USA has a different problem on hands - it has created an environment, where generally cost of starting and doing business is too expensive regardless even of the wages. The ever-increasing regulations, the income/payroll taxes, the subsidies of large monopolies makes barriers to entry for new businesses to high and at the same time the artificially low interest rates and thus a weakening currency prevents credit from reaching the private sector, because the banks loan from the Fed at near 0% and then 'invest' into US bonds at higher rate and make the spread. In this situation if the interest rates all of a sudden went up above the interest rates that the US bonds are promising, all those banks would immediately lose their profit and become insolvent. They wouldn't be able to return that money with that interest.

What inflation does in real terms: it increases prices of many goods, where prices should fall, this especially is true in housing and rent (and wages) and at the same time it forces the prices for necessities to rise.

Again, Bernanke just said that he wants to see prices rise much faster than they are rising right now. Isn't he concerned about the poor Americans who have to buy the food, the fuel, who have to rent?

preventing a Japan-like lost decade

- Japan never had the same problem as USA. Japan never stopped their production, never lost their manufacturing. Japan had huge surpluses, it didn't have the debt, it had very strong

Re:Slashdot Economics section

[tronbradia]

Dear slashdot, is my point made? Does anybody want this?

Re:Slashdot Economics section

[roman_mir]

You say "more inflation" as if we've been experiencing high inflation already, when in fact inflation has been unusually low for quite some time (lower than the Fed's target level, and it's only just now they've considered doing anything to bring it back up).

- well, that's why /. needs an economic section.

The inflation is rampant. If there was no inflation, you would have seen what really happens during recessions - deflation of prices. And prices should deflate, home prices should fall dramatically, much lower than they are now, and many other things should also deflate in prices. You are observing inflation, which is what the Fed is doing - it is expanding the monetary supply.

The inflation IS expansion of monetary supply. You are looking for price inflation, but prices ARE inflated, they should have been much lower right now if the Fed didn't put its dirty little hands into this.

The Fed is not satisfied with the current inflation levels and it wants the prices to go higher, I have explained the reasons in an above comment in this thread, it's lengthy, I do not want to retype.

Suffices it to say that if you look carefully at commodity prices, sugar, cotton, wheat, gold, meat, whatever, prices are rising. I have left a comment about it a bit earlier on /. as well.

Many economists believe that since the main problem with our economy now is a lack of demand,

- let us stop here. First, all of the economists who believe this should not be considered actual economists.

The problem in USA is lack of production, not lack of consumption. Should USA start producing again, it will be able to consume. Here is a simple mental exercise, I mentioned it earlier:

If all currencies devalue, which countries will be better off, those who have production capacity and manufacturing sector in their countries, or those who do not?

Countries with productive capacities will be fine, they'll aim at their own markets and their quality of life will suffer initially, but eventually will go up.

Countries without productive capacities will not be fine. They have nothing to offer even to their own citizens, they will have shortages of everything. All goods and services will become scarce and quality of life will go down.

an increased money supply and higher inflation is what we need to get it moving again. - no. Another mental exercise: what will happen if everybody in the country was given a newly printed stash of cash, let's say a million dollars? Would that help to restart the economy or would that crash the currency?

No amount of borrowing and printing can help economy that is losing it's productive capacity. What is needed is the return of real investment capital, real credit, which right now is being eaten by the gov't, that stimulates spending and not savings, which are needed to re-create the productive economy. You see, a society without production and which only is relying on subsidies is not an equivalent player in an economy that has producers. US consumer will not be subsidized forever and no amount of stimulus spending by government can make USA a productive society again.

The only correct way to make USA a productive society is to allow the private sector to have access to the credit that is currently used by US gov't, who spends it on stimulus and wars and various gov't programs, even though gov't is basically insolvent right now. Should the US bond holders decide not to continue holding the bonds and not rollover at the end of their very short holdings (6 months to a year rather than 10-30 years) the US will be obliged not only to pay interest, but to repay the principal, which they of-course woul

Re:Slashdot Economics section

[Mr2001]

The inflation is rampant.

Uh, no. A very low positive inflation figure does not magically become "rampant" inflation just because you think the figure should actually be negative. Inflation is measured in absolute terms, not relative to your subjective expectations.

If there was no inflation, you would have seen what really happens during recessions - deflation of prices.

If there were no inflation, that would be zero inflation, with prices staying the same. If prices were falling, that would be deflation, not "no inflation".

And prices should deflate, home prices should fall dramatically, much lower than they are now, and many other things should also deflate in prices.

That would be catastrophic, so it's a good thing that isn't happening.

Deflation is a bad thing for anyone who isn't sitting on a big pile of cash. If you have any household debt, like the average American does, deflation effectively jacks up your interest rates, since you owe the same number of dollars but those dollars are now worth more (and harder to obtain). And it certainly doesn't help a slow economy -- why would I buy a widget today for $500 if I think it might be $450 next week, or $400 the week after that?

You are looking for price inflation, but prices ARE inflated, they should have been much lower right now if the Fed didn't put its dirty little hands into this.

That's not what inflation means. If you have to start redefining terms to make your arguments sound correct, maybe it's time to reconsider your arguments.

First, all of the economists who believe this should not be considered actual economists.

The problem in USA is lack of production, not lack of consumption.

Maybe it's a good thing Slashdot doesn't have an economics section. We ought to be listening to professional economic experts, not random contrarians who think all the experts are wrong and manage to get their theories modded up.

Businesses in the US are sitting on cash, rather than using it to expand, because they see that there isn't enough demand for what they're already producing. Producing even more stuff that customers aren't willing to buy would not help.

Another mental exercise: what will happen if everybody in the country was given a newly printed stash of cash, let's say a million dollars? Would that help to restart the economy or would that crash the currency?

Both. A million is surely too high, but if everybody in the country were given a more reasonable sum, that would go a long way toward restarting the economy. Even better would be if that money were targeted toward the people who are most likely to spend it immediately, which is why the real plans that economists have suggested involve things like food stamps and lower-income tax breaks that are targeted in that way.

Of-course the US Fed can print US dollars until they cut down the last tree, but with every printed dollar there is less and less incentive to hold US debt (in fact there is no incentive to hold it now but fear of causing a major sell off, which would result in a completely devalued US dollar.)

If foreign investors become less willing to invest in US debt, we'll see a rise in interest rates. But we aren't seeing that. Interest rates are as low as ever, and people keep buying US bonds because they see it as a safe investment.

Re:Slashdot Economics section

[roman_mir]

Uh, no. A very low positive inflation figure does not magically become "rampant" inflation just because you think the figure should actually be negative. - again, the Fed is expanding the money supply all the time, all the stimulus and 0% lending to banks and selling the bonds, all of this is inflation.

If there were no inflation, that would be zero inflation, with prices staying the same. If prices were falling, that would be deflation, not "no inflation".

- I can't make you see what you are refusing to see - in recession prices fall, the price stability that you are observing and that is unnerving the Fed is inflation of money printed canceling the deflation of prices that should happen as the bubble burst.

Unless you were in a cave for the past number of years, you should have noticed bursting of housing bubble, the house prices must be coming down, they still must go down more.

If you looked at the shorts in bond market, you'd see a number of US municipalities shorted right now because they are expected to implode, you'd see places like Las Vegas being shorted for the past year for example, the place is about to collapse in terms of the bond market. The recession brings prices down but you are not seeing it because there is so much stimulus and bailouts and just free money handed out.

That would be catastrophic, so it's a good thing that isn't happening.

- no, that's the necessary step in a bursting of an asset bubble, it's not 'catastrophic', it's excellent for starting to restructure the economy. Why do you call this catastrophic? The mortgages that were handed out to all the people who couldn't pay - that was catastrophic, that, and interest rates at 0-1% led to the overheating of the housing market.

Prices must come down, they are blown up out of proportion. Houses need to be affordable first of all, because don't forget, houses are NOT investment, they are an expense that people take in order to live somewhere. Many people must lose their houses that they have with mortgages they can't afford and where they didnt' even put any money down, and they should go rent, and rent should be cheap in a falling asset category.

Housing must become cheap, with jobs moving out why, how, for what reason should house prices stay so high?

So Bernanke came out with more money printing, he believes, like you, that house prices must not only be kept at their level, but that they should be inflated. Of-course he wants to do that - the Fed, the banks, the gov't are holding toxic assets - failed mortgages.

Deflation is a bad thing for anyone who isn't sitting on a big pile of cash.

- no, of-course not. Deflation is a necessary step, it is a GOOD step, it brings the overheated prices down, keeps the money stronger and allows people to buy stuff cheaper, allows people to save money to restart economy by creating new businesses. Of-course people have no money to save, the gov't is incentivizing spending and it taxes income. The gov't is wrong. It's not spending that's needed but savings, savings allow people to restart economy by creating new businesses. Can't do it while being taxed on income and being pushed to spend money you don't have.

If you have any household debt, like the average American does, deflation effectively jacks up your interest rates, since you owe the same number of dollars but those dollars are now worth more (and harder to obtain). And it certainly doesn't help a slow economy -- why would I buy a widget today for $500 if I think it might be $450 next week, or $400 the week after that?

- and you SHOULD NOT be buying any widgets. You should be saving your money, the widget prices must fall. The household debt, well that's an excellent question - if you have a house that's falling in price to the point where it's under water (you owe more than the house is worth), leave the house. Get out of tha

Re:Slashdot Economics section

[Peeteriz]

Mod parent up above the +5 - quite a few of tech-related topics would fall into this category, but they are of quite separate nature and would be best served in a separate category that some users can filter out and others can put them in front page.

Re:Slashdot Economics section

[Mr2001]

again, the Fed is expanding the money supply all the time, all the stimulus and 0% lending to banks and selling the bonds, all of this is inflation.

No, expanding the money supply is not the same as inflation. Inflation is a rise in price levels (but you don't have to take my word for it). When the money supply is expanding perfectly in sync with the level of economic activity, so that prices remain flat, that's zero inflation.

If you're going to make up your own definition of common economic terms, you're going to have a hard time discussing economics with anyone.

you SHOULD NOT be buying any widgets. You should be saving your money, the widget prices must fall.

Congratulations, you've found a delicious recipe for an even worse economy.

People don't buy widgets; widget manufacturers see reduced demand and lay off their employees; laid off employees have even less money to buy even fewer widgets; the cycle continues. That's why serious economists caution against deflation.

The household debt, well that's an excellent question - if you have a house that's falling in price to the point where it's under water (you owe more than the house is worth), leave the house. Get out of that house, leave it, don't pay.

What makes you think all debt is mortgages?

What's your prescription for all the American households who have thousands of dollars of unsecured debt? Deflation would mean they owe even more than they currently do. Should millions of families declare bankruptcy?

inflation means monetary expansion. You, not I believe that inflation is all about looking at prices.

Inflation is not at all the same as monetary expansion. I and everyone else except you believe that inflation is all about prices, because that's the standard definition of the term. That's the definition used in every textbook and by everyone who works in the field.

You seem to have made up your own definition, but that doesn't mean anyone else is required to use it.

it's not 'my own' theory, though it's completely logical, this is Austrian economics.
[...]
that's one of the ridiculous believes forced upon the people in most of the so called 'educational institutions' by the so called 'economists', which the Keynesians are most surely not.

Ah yes, Austrian economics. Generally discredited, but popular among libertarians, which I guess is why you want an economics section on Slashdot -- you're far more likely to find support for those theories here than in any serious economics forum. And while you're posting about those theories, you can chuckle at the majority of economists who disagree with them, and tell yourself they're not really economists.

What's the purpose of giving money to people who are going to spend it on trinkets? Is it to pass that money to the companies?

The point is to facilitate economic exchanges. Every time you exchange money for goods, you're creating value: you and the seller are each better off. That's how an economy works.

The problem we're currently facing is that people are unwilling to make those exchanges because they're placing a high value on cash. The solution is to give them more cash so they'll be willing to trade some of it away.

Re:Slashdot Economics section

[roman_mir]

No, expanding the money supply is not the same as inflation. Inflation is a rise in price levels (but you don't have to take my word for it). When the money supply is expanding perfectly in sync with the level of economic activity, so that prices remain flat, that's zero inflation.

- that is Keynesian nonsense. Inflation is expansion of monetary supply. The Keynesian shamans have perverted that notion and invented a new term for it, which you bought: 'monetary inflation' and they redefined what inflation always used to mean before Keynesian shamans destroyed the field of economics, they redefined inflation as price inflation.

I notice that you are trying to be a smart ass with the 'let me google it for you' routine, and as I said previously that there isn't much I can do for you further if you continue with the same Keynesian shamanism, I then do stick to my words: I can't do anything for you.

You insist that Austrian economics is discredited, which of-course is pure nonsense, Jim Rogers, Soros, Schiff and others who make pretty living investing based on Austrian school, have predicted the economic collapse during the Internet bubble, predicted the collapse of the housing bubble, predicted the inflation and the resulting rise of commodities and emerging markets while the Keynesians are generally lost in the woods normally found speculating on stocks going up and down in basic day trading schemes.

But good luck to you in all your endeavors, may you be right and may you never experience the effects of the inflation that you are so consistently not seeing, AFAIC there isn't much hope for this not to become a hyper-inflationary depression, which I wish you also never to experience.

Cheers.

Re:Slashdot Economics section

[DragonWriter]

that is Keynesian nonsense. Inflation is expansion of monetary supply.

The fact that the Austrian school has tried to redefine the term doesn't mean that that is what it means, outside of conversations exclusively between members of that group.

Inflation has a very well-established meaning (which, incidentally, predates Keynes) of being increases in the general price level.

The Keynesian shamans have perverted that notion and invented a new term for it, which you bought: 'monetary inflation' and they redefined what inflation always used to mean before Keynesian shamans destroyed the field of economics, they redefined inflation as price inflation.

The classical term for what is now called "monetary inflation" wasn't, as you suggest, plain "inflation" but "currency devaluation". Of course, that was the term for it when the dominant form of currency was representational commodity currency so that printing more currency meant increasing the ratio of circulating currency to reserves of the backing commodity. The term "currency devaluation" is less apt when there is no backing commodity, as is the case with fiat currency, and is less apt it describing expansions in the money supply other than expansions in the supply of actual currency, hence "monetary inflation" displaced it as the general term for expansion of the supply of money.

It is true that what is now known as just plain "inflation" was previously known as "price inflation", but it didn't replace a previous use of the term "inflation" by itself to mean something else in economics.

You insist that Austrian economics is discredited, which of-course is pure nonsense, Jim Rogers, Soros, Schiff and others who make pretty living investing based on Austrian school, have predicted the economic collapse during the Internet bubble, predicted the collapse of the housing bubble, predicted the inflation and the resulting rise of commodities and emerging markets while the Keynesians are generally lost in the woods

Soros rather explicitly is not a subscriber to the Austrian school, though certainly a few of his ideas are similar to or drawn from the same sources that the Austrian school draws from. And lots of people -- economist, investors, etc., from different schools of economics, including Keynesians like Paul Krugman, predicted each of those collapses. Really, investment bubbles are so common historically that its hard to imagine any theory of economics which could account for and comprehend them. That's not where different schools of economics differ.

Re:Slashdot Economics section

[Mr2001]

that is Keynesian nonsense. Inflation is expansion of monetary supply.

According to a handful of believers in a niche theory, sure. If you want to become marginalized, making up your own definitions of common terms is a great way to do it!

But like I said, you're going to have a hard time discussing economics with anyone outside that small, insular group if you insist on using your definition instead of the standard one that everyone else uses.

Tell me this: why on earth would you talk about "rampant inflation" when you know perfectly well that "inflation" means something else in the minds of everyone who will read your comment? Are you trying to deceive them, or do you just not care whether they understand what you're saying?

You insist that Austrian economics is discredited, which of-course is pure nonsense, Jim Rogers, Soros, Schiff and others who make pretty living investing based on Austrian school, have predicted the economic collapse during the Internet bubble, predicted the collapse of the housing bubble, predicted the inflation and the resulting rise of commodities and emerging markets

You say that as if they're the only ones who predicted those bubbles. That is not what happened.

while the Keynesians are generally lost in the woods normally found speculating on stocks going up and down in basic day trading schemes.

What a bizarre thing to say. Are you using some special Austrian definition of "day trading" too?

But good luck to you in all your endeavors, may you be right and may you never experience the effects of the inflation that you are so consistently not seeing, AFAIC there isn't much hope for this not to become a hyper-inflationary depression, which I wish you also never to experience.

You too, sir. I hope the deflationary spiral your preferred policies would create never becomes reality, and I hope you're never laid off or forced into bankruptcy as a result.

Re:Slashdot Economics section

[roman_mir]

Keynesians invented their definition of inflation, which came much after Birmingham scholars had theirs, 100 years before Keynesians and those guys knew what inflation was - increase of money supply, and they counted on it.

You are completely ignorant of the rampant inflation around you, but I will teach you, though you may not be susceptible to teaching, but how about these facts:

October 1 2010

Gold: new high
Silver: new 30 year high
Gold stocks hit 52 week high
Oil: strong day and strong week
Dollar: dropped 13 percent from peak 3 months ago

September is done, media says: this is best September in 71 years. Dow gained 7.7%, S&P gained 8.8%.

However this month of September.

CRB Index (commodities): gained 8.7% - beat DOW and just under S&P
Soy beans: up 9.5% - beat S&P
Copper: up 10% - beat S&P
Rice: up 10% - beat S&P
Oil: up 11% - beat S&P
Corn: up 12% - beat S&P
Silver: up 13% - beat S&P
Frozen concentrated orange juice: up 13% - beat S&P
Cotton: up 17.5% - beat S&P
Sugar: up 19.3% - beat S&P

Currencies:
Swiss Frank: up 4.6%
Euro: up 7%
Australian Dollar: up 9% - beat S&P

--------

Keynesians cannot see forest for the trees, none of them predicted the bubbles, they didn't even see the bubbles of housing prices, of stock prices in the Internet bubble before that and they don't see the bond bubble now either. They are blind, useless and dangerous, as they are in power.

--------

I prefer deflation. In my world it is much better when prices fall, so I can afford more with less money. You can go ahead and have your hyper inflation, which does not even need to be hyper, just the price increases indicated above should make anybody worry about their ability to pay the bills in the near future.

Re:Slashdot Economics section

[roman_mir]

What predates Keynes, was Birmingham ideas, which understood inflation for what it was - increase of money supply. They wanted to use that to achieve some bizarre notion of total employment.

There is inflation right now, it is rampant and it will eventually hit the prices near you, just because most Keynesians expect to see the FINAL stage of inflation first, reflected in local prices, does not make this inflation any less real.

October 1 2010

Gold: new high
Silver: new 30 year high
Gold stocks hit 52 week high
Oil: strong day and strong week
Dollar: dropped 13 percent from peak 3 months ago

September is done, media says: this is best September in 71 years. Dow gained 7.7%, S&P gained 8.8%.

However this month of September.

CRB Index (commodities): gained 8.7% - beat DOW and just under S&P
Soy beans: up 9.5% - beat S&P
Copper: up 10% - beat S&P
Rice: up 10% - beat S&P
Oil: up 11% - beat S&P
Corn: up 12% - beat S&P
Silver: up 13% - beat S&P
Frozen concentrated orange juice: up 13% - beat S&P
Cotton: up 17.5% - beat S&P
Sugar: up 19.3% - beat S&P

Currencies:
Swiss Frank: up 4.6%
Euro: up 7%
Australian Dollar: up 9% - beat S&P

--------

Keynesians cannot see forest for the trees, none of them predicted the bubbles, they didn't even see the bubbles of housing prices, of stock prices in the Internet bubble before that and they don't see the bond bubble now either. They are blind, useless and dangerous, as they are in power.

Re:Slashdot Economics section

[Mr2001]

Keynesians invented their definition of inflation, which came much after Birmingham scholars had theirs, 100 years before Keynesians and those guys knew what inflation was - increase of money supply, and they counted on it.

Regardless of which came first, you're aware that your definition is not a common one today, right? So...

Tell me this: why on earth would you talk about "rampant inflation" when you know perfectly well that "inflation" means something else in the minds of everyone who will read your comment? Are you trying to deceive them, or do you just not care whether they understand what you're saying?

You are completely ignorant of the rampant inflation around you

Not at all. I am fully aware of the increased money supply. I just don't use the word "inflation" to refer to it -- and neither do most people outside your Austrian echo chamber. I also don't consider it a bad thing.

(You are completely ignorant of the monster under your desk! Of course, the thing I call a "monster" is the same thing that 99% of the world calls a "harmless dust mite"... ;)

Keynesians cannot see forest for the trees, none of them predicted the bubbles, they didn't even see the bubbles of housing prices

False. Paul Krugman was one Keynesian who predicted the housing bubble.

I prefer deflation. In my world it is much better when prices fall, so I can afford more with less money.

Spoken like someone with a big pile of cash in the bank and no debt.

Unfortunately, most Americans aren't in that boat. As I've explained, deflation is a very bad thing for everyone else: their debts are measured in nominal dollars, so deflation means they owe more; and since their wages fall as prices fall, they can't actually "afford more" for any significant time.

Re:Slashdot Economics section

[roman_mir]

Krugman? Krugman 'predicted' the housing bubble as it started to burst. He 'predicted' a bubble when the housing market started showing contraction.

Austrian scholars, like Ron Paul, Schiff, Rogers have predicted the housing bubble a number of years earlier, there is a video of Schiff from 2002 describing how the bubble is being pumped.

--

You are comparing the rampant inflation to a dust mite? Good luck holding onto your purchasing power.

--

On deflation: I have no kind words for you there at all. Saying that people with PILES OF CASH will profit from falling prices? What bubble do you live in?

People with less money will benefit from falling prices. I don't understand how your world view got so perverted to believe that people who benefit from falling prices are the rich ones, when it is absolutely clear that falling prices benefit first of all the poorest and then the middle class, it's amazing, your understanding of money is inverted.

Re:Slashdot Economics section

[Mr2001]

You are comparing the rampant inflation to a dust mite? Good luck holding onto your purchasing power.

Tell me this: why on earth would you talk about "rampant inflation" when you know perfectly well that "inflation" means something else in the minds of everyone who will read your comment? Are you trying to deceive them, or do you just not care whether they understand what you're saying?

Until you can answer the above questions, I'm going to avoid referring to either "inflation" or "deflation" with you, since you don't seem to grasp the fact that other people understand those words to mean something very different from what you mean with them.

So, yes: I am comparing monetary expansion to a harmless dust mite. An increase in price levels would be worrisome, once it got high enough, but even you yourself acknowledge that that isn't happening. My purchasing power is perfectly safe when prices aren't rising.

I am not at all worried about monetary expansion that doesn't lead to an increase in price levels. In fact, I think the fact that we aren't seeing an increase in price levels suggests that we haven't had enough monetary expansion.

On deflation: I have no kind words for you there at all. Saying that people with PILES OF CASH will profit from falling prices? What bubble do you live in?

It's called the real world.

Look, this is simple. If you have cash when prices are falling, that means you can buy more stuff without any extra effort. That's good for you. And the more cash you have saved up, the better it is for you.

If you don't have a pile of cash in the bank, because you're living paycheck to paycheck, then you don't get that benefit, because your wages will fall too. The price for labor will fall just like the price for goods. This can play out two different ways.

The better scenario is that the price of goods falls first, and then for a short while before your wages fall (or you get laid off), you're able to buy more stuff with the same paycheck. But once wages fall (assuming you still have your job), you're back to where you were before.

The worse scenario is that the price of wages falls first, and then for a short while before the price of goods falls, you're able to buy less stuff with your paycheck. Sucks to be you, but once the price of goods falls, you'll be back to where you were before. (Again, assuming you still have your job.)

But worst of all is if you have any debt -- like most Americans do. If you owe $5000, that amount is given in nominal dollars and is not affected by changing price levels or wages.

Suppose you earn $10 an hour: your debt is equivalent to 500 hours of labor. But if the price for labor falls and suddenly you're only earning $8 an hour, your debt is now equivalent to 625 hours of labor; it will now take you 25% longer to pay back that debt. Do you see the problem?

Let me ask that again, since this is another one of those points you keep refusing to acknowledge. Do you understand why it's a problem for wages to fall while debt in nominal dollars stays the same?

I don't understand how your world view got so perverted to believe that people who benefit from falling prices are the rich ones, when it is absolutely clear that falling prices benefit first of all the poorest and then the middle class

I think the reason you're so confused on this point is that you somehow think the prices of goods and services will fall while wages stay the same!

Obviously, in a fantasy world where wages stayed the same while everything else got cheaper, that would benefit rich and poor alike. But that's not what would actually happen, because wages would fall too.

And since wages fall just like the prices of everything else, who gets the benefit? People with piles of cash sitting around! Because just like a $5000 debt is still $5000 even when prices are falling, a bank balance of $50

Re:Slashdot Economics section

[roman_mir]

The inflation is rampant.

Even your primitive brain should be able to understand the numbers I gave 2 comments ago, that show in fact how inflation causes prices to increase. Your end-of-line consumer prices will be hit as well.

Over the past 3 months, corn futures have gone up by 60%.

Sixty percent. SIXTY PERCENT. That's only one single commodity and it will drive prices up for various other commodities. What will be displaced next year, which crops will be displaced by corn? Will it be soy?

Corn is used to feed livestock, this includes cows and chickens and pigs. As a vegetarian I don't even care, but most people should. Also as prices for corn go up, so will prices for various foods that contain corn.

This IS rampant inflation. You don't see it because you are blind. Your government made you blind. Compare the prices you had to pay a year ago to prices today. Prices are going up.

Inflation is rampant and you don't see it yet because while money is increasing, the US gov't has been quite successful since Nixon in fixing certain prices, especially prices for food, but even food prices are growing. US has been exporting inflation to other countries, who lost so much of their purchasing power so that prices could stay leveled in US.

Inflation IS rampant. The housing prices should be falling by another 70% easy, but they are not. It's done by the gov't by adding printed money into the system.

Of-course inflation is rampant. When the gov't got rid of M3 numbers in 2006 it was clear that the gov't decided to start hiding the inflation. They KNOW that inflation is money supply and not the stupid bullshit ridiculous mindless idiotic garbage they brainwashed you with. They know that inflation is about the money that's printed and provided to their preferred corporations, so they decided to stop counting the M3 to prevent everybody from talking about it.

Inflation is rampant. The commodity prices are showing it. There is time period between the commodity prices on the markets going up and end-of-line prices rising.

By the time your local market prices go up it's too late for you to start thinking about inflation and trying to save your money. You have to think about it much earlier, so you can actually protect yourself from your gov't stealing your purchasing power.

Of-course I am not talking about you, specifically, to me you are pretty much a lost case.

----

Deflation is a desired outcome of a recession. It is a necessary outcome. Inflation is a much worse outcome for any average person.

Do YOU understand that? I KNOW that you do not.

When was the last time ANYBODY in USA got a pay increase except for the Wall street money making robots? That's right, the wages are stagnating and have been for at least 10 years for sure.

So just how incredibly stupid it is to suggest that inflation is better than deflation for all these people, who are not seeing any of their wages increased while the prices are going up? And prices ARE going up.

And if you think that the 60% price increase on corn in 3 months will not result in gigantic price increases across the board for foods and probably other products, you are as deluded, as blind, as brainwashed as your manipulative dangerous gov't wants you to be.

Deflation is MUCH better for people for more reasons than one. First of all deflation allows people to buy more with less. To say that it does not is simply inconceivably stupid.

But let's look at the situation of people who are in debt. You think these people will ever be PAYING DEBT OUT IN INFLATION?

Well there you go. Your idiotic assumption is that people will be paying debt out in INFLATION. Well they will NOT be paying debt out in inflation. They will be getting into more debt, as obviously their salary growth (which is not growing anyway) will be outpaced the growing prices. People will be getting into more and more debt.

Their 5000 debt, you are assuming this number will not go up and

Re:Slashdot Economics section

[Mr2001]

This IS rampant inflation. You don't see it because you are blind. Your government made you blind. Compare the prices you had to pay a year ago to prices today. Prices are going up.

Not very much. Overall price levels have been rising more slowly than they have in the past. They have risen more slowly than the Fed's target level. In some cases, they've fallen.

They KNOW that inflation is money supply and not the stupid bullshit ridiculous mindless idiotic garbage they brainwashed you with.

Really, this is such a stupid line of argument that I can't believe you're still pursuing it.

It doesn't matter what you call it. Using the term "inflation" to refer to monetary expansion doesn't make monetary expansion any better or worse. And a downward spiral in price levels doesn't magically become a good thing just because you stop calling it "deflation".

You say we shouldn't fear deflation because when you say "deflation" you refer to something that isn't bad (and let's say, for the sake of argument, that you're right). But this is like claiming we shouldn't fear tigers because when you say "tiger" you're referring to what the rest of us call a butterfly. At best, it's a pointless semantic game; at worst, it's going to get someone eaten because they don't know your nonstandard definitions.

So just how incredibly stupid it is to suggest that inflation is better than deflation for all these people, who are not seeing any of their wages increased while the prices are going up? And prices ARE going up.

No, actually. There is a figure that measures the rate of rise in price levels, and that figure shows that prices are not going up at the rate they typically have in the past. Most of the world calls that figure "inflation"; I don't know what you call it, but calling it something else doesn't change the facts.

The only way for people to start saving money is if these people could actually pay LESS for things.

The phenomenon that results in people paying less for things also means they get paid less for working. That's the part you continue to ignore. If the price of goods falls, the wages of the people who make those goods must also fall.

Deflation is the correct way to get rid of that $5000 debt.

Sure -- by turning it into an even bigger debt (in real dollars). That's what we call "out of the frying pan and into the fire".

But the most important problem would be eliminated - inability to save due to non-existent interest rates, due to the policy of gov't, which destroys all incentives to save and creates an impossibility to get out of the debt hole.

What nonsense. Low interest rates (on savings) don't destroy the incentive to pay down debt, because interest rates on loans and credit cards are still as high as ever. If you're paying 18-24% interest on your credit card, that's all the incentive you need!

The money is expanded and the market is showing CRAZY RAMPANT inflation

Tell me this: why on earth would you talk about "rampant inflation" when you know perfectly well that "inflation" means something else in the minds of everyone who will read your comment? Are you trying to deceive them, or do you just not care whether they understand what you're saying?

Why are you so afraid to answer my questions, roman_mir? Are you so guilty about your obfuscation that you can't bear to admit it?

Re:Slashdot Economics section

[roman_mir]

I see that you live in a different universe, for you up is down, white is black, growing prices are decreasing prices.

In your world inflation and stagnating wages means that debts will be repaid rather than increased.

In your world non-existent interest rates encourage savings.

In your world 60% increase of prices of corn in 3 months time period shows no inflation.

In your world silver going up from $10 in 2006 to around $24 dollars now shows no inflation.

In your world M3 numbers being hidden by the government means nothing.

In your world deflating prices mean that only the rich will be able to afford them.

It must be something else, living in your world.

Re:Slashdot Economics section

[Mr2001]

Tell me this: why on earth would you talk about "rampant inflation" when you know perfectly well that "inflation" means something else in the minds of everyone who will read your comment? Are you trying to deceive them, or do you just not care whether they understand what you're saying?

It must be something else, living in your world.

Yeah, you ought to come visit sometime. There are over 6 billion of us here. It's much less lonely than your world.

Re:Slashdot Economics section

[roman_mir]

You are wrong. There is fewer than 300,000,000 of you there, much fewer. Not everybody is as brainwashed.

As to inflation, I have shown everything, the prices are rising the dollar is being printed. If you do not understand difference between 10 dollars 4 years ago and 24+ dollars today for an ounce of gold, that's not my problem. If you don't understand 60% increase of price of corn over the last 3 months, that's not my problem.

If you don't understand that prices for homes must be falling much lower and what is holding them up is gov't printing money, that's not my problem.

Re:Slashdot Economics section

[roman_mir]

Made an error, that was an ounce of silver of-course. Gold cost under $480 in 2006 if I remember correctly, today it's around 1360.

So I guess in your head that means poor people can afford more gold, look, it's more expensive. So prices went up, must be better for the poor.

yes yes, wonderful logic.

Re:Slashdot Economics section

[Mr2001]

If you do not understand difference between 10 dollars 4 years ago and 24+ dollars today for an ounce of gold, that's not my problem. If you don't understand 60% increase of price of corn over the last 3 months, that's not my problem.

If you don't understand that corn and gold aren't the only two things on the market, that is your problem.

There is a measure for the rate of change in overall price levels, and it is showing historically low rise. You can cherry-pick a few commodities whose prices are going up, but you're not fooling anyone.

So I guess in your head that means poor people can afford more gold, look, it's more expensive. So prices went up, must be better for the poor.

It's amusing how you make up ridiculous strawmen like this. I can tell that even you realize that you're utterly out of your league, and you're flailing around as fast as you can to try to distract yourself from your own incompetence.

You know as well as I do that falling wage and price levels are bad for people with debt, and good for people with stockpiles of cash. You know it because it's so simple and obvious that there's no way not to know it, especially after I've spoon-fed the explanation to you over and over.

But you can't bring yourself to admit it, so you make up nonsense arguments and try to stuff them in my mouth. You try to turn this into some kind of class issue about "poor people" vs. "rich people", when you know perfectly well that I'm talking about people who have debt versus people who have stockpiles of cash -- it's about what you own, not what you earn. You know the argument I've actually put forward is correct, and now you're desperately trying to deflect the conversation from it. It'd be pathetic if it weren't so hilariously transparent.

That's also why you're so afraid of these simple questions:

Tell me this: why on earth would you talk about "rampant inflation" when you know perfectly well that "inflation" means something else in the minds of everyone who will read your comment? Are you trying to deceive them, or do you just not care whether they understand what you're saying?

Since you've proven to be too much of a coward to answer on your own, I'll answer for you: you do it because deception and sophistry is all you have. You have no true understanding of the subject outside your own tiny bubble. You refuse to make any attempt to communicate honestly or in commonly understood terms, because such obfuscation is the only hope you have of hiding your ignorance.

I thought there might be a shred of understanding somewhere in your mind, if I just worked hard enough, but now I can see I've been wasting my time. You are a complete fraud, and this will be my last response. Have a nice day.

Re:Slashdot Economics section

[roman_mir]

If you don't understand that corn and gold aren't the only two things on the market, that is your problem.

- I presented a much bigger list a few comments ago, if you can't read - that's not my problem. Of-course the things I provided in that list are a tiny subset of the list there is, because all commodities are going up in price, because US dollar is falling, which you probably do not understand even the concept of, but you maybe able to read a number, right?

US dollar index fell 18% since 2006. The only reason it's even as high as it is, is because the other currencies that constitute the index are also being printed in currency wars. Good thing Asia has waken up last week, it looks like Singapore decided it cannot win the currency war and the rest of Asia just may follow suit.

Of-course in this war 'winning' means you destroy your own people's purchasing power, nothing else. Those who 'win' this war, lose their quality of life.

There is a measure for the rate of change in overall price levels, and it is showing historically low rise. You can cherry-pick a few commodities whose prices are going up, but you're not fooling anyone.

- except of-course that the smart money has left USD and is in other currencies, in Asian equities and in commodities.

So if you are so dumb not to understand the insane levels of inflation presented by the price increases, then you deserve to lose your purchasing power.

You think ALL metals going up is 'cherry picking', you think ALL agriculture going up is 'cherry picking'? You think cotton going up by 17.5% in JUST September of this year is cherry picking? Sugar? Rice? Wheat? Basically futures of all staple foods is cherry picking. Ha, interesting. I must check what happened to the cherries, they must have done better than the DOW and S&P in September just as well, though I do not have that number in front of me right now, I'll find out.

It's amusing how you make up ridiculous strawmen like this. I can tell that even you realize that you're utterly out of your league, and you're flailing around as fast as you can to try to distract yourself from your own incompetence.

- I see, so I am dealing with a troll. Well I understand I am dealing with a troll, but this thread has gone long enough for me just to stop destroying every single one of your arguments in every comment I make.

You are the one saying deflation hurts the poor by taking away their purchasing power. You amuse me in your ignorance by making such statements, so I am waiting for more and more comes with every new comment of yours.

You are the one saying inflation provides people with more purchasing power, which is bullshit because nobody has wages rising at all except for the bankers and probably politicians taking bribes to help out the bankers.

So you have to decide, which is it? Is deflation hurting people or is it inflation?

I am clearly on the side that inflation hurts people more, all things considered inflation will destroy currency at this point.

You believe that deflation hurts people. So it must really hurt people if commodities, the basic foods, the basic elements go down in price, it must be truly painful to know, that sugar would go down in price rather than going 19.3% UP just in month of September of 2010. Which shows clear inflation because at the same time dollar lost a few percentage points and S&P gained only 8.8% and Dow gained only 7.7%. You do not see the inflation and move into the commodities and foreign markets, but what else is new? nothing.

You know as well as I do that falling wage and price levels are bad for people with debt, and good for people with stockpiles of cash. You know it because it's so simple and obvious that there's no way not to know it, especially after I've spoon-fed the explanation to you over and over.

- but you are willfully ignoring the simple fact that in

Why a subject ?

[bytesex]

Pinkie in the cheek: "One million dollars!"

Ya this is retarded

[Sycraft-fu]

Oh you have to work to keep something up? No shit, never heard of that before. I mean our building we are in, we spend nothing on that. Well except for janitorial staff. Oh and lightbulb replacements. And roof maintenance. And new furniture. And HVAC maintenance. And elevator maintenance....

Seriously, when you buy something the total cost is never just the up front price. You don't plunk down cash and then never again have to spend any time or money for the thing to work perfectly. In some cases it may be direct monetary costs at certain points. The roof at work is a good example, we had to have it largely replaced a couple years ago. Not because of a problem, but because the building is like 40 years old. Had to pay tens of thousands of dollars to do that, which was budgeted. Some of it is indirect, just regular maintenance you have to pay someone for. Our custodial staff is a good example. While some of what they do, like say wash windows, is just aesthetic, much of what they do is necessary upkeep to keep the building in good condition. There isn't a precise dollar figure on each job they do, it is just a general cost that is their salaries. Some stuff has just a time cost, more or less. Like yesterday I dusted off my MIDI keyboard. Needed to be done both because the dust is annoying and because excess dust can work in to the electronics and cause damage.

Why would software be any different? Yes, you have to spend time and money above just the initial cost. You have to patch it, some software has yearly support contract cost (like say RHEL), you have to have support staff to make it work and help people with it, and so on.

I fail to see how this is a "debt" of any sort. It is a "cost" like any other. The more software you use, the more cost ther'll be not just purchase cost but also support cost. This is surprising to nobody who understands how this shit works. This is also why the price tag on software is often not a big deal. Doesn't matter is a package costs $50,000 whereas another costs $50. If the $50,000 ones saves $100,000 in support and other costs (like lost productivity) it is worth its price easily.

To me this sounds like the kind of thing a dumb manager would say: "You mean that price we paid for our software 6 years ago isn't the only thing it cost! Holy shit we have software debt!"

Re:Ya this is retarded

[Pharmboy]

This is surprising to nobody who understands how this shit works.

True, but to the average consumer (this included pointy haired bosses) the upgrades for their home computer cost $0, the software came with it new, or was a one time purchase and the updates are either free or simply not done (or both), and every few years you just buy another one and give the old one to a friend or Goodwill with all your personal information still on it.

In the home consumer world, software IS only a one time expense for most people. Unless you are the guy who is having to get permission for upgrades, and patch all the servers in a commercial environment, this is your world view because it is your reality. It is not so shocking that average Joes and bosses don't know this.

Re:Ya this is retarded

[Hognoxious]

I fail to see how this is a "debt" of any sort. It is a "cost" like any other. The more software you use, the more cost ther'll be not just purchase cost but also support cost.

The similarity is that the costs are ongoing, like repayments on a loan.

I seem to remember reading somewhere [1] that every dollar you spend on development costs around ten in maintenance, which is perhaps surprising: I'd wager most managers would think it's the other way round.

[1] I don't have the reference to hand. Maybe Code Complete?

Re:Ya this is retarded

[Anonymous Coward]

I fail to see how this is a "debt" of any sort. It is a "cost" like any other.

The "cost", when not taken care of properly, silently becomes a "debt", usually when someone wants to do some new never-thought-of-before things with the old code. Try cutting your car maintenance cost to zero for a year or so, and you'll figure it out. Oh, you already knew that's not gonna work? Sadly, there are quite a few middle managers out there who haven't got a clue.

Re:Ya this is retarded

[Anonymous Coward]

I worked for a company that bought a building, and immediately had to put 3x the purchase price in the building, so it would no longer rain on the servers. This was known when we bought the building that significant costs would be incurred to rehabilitate it as we could see when we bought it 1/3 of the roof was missing. It was also why the building was so cheap. If we had bought a new building, we would not have expected rain on the servers.
At the current company I work for, we buy $1 million software packages every year or two, and these always need significant time and effort to get to work right. The expectation is that this is some expensive stuff, and it should work reasonably well out of the box, but the reality is "it will be fixed in the next version" The software from 6 years ago is the stuff that's doing it's job.

Re:Ya this is retarded

[DragonWriter]

I fail to see how this is a "debt" of any sort.

"Technology debt" (or "technical debt") is referred to as a debt because it has effects that are very similar to financial debt. First, it has a cost to resolve, which is analogous to the principal of a financial debt. Second, it has imposes ongoing costs until it is resolved, which works like the interest on a financial debt. Thirdly, the starting value of the cost to resolve -- the principal -- is often greater than the costs which could habe been paid out of pocket initially instead of incurring the debt, making it analogous to the various initial costs associate with many financial debts.

To me this sounds like the kind of thing a dumb manager would say: "You mean that price we paid for our software 6 years ago isn't the only thing it cost! Holy shit we have software debt!"

The "technical debt" terminology was invented by people who understood the technical problems and the consequences (mostly, of trying to minimize the initial costs of developing or acquiring technology-based solutions to business problems) as a means of explaining the issue to managers and executives, who generally understand financial concepts like "debt" much better than they understand technical processes.

 

Re:Ya this is retarded

[Rich0]

Yeah, and in the home consumer world people don't pay their brother or cousin or friend or whoever it is that they get to deworm their computer every six months.

If everybody made their cousin the mechanic give them oil changes every three months then car maintenance would be "free" too.

Re:Ya this is retarded

[DarkOx]

Your right its not a "debt" I don't know why the TFA is trying to confuse everyone with that term. It is a liability and often an poorly recognized and accounted for one; but it is not a debt.

Re:Who needs karma?

[Anonymous Coward]

I have five modpoints.

Big deal. I have fifteen (posting Anon so I can mod comments in this story later).

Turns out I don't understand how the system works, after all. I see something in the FAQs about having 10 points instead of 5 for being a good moderator, so I don't know if this is a bug (adding 10 to 5 instead of replacing 5 with 10) or if something changed more recently than the FAQ entry. The last time this happened (the first time I had 15 points), they were still set to expire in 3 days, and the system let me use them all normally. Not sure if I can ever remember having just 10 mod points to begin with.

Anyway, point is, someone needs either to squash a bug or to update the moderation FAQs.

Re:Who needs karma?

[Shikaku]

You are BOT. Assimilate, Assimilate!

The Cloud is perfectly safe.

[Anonymous Coward]

Wait a minute. I'm a manager, and I've been reading a lot of case studies and watching a lot of webcasts about The Cloud. Based on all of this glorious marketing literature, I, as a manager, have absolutely no reason to doubt the safety of any data put in The Cloud.

The case studies all use words like "secure", "MD5", "RSS feeds" and "encryption" to describe the security of The Cloud. I don't know about you, but that sounds damn secure to me! Some Clouds even use SSL and HTTP. That's rock solid in my book.

And don't forget that you have to use Web Services to access The Cloud. Nothing is more secure than SOA and Web Services, with the exception of perhaps SaaS. But I think that Cloud Services 2.0 will combine the tiers into an MVC-compliant stack that uses SaaS to increase the security and partitioning of the data.

My main concern isn't with the security of The Cloud, but rather with getting my Indian team to learn all about it so we can deploy some first-generation The Cloud applications and Web Services to provide the ultimate platform upon which we can layer our business intelligence and reporting, because there are still a few verticals that we need to leverage before we can move to The Cloud 2.0.

Re:The Cloud is perfectly safe.

[Anonymous Coward]

You're hired!

Re:The Cloud is perfectly safe.

[Crudely_Indecent]

Wow, that least informed statement I've read in a while. Reminds me of my old boss.

Steven, is that you?

Re:The Cloud is perfectly safe.

[Rich0]

As CIO!

Re:The Cloud is perfectly safe.

[painandgreed]

Wait a minute. I'm a manager, and I've been reading a lot of case studies and watching a lot of webcasts about The Cloud. Based on all of this glorious marketing literature, I, as a manager, have absolutely no reason to doubt the safety of any data put in The Cloud.

You obviously did not have a Sidekick.

Re:The Cloud is perfectly safe.

[Anonymous Coward]

If your joking... That was great lol.
If this is serious, please post the company you work for I want to make sure none of there stock is in my portfolio, 401k or any mutual funds I might own.

Ohh wait, Larry Larry Ellison is that you... I should have known.

Business Management Rebuttal

[NYMeatball]

"Its okay, this project/software is using 'internal resources'"

"Say, Jim, would you mind working a few extra hours for the next 14 weekends in a row? I know you're salary, but we'll make it up to you once this project is done..."

And that, my friends, is how you completely ignore hidden costs and justify even the most lingering of projects.

At least at my company, anyway.

Re:Business Management Rebuttal

[benjamindees]

That's funny, because everywhere I've worked the standard method of ignoring hidden costs was to purchase poorly-designed and ill-suited proprietary software and then pass it off to internal resources to maintain* it.

*re-write

Re:Business Management Rebuttal

[Anonymous Coward]

"Say, Jim, would you mind working a few extra hours for the next 14 weekends in a row? I know you're salary, but we'll make it up to you once this project is done..."

I am not sure I understand where the cost is hidden. You're salaried; you knew that going in.

Re:Business Management Rebuttal

[Slim_Jack]

Putting an employee who would be twiddling his thumbs on a project like that may not be the same as allocating a productive employee. Sometimes companies make those decisions just to keep people busy when they are not immediately needed.

Re:Business Management Rebuttal

[Dr_Barnowl]

The cost is to Jim's health and sanity - it doesn't show up on any balance sheet. Business love this sort of thing, enough that there is a term for it in economics ; an externality. It belongs in the same category as dumping toxic waste.

Re:Business Management Rebuttal

[Anonymous Coward]

Health and sanity are affected regardless of how many hours a day you work. Enough that there is a term for it: Stress. Wages/salary are heavily based upon it.

I reiterate: where is there hidden cost?

Re:Business Management Rebuttal

[Tablizer]

Say, Jim, would you mind working a few extra hours for the next 14 weekends in a row? I know you're salary, but we'll make it up to you once this project is done

And that's what America deserves for pissing on unions.
   

Re:Business Management Rebuttal

[martin-boundary]

Nonsense. The health effects are not linear with the number of work hours, they are more pronounced the more hours you work. Moreover, working over the weekends in addition to a full working week directly reduces the recuperative function of time off. But you're just trolling, I guess.

Re:Business Management Rebuttal

[Overzeetop]

I didn't think he implied they were linear. They're not even static for the same number of hours when considering different types of work. There is always stress, and every manager (well, every competent one) judges the health and performance of his employees to maximize their output, both short term and long term. Do you know what a pain in the ass it is to have to replace an employee - especially a good one?

The disconnect is (and I've said this before) there are 4 lousy employees for every good one. Management is not excepted.

Re:Business Management Rebuttal

[Anonymous Coward]

I never implied a linear relationship.

Regardless, if you opt to take on a salaried position, there is an explicit agreement that you work the hours required to get the job done. Any good business is going to that to their advantage. What part of the cost is hidden, and who is it hidden from?

Now, I am also having trouble understanding why you think I am trolling. Is it because I choose to post A/C instead of hiding behind a user-name?

i'd love to see this for Waves

[areusche]

I just spent a lot of cash on the Waves Mastering Suite for Pro Tools. In fact any "multimedia" software has a crazy price. I figure they do this to milk media companies for all that they're worth.

those idiots

[Profane MuthaFucka]

If they really want to know what software costs these days they need to be calculating those prices in Rupees, not Dollars

Re:those idiots

[Anonymous Coward]

Hahaha, that's awesome! I lol'd

Re:those idiots

[Anonymous Coward]

Good one! But in reality all Indian companies bill in US Dollars and not in Rupees.

"...$2.82 per line of code..."

[John Hasler]

The solution is obvious. Ban newlines.

Could impact "software metrics" though. "Three months and you guys have produced only one LOC? You're all fired. We're sending the job to a guy in India who guarantees 20 LOCs per day from each programmer."

Re:"...$2.82 per line of code..."

[nacturation]

And don't optimize.

Re:"...$2.82 per line of code..."

[Hatta]

What software actually costs to produce is irrelevant. What matters is how valuable it is to the customer, and how much they're willing to pay for it.

Not just managers.

[khasim]

We run a lot of HP servers.

HP publishes firmware / software updates.

I'm the only person in the department that applies them to any of the servers.

"If it's not broken, why fix it?"

Re:Not just managers.

[Dan Ost]

Don't call them "updates". Instead, say the software/firmware has been "recalled" and you've got the "fixes" from HP.

Re:Not just managers.

[jimicus]

I'm the only person in the department that applies them to any of the servers.

"If it's not broken, why fix it?"

And I would argue that this is exactly the right attitude to take. Unless you have a damn good reason to make any change, you don't make it. Changes to a system are more often than not the cause of breakage.

While it's unusual for a firmware upgrade to actually break hardware, it's not unknown. How do you feel about the 5 minute downtime to reboot following such an update becoming four hours or more while you call out the field circus to replace parts when there was no good reason for the update in the first place?

Obligatory car analogy

[khasim]

Yeah, it isn't shocking. Mostly because I'm beyond being shocked by anything those idiots do.

If it's physical, they can understand it. They put gas in their cars. They take the cars in to have the oil changed. And so forth.

But software can't be touched. A server running the latest patches looks the same as a server without them.

Unless there is a problem in the software that they are experiencing, they don't understand it.

Absurd

[Maxo-Texas]

your cost is the salary divided by the work done.

These kinds of studies often lead to stopping work because it's "too expensive" which leads to your staff sitting doing nothing. It's absurd.

I've seen many small projects which would have 1 to 2 percent improvement canceled because they were not "cost effective" and then the programmers sat there doing nothing for 2 months. You should always let your programmers work on little side projects that they are enthusiastic about as long as they make the big deadlines that you want.

Re:Absurd

[Anonymous Coward]

Definitely. I worked at a Fortune 50 which had a team of developers just for fixing production issues. At some point, they calculated their per-production-bug total cost and didn't like what they found. (something in the thousands of dollars per bug that needed a production patch) Solution? Stop fixing bugs that didn't seem too important because it was "too expensive"...

The total cost is fixed since we're already working there and we're salaried, jackass...

Re:Absurd

[DoofusOfDeath]

your cost is the salary divided by the work done.

Employers wish that were true. Parts of your cost beyond mere salary include:

• benefits, including health insurance
• facilities cost
• other infrastructure to support you (accounting, etc.)

Workers in industrialized countries are expesnsive.

These kinds of studies often lead to stopping work because it's "too expensive" which leads to your staff sitting doing nothing.

What makes you believe this happens "often"? I've never seen this after working for a variety of employers large and small.

Re:Absurd

[Maxo-Texas]

I've been in IT since 1985. A little over 20 years. I've seen this happen over a hundred times.
Twice I've seen people sit doing *NOTHING* rather than do work which was "too expensive". Happened to me once. It was really creepy feeling.
I like for the pipe to be loaded with work.

It got much worse in 2000. Before then, programmers frequently sneaked in little refactorings and little fixes. After then, every line change had to be justified by a project. So you did exactly what was specified, sat around for several days til everyone synced up to the build point, then you could start working again.

Much better than what they are doing now of course- 12 hour days, 24 hour coding. Maximum efficiency by working us to death. I checked- it's all legal. There is a special law in texas for computer programmers if you write, design, test, or install, you are screwed and have no legal protection.

related cost of dead formats

[Anonymous Coward]

It seems strange to me that NSF blew 500k on the "cost of software" when the more interesting cost is the cost of data lost to proprietary formats. How many scientific experiments are done, on the NSF's dime, that never get shared with the public in open formats because instrument manufacturers lock in their clients.

as someone above mentioned, the cost of decommission is a real bear, and breaking the lockin instrument manufactures have on the instrument data should be something NSF devotes monies toward.

Broken record

[rbrander]

Gartner's been saying this stuff for 20 years. In practice, the news that software has ongoing costs was used to exterminate any solution except Microsoft from large organizations.

In order to do that, non-IT departments had to be forbidden to install or choose any software at all, or they would have shown an annoying tendency to pick software that worked better for their needs. So IT had to remove all admin privileges and get Purchasing to not permit any purchase orders for software not OK'd by IT.

The larger the organization, the better the argument works. The proportional costs actually drop through advantages of scale; but the absolute cost starts to sound appalling when multiplied by 10,000, particularly when a single, generic, (Garter-quoted) number like $1000/application/year/PC (developed by dividing the whole support budget by the number of apps) is used for all apps, including handy little graphics utilities like XnView.

In theory, a department could prove by business case that some second (third...) solution to the same basic software category within the organization was justified by some benefit. In practice, this was made almost impossible to prove and was limited to graphics jobs being allowed Macs.

It was used to prevent Firefox, for instance; though free, the same "administration costs" were applied to the decision. Pleas that customers could upgrade and manage it themselves by clicking the "upgrade" button were scoffed at; one or two anecdotes of users that got themselves into a mess were multiplied by 1000 PCs to claim that vast costs would be incurred.

In short, this argument was used to take the "Personal" out of corporate PCs. Someone I know discovered there were only a few things he COULD change on his desktop; couldn't even delete the icons for Approved Corporate Software he didn't use. But he could, and did, change one icon to read "Their Computer".

Re:Broken record

[jimicus]

Depending on the company (and the industry in which it operates), this may not be far from the truth. Some industries are so tightly regulated that letting unknown software onto your PCs - regardless of its purpose - is a Very Big No No.

It wouldn't be too far from the truth to describe the entire history of the PC in business as "putting computing power onto peoples desks and spending the next 20 years trying to regain the control that was lost as a result".

goddamn that's a stupid commercial.

[Anonymous Coward]

yeah, but was he voted "voted #1 vodka of 2033" ?!

Did they forget about TCO?

[swb]

Isn't this the whole TCO thing, all over again?

The cost of not writing software

[Klync]

As a sysadmin, the points about maintenance and downtime really resonate with me. And then there's crap like having a team of 10 to 20 staff (many of them very senior) standing around scratching themselves due to some bug or shortcoming (often just in the UI) that would've taken an hour or two to implement. The cost of *not* writing software can be astronomical. As a more concrete example, I worked in a shop that used LDAP to authenticate a myriad of services (desktop signon, shared volumes, shell access, web applications, mail, etc.), but there were some "glitches" in the LDAP schema and the clients weren't always properly configured to use them anyway. Fixing the issue completely would've taken maybe 30 hours. Writing our own web app to create/modify accounts with a step-by-step set of screens that implemented our business logic for new accounts might've taken 150 hours. But doing something like that would be too costly. Better to eat up an average of 5 hours per week of sysadmins time diagnosing trouble with sign-in to individual services, another 5 hours of the staff's time who were trying to sign in, and the occasional 5-10 hour patch of yak shaving when someone stumbled into the thicket accidentally once a month. And on top of *that* are all the dirty little secrets of employee behaviour to work around the shortcomings of the system.

Re:Who needs karma?

[FatdogHaiku]

Won't that drive up the true cost of maintaining the moderation system software? And adjusting the FAQ could lead to countless man hours used replying to gripes from people that never get extra-extra mod points.
Do you want to drive up the hidden cost of /.?
It's already enormous when you factor in lost work hours...

Re:Who needs karma?

[Anonymous Coward]

I think this is an FAQ issue. I've asked a few questions about how things work and made a couple complaints about how far certain information is buried to the powers that be around here. The answer was that the FAQ's are way out of date and there just isn't time to update them.

I have been given 15 mod points 95% of the time for last 4 or 5 months, and almost every day for the last week or so, but haven't asked why after being told how far out of date the FAQ's are. I figure it's a policy change of one type or another. It's either a bonus for being in the top 1/2 of 1% of moderators or something like that, or they are just adding the 10 mod points to the normal 5 whenever you are given mod points now when you're a 1%er.

Costing by Size

[DERoss]

Costing software by its size ($2.82 per line of code) is not only foolish, it is counter-productive. Much software development effort is applied to making applications faster and more easily hosted on small devices. That is, the effort is in removing code without removing capabilities. How do you cost the removal of lines of code?

Louis B. Mayer

[srobert]

Louis B. Mayer once commented about the movie industry, "I realized then that movies are the only thing you can sell and still own." Mr. Mayer lived before software but I'm guessing he'd have been heavily invested in it.

Re:Who needs karma?

[MichaelKristopeit 30]

MichaelKristopeit 16 is an impostor attempting to steal my identity.

to the coward responsible: present yourself to me, admit what you've done, and i will kill you.

Total cost of a pack of cigarettes

[Anonymous Coward]

Personally, I take TCO figures with a grain of salt. The methodology is so speculative, coarse-grained and pre-biased that the numbers are, frankly, ridiculous. Somewhat relatedly, a recent Spanish study estimated the total cost of a pack of cigarettes at $150:

http://www.torontosun.com/life/healthandfitness/2010/10/08/15628006.html

The NSF could have saved money ...

[lwriemen]

... by buying a copy of Applied Software Measurement by Capers Jones. There's enough data in that book to extrapolate the cost.

Solutions ot the economic problem of abundance

[Paul Fernhout]

http://knol.google.com/k/paul-d-fernhout/beyond-a-jobless-recovery#Four_long(2D)term_heterodox_alternatives
Re: "Sadly I think its too late to really do anything about it."

Essentially, rather than create more "artificial scarcity", we need to shift our socio-economic paradigm to deal better with the abundance computer technology can create.

Re:Who needs karma?

[Anonymous Coward]

michaelkristopeit 30 is an impostor attempting to steal my identity. signed, therealmichaelkristopeit123456789whodoesntusecapitalletters.

Well...

[phanboy_iv]

...somebody tell them then, damn.

The value of "support" is greatly exaggerated

[ecloud]

With most commercial software you end up being on your own in the end, and the end comes sooner than you think. They are greedy after all. I have tried switching to MacOS for some tasks, and now I'm reminded again why I hate proprietary software. One of my latest disappointments there has been GarageSale... a few months after buying it, there's a new version for which I'd have to pay to upgrade. And ebay changes their APIs too much, so I'm afraid pretty soon there will be a change which they will not "support". Being closed-source software it would then become useless. I bought it though because there aren't any good free software alternatives these days, and it saves time when creating auctions compared to using the ebay site... just stuff like drag-and-drop of images, and easy formatting (even though I've got lots of experience writing HTML by hand, it's a boring time-wasting thing to do). Another is Parallels. TWO MONTHS after I bought it, I'm already ineligible for a free upgrade to the next version, in which they supposedly made it much more efficient. So my impression of that company is even worse, but OTOH I do have free alternatives (just not as nicely integrated, I suspect).

Several times I've worked at companies which insist on using expensive software because it has "support", e.g. ClearCase and ClearQuest. Again, they suck in some ways, you can't fix it, and you can get better results with svn or git by just investing a little sweat equity in setting it up and getting use to the workflow. So to me the word "support" is always a weasel word: As soon as someone utters it, watch out... here comes a snow job.

Re:Who needs karma?

[mini me]

I went a good three-four years without being able to moderate at all, and now I routinely get 15 mod points. Must be allowing me to make up for lost time or something.

Free software?

[kmoser]

If only there was a source for free software which other people patched for you whenever a bug was found.